COVID-19: Impact on Regional Australia – JobKeeper & JobSeeker
What impact will the JobKeeper and JobSeeker payments have on regions?
JobKeeper and JobSeeker payments will have a significant impact on supporting incomes in regions
The impact will be much greater in regions than in metropolitan areas
The JobKeeper payment is close to 100% of median incomes in some regions
The JobSeeker Coronavirus Supplement alone will inject from $33 million to $86 million into disadvantaged regions
JOBKEEPER AND JOBSEEKER PAYMENTS
The JobKeeper payments to eligible employers provide them with $1,500 per fortnight for employees on their books on the 1st of March 2020. It is designed to help businesses that have seen income fall by 30% or 15% for charities to retain their staff – going some way to maintaining local incomes and reducing the number of workers expected to be laid off. Nationally, this payment is expected to cost over $130 billion.
Incomes vary considerably across Australia’s regions. The JobKeeper payments have been set at around 70% of the national median wage, but the variability in median wages across Australia means that the payments are almost 100% of median incomes in some regions.
The JobSeeker Coronavirus Supplement is a significant increase to the value of allowances for recipients of a range of government assistance: Jobseeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefits (1.1 million people), and now Austudy and Abstudy (another 200,000 people).
The estimated cost of this Supplement is $14 billion over six months, and it looks like this cost includes not just the 1.3 million people currently eligible, but also includes provision for payment to another 1 million Australians who lose their jobs under the COVID-19 response measures.
The RAI has looked at how the JobKeeper payments and the JobSeeker Coronavirus Supplement will impact on different parts of Australia. To keep the modelling of the Supplement simple, we have based it on a single person on one of the eligible benefits, with no additional income. The Supplement effectively doubles the value of these allowances, from an equivalent of around $15,000 per year (with no additional income) to about $29,000 per year.
Incomes vary considerably across Australia’s regions. With the JobKeeper payment and the JobSeeker Coronavirus Supplement, the equivalent value of the income support is close to median incomes in many regions, as there are many regions where average incomes are low. The 20 regions with lowest median incomes are shown in the table below, along with the 10 with the highest median incomes.
The low median income regions reflect a mix of high unemployment and large retiree populations. For the latter group, the cost of housing is usually (but not always) low, meaning that low cash income may be adequate. In these regions, the value of the JobKeeper payment is almost 100% of median incomes, while the supplemented JobSeeker benefit is over 60% of annual median incomes, and for the top region, it is around three quarters. This means that the income cushion that these payments will provide in these regions will go some way to maintaining consumer spending power.
There are many other regions with high median incomes, usually comprising large percentages of well-paid workers. In these regions, the JobKeeper payment is under two-thirds of median incomes, and the supplemented JobSeeker benefit is less than 50% of median incomes and so will have less of an impact on consumer spending power.
The table shows the share of median average incomes that the JobKeeper payment and supplemented JobSeeker allowance are equivalent to.
|SA4 Region||State||JobKeeper payment|
as proportion of
allowance as proportion
of median income
|Mid North Coast (NSW)||NSW||98.8%||73.5%|
|Wide Bay (QLD)||QLD||96.5%||71.7%|
|Richmond – Tweed (NSW)||NSW||95.7%||71.1%|
|Coffs Harbour – Grafton (NSW)||NSW||95.3%||70.9%|
|South East (TAS)||TAS||94.8%||70.5%|
|Southern Highlands and Shoalhaven (NSW)||NSW||91.2%||67.8%|
|South Australia – South East (SA)||SA||91.1%||67.8%|
|Latrobe – Gippsland (VIC)||VIC||90.5%||67.3%|
|North West (VIC)||VIC||89.7%||66.7%|
|Darling Downs – Maranoa (QLD)||QLD||89.4%||66.4%|
|Sunshine Coast (QLD)||QLD||89.0%||66.2%|
|Warrnambool and South West (VIC)||VIC||88.5%||65.7%|
|West and North West (TAS)||TAS||86.9%||64.6%|
|Launceston and North East (TAS)||TAS||86.1%||64.0%|
|New England and North West (NSW)||NSW||85.9%||63.8%|
|Barossa – Yorke – Mid North (SA)||SA||84.6%||62.9%|
|Melbourne – Inner South (VIC)||VIC||67.1%||49.9%|
|Sydney – Northern Beaches (NSW)||NSW||66.9%||49.7%|
|Sydney – Sutherland||NSW||66.5%||49.5%|
|Brisbane Inner City||QLD||66.3%||49.3%|
|Perth – Inner||WA||62.7%||46.6%|
|Sydney – North Sydney and Hornsby||NSW||59.8%||44.4%|
|Sydney – Eastern Suburbs||NSW||59.6%||44.3%|
|Australian Capital Territory||ACT||58.9%||43.8%|
|Western Australia – Outback (North)||WA||55.7%||41.4%|
Regional data on the number of JobSeeker allowance recipients can be used to consider the scale of additional payments to regions that the Supplement triggers. The impact of the Supplement varies based on the number of recipients and their share in the overall labour force. Both these numbers vary across regional Australia. While the largest outright numbers of recipients are in the largest population regions (such as Melbourne West, Melbourne Southeast and Gold Coast), by proportion, the share of recipients amongst income earners varies from a low of 3% to a high of 14% across all regions.
The regions where the JobSeeker Coronavirus Supplement will have the most significant impact are shown in the table below. These are the ten regions with a large share of recipients in relation to the number of overall income earners, and where the Supplement will make the biggest contribution to earned incomes. The table shows the estimated dollar value of the Supplement to each region over six months, and the share of this in total earned income for each region.
|SA4 Region||State||Estimated value|
of Supplement ($)
of earned income
|Mid North Coast||NSW||69,406,651||2.9%|
|Coffs Harbour – Grafton||NSW||45,094,994||2.6%|
|West and North West||TAS||36,286,942||2.5%|
|Adelaide – North||SA||134,178,365||2.4%|
|Launceston and North East||TAS||45,737,858||2.4%|
|New England and North West||NSW||56,127,500||2.2%|
|Richmond – Tweed||NSW||72,937,705||2.2%|
|Barossa – Yorke – Mid North||SA||33,797,247||2.2%|
The table shows that for regions with high numbers of recipients the additional funds flowing into each region will be substantial from $33 million to over $80 million in regional places over six months, and almost $135 million in Adelaide north. These amounts are up to 2.9% of total income earned in each region, a sizeable injection of consumer spending power in the expected six months.
Note the regional distribution of recipients has been estimated from data provided by Centrelink at the Employment Region scale rather than the actual counts of recipients in each SA4. It would be preferable to have actual counts by SA4 region and discussions are underway with Centrelink on this.
Regional income data for 2016-17 (latest available) has been trended to an estimate for 2018-19 using a uniform 5% increase over those two years.