Newstart ‘not transitional, $75 boost insufficient’: Australia Institute report

The Australia Institute’s submission to the Senate inquiry into the adequacy of Newstart has shown that, currently, the unemployment benefit is neither sufficient nor transitional, as the Government claims.

The single rate of Newstart would need to be increased by more than $180 a week to reach the Henderson poverty line and the average length of time on the payment is now likely to be around six years, based on current statistics, the submission has revealed.

“Despite what the Government says, for many Australians Newstart is not a transitional payment,” said David Richardson, Senior Research Fellow at The Australia Institute.

“The average duration on Newstart currently sits at 156 weeks, but it’s not like people are going to get off the payment immediately. Total average spells on Newstart, once someone is actually removed from the payment, are likely to be close to double that; around 312 weeks, or six years in duration.

“The inadequacy of Newstart is far worse than many believe, with a family of four on Newstart now forced to live around 20% below the poverty line.

“As a wealthy and prosperous nation, Australia could and should support these families well enough so that they are able to live above the poverty line. Simply increasing Newstart by $75 a week would be insufficient, as the single rate payment is currently $182 a week below the poverty line.

“While we don’t recommend a specific amount by which Newstart should be increased, a number of indicators suggest a family of four would require an increase of around $200 a week to reach the poverty line. For an Australian family of four to receive the same level of support that they had in the early 1990s, an increase of just under $300 a week is required.

“While some say that keeping Newstart low is an incentive for people to return to work, our research has shown that countries with better unemployment support actually enjoy lower rates of unemployment.

“There is no reason for Australia to punish the least fortunate among us with the insufficient rate of Newstart. The IMF has repeatedly shown that greater rates of inequality mean worse economic performance in terms of growth and living standards.

“Currently, 716,800 people and their dependents are suffering as a result of the Government’s failure to adequately maintain the rate of Newstart. If the status quo is maintained, they will be doomed to live a pale imitation of the lives the majority of Australians enjoy.”

The submission is avialable here

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