With interest rates rising, the next government must rule out harsh spending cuts, commit to full employment

In anticipation of today’s RBA decision on interest rates, ACOSS warns that hard-won reductions in unemployment and underemployment will be jeopardised if a hard line is taken by the next government on budget spending.

Instead, Australia needs a solid commitment from the Government to achieve full employment and sustain it. 

ACOSS CEO, Dr Cassandra Goldie said

“It’s one thing to reduce unemployment to the lowest level in two decades, but we have to sustain it to give those locked out of paid work a real chance, to lift lowest incomes and get wages moving again, and ensure that those who need more paid hours can get them.

“That will make a real difference to the lives of almost a million people struggling on unemployment payments, together with almost 900,000 people who are employed but need more paid hours, 60% of whom are women. 

“Interest rates will inevitably rise above their historically low level, but we hope the RBA follows its own advice to hasten slowly from now on so that the benefits of full employment are realised.

“Along with improved income supports for those who are struggling the most, the best way to ease cost of living pressures is to strive for full employment, promote growth in wages and tackle the housing crisis, particularly for renters and those struggling the most. Avoiding a rapid rise in interest rates would also ease the impact on people who have taken on high levels of debt, with little behind them, to break into our vastly over-priced housing market.  

“The major parties should rule out brutal spending cuts like those in 2014 which would smother jobs growth. Essential services and safety nets are already seriously under-funded, and cuts would bring a swift end to progress in reducing unemployment. Strong investment in essential services and safety nets is vital for pursuing full employment and lifting wages. 

‘’We haven’t had full employment in Australia for 50 years and we’re not there yet.

“Let’s not forget, all of the growth in employment since the pandemic began has been in high-skilled jobs (e.g. managers and professionals) for which most people on unemployment payments are not qualified. Despite labour and skills shortages, there are nine people receiving unemployment payments for every entry-level job vacancy. There are still fewer entry-level jobs (for labourers, community and personal service workers and shop assistants) than before the pandemic.  

“Among the one million people receiving unemployment payments in December, there were 850,000 people on income support for over a year, 440,000 people aged 45 years or older, 390,000 people with a disability, 120,000 sole carers for children, and 130,000 people from First Nations communities – all people that are still overlooked by employers.

“People receiving unemployment payments are at the back of the job queue, not because they aren’t trying, but because many employers are still wary of giving them a chance. Only consistently low unemployment and a fresh investment in decent employment services, work experience and training programs will change that.

To lift people out of poverty and strive for full employment, the next government should:

1. Commit to full employment and the policies needed to sustain it

2. Invest in a jobs and training guarantee for people unemployed long-term, so they gain the paid work experience and training they need to take up the jobs available

3. Partner with employers, unions and civil society to build a robust workforce planning and training system that’s fit for purpose to ease labour and skills shortages

4. Lift the lowest income support payments such as Jobseeker Payment from $46 to $70 a day and increase rent assistance by 50% 

5. Rule out brutal spending cuts especially to essential services and safety nets such as those we saw in 2014, which would smother jobs growth