Jobseeker payment: economists on why it's dangerous to cut the coronavirus supplement

As the federal government changes the supplement from $550 to $250 a fortnight, economists reveal why jobseeker should be permanently raised

The Morrison government has announced changes to jobseeker that will cut the $550-a-fortnight coronavirus supplement to $250 from 28 September, reducing the total jobseeker payment for about 1.6m Australians from $1,100 to $800 a fortnight.

Experts say the supplement has been vital in raising many Australians, including children, out of poverty for the first time. Its effect on the economy has been positive, with the extra $663m in cash being spent by consumers supporting small business, as well as keeping the housing sector afloat by allowing people to keep up rent and mortgage payments. And it is popular: most Australians are opposed to reducing the payment.

But there has been pressure from the coalition backbench and some business groups to lower the rate, claiming it acts as a disincentive to work.