Is the worst yet to come? COVID-19 and social security


Written by Laura Elliot, Economic Justice Australia (Seconded Pro Bono Associate, DLA Piper)

Economic Justice Australia is the peak organisation for community legal centres providing free, specialist advice to people on their social security issues and rights. Economic Justice Australia’s 15 member community legal centres operate in every state and territory around Australia.

Is the worst yet to come? COVID-19 and social security

The economic effects of COVID-19 have already been devastating, but the worst may be yet to come as aftershocks ripple through the country in the coming months. This will likely be particularly devastating for people who need support from the social security system.

Since March, the Federal Government has been delivering a $249 billion economic support package that has provided timely support to affected workers, businesses and the broader community, and has kept many Australians in work. However, over one million people living in Australia do not have access to either social security support (including JobSeeker Payment, Youth Allowance and Special Benefit) or the JobKeeper wage subsidy. Particularly vulnerable groups missing out include temporary visa holders, asylum seekers on Bridging Visas, New Zealanders on Special Category Visas, students, and pensioners who have lost income due to COVID-19.

Red Cross emergency funds and state and territory government packages are providing some relief to people who are ineligible for Federal Government support. However, these do not provide stable, longer-term support and are inadequate to ensure the health and safety of people who are left without social security or other income. Many of these people have been living and working in Australia for years and now face serious financial hardship, where struggling to pay rent and put food on the table has become a daily reality.

Economic Justice Australia (EJA) members have been providing legal help to many people affected by the economic impacts of COVID-19 who are trying to access income support. The Welfare Rights Centre in New South Wales alone has seen a 15% increase in the number of calls since 20 March 2020, and the centre expects to see another 30% increase in demand later this year as COVID-19 support measures fall away.

EJA anticipates that there will be waves of legal need associated with the economic impacts of COVID-19 in the coming months. These will relate to:

  • eligibility for temporary COVID-19 payments in the short term
  • reinstatement of mutual obligation penalties
  • issues arising from the planned end of the Coronavirus Supplement and relaxed means testing in September/October
  • renewed debt recovery activity in the longer term.

Issues arising from current social security payments

Short term issues

In the short term, the difficulty of navigating claim and appeals processes means that people who are initially assessed as ineligible for payments may simply give up and never access social security support. This combined with the fact that people in the groups mentioned above are ineligible for  income support means that many people are facing severe financial hardship and the prospect of homelessness and extreme poverty once they have used up any savings they may have.

Over 600,000 Australians lost jobs in April alone. The unemployment rate is now 6.2%, and the underemployment rate is 13.7%.  In this climate, the prospects of someone who has just lost their job being able to get a new one are next to impossible, heightening the need for equitable access to social security.

COVID-19 does not discriminate. More needs to be done to ensure that all people who have lost work due to COVID-19 have access to social security support and that no one is left behind.

Medium to longer term issues

Whilst the temporary COVID-19 economic package has been a lifeline for many people who have lost income, the Coronavirus Supplement and JobKeeper wage subsidy are set to end in September/October. People who are currently relying on these payments to survive will see a large drop in income and could face serious financial difficulties. Many will be at risk of extreme poverty.

Over 6 million people are currently receiving the JobKeeper Payment. There is concern that the JobKeeper wage subsidy has created “zombie” companies that will cease to exist once JobKeeper ends, and that this may lead to higher unemployment levels. In turn, this would lead to many more people claiming the JobSeeker Payment from October. By this time, its rate will have reverted to the previous Newstart Allowance rate.

The fact that the JobSeeker Payment was essentially doubled overnight when it became clear that close to a million Australians impacted by COVID-19 would need to claim it, demonstrates that the previous rate of Newstart Allowance at $550 per fortnight (the equivalent of $40 per day) was grossly inadequate.

Proposed reforms

Expanded eligibility for Special Benefit

There is a cohort of people who have been living in Australia on long-stay temporary visas and contributing to the economy for a long time, some for many years, who have lost employment or cannot work due to COVID-19 but are not covered by the social security measures introduced as part of the Coronavirus Economic Response Package Omnibus Act 2020 (Omnibus Act). Special Benefit is the Social Security ‘safety-net’ payment available to people experiencing severe financial hardship, but many people living in Australia on long-stay temporary visas are excluded from access.

If the COVID-19 temporary measures are to address the hardship faced by Australia’s workforce, Special Benefit needs to be accessible to all people on long-stay temporary visas. EJA has written to  the Minister for Families and Social Services, Anne Ruston, seeking that she exercise the power given by the Omnibus Act to change social security settings via legislative instrument to provide all New Zealand citizens living in Australia access to Special Benefit, and extend the list of visa sub-classes which attract Special Benefit. This extended coverage should include people who hold:

  • Bridging Visas (all sub-classes)
  • Student Visa
  • Temporary Resident (Skilled Employment) Visa
  • Pacific and Seasonal Worker Visa
  • Temporary Graduate Visa.

EJA has also proposed that policy guidelines regarding the administration of section 729 of the Social Security Act 1991 (Cth) be revised to grant full-time students holding a Safe Haven Enterprise Visa access to Special Benefit.

Extended access to increased JobSeeker Payment

Whilst the JobSeeker Payment rate is currently double the usual amount, this temporary increase is set to end in September/October. At that time, the JobSeeker Payment will revert to the previous Newstart Allowance rate.

JobSeeker is currently paid to over 1.6 million people who are out of work. It is the main payment people  accessing social security support receive and is a vital safety net for individuals who have lost income due to COVID-19.

The COVID-19 JobSeeker Payment has been set at a rate that that guards against poverty. However, before the outbreak of COVID-19, households relying on social security payments were five times more likely to live in poverty than those with breadwinners earning a wage. The Newstart Allowance rate has not materially increased since 1994. A survey undertaken by the Australian Council of Social Service last year found that people living on that rate faced serious hardship, with many showering just once a week to reduce bills and 90% regularly skipping meals.

EJA members see first-hand the impact of the low rate of payment on the lives of many people in our community. It is impossible to live on the ‘normal’ rate of $550 per fortnight. After housing costs, households whose main income is JobSeeker are $124 a week below the poverty line.

This unacceptably low payment perpetuates a cycle of poverty. People who rely on it face homelessness, are unable to afford essential items like food and medication, experience negative health outcomes, and experience higher rates of domestic violence due to financial stress or reliance on abusive partners for money. All of these factors have negative implications for job seeking, and so the cycle continues. These issues are compounded for many people with disability.

The Senate Community Affairs References Committee recently reviewed the adequacy of social security payments for jobseekers. One of its key recommendations is: “once the Coronavirus Supplement is phased out, the Australian Government increase the JobSeeker Payment, Youth Allowance and Parenting Payment rates to ensure that all eligible recipients do not live in poverty.”  EJA strongly supports this recommendation.

The rate must be increased permanently so that people receiving the JobSeeker Payment are not forced to live below the poverty line and can afford the minimum essentials to live a healthy and dignified life.