As Australia prepares for the upcoming federal budget, experts are warning against splitting welfare payments based on age.

In recent days, media reports have suggested the federal budget may include a slight increase to JobSeeker, with the extra money going exclusively to those aged over 55. You can read our report on this news here. But one leading economist recently warned that such an action would be disastrous, setting a ‘dangerous precedent’ in which some welfare recipients aren't treated as equals.

Advocates are worried that age-specific welfare increases could cause a rift between generations. Credit: Shutterstock

Danielle Wood, CEO of the Grattan Institute, spoke about the issue at the National Press Club in Canberra on Wednesday.

'I do think it is a bit of a slippery slope, this division of people on those payments,' she said.

'Equally, people under 55 are really struggling to get by.'

These comments came alongside the Australian Council of Social Service (ACOSS)'s calls to increase JobSeeker to at least $75 per day in order to help people meet their basic needs. The council has calculated that this increase would come at a cost of around $9 billion a year and that it's well within the government's realm of possibility.

However, ACOSS's call hasn't been heeded and the government has rejected calls from two expert panels for an increase to JobSeeker for everyone on the payment. So, at this stage, it seems the only sort of increase we can expect (if any) is one tailored exclusively for those over 55.

Leaked reports suggest that the government’s proposed $3.70 a day increase to about 227,000 JobSeeker recipients aged over 55. While Treasurer Jim Chalmers refused to confirm or deny these reports, he did declare unemployed women over 55 to be the ‘most vulnerable’ cohort of unemployed Australians.

This controversial proposal, rumoured to be included in the upcoming budget announcement, has garnered its fair share of backlash from welfare advocates and various Labor MPs. Despite Wood being no fan of the proposal herself, she expressed that she wouldn’t begrudge anyone over 55 an increase if that was the final decision from the government.

Antipoverty Centre spokesperson Kristin O'Connell stated, 'Restricting an increase in JobSeeker to people of a certain age is really an attempt to divide us and to encourage people to think that there are “deserving” and “undeserving” welfare recipients.'

Abby Manning, 20, knows all too well what it’s like to live off Centrelink while trying to find work. Last year, she relied on the payment of approximately $33 per day while studying at TAFE for a career in disability support.

‘It definitely was not enough to live on,’ she said. ‘I couldn't afford the basics [and] I definitely couldn't afford my rent’. In the end, Ms Manning was forced to drop out of TAFE and get a job working as an organiser for the Greens in the lead-up to the last federal election.

She is reportedly horrified that her generation of unemployed Australians is being overlooked.

‘I definitely feel like my generation isn't being cared for,’ she said. ‘The government simply doesn't want to prioritise its spending on young people.’

Meanwhile, Carolie O’Connor, 63, has been borrowing money from family members to help pay her bills. Despite the proposed modest increase, every extra bit of JobSeeker payment she receives would still go towards energy and water bills, leaving her far from financially comfortable.

Historically, unemployment payments leaned towards helping younger recipients. However, the number of older Australians on JobSeeker has increased significantly over the past few decades. Member comments on our previous story suggest this could be due to the difficulty of strict eligibility criteria for disability payments.

Women over 55, who once comprised only 2 per cent of recipients in 2001, now make up the largest proportion of JobSeeker recipients at 16 per cent.

The Grattan Institute has put forward their own suggestion which could help offset the cost of such an increase. They suggest the government cancels part of its Stage 3 tax cuts, which are set to come into effect in 2024.

By keeping the 37 per cent tax bracket, rather than scrapping it altogether as previously planned, the government could save around $8 billion a year, consequently offsetting the cost of increasing JobSeeker. As Ms Wood highlighted, 'That alone would offset the fiscal and inflationary impact of a JobSeeker rise.'

Key Takeaways

• A leading economist has warned against creating two classes of welfare recipients by increasing JobSeeker only for Australians aged over 55.
• Grattan Institute CEO Danielle Wood spoke at the National Press Club in Canberra, cautioning against splitting welfare payments based on age.
• The government is yet to confirm reports of a JobSeeker increase for people over 55 in the upcoming federal budget.
• Women aged 55-64 now make up the largest cohort on the JobSeeker payment.
• Advocates argue that everyone on unemployment payments needs a significant increase to lift them out of poverty.
• The decision to increase JobSeeker payments for those over 55 while ‘neglecting younger recipients’ has been met with criticism and feelings of being ignored by the younger generation.
• The Grattan Institute has proposed redesigning the contentious stage three tax cuts, saving around $8bn a year.

So far the government has not commented on this suggestion, but the Labor Party have promised to keep the Stage 3 tax cuts in place.

Age-specific welfare increases could become a complicated, risky factor in Australia's economy and social policy, creating resentment and tension between different generations.

Members, this is a complex and very important issue. But what do you think? Should JobSeeker be increased for all Australians on the payment or just those aged over 55? Is it unfair for younger generations to dismiss the increase for over 55s? Let us know in the comments below.

 

[Simplelife]

I don't agree. From the time I entered the workforce at the age of 17, I was aware that I needed to save towards my retirement if for no better reason than that there were just too many of us boomers.

In the early 1970s my then husband and I took out superannuation policies through an insurance company. When we split a few years later, we divided the increase in value of our house in two (he kept his things and I kept mine), which gave me just enough for a deposit on a modest house for my three kids and myself, there were no child support payments from the ex. A few years later, I sold that house and had a new, larger house built. I then re-married, had another child and my second husband nearly broke me financially within the two years of our marriage, but I was able to keep my house.

Over the next few years, I made several interstate moves and bought three more properties while keeping the ones I already had. I also contributed between 5% and 10% of my gross income into super, all while raising my youngest child as a single mother. I had my current house built when I was 62 years old.

Since retiring, I have sold two of my properties and still own two rental properties and my own home. Obviously, I do not get any pension because of my assets, but that was my goal from the very start, to be financially independent.

Well you have done really well but you are one of the lucky ones. My husband and I (second marriage) have worked hard and employed people over our time but simply did not have the funds to put into a super fund. We now face retirement on the pension alone. We are lucky enough to own our home but that’s all we have and that doesn’t pay the bills

 

[gordon1940]

I don't agree. From the time I entered the workforce at the age of 17, I was aware that I needed to save towards my retirement if for no better reason than that there were just too many of us boomers.

In the early 1970s my then husband and I took out superannuation policies through an insurance company. When we split a few years later, we divided the increase in value of our house in two (he kept his things and I kept mine), which gave me just enough for a deposit on a modest house for my three kids and myself, there were no child support payments from the ex. A few years later, I sold that house and had a new, larger house built. I then re-married, had another child and my second husband nearly broke me financially within the two years of our marriage, but I was able to keep my house.

Over the next few years, I made several interstate moves and bought three more properties while keeping the ones I already had. I also contributed between 5% and 10% of my gross income into super, all while raising my youngest child as a single mother. I had my current house built when I was 62 years old.

Since retiring, I have sold two of my properties and still own two rental properties and my own home. Obviously, I do not get any pension because of my assets, but that was my goal from the very start, to be financially independent.

Well done. You planned for the future, as did I, to ensure that YOU were in control of your Destiny.