EXPLAINER

Explainer: What changes are being made to JobKeeper and JobSeeker?

Students protest the reduction of pandemic support payments. Picture: Dion Georgopoulos

Students protest the reduction of pandemic support payments. Picture: Dion Georgopoulos

It's been the payments that have kept millions of Australians on their feet during the coronavirus pandemic. But from Monday, the rate of the federal government's JobKeeper and JobSeeker payments will reduce.

While more businesses are reopening as the coronavirus situation improves in many states and territories, there are fears the reduction of the economic lifeline to many will lead to more people suffering financial hardship.

What are the changes?

The JobKeeper payments were introduced in March when the pandemic first hit Australia and businesses were forced to close due to ever-increasing levels of coronavirus restrictions.

It's estimated 3.5 million Australians received the fortnightly payments of $1500 in order to financially survive, despite being out of work.

The government announced in July it would be scaling down the $70 billion relief measure, as the economy began to open up again. From September 28, the JobKeeper rate for full-time employees will reduce from $1500 a fortnight to $1200 a fortnight.

It's a different scenario for part-time workers, or those who were working less than 20 hours a week before the pandemic hit.

The JobKeeper rate for those workers will reduce to $750 a fortnight.

Those changes, which kick in from September 28, are only the first stage of the gradual reduction of coronavirus relief payments from the government.

For full-time workers, the $1200 a fortnight rate will reduce to $1000 on January 4 and will last until March 28.

For employees who work less than 20 hours a week, the reduction will be from $750 to $650 on January 4.

It's estimated the extension of JobKeeper until March next year will cost an additional $16 billion, bringing the total cost of the scheme to $86 billion.

Has anything changed for businesses that have applied for JobKeeper?

When JobKeeper was first announced, businesses - and in effect their employees - would only be eligible if they had seen a drop in turnover of more than 30 per cent from before the pandemic and when the pandemic hit.

Those requirements will become stricter as the JobKeeper payments become extended. Businesses will be required to resubmit their eligibility for the scheme.

That comparison of a drop in turnover will remain the same at 30 per cent, but will be taken from July to September this year compared to the same quarter last year in order to qualify for the payments from September to January.

To be eligible for the payments from January to March, businesses will have to show a drop in turnover from October to December compared with 2019 levels.

What about JobSeeker payments?

Recipients of JobSeeker payments, for those who are unemployed, the situation is a bit different.

Those on JobSeeker, formerly called the Newstart allowance, were on $565 per fortnight before the pandemic hit.

The government then topped up those payments with a coronavirus supplement of $550 a fortnight, almost doubling the rate of pay. That supplement then reduced on Friday to $250 a fortnight.

As well as JobSeeker, the coronavirus supplement was also added on to those on other payments such as Austudy or youth allowance.

While the total payment depends on personal circumstances (such as if you have a partner or children) the new fortnightly payments for singles is now $815.

Do those on JobSeeker have to start looking for jobs again?

While the number of jobs that payment recipients had to apply for each month was suspended due to the pandemic, mutual reporting obligations will start again from September 28. Depending on circumstances, those on the payments will have to apply for up to eight jobs a month.

The restart of mutual obligations has led to concerns of a crowded jobs market, which has worsened due to the recession, with reports of hundreds or even thousands of people applying for the same jobs.

Some on JobSeeker were required to apply for four jobs per month from August 4.

Mutual obligations are still suspended in Victoria, due in large part to the state still being in lockdown as a result of the second wave of coronavirus cases.

Why are people worried about the changes?

With millions of people either on JobKeeper or JobSeeker payments, some of the worst-case economic scenarios were able to be avoided.

However, the reduction in rates of the payments are coinciding with the end of mortgage deferral programs that were instituted by many banks at the beginning of the pandemic. Many advocates have said the changes amount to a perfect storm as people head towards an economic cliff forcing more people into financial hardship.

Chief executive of the ACT Council of Social Services Emma Campbell said it was expected a large number of people would fall below the poverty line without the regular JobSeeker payments at the original rate.

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"The issue is a lot of measures being put in place are deferrals, like mortgage deferrals or eviction moratoriums, and it doesn't mean the debts that are amassed disappear," Dr Campbell said.

"We need to ensure that measures are in place that support people who lose their jobs and experience significant decreases in income to deal with the ongoing costs they face."

With those on the payments receiving less each fortnight, Dr Campbell said some of the economic hardships that were avoided in the early stages of the pandemic could become a reality down the track.

"Costs that have been deferred have to be paid at some point," she said.

"Otherwise, we will see people facing homelessness and health crises and being unable to put food on the table."

This story What will JobKeeper changes mean? first appeared on The Canberra Times.

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