Lifting JobSeeker earnings limit a 'no regrets' policy

·3-min read

Voices across the political spectrum have given their tick of approval to the coalition's flagship welfare policy, but questions remain over how much it would cost.

Shadow treasurer Angus Taylor extolled the merits of his proposal to allow JobSeeker recipients to earn more money before losing Centrelink payments but was unable to put a price tag on it.

The policy would remove a huge disincentive to work for welfare recipients, who face the biggest effective marginal tax rates of up to 60 cents in the dollar, Mr Taylor told the National Press Club on Wednesday.

As they earn more money above $18,200 per year, people on JobSeeker are hit with the double-whammy of paying more tax and losing welfare payments.

"We are saying take that away and the result of that is we believe there will be more people working," he said.

"There is nothing like a job to improve somebody's life."

The policy has earned the support of the Australian Retail Association, who said it could bolster the industry's casual workforce.

"At present, some JobSeeker recipients may turn down additional hours as it will impact their payment," chief executive Paul Zahra said.

"This contributes to higher job vacancy rates in retail, and across other Australian sectors at a time when the sector is at breaking point around retail vacancies."

Policy institutes on both sides of the political aisle were glowing in their analysis of the plan.

Matt Grudnoff, senior economist at left-leaning think tank the Australia Institute, says it is a good idea but increasing the base rate of JobSeeker is also needed.

"It'll help people who are on really low incomes keep more of whatever employment income they have," he told AAP.

"Anything that we can do to encourage people into employment we should do."

The policy was also welcomed by research fellow Lachlan Clark from the right-leaning Institute of Public Affairs, who said removing financial impediments for job seekers is a no-regrets policy because in the long term it would reduce welfare payments and increase tax receipts.

Government analysis suggests the plan would cost between $700 million and $2.3 billion, The Australian reported on Wednesday, but Mr Taylor was unable to confirm the figure.

The leaked analysis predicts an extra 50,000 people would become eligible to move onto JobSeeker as a result of the change, costing the budget $400m over four years.

Treasurer Jim Chalmers earlier seized on the opportunity to accuse the coalition of hypocrisy.

"You can imagine what they would do to a Labor opposition who made an announcement without costing it," he told reporters.

Social Services Minister Amanda Rishworth says the coalition's failure to cost its plan shows it has not thought it through and is not serious about improving welfare.

Ms Rishworth has not ruled out supporting the measure, saying the government is intent on getting more people into work.

Labor is considering a range of measures to increase economic participation as it consults on its employment white paper, to be released later this year.

But the treasurer said the coalition needed to explain how the extra spending would not contribute to inflation.