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Federal

May 4, 2012

All doled up, nowhere to go: when the cost of living really bites

Joe Hockey's recent speeches calling for a reduction in future expenditure on welfare was targeted at "expectations" of welfare recipients -- their welfare payments, writes Lionel Elmore.

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There was plenty of talk in Crikey yesterday about the cost of living and whether us whingeing Australians need to realign our expectations. All heavily qualified with a nod to those in “the bottom quintile of incomes,” as Bernard Keane put it, “who spend a much bigger proportion of their income on necessities than the rest of us. But even they have enjoyed nearly 20% growth in real income over the last 30 years.” But what about the people with no prospect of a regular income?

Eva Cox acknowledged the bracket of people who really are #doingittough (yes a hash tag on Twitter started trending) — people beyond the bottom quintile of incomes who are attempting to live off Newstart — when she wrote, “it is obvious that those dependent on dole payments are grossly underpaid.”

A single person on welfare benefits must live on less than $17 per day — the lowest rate in the OECD. Do your own budget for that amount and see how you could live and pay for rent, food, gas, electricity, clothing and food, let alone for a vehicle, a phone and internet connection. On Newstart, a traffic fine or even registration for a vehicle can mean disaster. Income management of this low amount simply makes life almost impossible. It just does not add up, as Greens Senator Rachel Siewert has discovered.

Joe Hockey’s recent speeches calling for a reduction in future expenditure on welfare was targeted at “expectations” of welfare recipients — their welfare payments.  The administration of all forms of welfare has grown like a bureaucratic triffid, feeding public angst about dole bludgers and political opportunism as successive federal governments make it “harder” to get welfare — and more costly to the taxpayer.

From “workplace providers” to private security firms and legal costs in taking welfare recipients to court — even their imprisonment — this has become a barely accountable taxpayer-funded “industry” that generates wealth from welfare but not for its recipients.

Recently The Australia Institute released the results of a survey on community attitudes towards welfare payments, which showed that Australians support an $84 increase to the Newstart allowance.

When asked how much money a single adult needs to meet the cost of living, respondents indicated that on average $454 is required — almost twice the amount received by Newstart recipients.

When asked how much a single unemployed adult should receive per week from Centrelink, respondents indicated that on average $329 would be desirable.

Respondents were also asked how their spending patterns would likely change if they were required to live on the Newstart allowance. The vast majority said that they would drive their car less (83%), use less energy (77%) and buy less fresh food (63%). Welcome to the slice of population that can at least afford to whinge about how much the cost of living bites.

Recently retrenched Toyota workers seeking unemployment benefits face a daunting maze (Ford is also facing layoffs). The company they worked for was far more generously subsidised by taxpayers than they will be as just members of the unemployed.

First, they’ll have to make a phone call, which can often take between 45 minutes and two hours to be answered. Then to qualify (with payouts) they will find that they have to erode a considerable amount of their savings before they are eligible — reducing them to $3000 if they are single and $6000 if they are married.

It gets complex rapidly with varying “preclusion” periods listed in the “Retrenched or leaving your job“. If their spouse is working, they will not be eligible — the spouse income effectively subsidising the retrenchment.

If they do qualify, they will have to provide all the required documentation and identification — bank account details, loan obligations, value of all their possessions, etc. On Newstart there is also a bewildering array of obligations: from attending meetings with workplace providers, to the requirement to provide lists of jobs applied for in an unemployment diary, to personally handing in forms once a fortnight. Breech any of these conditions and a significant portion or all of your income can be suspended — forcing people into poverty and instantly making dependent children and others vulnerable.

The Australian Bureau of Statistics through interviewing a few thousand people “randomly”, neatly avoiding unemployment “hotspots”, includes those who work as little as an hour per week as employed. There is no relationship between the unemployment statistics and reality. Nobody can live on one hour’s worth of work per week. Many people on welfare legally work one to a few hours per week in a desperate attempt to top up their income — single mums with kids over a certain age are being forced to as condition of receiving benefits.

These people are not employed. Neither Centrelink nor the numerous private contracting agencies, from workplace providers to private investigators, have incentive to do other than increase the pressure on welfare recipients, enlarge the bureaucracy and the costs to the taxpayer.

Perhaps Hockey could achieve massive savings on welfare by the abolition of Centrelink and the workplace provider industry and treating with respect people who receive benefits as they do companies that pay tax and get subsidies. A standardised rate for all benefits with no means tests for pensioners would be possible with the realisation that although pensioners are not “working” as such, they employ many hundreds of thousands of others to do the things they used to do when they were able — especially when they get a decent pension.

It could also recognise the vast amount of unpaid work that pensioners, unemployed and other people on welfare do when they are not forced to fill out pointless paperwork, sit on phones for hours, attend meetings or the modern equivalent of paint rocks white in work-for-the-dole schemes.

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5 comments

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5 thoughts on “All doled up, nowhere to go: when the cost of living really bites

  1. TormentedbytheDs

    I get $199.00 a fortnight as my wife earns $23,000 a year part time and I get another $5,000.00 from the remnants of my business. Luckily, it seems I may have a job in the next few weeks. I am trying not to get to enthusiastic as hopes have been dashed many times before. It is an entry level help desk role in an industry I have been in for twenty five years. I am to old for work for the dole but I have done all the job agency appointments with the list of jobs applied for most with no reply. The agency, in all this time, has never come up with one potential job. All they seem to want to do is push “training courses” which they get paid to run by the government.

    Under the Australian Bureau of Statistics rules, of course, I am not even unemployed.

    I don’t have to pay a mortgage or rent and I live in the bosom of a large and generous family so I am better of than most. How anyone, with no other resources, could survive on the dole I find impossible to imagine.

    By the way, am I correct that the one group not being compensated for the carbon tax is the unemployed?

  2. cpobke

    undoubtedly very hard to live of newstart.
    Newstart is indexed to CPI so in theory, so no more difficult than in
    the past unless price changes favour luxury goods compared to
    necessities (there is probably some good systematic research on this,
    but i am not aware of it off the top of my head).
    A few points of correction. As far as i know:
    – Newstart allowance for a single adult is $243 per week. This equates
    to around $35 per day, not $17.
    – Partner’s income earned in Australia does not affect Newstart payment
    – You don’t have to reduce your savings to any specified amount to get
    newstart, but if it is above $3000 (for single) you would have some
    waiting period. For a large amount of cash savings this would be a
    maximum of 13 weeks.
    -the requirement on single mothers you point to would only be in effect
    when their youngest child in above 6 years of age (so at school)

  3. cpobke

    Actually, i am reliably informed i am mistaken on partner’s income,
    which will reduce newstart entitlement.

  4. Scott Grant

    I have often thought that every federal politician, in order to get paid, should be required to follow whatever rules are in force at Centrelink for the Newstart allowance. Especially the bits where payment is suspended for breaching the rules. And all paperwork to be done by their own hand. I imagine the rules would rapidly become less onerous and more sane.

  5. lilac

    @cpobke
    So Newstart is $243/week would you mind telling me how it is possible for anyone to be able to service a mortgage or pay rent, buy food and pay for utilites on that? Let alone the of purchasing public transport tickets to attend job interviews as running a vehicle is beyond the persons means.

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