Increasing JobSeeker is long overdue. Here’s how we could do it, without breaking the budget

In the lead-up to the federal budget, there’s much focus on what the government will do to address cost-of-living pressures for households amid rising inflation and interest rates.

Research shows where those cost-of-living stresses are greatest. It’s not the vast bulk of middle-income Australia, but working-age welfare recipients.

It’s against this backdrop that the Economic Inclusion Advisory Committee recently handed its 2026 report to government. It’s the fourth report in a row to recommend a substantial increase to JobSeeker: the payment that around 900,000 mostly unemployed, working-age Australians receive.

As everyday essentials get more expensive, this is the cohort that requires the most urgent attention in next week’s budget.

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$272 extra per fortnight

The JobSeeker payment is the social security payment that is paid to working-age people, many of whom are unemployed. Some recipients are employed (likely on a part-time or casual basis) and some are not in the labour force.

The payment is heavily means-tested with a tight income test, an assets test and a liquid assets test, ensuring people eat away at their savings before receiving it.

While on the payment, recipients are often subject to “mutual obligations” requiring them to look for work and undertake training or other related activities.

In each of its last four reports, the Economic Inclusion Advisory Committee has given the government the same recommendation. It suggests the payment be increased from its current rate of around $808.70 per fortnight to around 90% of the age pension – around $1,080.80. This would be a lift of around $272 per fortnight.

In 2023, the government did increase the payment by $40 a fortnight, which followed a slightly more generous increase by the former Morrison government of $50 per fortnight.

The payment is adjusted for inflation every six months. With strong inflation recently, these substantial increases have been largely cancelled out by cost of living increases. They don’t raise the payment in “real” (after inflation) terms.

No ‘real’ relief

The committee’s reports have considered a range of evidence to show that the payment is too low.

The primary concern is that living standards, wages and many other welfare payments have increased since the early 1990s by substantially more, as they match up to an economy that has grown substantially in “real” terms. JobSeeker recipients have missed out on the living standards growth of the Australian economy.

JobSeeker recipients also have much higher rates of financial stress than the rest of the population – around six times that of non-welfare recipients and ten times that of age pensioners.

The committee also heard from people who survive on the payment. These people have struggled financially, physically and mentally, linking some of these issues to the low rate of payment.

A short-term payment?

As the JobSeeker payment has become relatively less generous over time, the committee’s research also found it to be less fit for purpose.

The length of time people spend on the payment is increasing. This is likely because recipients are increasingly “partial capacity to work” recipients – those deemed by the government to have a limited capacity to work due to illness or physical disability.

In theory, JobSeeker is supposed to be a short-term payment. The payment is frugal by design, with the goal of incentivising people to work. Given it’s short-term, the payment doesn’t have to be as high as ongoing support payments, such as the age pension.

However, the structure of the payment has changed. In the 2024-25 financial year, around 30% of recipients were on the payment for five or more years. In 2012-13, this figure was around 20%.

An increasing share of recipients are unable to work full-time hours. The share of people only working part-time roughly doubled to 40% between 2012 and 2024.

This all calls into question the assumption that JobSeeker recipients have (or should have) short spells on the payment before quickly finding employment and shifting off the payment.

These are the options

It’s important that welfare payments, particularly for working-age people, are designed to ensure a strong incentive to find work. But these payments should also be decent enough to get by.

The Economic Inclusion Advisory Committee has made it quite clear that is not the case at the moment. It hasn’t been for several decades.

In designing cost-of-living relief for Australian households, the clearest need is for greater assistance to working-age welfare recipients.

While politically popular, recent attempts at cost-of-living relief, such as petrol excise cuts or energy rebates, are largely directed at people who would get by regardless and have little need for such assistance. These programs also work against the direction of monetary policy from the Reserve Bank.

Read more: Halving the fuel excise is smart politics, but flawed policy

Increasing the JobSeeker payment to the suggested 90% rate would cost around $6 billion per year. This is a permanent cost to the budget.

But the committee’s report provides a number of alternatives that cost roughly half this over the forward estimates (2026-29 financial years).

The first approach is to gradually increase the rate each year until it reaches 90% of the age pension by 2029.

A second approach would be to vary JobSeeker according to how many hours a person had a “partial capacity to work”, with more support for those who can work less.

These approaches don’t provide the ideal level of support, but would still provide substantially better immediate support to those most in need on the payment.

To date, the response from the Albanese government to the cost of living crisis has been mostly spread widely rather than targeted towards those most in need. Tuesday’s budget is an opportunity to fix a major problem with the welfare system for the most disadvantaged that has been well documented for decades.

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