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Liquid assets test sees applicants with savings shut out of JobSeeker payments

ABC NEWS logo ABC NEWS 30/07/2020 By social affairs correspondent Norman Hermant
a person in a blue shirt: Kristie lost her job as a business development coordinator in July. (ABC: Brendan Esposito) © Provided by ABC NEWS Kristie lost her job as a business development coordinator in July. (ABC: Brendan Esposito)

Kristie thought she was doing everything right for her young family.

Every month, the single mother had been diligently watching her budget, limiting her spending and building up her savings.

Then came COVID-19.

"I've been working full time now on a few different jobs for just over six years," she said.

"I've been making sure that I've been looking to the future and putting money aside. It's taken, you know, a good five or six years to get us to this point where we're not living week to week."

At the beginning of July, she lost her job as a business development coordinator at a property management company.

The Sydney woman received a redundancy payment, and under Centrelink rules she's not eligible for JobSeeker payments until early October.

But, even then, she's unlikely to receive payments.

All the money she's saved will put her over the threshold of the liquid assets test, which measures what the government deems 'funds readily available to you' — a determination made with departmental discretion.

The Federal Government removed the liquid asset test in March as the COVID-19 crunch took hold, but will reintroduce it for JobSeeker applicants on September 25.  

"It does make me feel like I'm being penalised," she said. "I'm going to be even further behind the eight ball."

For singles, the test threshold is $5500. For singles with children, it's $11,000.

Depending on the value of someone's 'liquid assets', and how far it puts them above these thresholds, JobSeeker payments can be delayed until a time they are deemed eligible to receive them, which can be up to 13 weeks.

Kristie's savings are above the threshold, so she'll have to use them up while she waits for JobSeeker to kick in.

By October, her savings could be more than $12,000, which would mean a further two weeks without JobSeeker payments. But if Centrelink determines her assets are greater than that, she could wait longer.

"It doesn't feel fair," she said. "I don't have a lot of a buffer. I don't have a lot of savings for a rainy day."

In a statement, a spokesperson for the Minister for Employment Michaelia Cash said that the test could be waived if a person was in severe financial hardship.

"Before the temporary exemption, the vast majority of income support recipients did not serve any Liquid Assets Test Waiting Period," the statement said.

The Government said it didn't know how many people currently on JobSeeker had benefitted from the Liquid Asset Test being suspended in March.

Kristie said she understood if some people questioned why she should get JobSeeker payments while she still had money in the bank.

"What I don't agree with is the amounts that the Centrelink allows you to have; $10,000 is not going to last very long," she said.

"I think that everybody should have a little bit of of a buffer."

Some economists believe bringing back the liquid asset test now is a bad idea. 

"It means that many Australians, particularly the kind of Australians who have lost jobs for the first time, will have to burn through quite a lot of their savings before they become eligible for the payment," the Grattan Institute's Brendan Coates said. 

There are about 1.6 million Australians on JobSeeker and some experts suggest up to 300,000 people now receiving the JobKeeper wage subsidy may join them by the end of the year.

Mr Coates argues the more money those on JobSeeker have to spend in the economy, the better.

"The challenge here is the more that we rely on people relying on their own savings to get themselves through, then the less willing they are going to be [to] spend," he said.

"On the other side of the crisis, [that] is something we're going to need them to do in the recovery.

"Getting Australians to draw down on those savings, particularly their liquid savings that they can access today, does probably make it harder for a lot of Australians to get through this."

As for Kristie, she's already on the hunt for a new job.

But she said she was "petrified" about a future with no savings and trying to live on JobSeeker.

"So if something goes wrong, if the car breaks down or, you know, we get a big bill or my rent increases or any of those kinds of things, I'm not going to have the option of taking that on the chin," she said.

"It's really going to be a massive stress because I don't have that buffer sitting in the bank waiting to be used in an emergency."

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