It was just last Tuesday when I found myself standing in the checkout line at Woolworths, watching the total climb higher with each beep of the scanner.
The young mum ahead of me was counting coins from her purse, asking the cashier to remove the packet of TimTams from her groceries.
“Can’t stretch the budget this fortnight,” she said with a resigned smile that didn’t quite reach her eyes.
That’s the reality for countless Australians right now – making small sacrifices daily as inflation continues to bite into household budgets.
The announcement of the $698 cost of living payment scheduled for early 2025 couldn’t come at a more crucial time for families like hers.
As someone who’s been reporting on economic policies for over a decade, I’ve seen relief packages come and go, but this one has some unique aspects worth unpacking.
When the Treasurer stepped up to the podium last month to announce this measure, you could feel the collective sigh of relief across the nation.
Let’s dive into what this payment means, who qualifies, and honestly assess whether it will make a meaningful difference in the lives of struggling Australians.
The Basics: What Is the $698 Payment?
The Australian government has officially confirmed a one-time $698 cost of living payment to eligible households starting in February 2025.
This payment represents the latest in a series of economic relief measures designed to help Australians navigate the persistent inflation and rising costs that have characterized the post-pandemic economy.
Unlike previous payments that were automatically deposited to those receiving certain benefits, this one requires an application through the MyGov portal, which opens on January 15, 2025.
The payment is tax-free and won’t be counted as income for the purposes of existing government benefits.
When I spoke with financial counselor Meredith Symons last week about the impact of this payment, she emphasized that while welcome, it represents just a fraction of the increased costs many households have absorbed over the past year.
“For a family with two children, just the increase in their quarterly energy bills over the past year could easily exceed this amount,” she noted from her small community office in Geelong where appointment slots with financial counselors are now booked out six weeks in advance.
Who Is Eligible for the Payment?
Eligibility for the $698 payment has been designed to target low and middle-income households.
You’ll qualify if you meet one or more of the following criteria:
- Australian residents who earned less than $90,000 in the 2023-2024 financial year
- Recipients of Family Tax Benefits
- Age Pension or Disability Support Pension recipients
- JobSeeker or Youth Allowance recipients
- Commonwealth Seniors Health Card holders
- Families with dependents under 16 years of age
What’s interesting about this round of payments is the inclusion of casual workers and those in the gig economy who can demonstrate they worked at least 26 weeks in the previous financial year.
This represents an acknowledgment of changing work patterns and the financial vulnerability of those without permanent employment.
When I visited the community center in Blacktown last Thursday, I met Raj, an Uber driver supporting a family of four.
“Between fuel prices and car maintenance, my earnings have been squeezed from both ends,” he told me while waiting for a free financial counseling session.
“This payment won’t solve everything, but it means I won’t have to choose between paying the electricity bill and my daughter’s school excursion next term.”
How Will the Payment Be Distributed?
The government has opted for a digital-first approach to distribution, with all applications processed through the MyGov portal.
Payments will begin processing on February 3, 2025, with most eligible recipients receiving funds within 3-5 business days of application approval.
For those without digital access, Services Australia offices will provide in-person assistance with applications, though officials are encouraging those who can apply online to do so to reduce waiting times.
During my conversation with Services Australia representative Joan Murray yesterday, she emphasized the importance of having all necessary documentation ready before beginning the application.
“You’ll need your tax file number, income details from the previous financial year, and any relevant Centrelink reference numbers,” she advised.
“Taking ten minutes to gather these before starting your application can save hours of frustration later.”
The Economic Context: Why Now?
This payment comes against a backdrop of persistent inflation that has outpaced wage growth for much of the past three years.
The latest figures from the Australian Bureau of Statistics show that essential costs have increased dramatically, with housing up 12.3%, food up 9.1%, and energy costs up 15.7% year-on-year.
When I interviewed Professor Alan Kohler, economist at the University of Melbourne, he provided some important context.
“What makes this inflation cycle particularly difficult for ordinary Australians is its concentration in non-discretionary spending categories – the things you can’t simply choose to stop buying, like food, housing, and utilities,” he explained over coffee at his university office.
“The $698 payment acknowledges that reality, though it’s essentially a bandaid on a more systemic issue of wage stagnation.”
The timing of the payment – February 2025 – coincides with the return-to-school period, when many families face additional expenses for uniforms, books, and educational supplies.
This wasn’t accidental, according to government sources I’ve spoken with who weren’t authorized to comment officially.
Will $698 Really Make a Difference?
This is the question I’ve been asking people across Australia over the past week – from financial counselors to families doing it tough.
The consensus? It helps, but it’s not a solution.
For perspective, the average Australian household is spending approximately $4,500 more per year on essentials than they were three years ago, according to analysis from the Australian National University’s Centre for Social Research.
In that context, $698 represents about six weeks’ worth of increased costs.
When I visited the Morgan family in their Penrith home on Saturday, they showed me their meticulously planned budget spreadsheet.
Sarah, a nurse, and David, a construction worker, have two children in primary school and have seen their weekly grocery bill increase from $180 to $240 over the past year.
“We’re grateful for any help,” Sarah told me while preparing the family’s weekly meal plan designed to minimize waste and maximize leftovers.
“But this payment will be gone within a month just covering the basics – then we’re back to the same struggle.”
Expert Tips for Maximizing the Payment
Financial counselors across Australia have been preparing advice for recipients to make the most of this one-time payment.
When I sat down with financial planner Rebecca Wong at her Sydney office on Monday, she offered several practical suggestions:
- Prioritize clearing high-interest debt first, particularly credit cards
- Consider prepaying essential bills that offer discounts for advance payment
- Invest in energy-efficient appliances if current ones are driving up electricity costs
- Set aside a portion for unexpected emergency expenses
- Consider bulk purchasing non-perishable household essentials
“The worst thing people can do is view this as ‘free money’ for discretionary spending,” Wong cautioned.
“This payment should be treated as a strategic resource to either reduce ongoing costs or provide financial buffer against future expenses.”
The Human Impact: Beyond the Numbers
Statistics and economic analysis only tell part of the story.
During my visits to community centers and conversations with families across Australia this past week, the human impact of rising costs became vividly clear.
I met Elena, a single mother of three in Brisbane, who has started skipping meals so her children can eat properly.
“I’ve got a good job in administration, but after rent, utilities, and school expenses, there’s just not enough left,” she explained while waiting at a community food share program that has seen demand double in twelve months.
For Elena, the $698 payment will mean an opportunity to catch up on overdue bills and perhaps restore some small dignity to her family’s situation.
“Maybe we can have one night where we order pizza and watch a movie together like we used to do monthly before everything got so expensive,” she said, momentarily brightening.
These are the real stakes behind economic policy discussions – not just numbers on a spreadsheet but the quality of life and wellbeing of millions of Australians.
Criticism and Alternative Approaches
Not everyone views the payment as the right approach to addressing cost of living pressures.
Some economists I’ve spoken with have argued that one-off payments may actually contribute to inflation rather than alleviate it.
Dr. Samantha Richardson from the Economic Policy Institute suggested during our phone conversation on Wednesday that structural reforms would be more effective.
“Meaningful intervention in the housing market to address rental affordability, stronger wage growth policies, and permanent changes to benefit rates would provide more sustainable relief than one-time payments,” she explained.
Opposition politicians have also criticized the timing of the payment, suggesting it’s politically motivated rather than designed for maximum economic benefit.
However, for those receiving the payment, these debates are largely academic when faced with immediate financial needs.
How to Apply: Step by Step
The application process for the $698 payment has been streamlined compared to previous relief measures.
Based on information provided by Services Australia, here’s what you’ll need to do:
- Log into your MyGov account after January 15, 2025
- Select “Cost of Living Payment” from the available services
- Confirm your eligibility based on the criteria questions
- Verify your identity and banking details
- Submit your application
Most applications will receive an immediate preliminary assessment, with final approval and payment typically processed within 5-7 business days.
For those without internet access or requiring assistance, Services Australia will offer phone support and in-person help at branch locations.
The government expects approximately 65% of Australian households will qualify for the payment.
Looking Beyond the Payment: Long-term Solutions
While immediate financial relief is welcome, most experts agree that addressing Australia’s cost of living crisis requires more substantial policy changes.
During my interview with housing advocate Michael Torres on Friday, he emphasized the need for broader thinking.
“We’re treating the symptoms rather than the disease,” he said from his community legal center where tenants’ rights cases have increased 45% year-on-year.
“Until we seriously address housing affordability, energy costs, and wage growth, we’ll be having the same conversation about cost of living payments year after year.”
This sentiment was echoed by every economist and financial counselor I spoke with during my reporting.
The $698 payment offers temporary breathing room, but sustainable solutions require more fundamental changes to how our economy functions and who it serves.
The Bottom Line: What This Means for You
If you’re eligible for the $698 cost of living payment, mark January 15, 2025, on your calendar and prepare to submit your application as early as possible.
While the payment won’t solve long-term financial challenges, strategic use of these funds can provide meaningful, if temporary, relief.
As I’ve traveled across Australia these past two weeks talking to families, financial experts, and community workers, one thing has become abundantly clear: Australians are resilient and resourceful in the face of economic pressures.
The creative budgeting, community support networks, and determination I’ve witnessed in households from Perth to Townsville speaks to the strength of our communities.
The $698 payment is just one tool among many that families will use to navigate these challenging economic times.
And for that young mother I saw at Woolworths, counting coins from her purse? It might mean her kids get to enjoy those TimTams after all.
At least for a while.
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