A report released in early September summarises the extent and effects of income and wealth inequality before Covid-19, and provides a lens through which to assess the affects of Covid-19, as it continues and governments and businesses respond.
The third 2020 publication from the five-year Poverty & Inequality Partnership between the Australian Council of Social Service (ACOSS) and the University of NSW is a multi-disciplinary collaboration which has enabled the exploration of the intersection of poverty and inequality with other dimensions of disadvantage, including housing, health, and justice.
St Vincent de Paul Society is proud to be one of 12 ACOSS members and philanthropic partners providing financial and other support to allow this important work to be undertaken.
The report’s worrying findings should be on everyone’s radar, not just that of policy writers and decision-makers.
The report has simplified complex data about levels of income inequality, making it readily accessible to people with an interest in these important issues.
The key findings show that the highest 20 percent of households have six times the income of the lowest 20 percent. Average household wealth has now surpassed $1m, but it is very unequally distributed, with the highest 20 percent having more than 90 times that of the lowest 20 percent.
In the last 20 years, income inequality has grown during periods of income growth, and flattened during periods of income stagnation. From 2003 to 2017, the average wealth of the highest 20 percent grew almost twice as fast as that of the middle 20 percent, and over 10 times faster than the lowest 20 percent.
And the report concludes that the long-term impact of Covid-19 and mass unemployment on income and wealth inequality will depend very much on how governments respond.
The supplementary report, The impact of Covid-19 on income inequality, shows that the pandemic has already had a profound effect on employment and earnings in Australia, reducing paid working hours by 10 percent and employment by 6 percent between March and May 2020. It notes these income losses have impacted women and young people disproportionately.
Covid-19 is likely to exacerbate income inequality, due to the spike in unemployment, with the biggest job losses occurring in low-paid industries. Income inequality is likely to become more severe, unless economic recovery strategies focus on job replacements (including in many industries in which women and young people make up the majority of the workforce), and provide an adequate income floor through social security.
The Australian Bureau of Statistics’ National Accounts data released this week confirm Australia is now officially in a recession, following a massive fall in GDP of seven percent in the June quarter. This is the largest quarterly decline since 1990, and comes off the back of a 0.3 percent decline in the March quarter.
Recently the Federal Government also confirmed that JobSeeker (the rebranded Newstart allowance) will drop to $800 a fortnight from the end of September. It had initially doubled to around $1,100 a fortnight with the introduction of the Coronavirus supplement in March this year. A number of other payments will be affected. The reduced JobSeeker will continue for now until the end of December.
JobKeeper will be extended till the end of March next year, but that payment will also fall dramatically from the end of September. For people working at least 20 hours a week before JobKeeper was introduced, the payment will drop from $1,500 a fortnight to $1,200. This will fall further in January to $1,000 a fortnight. Payments for part-time workers will drop from $1,500 to $750 a fortnight by the end of the month, then to $650 in January.
A number of changes will give new employees access to the JobKeeper scheme. However, some particularly vulnerable groups remain excluded – many casual workers who have lost their jobs, asylum seekers on bridging visas, temporary visa holders including refugees, temporary migrant workers, and international students.
The Society is mostly using its own resources to provide housing and emergency assistance to these people. Based on the total Emergency Relief funds the Society delivered last year, approximately 25 percent is from Commonwealth grant funds, and 75 percent from the Society’s funds.
The situation has been made worse by cuts to the Status Resolution Support Service (SRSS), the effect of which was felt well before the pandemic. The SRSS was put in place to provide regular payments to help with basic living costs while someone’s immigration status is being determined.
Several states have reported an increase in the number of asylum seekers requiring support services. In one jurisdiction, our members have estimated that over 100 additional people have sought assistance as a result of the changed eligibility criteria and funding cuts to the SRSS implemented in early 2018.
In another jurisdiction, our members are telling us that finding sustainable housing and covering rental costs continue to be significant issues for this group. Research commissioned by the Refugee Council of Australia in partnership with a number of community-based organisations including the Society has found that changes to SRSS have forced people into situations of material poverty, rather than assisting them to find employment.
Almost four in five people seeking asylum are at risk of homelessness. Only one in five are job ready. Removing income and case management support shifts federal welfare costs and responsibilities to state agencies and community-based organisations, many of which depend on private donations and volunteer support.
Total costs to the states and territories are estimated to be between $80-$120 million per year. The changes represent an unnecessary penalty for a group already rendered vulnerable by the drawn-out and unsatisfactory immigration status resolution process.
In July 2020, there was only one job vacancy available for every 13 people on JobSeeker or Youth Allowance. Unemployment increased to almost a million people, or 13 percent. From March to May 2020, employment fell by 6.5 percent (835,000 jobs), and hours worked by 10.2 percent. Altogether, in April and May 2020, over 2 million people (20 percent of people employed) either lost jobs, or had their paid hours cut. These are truly daunting times for many of our young community members.
We know that many people on the old Newstart payment who were on the increased JobSeeker payment were finally able to access essentials like prescription glasses, a fridge, warm clothes, and children’s school supplies. People benefitted directly: the number of people skipping meals dropped by over half, to 33 percent, while the number of people struggling with medical costs dropped by over 40 percent.
The $150 per week reduction is the impact of most concern for more than 1.1 million children whose parents receive a qualifying payment for the coronavirus supplement.
The Government would do well to heed the 27 recommendations made by the Community Affairs References Committee’s inquiry into the adequacy of Newstart, by defining poverty, reviewing the income support system to ensure recipients are not living in poverty, and increasing emergency relief and social housing.
Research has commenced on understanding poverty and measuring inequality in Australia.
The Federal Budget will be delivered in October. Tackling some of these key social policy issues would improve significantly the lives of many people living in Australia, and provide a shot in the arm for an economy which will take a particularly big hit if the incomes of the lowest paid people are cut back in line with this week’s announcement.
The St Vincent de Paul Society National Council of Australia (the Society) is a lay Catholic charitable organisation comprising more than 60,000 volunteers and members, and more than 3,000 employees who provide on-the-ground assistance across Australia.
Republished from John Menadue’s Pearls & Irritations of 9 September 2020.
Photo Helping homeless man. Ed Yourdon. flickr cc.
29 September 2020.