‘Far too low’: Call to reform indexation as JobSeeker recipients struggle with soaring inflation

Australians on income support payments aren't keeping up with rising prices, new analysis finds.

Australians on income support payments aren't keeping up with rising prices, new analysis finds. Photo: Getty

Australians on JobSeeker payments can’t keep up with basic living costs like housing, food and electricity, according to a report that finds government income support is still “far too low”.

Analysis published on Tuesday by Anglicare Australia, ahead of the federal budget in May, shows how income support recipients are being squeezed by soaring prices, with housing costs up 22 per cent and both food and electricity increasing 17 per cent in the past two years.

All of those costs have outpaced headline inflation, which is used to index income support, leading to a situation where payments on programs like JobSeeker don’t cover the basics.

“Some people find themselves in debt spirals trying to juggle all of their costs. Others forego basic essentials by skipping meals, missing medical appointments, and avoiding getting insurance – only to pay for it down the track,” Anglicare executive director Kasy Chambers said.

“These numbers show us that Australians doing it tough need real action, and real leadership. That means raising the rate of Centrelink payments, making the minimum wage a living wage, and creating cheaper insurance and energy options for people who need them.”

Essentials squeeze outpaces indexation

The Albanese government has sought to address cost pressures for income support recipients since coming into office passing through a boost to many payments in the 2021-22 budget.

Social Services Minister Amanda Rishworth has also in recent months sought to trumpet regular inflation indexation of government payments as a salve for families struggling with soaring bills.

But while these consumer price index-linked increases to support payments have become larger as inflation has soared, Anglicare’s analysis shows that because essentials have risen faster than headline inflation millions of people on payments are still actually worse off.

“Households on lower incomes spend a greater proportion of their budgets on essential items,” advocates said.

“Higher prices for these items hit lower income households harder, and this is important to note because the greatest contributors to inflation over the past 18 months have been in electricity, food, and rents.”

Anglicare used rent inflation as an example, pointing out that capital city prices have more than doubled in the past three decades, far outstripping increases in income support payments.

It is at the point where average asking rents in Sydney are almost $850 a week, meaning someone on JobSeeker could spend all of their income and still not be able to afford housing, even including Commonwealth Rent Assistance.

The findings echo earlier research that has found support payments, including rent assistance, have failed to keep pace with the rising costs of essentials, squeezing family purchasing power.

Call to reform way JobSeeker changes

Anglicare wants the Albanese government to change the way government support payments are indexed away from the CPI, arguing that headline inflation isn’t the best yardstick for cost-of-living pressures.

It argues that changes in pensions are already adjusted both in line with prices and a benchmark that captures changes in wages, while measures of essential costs such as the Henderson Poverty Line are not used to determine changes to payments such as JobSeeker.

“JobSeeker is one of a number of working age payments that are indexed using the CPI without any benchmark that is linked to living standards,” advocates said.

“Youth Allowance for jobseekers, and Youth Allowance for students and apprentices are also indexed in this way and this has led to working age payments that are well below the poverty line.”

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