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JobMatcher Real unemployment insurance Blueprint Institute Contents 5 Summary 6 Our one-size-fits-all unemployment benefit fits nobody well 10 JobMatcher 11 Real unemployment insurance 12 Real insurance premiums 13 Real benefits 15 What about JobSeeker? Blueprint Institute 2 About Blueprint Acknowledgements Institute This work was originally inspired by a figure designed by Matt Cowgill at the Grattan Insti- Every great vision starts with a blueprint. We tute (see Figure 1), which visualised how out of help move ideas to action. Blueprint Institute step Australia’s unemployment benefit is relative exists to inspire reform by presenting bold ideas, to the step-down systems that are ubiquitous honest conversations, and evidence-based among other wealthy countries. Thanks to the research. We offer fresh thinking to help leaders various experts who have been consulted on take a step back from the day-to-day and see the development of this work, and for the excel- the bigger picture. We design blueprints for lent research assistance provided by Matthew practical action as a step towards creating a Elias. more resilient and prosperous Australia. Images courtesy of UnSplash. Blueprint Institute was established in the era of COVID-19, in which Australians have witnessed how tired ideologies have been eclipsed by a Attribution sense of urgency, pragmatism, and bipartisan- This report may be cited as: Barrett, T., Beal, E., ship. The challenges our nation faces go beyond D’Hotman, D., Hamilton, S., Hawcroft, A., Steinert, partisan politics. We have a once-in-a-gener- J. (2021) JobMatcher: Real unemployment insur- ation opportunity to rethink and recast Austra- ance. Blueprint Institute. lia to be more balanced, prosperous, resilient, and sustainable. For more information on the institute please visit our website—blueprintinstitute.org.au. February 2021 About the authors Tom Barrett Steven Hamilton, PhD Researcher Chief Economist Tom is currently undertaking his Honours in Politics at Steven is an Assistant Professor of Economics at The the University of Sydney, having recently completed his George Washington University in Washington, DC. Bachelor of International and Global Studies, majoring Steven authored a major small business support in Political Economy and Government & Internation- policy proposal in the US for the Brookings Institution, al Relations. He has studied Populism, Authoritarian- and has provided extensive commentary in the US ism, and International Relations at the Freie Univer- and Australia on wage and small business supports sitat Berlin and Wissenschaftszentrum Berlin (WZB) during the COVID-19 crisis. Steven has published overseas, and has previous experience working with opinion pieces in the Washington Post, the Austra- community social justice organisations. lian Financial Review, and The Age, among others, and has provided economic commentary to the New Emma Beal York Times, the Wall Street Journal, the LA Times, Time Magazine, Newsweek, The Atlantic, Slate, The Hill, the Researcher Sydney Morning Herald, and The Australian, among Emma has a Bachelor of Advanced Finance and others. Steven is a former economist at the Australian Economics (First Class Honours) from the University of Treasury, where he worked on the federal budget and Queensland. As part of her Honours, she investigated the Garnaut Climate Change Review Update. Steven the commercial viability of large-scale battery energy holds a PhD and MA in economics from the University arbitrage within the Australian market. Throughout her of Michigan, and a Bachelor of Economics with First studies, she completed an exchange with Harvard Class Honours and Bachelor of Business Management University, and was awarded one of six internation- from the University of Queensland. al Women in Business Scholarships by Zonta Club for demonstrating outstanding potential within the Aurora Hawcroft field. With experience in private equity and consult- ing, Emma has previously worked for the Queensland Researcher Investment Company’s Global Infrastructure team and Aurora is one of the first students to graduate from within Deloitte’s Energy Financial Advisory team. the Dual Degree between the Paris Institute of Polit- ical Studies (SciencesPo) and the University of Sydney. Daniel D’Hotman She finished cum laude from her Bachelor of Arts at SciencesPo Reims campus and achieved Dean’s list, Director of Research & Operations Academic Merit, and Political Economy faculty awards Daniel is a Rhodes Scholar and medical doctor current- throughout her Bachelor of Economics at the Univer- ly completing his PhD at the University of Oxford. With sity of Sydney. With a passion for innovation policy a strong interest in business and innovation, Daniel was and management, she recently worked as a Research awarded one of two undergraduate scholarships in the Intern at the United States Studies Centre’s Innovation Asia-Pacific by the Boston Consulting Group, under- and Entrepreneurship program and simultaneously taking health systems and private equity projects in founded her own music marketing business. She will Sweden. Daniel has published a variety of academic pursue postgraduate studies overseas in the field of papers, with one of these articles selected amongst the innovation in the latter half of this year. ‘Best in Philosophy’ collection for 2019 by Oxford Univer- sity Press. His work in the media has been featured in The Josh Steinert Spectator, The Sydney Morning Herald, The Sun Herald, Herald Sun, Brisbane Times, The Critic, The Mandarin, Researcher Government News, and The Conversation. Josh recently graduated from the University of Oxford with a degree in Politics, Philosophy, and Econom- ics (PPE). There he specialised in Political Theory and Ethics, with a particular focus on the limits of tradi- tional social contract theory. He is currently studying an MSc in Resource Economics at the Bartlett School, part of University College London. His current focus is upon risk management in natural resource projects. His work has appeared in numerous publications including The Conversation and The Mandarin, among others. Blueprint Institute 4 Summary Australia doesn’t have true unemploy- Australia should introduce real unem- ment insurance. Not really. Instead what ployment insurance, called ‘JobMatcher’, we have is a fairly meagre form of per- which would: manent welfare—not too high to prevent recipients from accepting whatever work • top up the existing benefit to 70% they can get, but not high enough to of the individual’s former wage for the ensure a dignified standard of living. With first six months; its universal, flat, and very low rate, our • be capped at $35,000 and limited one-size-fits-all unemployment benefit to a cumulative six months every two fits nobody well. By lumping together the years; and short- and long-term unemployed into one system, the Government is left ham- • be fully funded by a 1% JobMatcher strung—forced into a trade-off between Premium administered like the living standards and work incentives. Medicare Levy. But there’s a better way. Almost every By paying into the system, people earn the other rich, advanced country—Canada, right to access it when they fall on hard South Korea, Israel, you name it—does times. Because an unemployment spell it differently. They all offer a high initial can happen to any of us, everyone who rate—usually a portion of the former contributes also benefits. wage—that steps down at some point to JobMatcher would offer substantial a lower level. The high initial rate helps benefits to recipients, employers, taxpay- people weather the temporary income ers, and the economy, including: shock, and provides them ample oppor- tunity to search for the job that’s right for • getting people off the dole faster; them and for their employer. • getting workers back into better jobs; It’s hard to believe that today Austra- lians receive very little protection from • smoothing the temporary income income risk due to unemployment. A shock; and significant portion of people live pay- • serving as an automatic stabiliser. check-to-paycheck. And for many, the only source of debt finance is a high-in- In the debate about the unemployment terest credit card. The private market benefit, the only thing anyone ever talks for unemployment insurance is virtually about is the rate. While the rate for the non-existent, with super funds refusing long-term unemployed should rise, we’re to cover it and only a small handful much further out of step with the rest of of insurers offering it under restric- the world when it comes to our short- tive terms and at high prices. It’s hard term benefit. The Government recognised to imagine a stronger case for govern- as much by supplementing JobSeeker ment intervention. during the crisis—but only for a limited time. Job losses don’t only occur during recessions—the risk is ever-present. A real unemployment insurance system should be one of the few good things we take with us beyond the crisis. Blueprint Institute 5 Our one-size-fits-all unemployment benefit fits nobody well ustralia has a single system, called Job- As it stands, JobSeeker isn’t a true form of unem- Seeker (formerly Newstart), to support ployment insurance, though we rely on it to serve A all unemployed people. During normal as one. With its open-ended structure and low times, it provides a flat payment of $565.70 per rate, which differs neither across people nor time, fortnight (for single people aged 22–66 without JobSeeker is really a fairly meagre form of per- children), which is just 38% of the full-time manent welfare geared towards the long-term minimum wage and 17% of the full-time average unemployed. By being forced to be all things to wage. The payment remains at that rate indefi- all people, JobSeeker fails to fully satisfy anyone. nitely, provided the recipient fulfils a set of mutual All OECD countries, other than the UK, Ireland, obligations, and satisfies income and assets and New Zealand, provide unemployment tests.

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