Right: Centrelink clients wait for interviews and to search the jobs database, forming the so-called "dole queue".
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Arguments against restricting access to Newstart and Youth Allowance
1. Employment has become harder for young Australians to find
Unemployment is often high among young people because they lack experience and because they are attempting to enter the workforce, often in large numbers at the end of their final school year. Since the global financial crisis, this situation has worsened, with increasing numbers of young people finding it harder to gain employment. Critics maintain that it is unfair to impose a waiting period for unemployment benefits on young people in these circumstances.
It has been claimed that there are structural factors in the Australian economy which have resulted in increased youth unemployment, especially the retractionary effect of the global financial crisis. In the 14 years leading up to the global financial crisis in 2008, youth unemployment had been trending down. It fell from more than 380,000 (seasonally adjusted) in October 1992 to less than 160,000 in August 2008.
In April, 2014, the number of those aged 15 to 24 who are unemployed had climbed back to around 260,000. By August 2014 the figure had reached more than 277,000, almost 40 per cent of the total pool of unemployed.
In May 2012, the rate of unemployment for 15 to 19-year-olds was 18.8%; and for the broader group of 15 to 24-year-olds it was 13.1%. This compares to an unemployment rate of 5.8% for the population aged 15 to 64 years.
University of Sydney Workplace Research Centre director Professor John Buchanan points out that the latest statistics show there are 146,000 job vacancies for 727,000 people unemployed and 922,100 under-employed.
Long-term unemployment also becomes a more severe problem as the economic downturn lengthens. Of those 15 to 24-year-olds who were unemployed in May 2012, more than 25% had been unemployed for 12 months and longer.
Currently Australia's potential labour force is growing at a faster rate than job places. In an article published in The Guardian on August 11, 2014, Greg Jericho has stated, 'As a general rule, our adult civilian population grows by around 1.6% every year (although it has been slightly higher than that for most of the past eight years). If employment doesn't grow faster than population, unemployment is likely to rise.
In the past year employment grew by just 1%, and it has now been 36 months since annual employment growth was above 1.6% - the second longest streak ever...'
On August 12, 2014, Leith van Onselen wrote in macrobusiness.com.au, 'The number of jobs for Australia's youth has been falling, down 6.2% since the GFC versus 10.4% growth for the rest of the labour market...'
2. Australian unemployment benefits are already low and the gap between rich and poor is widening
It has been pointed out that by international standards Australia's unemployment benefits are low and that the gap between the rich and poor in Australia is becoming greater.
Critics argue that these benefits are already so low that they are unlikely to encourage people to remain unemployed. They claim it is not necessary to have a compulsory period during which the unemployed have to survive without government financial assistance.
Peter Whiteford , an Australian National University labour market economist, has stated, 'The idea that there are people out there having fun on unemployment payments is just ridiculous.'
Professor Whiteford has noted that Australia's unemployment benefits are the lowest in the industrialised world and that their recipients live well below the poverty line. For a single person on the average wage losing his or her job, Australian benefits are now the lowest in the OECD (Organisation for Economic Co-operation and Development). Australia is the last runner among the 29 OECD countries, with a single unemployed person receiving a pension at a replacement rate of around 33% of the average weekly wage compared to the median OECD rate of 58%.
Since 1996 the level of Newstart for a single person has fallen from around 54 per cent to 45 per cent of the after-tax minimum wage.
Numerous studies have been undertaken which have demonstrated how hard it is to survive on unemployment benefits in Australia. One such study noted that if you were on Newstart and paying rent for a one bedroom property in Wyong, New South Wales, you would have just $17.15 a day left over for your food, clothing, transport and other bills.
It has further been noted that income disparity is increasing in Australia and that the wealthiest are not paying their fair share of tax.
In recent decades the income share of the top 1% of income earners in Australia has doubled, and the wealth share of the top 0.001% has more than tripled. At the same time, poverty is increasing and many of those dependent upon government benefits, including the unemployment benefit, have fallen well below the poverty line.
It has also been noted that Australia is one of the lowest-taxing countries in the industrialised world and its welfare spending as a proportion of GDP is among the lowest in the OECD.
Critics maintain that rather than claiming our welfare system is unsupportable, governments should be looking for ways to increase equity within the Australian community. This would include developing a fairer tax scale which would increase taxation revenue and impose higher taxes upon the very wealthy.
3. Poverty makes it more difficult to gain employment
It has been claimed that denying benefits to the unemployed will make it more difficult for them to find work.
A new research paper by Alan Morris from the University of Technology, Sydney, and Shaun Wilson from Macquarie University has indicated that Australia's low unemployment benefits are actually making it harder for the unemployed to look for work. Their study into the implications of life on Newstart found many recipients were so deprived they were ill-equipped to get work. Newstart's very low rate was 'scarring' the unemployed and making it more difficult for them to find a job.
Studies have found that the relative poverty of Newstart recipients makes it difficult for them to travel to job interviews; to dress appropriately for job interviews; to update their qualifications and to afford child care.
Evidence from the World Health Organisation's social determinants of health data shows that lack of adequate income can lead to a loss of feelings of agency, and therefore the confidence that is necessary to do a good job interview.
Critics of the new proposals have speculated that a period of one to six months without any form of government assistance might well make it virtually impossible for many of the unemployed to apply for work.
4. Restrictions on Newstart and Youth Allowance cannot be addressed by families or private agencies and will create a desperate underclass
Youth Allowance presupposes that those drawing this benefit will receive additional assistance from their parents and other family members. With the upper age for Youth Allowance recipients now extended to 25 this has become increasingly unlikely. There will be many parents in no position to supplement their children's living allowance for seven years after these young people have left school.
Emma Robertson from the Australian Youth Affairs Coalition has asked, 'How do people support themselves if they have no income, no access to income and their families can't afford to help?'
If Newstart and Youth Allowance are withheld for an initial six months, private aid agency will be expected to assist these people. Yet agencies have claimed that they will be unable to offer sufficient support to help those have to wait for up to 26 weeks before they can access either Newstart or Youth Allowance.
Anglicare ACT and south New South Wales chief executive, Jeremy Halcrow, has indicated he expects the changes will lead to a significant surge in demand for services.
St John's Care director, Sue Jordan, stated that she expected services that supported young people at risk of violence and homelessness would buckle under the pressure.
Survey results released in May 2014 (before the implementation of the proposed new cuts) found six in ten people in west Sydney living on Newstart for more than a year have approached a charity for help and one in four have been forced to beg on the streets.
One of the survey report's co-authors, Dr Alan Morris from the University of Technology in Sydney, believes that the changes outlined in the budget can only make the situation worse.
Dr Morris stated, 'The changes threaten to undermine social cohesion and will help to create a desperate underclass. ..these changes are going to unleash terrible suffering. We are going to have more people begging in the streets.'
5. Work for the dole schemes do not improve employment prospects
Work for the dole schemes have been condemned as politically motivated 'busy work' for the unemployed which have no positive effect on their work readiness.
Evidence suggests that work for the dole is the least successful way to get people into employment.
By March 2014, less than 20 per cent of people who had done work for the dole had found a job three months later. Of those that had, two thirds were in part-time work. This is the worst success rate of all the training categories. Specialist training programs, voluntary work and unpaid work experience were all much quicker pathways to work.
University of Melbourne Professor of Economics, Jeff Borland, has studied the Howard government's work for the dole program and judged it a failure.
Professor Borland stated, 'The people who had done work for the dole spent longer on payments in the first 12 months after they had done the program than people who hadn't done work for the dole."
Professor Borland said international research conducted in the United States and Europe on similar schemes had come to similar conclusions.
On August 1, 2014, a comment by Simon Cowan, Research Fellow at the Centre for Independent Studies, was posted on the ABC's current affairs site The Drum.
Cowan stated, 'Traditionally most people (70 per cent) cycle off unemployment benefits within 12 months, and use Newstart for short-term transitional income assistance. There is little reason to assume the bulk of this group is dysfunctional, particularly those who have worked and contributed for years. Forcing these people into training or work for the dole, while quarantining their income, might prolong unemployment.'