‘Severe rental stress’: JobSeeker recipients trapped in poverty cycle as support is cut

By Matthew Elmas

Tuesday December 1, 2020

public housing towers in North Melbourne. Leaders
The strict lockdowns of public housing towers in North Melbourne and Flemington stand out as an example of an overly harsh response.

JobSeeker recipients are paying up to two-thirds of their income in rent as advocates warn Australians on unemployment support are being trapped in a ‘poverty cycle’ that’s being made worse by federal government cuts.

While a temporary coronavirus JobSeeker supplement has improved rental affordability for those on income support before the pandemic, about 755,000 Australians who have lost their jobs this year are increasingly struggling to cover housing costs.

That’s according to the latest Rental Affordability Index, which finds JobSeeker recipients living in capital cities are spending between 42% and 69% of their income on rent — forcing many to seek cheaper accommodation further away from employment opportunities.

Its called the ‘poverty cycle’ and Ellen Witte, partner at SGS Economics & Planning, says a $7.8 billion investment in social housing is needed to seriously address the problem.

“With the Government now reducing JobSeeker allowances dramatically, and the economy not (re)creating jobs, many households are being trapped in a poverty cycle, seeking affordable rents in areas further away from jobs and services,” Witte said in a statement.

“…With low interest rates, high unemployment and an increase of demand for affordable housing, this is the time to invest in social housing. And at the same time, people can be brought back into jobs.”

Published on Tuesday, the annual RAI report is a collaboration between the National Shelter, Bendigo Bank, SGS Economics and the Brotherhood of St Laurence — it encompasses the twelve months to the end of June.

It finds the housing market has responded to financial pressures by lowering rents in most capital cities during the pandemic, but this hasn’t been enough to make housing affordable for JobSeeker recipients, with rental stress continuing to affect the majority of low income households.

As many Australians are forced out to regional Australia, infrastructure in these areas is coming under pressure, David Robertson, head of economic and market research at Bendigo Bank said.

“Even in cities with higher than average incomes and better than average rental affordability, the plight of low-income renters continues to remain dire,” Robertson said.

The greater Hobart area in Tasmania remains the least affordable capital city for JobSeeker recipients in Australia, while researchers found JobSeeker recipients in greater Sydney were paying 69% of their income in rent during the pandemic.

Conditions were worse for pensioners, who spent between 74% and 79% of their income on rent in greater Sydney and the ACT.

The findings come as the federal government plans further cuts to the JobSeeker coronavirus supplement, with total fortnightly payments reducing from $815 to $715 from the end of December.

The supplement, which was initially $550 a fortnight but has since been reduced to $250, will expire entirely by the end of March next year, reverting more than a million recipients back to payments worth a little over $40 each day.

Witte said the cuts will hit young people (25-34) particularly hard after the COVID-19 recession saw the number on JobSeeker rise from 185,000 to 515,000.

“These young people would often have been hospitality workers, paying about 35% of income on rent in Sydney. Then, on JobSeeker, this became 69%,” Witte said.

“Now the fortnightly payments are being reduced. Without the jobs to back it up, this policy is unjust. It is punishing people for losing their job during the pandemic.”

Adrian Pisarski, Executive Officer at the National Shelter, said the findings underscore an urgent need for investment in social housing, calling for collaboration between federal, state and territory governments.

“As the Victorian Government has now done, there is a massive need for government investment in social and affordable housing — and now is the time for it since borrowing costs are so low in Australia,” Pisarski said.

“… Now is not the time to pass the buck of responsibility for building social housing between the Commonwealth and States; a truly national effort is required. If there is no action, the net result of our housing system failures will be a dramatic increase in homelessness.”

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