When are COVID disaster payments ending and why is the government phasing them out?
More than one-and-a-half million people are currently getting by on COVID disaster payments, as Victoria, New South Wales and the ACT remain in lockdown.
All up, it’s costing the Commonwealth about $1 billion a week, and is keeping households — and the broader economy — afloat.
In NSW and the ACT, for example, more than one in five people of working age are currently receiving the payments.
But Treasurer Josh Frydenberg has decided it’s time to spell out just how and when the payments will end.
He argues they were only ever supposed to be temporary, and once lockdowns are (hopefully) a thing of the past, the payments will no longer be needed.
It might be hard to take for those still unable to return to work in sectors like hospitality or tourism even after strict lockdowns are lifted, because many restrictions are likely to remain.
When are they ending?
The first changes will come when each state and territory passes the 70 per cent vaccination threshold.
That is, when 70 per cent of adults aged over 16 have been fully vaccinated. It’s only a few weeks away in NSW and the ACT, and about a month away in Victoria.
At that point, individuals receiving payments will have to re-apply every week, rather than automatically get the payments as they do now.
So everyone will still get paid, but they will just have to jump through a bureaucratic hurdle to do so.
Once the 80 per cent threshold is reached the payments start to taper off.
In the first week after hitting the milestone, that maximum disaster payment of $750 will fall to a flat rate of $450, no matter how many hours of work you have lost.
In the second week, it falls again to $320. And in the third week, it falls to zero.
If you are receiving a welfare supplement (for lost work on top of JobSeeker), it falls from $200 to $100 in the first week after hitting 80 per cent, and down to zero the week after.
Why is the government doing this?
The federal government says the payments have to end eventually, and it’s providing this detail now to give certainty to state and territory governments, recipients and their employers.
And it argues this mirrors the national reopening plan that states and territories agreed to — even though the states have all interpreted that plan in their own separate ways.
It also creates a disincentive for states and territories to put in place lockdowns or tight restrictions once that 80 per cent mark has been reached.
States would either need to foot the bill for similar payments themselves, or rely on people to get by either without an income, or on another welfare payment.
Mr Frydenberg says life needs to return to normal, and the government can’t keep up the payments forever.
“Other countries are adjusting to live with the virus, and so must Australia as well — particularly as we hit those vaccination targets of 70 and 80 per cent,” he told Nine.
“Our announcement is all about backing Australia’s plan to reopen, it’s about doing our best to bring to an end these lockdowns so Australians can get their lives back.
“We can’t continue with these emergency payments indefinitely, and that’s why we’re making these announcements today.”
Will people still get any money?
A fortnight after the 80 per cent target is reached, the COVID disaster payments will cease.
There is no indication of special deals being cut in special circumstances, at least for now.
Emergency Management Minister Bridget McKenzie says if people can’t find work at that point, they’ll be steered towards unemployment benefits.
“They will be able to transition to JobSeeker, and the support through our social security system, as is appropriate,” she said.
“But what we’re hoping, and what evidence would show, is our businesses will open and Australians will be getting back to work in those three weeks.”
The national reopening plan — informed by modelling from the Doherty Institute — warns of the possibility of “highly targeted lockdowns” beyond the 80 per cent target.
The government acknowledges that possibility, and says pandemic leave payments will remain available for those forced into isolation or quarantine, or caring for someone with COVID-19.
Other ordinary welfare payments will also be available.
But any specific support for those put out of work due to a localised lockdown will have to come from state and territory governments.
What do the states think?
The New South Wales and the ACT governments do not seem terribly surprised by the announcement.
NSW Premier Gladys Berejiklian suggested talks were still underway with the Commonwealth about some sort of ongoing support for those requiring it — but it is unclear if that applies to individuals or businesses.
“Going forward it will be a much more targeted approach … certainly, we’ve started conversations with our federal colleagues,” she said.
In the ACT, Chief Minister Andrew Barr said the announcement was expected, and he was confident it roughly aligned with the territory’s reopening plan.
“The additional weeks of payment will ensure that the month of October is covered, and then our restrictions take a much more significant easing point from the 29th of October,” he said.
“So that would see a lot of people return to work at that point.”
Federal Labor, however, has been quite critical of the decision, arguing the withdrawal of support should be based on the economic reality at the time, not pegged to vaccination targets.
Shadow Treasurer Jim Chalmers said the government is rushing to pull out support.
“We want to make sure that the economic support provided by the federal government actually matches the economic conditions that people feel in real communities around Australia,” he said.
“We want to make sure that economic support is tailored to economic conditions.”