Right: Job snobs? Tabloid headlines seem designed to demonise those who find themselves out of work, but to many politicians - and voters - front pages like this one are merely publicising a truth .
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Arguments in favour of increasing the Newstart allowance
1. The Newstart allowance is insufficient for recipients to live on
Opponents of the current level at which the Newstart allowance has been set claim that it is so low that it condemns recipients to living in extreme poverty which adversely effects their physical and psychological health and makes it extremely difficult to provide basic necessities such as shelter for themselves and their families.
A study by the OECD shows that 53.5 per cent of Australia's unemployed are now living in poverty. Among 33 comparable nations, our jobless population is the second poorest in the world, beaten only by Canada.
It has been claimed that one of the key reasons why the Newstart allowance is so inadequate is that Newstart is tied to the Consumer Price Index(CPI) and other pensions rise in line with average male weekly earnings. The Consumer Price Index has been condemned as a conservative measure of the average consumers expenditure on basic goods and other essentials. The Australian Bureau of Statistics (ABS) has acknowledged its inadequacy. The ABS website states,The Australian CPI measures the changes in price of a fixed basket of goods and services&In practice, no statistical agencies compile true cost of living or purchasing power measures as it is too difficult to do.
Even given the low level of wages growth in Australia, a pension that rises with average weekly earnings will grow far more rapidly than one tied to the CPI.Anglicare Victoria has compared the growth in Newstart with the growth in the old age pension. They state,Once close to each other, the pension and Newstart began to diverge in 1991 when the government pegged the single pension to 25 per cent of male total average weekly earnings and left unemployment benefits pegged to the consumer price index. The gap widened again in 2009 when the Rudd government lifted the peg for the pension from 25 per cent of male earnings to 27.7 per cent.
The 2010 Henry Tax Review found that if the existing arrangements continued, by 2040 a single pensioner would be paid more than twice as much as a single unemployed person .
A 2016 study undertaken by Anglicare indicated that the low rate of Newstart payment was making it impossible for many of its recipients to afford accommodation. Anglicare stated, The consequence of not adjusting Newstart or Youth Allowance payments become particularly stark as Australia goes through the most severe housing affordability crisis in memory. Forget home ownership&, the dire shortage of public housing is a national crisis. A recent study by Anglicare showed that people on either Newstart, Single Parent Allowance or Youth Allowance could not access any affordable rental accommodation in any capital city in Australia. Allowance provides no hope of its recipients achieving the most basic human need shelter.;
2. The Newstart allowance is not sufficient to allow people to job seek
Critics of the level at which Newstart is set claim that it is so low that it actually impedes jobseekers in their search for work.
These critics claim that when your income is so low that you are struggling to pay for basic necessities such as accommodation and food, then the added expenses of job hunting, including transport, communication expenses and appropriate clothing become very difficult to meet. This point has been made by the Brotherhood of St Laurence which states on its website,Such a low payment makes it harder for unemployed people to seek work, for example by being able to pay for public transport and clothing to attend job interviews. It also hurts their ability to secure proper housing and, broadly, to live with dignity in a country with our standard of living.
The same point has been made by Dr Cassandra Goldie, the chief executive officer of the Australian Council of Social Service(ACOSS). Dr Goldie has stated,Most people receiving Newstart live below the poverty line. It is very hard to look for a job when you dont know where your next meal is coming from or how to put food on the table for your kids. Similarly, in September, 2017, Jennifer Westacott, chief executive of the Business Council of Australia, stated,Im proud to have called out the inadequacy of the Newstart unemployment allowance which, at only $38 a day for single people, has itself become a barrier to effective jobseeking. In 2013, while the current leader of the Opposition, Bill Shorten, was Minister for Workplace Relations in the Gillard Labor Government, the Greens were campaigning for an increase in Newstart. As part of this campaign they gathered together a set of protest letters from then recipients of Newstar addressed to Mr Sorten. A large number of these letter writers noted the extreme difficulties they faced seeking work while on Newstart. One noted, It's an absolute disgrace that one of the most affluent countries per capita in the world&should persecute its unemployed so severely that those unable to obtain private assistance from family or friends, far from being assisted in obtaining employment, are forced to go hungry and abandon the very necessities, such as phone services, clean clothes and transport costs, which they need in order to find work. It's not only a disgrace, it's perverse and sick.
Another letter from the same collection stressed the negative impact of low Newstart payments on recipients capacity to look for work. The letter writer stated,People on Newstart are unable to afford accommodation, food, energy and water bills, ISP for phone and computer connections, petrol or diesel or public transport. Without network access, they cannot even apply for jobs. Without adequate discounts for all transport costs, Newstart recipients very often cannot get to interviews. They become the underclass if families cannot support them.
3. Newstart is not a short-term support for many of its recipients
Supporters of an increase to Newstart argue that the allowance is frequently drawn on for a significant period of time by recipients. It is not a short-term expedient tiding people over between jobs or before they enter the workforce. For many it is the income they have to rely upon in order to support themsleves and often their children for months or years.
The Australian Council of Social Services (ACOSS) has noted that 70 percent of people receiving Newstart have been unemployed for 12 months or more.
Dr Cassandra Goldie, the chief executive officer of ACOSS has indicated that there are key groups within Australian society for whom unemployment is likely to become long term. A recent ACOSS report has found that: 44 percent of those unemployed long-term were on these payments for over 2 years and 15 percent for over 5 years; 49 percent of long-term recipients were over 45 years old; 29 percent had a disability; 11percent were of Aboriginal and Torres Strait Islander background; 16 percent were principal carers of children, including sole parents, and 21 percent were of culturally and linguistically diverse backgrounds.
The Brotherhood of St Laurence has also noted, Over the past 30 years or so, the job market has changed dramatically, with a decline in manufacturing, a rise in part-time jobs and technological and demographic change&
Long term unemployment has grown, especially for mature-age job seekers who tend to remain unemployed for twice as long as those aged 25 to 54.
An ABC 7.30 report televised on September 25, 2018, stated, The number of people aged 55-64 on Newstart has risen by more than 55,000 in less than five years. The same program also interviewed labour market analyst Professor John Spoehr who stated that the sharp rise in the number of over-55s on Newstart was due to a downturn in traditional industries and a crackdown on eligibility for disability support payments.
Professor Spoehr explained, Despite the Australian unemployment rate being relatively low, that masks some other problems in the labour market. In particular, the difficult circumstances that mature-age workers face, particularly because of the decline in mining and manufacturing.
A 63-year-old woman, interviewed by Crikey, who has been out of work for four years, stated, Newstart is not enough money to live on when it is the sum total of your income. It is meant as a supplementary income as you seek employment and are supported by your family. If you are older (aging), single and have mobility issues, health and support needs, it is patently inadequate.
Critics of the level of support offered by Newstart also note that many children are condemned to long-term poverty because of the low rate of assistance offered to their parents. A Report recently released by the Australian Research Alliance for Children and Youth (ARACY) found children in jobless families were more likely to suffer from a greater number of deprivations than any other group examined.
This report and other studies have indicated that deprivation in early childhood can have enduring effects on the later life prospects of a child. Greens senator, Rachel Siewert, has noted re the impact of inadequate Newstart payments, Poverty in early childhood leads to poorer outcomes and if we dont address this now, we are condemning members of our community to poor health and education outcomes.
4. Increasing the Newstart allowance would benefit the Australian community
Supporters of an increase in the Newstart allowance claim it would have wide-reaching social benefits, including boosting economic growth and increasing employment, promoting social cohesion, preventing crime and helping to reduce inter-generational poverty.
Proponents of an increase in Newstart as a means of boosting the Australian economy and increasing jobs favour a bottom-up rather than a trickle-down model of economic growth. The trickle-down model argues that tax concessions should be given the wealthy, including business owners, in the hope they will spend more and invest within Australia, thus creating jobs growth. Critics of policies that make more money available to wealthy Australians argue that these people may simply increase their savings or invest overseas. The bottom-up model suggests that making more money available to the disadvantaged will have them spend more and that this will give an immediate and inevitable boost to the Australian economy and to jobs.
The bottom-up model has been proposed by Dr Cassandra Goldie, the chief executive officer of the Australian Council of Social Service (ACOSS). Dr Goldie has stated, People on the lowest incomes including Newstart and minimum wages must spend the money they receive to cover the very basics like food and rent, so boosting their incomes is a far more effective way to bolster economic growth than more tax cuts.
A rise in Newstart would particularly benefit businesses in the regions struggling the most with high unemployment. Increasing Newstart and the minimum wage would increase consumer spending, creating new jobs&
Referring to the impact of low Newstart payments on intergenerational poverty affecting children, Dr Goldie has stated, One in six children live in poverty in our wealthy country and in order to reduce child poverty we need to reverse government funding cuts to family payments and expressly consider these cuts in the setting of the minimum wage.
In the past decade, more than $12 billion has been cut from payments for individuals and families with low incomes, including by dumping all single parent families from the single parent payment on to the low Newstart Allowance once their youngest child turns eight.
Numerous studies have indicated that children brought up in poverty have extreme difficulty in acquiring an education and the sort of secure, well-paid employment which will help to protect them and their children from poverty. The 2004 Senate report on poverty and financial hardship stated,Low income families do not have a choice of school: their children must rely on the public education system and because of transport costs, must rely on the closest public school rather than the one best suited to the needs of their child. This can lead to lifelong disadvantage with early school leavers often unable to find employment, thus perpetuating the cycle of poverty. If this cycle is broken the whole community benefits.5. The cost to government of increasing Newstart would manageable
Supporters of an increase in the Newstart allowance claim that Australia is in a position to afford to implement this rise. They further claim that if tex cuts were not granted to wealthy taxpayers then the Newstart increase would become even more affordable.
A report released by Deloitte Access Economics, in September, 2018, stating that the increase they recommended of $10.71 a day to 700,000 people on Newstart would cost the federal budget $3.3bn a year. However, Deloitte also indicated that this expenditure would be significantly offset by what they referred to as a prosperity dividend. This means that the country would make other economic gains through increasing the allowance which would contribute towards its cost. This prosperity dividend would see the government collect an extra $1bn in taxes as a result of a stronger economy, and the proposal was also projected to create 12,000 extra jobs in 2020-21 and increase wages by 0.2%.
Spoorters of the increase in Newstart allowance also note the this increase would be more readily fundable if tax cuts were not given to high income earners. A recent survey conducted for the Australian Council of Social Services has found that a majority of Australians would rather see these tax cuts rescinded and an increase in the Newstart allowance.
The Essential Research poll of about 1000 respondents conducted for ACOSS on April 8, 2019, shows: 66 percent agree that it is not fair to give people on $200,000 a year a $200 a week tax cut; 72 percent agree Newstart should be increased to cover basic living costs and to help people search for jobs; and 67 p[ercent agree middle income earners would be better off with secure funding for services, such as health, education and aged care, than with a $20 per week tax cut.