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Issue #1554      4 July 2012

Long-awaited inquiry into Newstart Allowance

The National Welfare Rights Network has welcomed news that the Senate has voted to support an Australian Green’s initiated inquiry into the adequacy of Newstart Allowance and related payments for young people and students.

“It’s about time that we dragged our system of income support for unemployed Australians into the 21st century,” said Maree O’Halloran, President of the National Welfare Rights Network. “If we don’t act now, unemployment benefits will be just 11 percent of the average wage by the middle of this century.”

She said that the existing income support arrangements for unemployed Australians are not just failing to meet the needs of those out of work, but they are also failing our economy.

“Far too many people are languishing on inadequate benefits and with insufficient support to help them into sustainable employment. With the current rate of Newstart falling in comparison to average wages, the minimum wage and $133 a week below the austere rate of pension there is little merit in the argument that a payment of just $35 a day is a disincentive to work.

“We are pleased that the inquiry is looking into job seekers interaction with agencies such as Centrelink.”

Ms O’Halloran said it was also “sensible” that the inquiry is looking at Centrelink overpayments which can operate as a disincentive to work and take a job. She noted that Newstart is not just inadequate, it is also a debt trap for many, because of the way the income reporting rules work. These problems are connected to the growth in the casualised workforce with people juggling multiple employers and having to calculate earnings from different sources.

“Another major concern is the way the income support system works and the structure of income reporting – you have to report earnings when earned even if they have not yet been received.

“This makes it often impossible for a person to report within the 14 days required by Centrelink. Because they don’t get paid, have no income, yet their allowance is reduced.

“The allowable earnings threshold of just $31 for Newstart which has been increased by just $1 in over 30 years, needs to be examined. The indexation of benefits only to the Consumer Price Index means that the gap between payments continues to grow. This is especially a problem for young people on Youth Allowance which is increased only once a year.”

“As more and more people are being pushed onto lower-payment allowances by a government that wants to cut costs, it’s critical that the issue of payment adequacy is addressed.”  

Next article – Muslim Brotherhood are Western proxies

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