CANBERRA—Federal Treasurer Josh Frydenberg says the Australian government is “favourably disposed” to extending the COVID-19 supplement dole payment beyond December.
The government last week extended the JobSeeker supplement beyond its legislated September cut-off until the end of the year, although it will be reduced from $550 to $300 (US$213), bring the overall dole payment to $800 per fortnight.
However, in last week’s economic update, Treasury forecast the unemployment rate to peak at 9.25 percent by the end of the year, compared with 7.4 percent now, which would equate to a further 240,000 people being out of a job.
“We’re favourably disposed to continuing it, but we’ve got to do an assessment of where the jobs market is at that time,” Frydenberg told ABC”s Insider program on July 26 on the outlook for JobSeeker.
“It’s about getting the balance right so that there are incentives for people to return to work, and at the same time, providing the safety net.”
Business and welfare groups, economists, Labor and the Greens have long argued for an increase in the dole payment – formerly known as Newstart – which paid $40 a day before the COVID-19 outbreak.
Shadow treasurer Jim Chalmers wants to see certainty on the outlook for JobSeeker sooner rather than later.
“Almost two million people will be relying on this payment and need and deserve a bit of certainty about what it is,” he told Sky News’ Sunday Agenda program.
In his much-awaited economic and fiscal update, the treasurer said the deficit for the 2019/20 financial year was expected to be $85.8 (US$60.9) billion, rising to $184.5 billion in 2020/21.
AMP Capital chief economist Shane Oliver expects the government will be forced to provide at least a further $20 billion in stimulus between now and the delayed May budget on Oct. 6, and he also thinks revenue will recover more slowly than the government anticipates.
That would see the 2020/21 deficit ballooning to $220 billion.
“Supporting the economy through this tough period is absolutely the right thing to do,” Oliver said in a note to clients.
Treasury confirmed the economy is suffering its first recession in nearly 30 years and expects the economy will contract by 0.25 percent in 2019/20 and by a further 2.5 percent in the following financial year.
By Colin Brinsden