Students embraced in coronavirus welfare windfall

Australian stimulus package risked making it ‘more profitable’ to be jobless than studying

March 23, 2020
seesaw unequal benefits unintended consequences
Source: iStock

An eleventh-hour inclusion in an Australian government spending spree has delivered a reprieve to almost a quarter of a million students, reducing possible incentives on them to abandon their studies.

The government has acceded to lobbying for student income support recipients to be included in a short-term doubling of payments for social welfare recipients.

The “temporary coronavirus supplement”, part of an enormous A$66 billion (£33 billion) stimulus package announced on 22 March to reduce the pandemic’s economic carnage, increases unemployment benefits by A$550 a fortnight. The government has also waived waiting periods and an assets test for the payments.

The following day, the government enforced a lockdown of social gathering places including pubs, cafes, restaurants, gyms and cinemas. The two developments triggered unprecedented scenes as people queued for kilometres outside offices of the social security agency Centrelink to press their newfound eligibility for benefits.

But while the new supplement was to be made available to recipients of eight social security schemes, payments for students – through Austudy, Abstudy and the student stream of Youth Allowance – were originally excluded.

That decision was reversed in a late-night sitting of parliament on 23 March. A government amendment to extend the supplement to the three student benefit schemes was circulated in the senate and subsequently passed by the house of representatives.

Group of Eight chief executive Vicki Thomson said that more than 230,000 students would now have access to the stimulus boost. She said that the reversal was a “great decision by government” and “a significant step in the right direction for our students in these challenging times”.

Innovative Research Universities executive director Conor King said that students needed the supplement as much as anyone else, with the coronavirus laying waste to part-time jobs that kept many students afloat. He said that the government would have taken a risk by making it more profitable to be unemployed than studying.

Mr King said that policymakers who were “suspicious” about giving benefits to students should recognise that they were “good agents for expenditure”, because they were likely to spend the money and help keep businesses afloat. “You don’t have to like students,” he said. “You can still give them money and gain an advantage from them.”

The National Union of Students (NUS) said that the supplement, as originally intended, would have “punished” full-time students, forcing them into a “spiral of poverty” and creating “a perverse incentive for students to move part-time so they can get higher jobseeker payments”.

NUS president Molly Willmott hailed a “great night” for her constituents. “None of this would have happened without the hundreds of students who helped put this on the agenda of parliament today.”

Australian National University policy expert Andrew Norton said that unemployment and student benefits were normally “equally unattractive” and too paltry to determine people’s behaviour. During economic downturns, people tended to gravitate to study on the rationale that “I might as well do something if I can’t get a job”, he said.

But any “big discrepancy” between the available benefits could tip the balance, he warned, and that risked undermining the imperative to “keep people constructively engaged” – particularly during coronavirus lockdowns. “There’s going to be a huge hit to people’s mood and self-worth when they’ve got this enforced idleness.”

Register to continue

Why register?

  • Registration is free and only takes a moment
  • Once registered, you can read 3 articles a month
  • Sign up for our newsletter
Please Login or Register to read this article.

Related articles