Pressure is mounting on the federal government to hike Newstart payments to the unemployed. But an analysis of the unemployment benefits around the world shows Australia isn’t necessarily a terrible place to be out of work.
A single person in Australia who is “looking for paid work” (Centrelink’s euphemistic term for unemployment) is entitled to up to $492.60 a fortnight and could also qualify for $121 in rent assistance a fortnight.
Even the full Newstart allowance combined with rent assistance is $167.40 a week below the poverty line, which is updated quarterly by the Melbourne Institute of Applied Economic and Social Research. The most recent calculation of the Australian poverty line in October sets the minimum income at $474.20 per week including housing costs.
Australia is one of few countries where a person can remain on the dole indefinitely. Across the ditch in New Zealand the unemployed have to reapply after receiving the unemployment benefit for 12 months. A single person in New Zealand receives NZ$229.01 (A$182.74) weekly, A$127.12 less a fortnight than a job seeker on this side of the Tasman.
Australia is also one of few countries among its peers that does not charge a specific tax to employees or employers to fund unemployment benefits. In the UK, Canada, Germany and the US, employees pay to be “insured” against unemployment.
In the UK, employees pay on average 12% of their income as part of their National Insurance Contribution to be entitled to state benefits. The UK’s Jobseeker Allowance is £71 (A$108.13) weekly — significantly less than Australia’s dole, but housing benefits in the UK are more generous. Rates of housing assistance are calculated depending on location and the living status of a person, but the maximum amount for a single person is 250 pounds (A$380.74) per week.
The Canadian Employment Insurance program is not funded by the government but by premiums paid by employees and employers. In a complicated system, Canadians are only entitled to the dole if they have paid the 1.83% tax when they were employed. Their benefit is calculated at 55% of a person’s average insurable income up to C$47,400, meaning an unemployed person could receive up to C$501 (A$481.88) weekly. The period of time that a person can spend receiving the payment depends on the rate of unemployment in their province.
Unemployed Germans have access to €374 (A$473.31) monthly, only if they have previously contributed to the employment insurance scheme. This is almost half the Australian benefit, but the costs of accommodation and heating (it is Germany after all) can be paid in full “if they are reasonable“.
Although jumping through hoops at Centrelink is notoriously time-consuming and confusing, it is nothing compared to the rabbit warren of payments, taxes and food stamps in the United States. The maximum amount paid weekly changes from state to state, from US$247 (A$233) in Louisiana to a possible US$979 (A$926.47) in Massachusetts. It is unclear how many of America’s unemployed receive the full benefits in their home state as rates of payment are calculated by a person’s previous wages and employment.
In most states unemployment insurance can be claimed for a maximum of 26 weeks. Not only does the dole payment fluctuate across borders, but the taxes paid to the system and the eligibility rules to receive a payment are also state based.
The $50 a week rise in Newstart proposed by the Greens would cost the government $7.4 billion between now and 2016-17 and would leave the unemployed on the payment around $100 below the poverty line. The prospect of living on $35 a day is daunting, but perhaps not as daunting as $26 a day in New Zealand or $15 a day in Canada and Germany …