FactCheck Social Media

Is Scott Morrison the highest paid leader while Australia’s jobless get the lowest benefits?

2020-10-23 15:12:48

The Statement

A social media post compares the salary of Australian Prime Minister Scott Morrison, who it claims is the highest paid parliamentarian in the developed world, with the Jobseeker allowance – which it says is the lowest in the developed world.

The Facebook post, which had been shared more than 1200 times and drawn more than 750 comments and reactions at the time of writing, was accompanied by the comment: “#RaiseTheRateForGood.”

The post’s image is a screengrab of an October 17 tweet, which states: “(Scott Morrison) is the highest paid parliamentarian in the developed world – $1504 per day.

“#JobSeeker is the lowest unemployment benefit in the developed world – $40 a day. That’s wrong. Permanently raise JobSeeker above the poverty-line now!”

A Facebook post
 A post compares Prime Minister Scott Morrison’s salary to Australia’s unemployment benefits. 

The Analysis

While Scott Morrison is among the highest-paid elected leaders of countries in the developed world, he is not at the top of the heap. That honour goes to Singapore’s prime minister, Lee Hsien Loong, who has led the city-state since 2004.

Meanwhile, Mr Morrison, who has been Australian prime minister since August 2018, claimed during the lead-up to the 2019 poll that Australia had one of the best social-security safety nets – “if not the best” – of anywhere in the world, drawing renewed criticism of the $40-per-day unemployment benefit, then called Newstart.

The rate has been unfavourably compared to the salaries and allowances enjoyed by federal politicians.

Mr Morrison’s salary is made up of a base payment, determined by the Remuneration Tribunal, received by all parliamentarians, and an additional salary calculated as a percentage of the base.

As of July 1, 2020, the base salary was $211,250, while the additional salary comes to $338,000 – taking the prime minister’s combined annual pay to $549,250, or just under $1505 per day.

In comparison, the Singapore prime minister’s office reveals that Mr Lee receives a salary package, including bonuses, of SG$2.2 million ($2.29 million). The figure is based on a ministerial benchmark derived from the median income for Singapore’s top 1000 earners.

A 2019 analysis by USA Today of the best-paid world leaders put Mr Morrison’s salary at the fifth-highest in the world. However three of the four leaders ahead of him in the list are not parliamentarians but head their government’s executive branches.

They include US President Donald Trump, who is entitled to an annual salary of $US400,000 per year ($564,175) as well as an expense account of $US50,000. The pay packet for Hong Kong chief executive Carrie Lam is due to rise to a reported $HK5.21 million ($946,938) this year.

Mr Morrison’s salary is also lower than that of German Chancellor Angela Merkel, who reportedly earns more than €340,000 per year ($568,132). Nevertheless, Mr Morrison’s salary compares favourably to that of many of his peers.

New Zealand Prime Minister Jacinda Ardern ordinarly earns $NZ471,049 ($441,724) per year, although this was reduced during the COVID-19 pandemic, while Canadian leader Justin Trudeau earns $CA365,200 ($390,928) before allowances.

UK Prime Minister Boris Johnson was entitled to a salary of £158,754 in 2019-20 ($293,880 at current exchange rates), based on the pay for his position in addition to the standard MP’s entitlement.

Needless to say, a person on the JobSeeker unemployment benefit earns a fraction of the prime minister’s salary – receiving a base payment of $40.40 per day before the fortnightly COVID-19 supplement of $250, which is due to expire at the end of the year.

Rent assistance of up to $139.60 per fortnight is also payable to eligible single people living alone, with lower payments for couples and those sharing accommodation.

But does Australia have the lowest unemployment benefit in the developed world, as claimed in the post?

Writing for Inside Story, Australian National University public policy professor Peter Whiteford noted that international comparisons are difficult because many countries use contributory insurance systems – in which unemployment payments are based on people’s past earnings.

These tended to lead to higher payments during short periods out of work but lower benefits for the long-term unemployed, he said.

There are several other countries with lower base unemployment benefits. In the UK, the maximum unemployment benefit is £74.35 ($137.56) for those aged 25 and over, or only $A19.65 per day. Those renting may also be entitled to rent supplements.

In New Zealand, single people aged 25 and over can receive up to $NZ281.08 ($263.46) per week in unemployment benefits before tax, or $A37.64 per day. Weekly accommodation supplements of up to $NZ165 ($154.70) for singles are also available.

In the United States, which largely relies on state-based systems of unemployment insurance, the minimum weekly payment rates fall to as low as $US5 ($7.05) in Hawaii, according to an analysis from USAFacts.org.

However international comparisons that look at replacement rates – which compare unemployment benefits to workers’ previous incomes – put Australia at the bottom of the table.

OECD data (see chart) shows that Australia ranks ahead of only Russia when benefits after two months of unemployment are measured against previous incomes. The figures are based on a single person earning two-thirds of the average wage.

The relative situation improves for the long-term unemployed, whose benefits in Australia compare favourably to those available to the jobless in the US, Hungary and Czech Republic after six months out of work. For those out of work for five years, Australia’s replacement rate is above the OECD average.

Prof Whiteford wrote in his analysis, which drew on the same figures, that including rent assistance, which about 40 per cent of people on Newstart receive, and the equivalent housing benefits in other countries made Australia’s replacement rate for the unemployed the lowest in the OECD.

Research by Deloitte Access Economics in 2018 found that unemployment benefits in Australia had fallen relative to average wages, the minimum wage and the age pension over the past quarter of a century.

Prof Whiteford told AAP FactCheck that the “absolute purchasing power” of Australia’s unemployment benefits was higher than countries such as the UK and New Zealand.

“However, where I think replacement rates are important is in thinking about what the effects of losing your job are,” he said.

“When you move from employment to being on benefit what is important in the short run is whether you can keep up your previous financial commitments – particularly your rent or mortgage.

“So the drop in income is what is relevant here. And before the coronavirus supplement was introduced, the drop in income in Australia was greater than in any other high-income country.”

Prime Minister Scott Morrison
 Australian Prime Minister Scott Morrison earns $549,250 per year, or just under $1505 per day. 

The Verdict

AAP FactCheck found the claims in the post to be partly false. While it is true that Mr Morrison is among the best-paid leaders in the developed world, he is not the highest-paid parliamentarian.

Australia does not have the lowest unemployment benefit in the developed world, with several comparable countries all featuring lower payments. However Australia does have among the lowest benefits when unemployment payments are weighed against workers’ former incomes.

Partly False – Content that has some factual inaccuracies.

* AAP FactCheck is accredited by the Poynter Institute’s International Fact-Checking Network, which promotes best practice through a stringent and transparent Code of Principles. https://aap.com.au/