Income inequity declined during COVID-19: UC research

Income inequity in Australia has declined during the coronavirus pandemic, according to new research from the University of Canberra. The research from the university's National Centre for Social and Economic Modelling (NATSEM) found JobKeeper and the increased JobSeeker rates had helped. NATSEM director Professor Brenton Prosser said income inequity had dropped by 0.03 points on the Gini index - which measured inequity - between February and June. NATSEM found monthly disposable income grew by between 9 and 24 per cent across the two lowest household income groups. At first, researchers had estimated this would decline. "We initially estimated that the households income shock cause by COVID-19 would have seen a maximum of between 15 and 26 per cent decline in income across all groups," lead researcher Professor Jinjing Li said. "Instead, there was an increase of up to 24 per cent in monthly gross income in the lowest 20 per cent of households and up to 8.4 per cent across all others." The research was conducted through a "nowcasting" economic simulation method. The system uses near real time data. Data was pulled from the Australian Bureau of Statistics monthly Labour Force Survey, weekly payroll statistics and biannual income and housing surveys. The model also simulates the tax, transfer and welfare system, Professor Prosser said. Researchers analysed the impact of JobKeeper, JobSeeker and the COVID-19 childcare subsidy payments. "One of the challenges of statistical reporting is the amount of delays in the release of results and the 'nowcasting' method enables us to combine different sorts of available data into a reliable modelling approach," he said. "In this case we have been able to capture data between February and June this year, which marked the onset of the COVID-19 pandemic and the government's response." Professor Prosser said the data could be important evidence for political leaders as they faced key policy decisions in the coming weeks. "Usually the practical challenges of quickly collating and assessing rigorous data present a constraint for urgent policy response - while the impacts of crises are immediate, the results of robust analysis are often years away," he said. READ MORE: The findings of the research are temporary and due to JobKeeper and the increased JobSeeker wage subsidy, according to NATSEM. "The story behind these figures is that without government intervention, disposable incomes would have plunged considerably with severe consequences for income inequity and poverty levels," Professor Li said. JobSeeker is set to be cut from $1100 to $800 a fortnight from Friday. From Monday, the JobKeeper rate will decrease to either $1200 or $750 depending on hours worked. Professor Prosser said they had not modelled future scenarios based on the upcoming cuts to JobSeeker and JobKeeper. "NATSEM is confident about the results of this modelling but we prefer to comment on what our modelling shows rather than try and speculate or predict what might happen in the future," he said. "Government is working on changing its policy settings and there is a budget coming in less than two weeks so the conditions could potentially change quite quickly. "NATSEM will continue to monitor the impact of COVID-19 and policy responses in the coming months."

The research from the university's National Centre for Social and Economic Modelling (NATSEM) found JobKeeper and the increased JobSeeker rates had helped.

NATSEM director Professor Brenton Prosser said income inequity had dropped by 0.03 points on the Gini index - which measured inequity - between February and June.

NATSEM found monthly disposable income grew by between 9 and 24 per cent across the two lowest household income groups. At first, researchers had estimated this would decline.

"We initially estimated that the households income shock cause by COVID-19 would have seen a maximum of between 15 and 26 per cent decline in income across all groups," lead researcher Professor Jinjing Li said.

"Instead, there was an increase of up to 24 per cent in monthly gross income in the lowest 20 per cent of households and up to 8.4 per cent across all others."

The research was conducted through a "nowcasting" economic simulation method. The system uses near real time data.

Data was pulled from the Australian Bureau of Statistics monthly Labour Force Survey, weekly payroll statistics and biannual income and housing surveys.

The model also simulates the tax, transfer and welfare system, Professor Prosser said. Researchers analysed the impact of JobKeeper, JobSeeker and the COVID-19 childcare subsidy payments.

"One of the challenges of statistical reporting is the amount of delays in the release of results and the 'nowcasting' method enables us to combine different sorts of available data into a reliable modelling approach," he said.

"In this case we have been able to capture data between February and June this year, which marked the onset of the COVID-19 pandemic and the government's response."

Professor Prosser said the data could be important evidence for political leaders as they faced key policy decisions in the coming weeks.

"Usually the practical challenges of quickly collating and assessing rigorous data present a constraint for urgent policy response - while the impacts of crises are immediate, the results of robust analysis are often years away," he said.

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The findings of the research are temporary and due to JobKeeper and the increased JobSeeker wage subsidy, according to NATSEM.

"The story behind these figures is that without government intervention, disposable incomes would have plunged considerably with severe consequences for income inequity and poverty levels," Professor Li said.

JobSeeker is set to be cut from $1100 to $800 a fortnight from Friday.

From Monday, the JobKeeper rate will decrease to either $1200 or $750 depending on hours worked.

Professor Prosser said they had not modelled future scenarios based on the upcoming cuts to JobSeeker and JobKeeper.

"NATSEM is confident about the results of this modelling but we prefer to comment on what our modelling shows rather than try and speculate or predict what might happen in the future," he said.

"Government is working on changing its policy settings and there is a budget coming in less than two weeks so the conditions could potentially change quite quickly.

"NATSEM will continue to monitor the impact of COVID-19 and policy responses in the coming months."