Age pensions and other social security payments are tweaked twice a year so over five million Australians  are about to pocket their biggest increase in seven years.

And while this is an economic and even a social boost to their lives, these pay hikes are a help to the economy because the bulk of this money will be spent, creating demand, jobs and profits for businesses.

It’s classic win-win when our economy needs offsets from the negatives delivered by lockdowns. This is what recipients will receive:

1. From next week, the maximum single age pension rate will rise by $14.80 to $967.50 a fortnight,
2.  Age pensioner couples will receive an extra $22.40 combined, taking their fortnightly payment to $1458.60
3. JobSeeker and other allowances will increase by up to $11.90 a fortnight.
4. Parenting payments and rent assistance are also set to rise.

“These rises are the biggest increases since 2014, the government says,” reports  Anthony Keane in The Australian. “The $1.46 billion annual rise reflects stronger inflation data, which has rebounded after dropping sharply during the early months of the pandemic.”

He shows us the big payout to the 5.3 million Aussies on welfare and it looks like this:

1. 2.58 million on the age pension.
2. 756,000 on a disability support pension.
3. 977,500 receiving JobSeeker payments.

Behind these big rises is the spike in inflation coming out of the restrictions that the Coronavirus has created.

“The annual inflation rate in Australia jumped to 3.8% in Q2 2021 from 1.1% in Q1 and matching market consensus. This was the highest reading since Q3 2008, reflecting some base effects following the introduction of free childcare and a record fall in fuel prices in Q2 2020,” explained Trading Economics.

This is a kind of phony inflation rise that shouldn’t last but it is good that it has resulted in a spike in payments to the most economically vulnerable Australians. I expect inflation to fall in coming quarters so these rises will actually be good for helping the purchasing power of welfare recipients. And the more they can purchase, the better it is for the economy and Aussies hoping for jobs and a business bounceback.

This comes as the AFR reports unnamed bankers are worried that the promised resurgence of the economy, as we get out of lockdown might be negatively affected by labour supply problems, because of vaccination issues and global supply chain problems.

The RBA Governor is a big believer in the bounce back theory and I support him, but I also believe some of the bankers’ concerns are believable. That’s why I argue that over 2022, the momentum for our economic growth will build but it explains why the NSW Government is planning on keeping up business assistance going right into February next year.

To quote Rachel Hunter, the top model from the Pantene commercial who was once married to singer Rod Stewart: “It won’t happen overnight, but it will happen!”

And these rises in pension payments will actually help make it happen.

By the way, in case you’re wondering, the annual pension paid to a single person will be $25,155. For a couple, it’s $37,923, which shows these people aren’t living the life of Riley!