Living on a reduced income, or on JobSeeker, after the end of JobKeeper payments.

10 Minutes
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The Australian Government has ended Job Keeper and made Job Seeker changes that may affect your income support payments.

JobKeeper payments and the temporary coronavirus supplement given to welfare recipients through the pandemic have now finished, and understandably recipients may be feeling concerned. If you’re looking for work, you may be eligible for JobSeeker payments. To help you, we’ll outline:

  • What’s changed in relation to these government support payments.
  • How these payments helped.
  • The impact for individuals with the changes being made to these payments.
  • What’s available to help people manage their money during challenging times.

What’s changed?

The JobKeeper wage subsidy scheme was unveiled as part of the $130 billion stimulus package announced on 30 March 2020. The JobKeeper Payment rates until 28 March 2021 were:

  • Tier 1 (full-time employees): $1,000 per fortnight (before tax)
  • Tier 2 (part-time employees (or those who work less than 80 hours in a 28-day period): $650 per fortnight (before tax)

JobKeeper payments ended on 28 March 2021. Employers were able to make claim payments for JobKeeper up until that date.

The temporary Coronavirus Supplement was available at a rate of $150 per fortnight until 31 March 2021. This supplement was available to anyone receiving at least $1 of an eligible income support payment (including JobSeeker payments, Partner Allowance, Widow Allowance, Youth Allowance, Austudy, ABSTUDY Living Allowance, Parenting Payment, Farm Household Allowance, Special Benefit)

How much is the new JobSeeker payment?

JobSeeker changes took effect on 1 April 2021. The new JobSeeker rate, has been lifted by $50 and will be $620.80 a fortnight, equating to $310.40 a week, or just over $44 a day (for a single person with no children). Compared to pre-pandemic levels, the increase results in a real-world increase of $4 a day for recipients.

 What impact did the stimulus payments have for the economy?

The temporary Coronavirus Supplement provided a boost to the economy, and JobKeeper provided support to individuals and businesses during the pandemic. Moreover, these payments played a pivotal role in supporting the economy at a challenging time.

“At its peak in 2020, around 3.6 million workers were on JobKeeper. By late January 2021, that number had reduced to 960,000. When JobKeeper ends in a few weeks, the figure should be lower again,” says Besa Deda and Matthew Bunny in Westpac Wire.

Australian National University researchers from the Centre for Social Research and Methods found the government's support payments had reduced poverty and housing stress levels to those seen prior to COVID-19.  Without the support payments, the researchers predicted the number of people living in poverty in Australia would have exploded from 1.6 million to 3.8 million, while the average poverty gap for households would have almost tripled from $593 per year to $1685. That is about 2.2 million people saved from falling below the poverty line in the first few months of the pandemic.

Now, the labour market is recovering, “the good news is that total employment has all but recovered the jobs lost due to the pandemic, being just 0.5 per cent, or 58,500 jobs, below pre-COVID levels”, writes Justin Smirk in Westpac Wire.

It’s encouraging that leading indicators of labour market demand, including job advertisements and vacancies, point to further jobs growth over the coming months. 

What happens if you’re navigating the uncertainty of unemployment?

For some people, the end of the packages may coincide with facing the uncertainty of unemployment. Particularly if they’re in an industry which continues to face challenges: hospitality, arts and recreation, aviation, and tourism.

The JobSeeker payment will be available for people who:

  • Are unemployed, looking for work, sick, injured or can’t do their usual work or study.
  • Are aged between 22 and the Age Pension age.
  • Meet residence rules and meet the income and assets test.

To understand what the impact of moving to JobSeeker might mean for managing your money, let’s look at the example of Kym.

Kym has recently become unemployed and will be eligible for payments as a job seeker.

Kym works in the hospitality industry; her employer was eligible for JobKeeper. She usually works 37.5 hours per work and shares a rental property with 2 friends.

Between 4 January 2021 and 28 March 2021, Kym was eligible to receive JobKeeper - $1,000 per fortnight (before tax). She has a net income, after deductions for tax, the Medicare levy, and her superannuation, of $863 per fortnight equivalent to $1,869.83 per month.

Kym’s employer at the beginning of March 2021 informed her that they would not be able to retain Kym after the JobKeeper payment ended.

Kym is eligible for JobSeeker. She is single and with no children, and according to Services Australia, her JobSeeker payment fortnightly will be $620.80 (before tax).

She looks at her current budget and plans what changes she can make to manage her money each month now that she is on JobSeeker.

Between the start of the tax year on 1st July 2020 and 1st April 2021, Kym earned approximately $23,400. During the current tax year her income comprised of JobKeeper payments.

  • 1 July 2020 to 28 September 2020: $1,500 per fortnight (before tax)
  • 28 September to 3 January 2021: $1,200 per fortnight (before tax)
  • 4 January to 28 March 2021: $1,000 per fortnight (before tax)

For Australian residents with a taxable income between $18,201 – $45,000, tax is 19 cents for each $1 over $18,200. Kym’s JobSeeker post-tax income is $502.85 per fortnight. She has a net income, (after deductions for tax, the Medicare levy, and her superannuation) of $445.02 per fortnight equivalent to $964.21 per month.

The impact for Kym is that her net income per month, for the time she receives JobSeeker will be approximately half of what she received for the final month whilst she was on JobKeeper.

In this scenario, the following assumptions have been made:

  • Superannuation contributions of 9.5% are deducted from Kym’s gross income.
  • The Medicare levy is payable. The calculated Medicare levy assumes Kym is single with no dependents.
  • Does not take into account any tax rebates or tax offsets.
  • Kym doesn’t have any debt. She also pays for her expenses using a debit card and doesn’t have a credit card.
  • It’s assumed that none of the current expenses increase.

Please note that this worked example of Kym’s situation is for guidance purposes only and readers should obtain their own advice for their own situation.

Renegotiate, request relief, and reduce.

If you’re faced with a situation like Kym, ask yourself – can I renegotiate with my service provider or reduce my expenses?

For example, could you negotiate with your landlord, to reduce the monthly rent or increase the number of tenants in the property and reduce the total cost of rent per person. Alternatively, could you see if alternative accommodation with lower cost rent is available.

If you think you may have difficulty paying your rent, find out more on rent, rent reduction and support from the Tenant’s Union of NSW.

Kym’s overall income with JobSeeker has significantly reduced so she has made some changes to her expenses, particularly to her lifestyle expenses, until she finds new employment.

If you’re looking for ways to reduce your costs, have a look at this handy cost-cutting checklist.

Borrowing money when you’re on a low-income.

When you’re on a low-income it helps to understand the types of credit that is available to you.

There are many different types of credit – and the key is to do your research and choose the right credit option for you and your situation. Here is a potential scenario you may face and an outline of the type of credit available.

Scenario: “I need a small amount of cash for an unexpected bill or purchase.”

Consider this rule of thumb to help you manage your money on a low-income - take a purchase pause.

What does this involve?

  • Waiting a minimum period for purchases above a threshold, say a 30 day wait for anything over $100.
  • Not only is 30 days likely to be enough time to think about whether you really need something or not, it will also give you the time to research and find the best product or service at the best price.

Further help is available.

  • If you’re a Westpac customer experiencing financial difficulty, Westpac Assist are here to help.
  • Are you finding your finances are getting tight? Financial counselling is available from the Salvation Army.
  • Need help navigating job loss? Changes in your employment and income could affect your finances. Westpac’s Job Loss Hub has tools and articles to help you work through the uncertainty of unemployment.

Content current as at March 2021.

This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness for the information to your own circumstances and, if necessary, seek appropriate professional advice. ©Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.

author thumbnail image

Lali Wiratunga

Lali Wiratunga believes in encouraging positive financial behaviours to boost people’s financial confidence. He also advocates for the role of innovation, creativity and entrepreneurship in helping people and organisations deliver social impact and financial sustainability. In 2016, Lali was recognised for creating a positive impact through Pro Bono Australia’s Impact 25. Following a career as a corporate lawyer and management consultant in the UK, he's had 14 years experience in roles across financial services in Australia. He has served in the community as a Board member of a disability services organisation, and is a member of the Alumni Advisory Board at UNSW Business School, where he mentors students and advocates for the value of business education.

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