JobSeeker Payment

The Hon. D.W. RIDGWAY (14:34): My question is to the Treasurer. Can the Treasurer please inform the house of what the economic impacts would be if we had a permanent increase to the JobSeeker allowance here in South Australia?

The Hon. R.I. LUCAS (Treasurer) (14:34): I thank the honourable member for his question. This question has been directed to me over the last week, in particular in response to comments made by the Reserve Bank governor, Dr Philip Lowe. I have been asked my opinion as Treasurer as to whether or not I agreed with the comments that Dr Philip Lowe had made.

The first thing I say is that I respect the fact that these decisions are difficult decisions, and they remain decisions for the federal government. I acknowledge publicly that the federal government is running very significant deficits at the moment in the interests of trying to keep the economy going and save as many jobs and businesses as possible, and it is a difficult challenge.

In relation to the comments of the Reserve Bank governor, who talked about the positive economic impacts of a permanent increase in the JobSeeker allowance, I do not think there is any disputing that, and I have indicated my sympathy for the views that the Reserve Bank governor and other stakeholders have made.

Before directly commenting on the economic impacts, clearly any decision that the federal government might be able to make within the constraints of its federal budget for a permanent increase of some size will have important social benefits as well. For the individual households—and this has been an ongoing debate and argument for quite some time, even pre COVID—clearly there are important social benefits and objectives that might be achieved by some increase in the level of the JobSeeker allowance.

In relation to the economic impacts, there is no doubting that the Reserve Bank governor is correct. All of the evidence indicates that people on benefits and allowances, or households that are on benefits and allowances, tend to spend, by necessity, a more significant percentage of their household income on goods and services. That is an inevitable consequence of having to put food on the table, pay the household bills and all the challenges in terms of running a household whilst on benefits or allowances.

That, of course, means that there is more money flowing through the national economy and the South Australian economy, so clearly there would be immediate impacts. If you are a state with an older population or a state with a high percentage of people on benefits and allowances, or parts of the state have a large percentage of people on benefits and allowances, there would be correspondingly an increased flow through in terms of spending on goods and services in small and medium-sized businesses throughout the state, which obviously helps encourage further employment within those particular business sectors as well.

Finally, the Reserve Bank governor did not really specify, but it is clear that a boost in terms of consumption spending, in particular by households, is something that is good for the national economy, but it is also good for the states and territories in terms of their budgets, because our GST revenues are directly related to the level of consumption expenditure in the national economy, and the higher the level of consumption expenditure in the national economy the higher the level of GST collections.

I am sure members will recall the debates from just November last year in the budget. We are looking at reductions in GST revenues at the moment of around about just up to $1½ billion a year. Anything that sees some lowering of the level of reduction, if I can put it that way, of GST revenues coming to the states and territories has a positive economic impact for the states and territories in terms of trying to fund the many programs that we are trying to fund at the moment to try to save as many jobs and businesses in the state as we can.

It is for those reasons that when asked the question I have said, whilst couching my statements in the context that this ultimately is a decision for the federal government and we congratulate them on what they have done so far within the budget constraints they have, that if they were to make a decision along the lines of the Reserve Bank governor's exhortations we would have some sympathy in relation to the positive benefits, from both a social policy objective and also, from my viewpoint as Treasurer, an economic policy objective as well.