Inside Story

Jenny Macklin’s mythbusters

The Economic Inclusion Advisory Committee might not have got what it asked for, but it has kickstarted an overdue debate

Mike Steketee 10 May 2023 1667 words

Old colleagues, different priorities: former Labor minister Jenny Macklin with prime minister Anthony Albanese during the National Apology anniversary breakfast at Parliament House in February. Mick Tsikas/AAP Image

No wonder Jim Chalmers was keen to bury the report of the Economic Inclusion Advisory Committee when it was released a few weeks before the budget.

The report’s “highest” and “immediate” priority” was for a large enough increase in JobSeeker to significantly reduce poverty among the unemployed. The right amount, it suggested, would be 90 per cent of the age pension, or an increase of $256 a fortnight.

The government has responded by increasing the rate by just $40 a fortnight, or $2.86 a day. Yes, it did some other things — a slightly increased rate for unemployed people aged between fifty-five and sixty, an increase in rent assistance by $31 a fortnight, more money for single parents with children between eight and fourteen, incentives for more bulk-billing under Medicare, and help with energy bills. That will make a difference, but not — with the exception of the single parents’ payment and perhaps some people’s energy bills — a substantial one.

The increase in JobSeeker and the youth allowance will cost an estimated $1.3 billion next financial year out of an expected $668 billion in total revenue. Despite the professed concern about the impact on inflation of pushing more money into the economy, the inflation rate is coming down, the economy is slowing and the budget has been taking more money out of the economy than it is putting in.

No doubt the government believes it got the politics right. I mean, what were the members of the advisory committee thinking by suggesting such a huge increase in JobSeeker? Even $40 a fortnight was far too high in the eyes of people like Robert Gottliebsen, who wrote in the Australian that “it is particularly galling to see able-bodied younger people gaining extra money to pursue a non-working lifestyle at a time of labour shortages.”

How can a committee of experts possibly compete with such deep-seated prejudices, and with a government that feels it must indulge them?

It was ACT independent senator David Pocock who secured the government’s commitment to set up the Economic Inclusion Advisory Committee during the negotiations over industrial relations legislation last November. He called it a “game changer” for people living below the poverty line, especially as the government agreed that the committee’s expert advice about how the most vulnerable are faring “and what needs to change to ensure we don’t leave them behind” would be released publicly before each budget.

The government honoured the promise, appointing a stellar cast of committee members. At their head is Jenny Macklin, a former Labor minister with a legacy of major reforms (including the National Disability Insurance Scheme) and a record as a researcher and expert adviser on health and welfare issues extending back to the Hawke era.

She was joined by leading academic experts in relevant fields, including Professor Peter Whiteford on welfare payments, Professor Jeff Borland on the labour market and Associate Professor Ben Phillips on inequality. Then there were representatives of the major interest groups, including the Australian Council of Social Service’s Cassandra Goldie, the ACTU’s Sally McManus and someone even Mr Gottliebsen couldn’t place among the usual suspects — Jennifer Westacott, head of the Business Council.

The government shouldn’t have been surprised by the committee’s findings. Yet it did its best to bury the report, sneaking it out late in the day, distracting attention to other issues and writing Pocock out of the script.

This response wasn’t just part of the annual political ritual of lowering expectations before the budget. Treasurer Jim Chalmers had clearly decided that tackling what the report called the “serious inadequacy” of payments to the unemployed was not sufficiently important.

As its track record shows, Labor has higher priorities than that, such as politics. It didn’t get around to increasing unemployment benefits when it was last in government. Then, in opposition, it remained sufficiently unmoved by evidence that the unemployed couldn’t survive on the prevailing rate of $40 a day as to promise no more than a review in government.

Even that commitment was dropped before the last election. It was left to the Morrison government to provide a permanent $50 fortnightly increase ($10 more than in this budget) following the withdrawal of the Covid emergency payment.

Labor’s attitude stems from deep-rooted myths about unemployment. In the words of the Grattan Institute’s Danielle Wood, the myths’ most pervasive image is “a work-shy twenty-something playing video games in their parents’ basement.” The same attitude convinced the Morrison government it was on a winner with its ill-starred robodebt scheme and accompanying rhetoric about welfare bludgers.

Department of Social Services figures show that just 16.8 per cent of people on JobSeeker and Youth Allowance are under twenty-five. Anti-Poverty Week executive director Toni Wren points out that half of those on JobSeeker are over forty-five and 28 per cent over fifty-five — many of them facing overt or covert age discrimination.

Forty-three per cent of JobSeeker recipients have been assessed as having only a partial capacity to work, mainly because higher eligibility hurdles have barred them from the more generous disability support pension. Many of them are forced to apply for eight jobs each month to continue receiving their payment.

About 10 per cent of the unemployed are single parents with children between eight and fifteen who would have qualified for the higher parenting payment before the Howard and Gillard government reduced the cut-off age for children from sixteen to eight. This move has now been largely reversed, which will improve the lives of some of the one in six Australian children living in poverty — a figure that Toni Wren points out has not changed in twenty years.

In short, the figures reveal a very different profile of the unemployed from the stereotype.

JobSeeker has become the fallback payment for many of those who have been locked out of higher income support options by increasingly restrictive eligibility requirements. This has very little to do with the populist rhetoric that anyone should be able to get a job when the unemployment rate is down to 3.5 per cent.

Danielle Wood points out that the Macklin committee’s proposed increase of $128 a week would still take the payment to only just over half the minimum wage, leaving a very significant financial incentive to work. Better employment services for those who face large barriers to employment would help; ACOSS says Australia’s spending on those services is less than half the OECD average.

The government is reviewing employment programs, and it’s to be hoped they’ll improve, but this is no substitute for a decent level of JobSeeker. As the Macklin committee stressed, the payment’s current inadequacy is also itself a barrier to finding work.

Was David Pocock too optimistic about the Macklin committee being a game changer? Perhaps not, if we look to the future. Its first report shifted the public debate to an extent that must have unsettled the government, though not enough to take proper action. Otherwise, perhaps there wouldn’t have been even the $40 increase, which was decided only near the very end of the budget process when the government learned it had more money coming in.

The Macklin report’s message cut through the pre-budget communications clutter, despite the government’s best efforts and its equivocal response. It generated an outpouring of support from an unusually broad political spectrum. Among the 350-plus signatories to ACOSS’s follow-up letter to Anthony Albanese were four federal Labor backbenchers — and others came out in public separately — Liberal MP Bridget Archer, the teals, other independents and the Greens, former Labor and Liberal ministers and backbenchers, prominent economists, and church and community leaders. The letter made several pointed references to not leaving people behind — a sentiment Anthony Albanese expressed in his election victory speech last year and has repeated since.

The Macklin report’s impact came not only from its official, if reluctant, government sanction. Step by step it builds the argument for the sheer inadequacy of JobSeeker. In the twenty years to 2020, the rate for a single adult rose by less than 3 per cent in real terms. The post-Covid increase in 2021 lifted this to 13.7 per cent, still far short of the 47 per cent increase in disposable income received by median households. In the same period, the gap between JobSeeker and the age pension grew in real terms from $35 a week to $160.

As a proportion of the national minimum wage, JobSeeker fell from 47 per cent in 2002 to 41 per cent in 2021, making it the third-lowest rate, after Britain and New Zealand, among the thirty-four developed countries of the OECD. Including housing costs, for which assistance is more generous in both those countries, puts Australia at the very bottom of the OECD rankings. “When an average earner becomes unemployed their income drops by more than [in] any other high-income country,” says the report.

And then there is the moral argument. JobSeeker recipients told the committee about looking around the house for things to sell, choosing between medicines and paying electricity bills, and doing without meat and fresh fruit and vegetables. This is the face of poverty in Australia — one of the richest countries in the world, but one where inequalities in income and wealth have been growing.

Under the agreement with Pocock, the Macklin committee will report annually before the budget. The pressure to turn into reality the prime minister’s words about leaving no one behind and holding no one back will continue.

Has the government made a rod for its own back by agreeing to the committee, as the Australian Financial Review’s Phillip Coorey has argued, given how many worthy, competing and unavoidable demands are made on the budget?

To the contrary, if it helps dispel ignorance and misunderstanding about Australia’s unemployed and pushes the government to do more to help them, it may be to Labor’s political advantage. Voters may be less inclined to defect to the Greens and independents if the government implements more real Labor policies for which the arguments are so compelling. •