Jobseekers in locked-down Melbourne brace for ‘devastating’ $300 cut to welfare

Jobseekers in locked-down Melbourne are bracing for a “devastating” $300 cut to welfare benefits that will hit only two weeks after stage four restrictions are expected to end.

The federal government’s plan to taper the coronavirus supplement on 25 September is expected to reduce the incomes of about 2.3 million unemployed people, single parents and students across Australia.

But jobseekers and their advocates expect the economic cliff to hit Melbourne particularly hard, with the cut coming only 12 days after the scheduled end to restrictions that shut key industries and imposed a nightly curfew.

Cassandra Francisco, 23, who is living under stage 4 restrictions in Footscray in Melbourne’s west, said she was awaiting the change with “absolute dread”.

“I’m just going to barely be able to cover my rent,” she said. “I’m already stressed by the situation.”

The changes, announced before the scale of Melbourne’s second wave was clear, will cut the jobseeker payment from $1,115 a fortnight to $815.

The youth allowance payment will be reduced to $710, while people receiving the higher parenting payments also face the $300 a fortnight reduction.

Analysis of government data by the Guardian estimates about 420,000 people now living in Melbourne under stage 4 lockdown will be hit by the changes.

They were eligible for the supplement because they received jobseeker, student and parenting payments on 14 August.

That included an estimated 280,000 Melburnians receiving the jobseeker payment, about 19,000 people on the single parenting payment, and around 20,000 unemployed people under 22 on youth allowance.

It is also estimated 60,000 students on youth allowance, 10,000 Austudy recipients, and 32,000 people in Melbourne on parenting payment partnered will also experience the $300 cut next month.

Emma King, the chief executive of the Victorian Council of Social Service (Vcoss), said the cuts would be “devastating” for people in Melbourne given the state of the economy.

“I don’t think there is any other way to describe it,” she said.

King said the current rate of the coronavirus supplement should be “ongoing” in all states during the crisis, but added that the federal government had not acknowledged the specific situation in Victoria.

“It’s not over yet, things are very fragile,” she said.

The state government is yet to canvass how measures such as the nightly curfew, business shutdowns and restrictions on movement might be eased.

But as other states’ economies open up, the Reserve Bank still expects the national unemployment rate to increase due to the situation in Victoria, where the federal Treasury estimates 450,000 jobs will be lost.

A map of current jobseeker payment recipients in Melbourne, created by the Guardian, shows beneficiaries are concentrated in the city’s west, north and south-east.

In general, the same areas have also been hardest hit by the virus.

After moving to Melbourne this year, Francisco has been unsuccessfully applying for hundreds of jobs.

Despite good references from her previous full-time job as an account coordinator, she has only had one interview during the pandemic for a receptionist role.

“I feel like I’m pushing the rock up the hill endlessly,” she said.

Mutual obligations that require jobseekers to send up to 20 jobs applications a month are not in place in Victoria but Francisco said she was still applying for positions every week.

One junior receptionist position she applied for on 10 August received 796 applications, while another admin assistant role on August 19 drew 718 applicants, according to email responses from a popular jobs website.

Across seven of the positions she applied for in August and shared with the Guardian, the average number of applicants was 416.

Research released this week by the Australian National University found the $550 supplement had reduced poverty among jobseeker recipients from 67% to less than 7%.

The paper said the reduction to the supplement would push 740,000 people back below the poverty line, set at 50% of the median income.

“Now I can actually have three meals, and I’ve been putting a little bit money away in anticipation for the cut,” Francisco said. “It’s also just about dignity.”

The changes to welfare payments also coincide with a reduction to the jobkeeper wage subsidy on 28 September.

These payments will fall from a $1,500 fortnightly payment to $1,200 for full-time workers and $750 for part-timers.

That is despite Treasury predictions that stage four restrictions will increase Victorian jobkeeper recipients from 530,000 to 1.5 million people in the September quarter.

Kristin O’Connell, a spokesperson for the Australian Unemployed Workers Union, said the situation meant jobseekers felt “discarded”.

“It’s impossible for anyone on welfare or in precarious employment to feel confident about anything right now,” she said.

The government has argued it is still extending what was designed to be a temporary supplement.

It notes it also introduced a Pandemic Leave Disaster payment for Melbourne and boosted funding to emergency relief providers.

“The government is keeping a close eye on economic conditions and will continue to provide enhanced support to the community through this difficult period,” said a spokeswoman for Anne Ruston, the social services minister.

It also points to changes allowing more people to receive benefits and to earn up to $300 per fortnight in employment income before their payments are reduced.

But Francisco asked, “At what job? With what employment?”

“I’ve struggled with mental illness pretty much my whole life,” she said.

“I’ve been working hard with my psychologist. To have this happen really feels like two steps backwards.”

Concerns about her budget would only “compound” the stress caused by being unable to access social contact.

“It’s difficult enough as it is to exist in the middle of a pandemic,” Francisco said.

• Crisis support services can be reached 24 hours a day: Lifeline 13 11 14; Suicide Call Back Service 1300 659 467; Kids Helpline 1800 55 1800; MensLine Australia 1300 78 99 78; Beyond Blue 1300 22 4636