Last year we backed you, this year you’re on your own: COVID’s scorched economic path revealed

4 October 2021

New research by the ACOSS/UNSW Sydney Poverty and Inequality Partnership reveals the deepest, most enduring economic damage of the COVID pandemic has been felt in lower income areas, like outer north-west and south-east Melbourne, west and south-west Sydney, northern Adelaide, far North Queensland and regions between Brisbane and the NSW border. These areas are also impacted by cuts to economic supports in 2021.

The Report shows that, between September 2019 and October 2020, people needing to rely on income support, who became eligible for the Coronavirus Supplement, increased by a dramatic 70%, peaking in the 2020 First Wave of the Pandemic. The Coronavirus Supplement was a vital additional payment supporting this dramatic rise in people hit by unemployment.

The Report also shows that, following the Second Wave, by September 2021, the overall number of people on these income support base payments due to unemployment is still much higher than prePandemic, by a full 27%. Yet, the vast majority of these people have not had access to any additional supports like the COVID Disaster Payments, due to much tighter eligibility.

And, as the maps available at reveal, it is the lower income regions before the Pandemic that have also seen most dramatic increases in need to rely on income support, both in 2020, and again in 2021. The lower income areas have been hit hardest and repeatedly by the impacts of the Pandemic, and now are suffering the most from loss of paid work.

With the latest decision to end the COVID Disaster Payments regardless of the employment situation people in areas of highest financial need will be locked into poverty unless income support payments like Jobseeker are increased.

The report shows that robust COVID income support lifted many people out of paid work out of poverty. This was especially due to the $750pw Jobkeeper Payment and $275pw Coronavirus Supplement which together reached 44% of the workforce, and which meant that the number of people in poverty fell from 3 million (11.5%) before the pandemic to 2.6 million (9.9%) in June 2020.

However, more stringent support in 2021 puts those whose jobs and incomes were most deeply impacted by the Delta variant on a treacherous road to financial recovery. Both Jobkeeper and the Coronavirus Supplement were abolished in April 2021. The current COVID Disaster Payment ($750 per week) is restricted to people who lost paid work in a current lockdown. The Government has now announced its intention to even abolish Disaster Payments once overall vaccination rates reach 80%, even if further lockdowns occur or employment does not recover.

“This research paints a dire picture for those people and communities who have been left with inadequate support in 2021,” said Dr Cassandra Goldie, ACOSS CEO. “Unless we improve support now, income and social divides will fester across our major cities and outer urban areas.

“In 2020, we showed we could respond to adversity with cooperation, by providing economic security to the vast majority. Last year average incomes actually rose, despite the deepest recession in almost a century.

“But this year is a starkly different story. COVID has left a scorched economic path particularly in areas that were more disadvantaged pre-Pandemic. In so many communities, we are leaving people behind. In 2021, the Disaster Payments left gaping holes. Those who lost employment or paid hours a week before or after a lockdown have received nothing beyond the existing grossly inadequate income support payments, such as the $45 a day Jobseeker Payment.

Professor Carla Treloar, Director of the Social Policy Research Centre at UNSW Sydney said: “This new  research shows that the greatest overall increase in people relying on the lowest income support payments from September 2019 to September 2021 were in economically disadvantaged communities. These communities already faced high unemployment, as well as a myriad of other challenges. Let’s give them the chance to recover from the pandemic, rather than push them further into poverty.

“Just because someone has the bad luck to live or work in a community affected by another wave of lockdowns, they have been locked into poverty. Those people and families affected the most will find it incredibly difficult to reconstruct their lives.”

ACOSS recommends that the Government urgently fix the social security, social housing arrangements and employment help to protect people from financial distress and homelessness. The solutions include:

  • Immediately extend COVID Disaster Payments, not abolish them, in order to lift incomes for all people without paid work to at least $600 per week, including those in receipt of social security and those without any other income source at all.
  • Pass legislation lifting working age income support payments (JobSeeker, Youth Allowance, parenting payments and related income support) to the pension rate, which is just above the poverty line (at least $475pw for single people).
  • Index all income support payments twice a year to wage growth as well as prices.
  • Extend income support to all without adequate paid work, including temporary visas.
  • Increase Commonwealth Rent Assistance by 50%.
  • Provide supplementary payments for people with disability or illness, and single parents, recognising the additional costs they face.
  • Invest in social housing to address the critical shortfall of supply.
  • Introduce a flexible national employment support scheme to support jobs and wages for employers and workers directly or indirectly affected by lockdowns and border closures, which guarantees continued employment and payment of wages at least at COVID Disaster Payment levels.