Crikey is collaborating with the Centre for Policy Development to track the major parties’ and The Greens’ election promises. Yesterday, we had a look at carbon pricing and climate change. Today, the Newstart Allowance …

The 11th-hour intervention yesterday of 50 prominent Australians to force the Prime Minister to increase the Newstart allowance in Tuesday week’s federal budget shows that while the national disability insurance scheme dominates the headlines, the related fate of the 13% of Australians living in poverty is unlikely to be forgotten.

Newstart has fast becoming a festering sore for the government, as critics from across the political spectrum line up to demand a rise in the base rate from a lowly $35 a day. The Australian Council of Social Services have even suggested the dole in Australia has become a human rights issue, marshaling international forces to attack the government over its apparent tightfistedness.

Newstart has also been under the spotlight following the Gillard government’s decision in January to switch recipients of Centrelink’s single-parent payment to the Newstart Allowance, and the subsequent introduction of a private members bill to reverse the changes by Greens Senator Rachel Siewert.

In concrete terms, Labor withdrew the more generous parenting payment from 84,000 Australians when their youngest child turns eight. The move drew scorn and condemnation from both the party’s Left faction and the Greens, who said the government was exploiting community hostility towards single mothers to paper over collapses in revenue. Overnight, some of these parents, in the immortal words of Melbourne indie rock quartet Dick Diver, literally found themselves on “Newstart again”.

The Greens’ bill sought to increase Newstart and Youth Allowance by $50 per week. Under the existing policy the maximum amount you can receive under Newstart is $663.70 per fortnight, with the majority of payments equaling $533 per fortnight, or approximately $35 per day.

To be eligible for the Newstart Allowance you must be over the age of 22, under the age of pension eligibility, and unemployed but actively seeking employment. You also need to enter into an employment pathway plan (EPP) with an employment services provider and Human Services. The EPP is a legal document that specifies the services that one is entitled to receive, and refusal to sign can result in a denial of paid income support.

Payments are reduced if the recipient earns more than $62 per fortnight before tax. Additional earnings of between $62 and $250 reduces the allowance by 50 cents on the dollar, and any income of over $250 will reduce the allowance by 60 cents on the dollar.

At its current rate, those living on the Newstart Allowance are below the poverty line, as defined as 50% of median disposable income. The current poverty line in Australia is $358 per week for a single person and $573 per single parent (ACOSS, 2012). The corresponding benefit rates under Newstart per week equal $256.30 for a single person and $266.50 for a single parent. By comparison, the disability pension is $375 a week, and the minimum wage is $590.

A boost to the Newstart payment has support across the political spectrum — conservative economists say it condemns recipients to a life of desperation and depression, while the welfare sector is united in its support for a substantial rise. Business Council of Australia president Tony Shepherd called for a jump during his recent National Press Club address, and progressives have noted the Newstart base payment has not increased in real terms since the Keating government in 1994.

Supporters of the status quo point out that Newstart is not meant to be a long-term solution to unemployment, with some viewing it as more “a short-term payment between jobs”. Its rate is meant to encourage recipients to move quickly from the dole to paid employment.

So where do the major parties officially stand on the dole?

Labor:

The Labor government has not explicitly outlined its plan for Newstart Allowance in its national platform. The only mention of it within the document concerns single parents, and states that such recipients are now allowed an extra $3900 per year as a result of a “more generous income test”.

Labor Transport Minister Anthony Albanese, in an interview with Sky News in January 2013, admitted that increases to unemployment benefits will be considered during the next review of the federal budget. Last month, former human services minister Kim Carr said he sympathised with a jump in the dole, noting Newstart’s base single rate had jumped just $38.50 a week over since the last full year of the Howard government, from $210 in 2006 to $248.50 in 2013. He described the ALP’s decision on single parents as fraught with “difficulties”.

The Coalition:

No official policy on the Newstart Allowance has been released by the Coalition since the last election. However, Opposition Leader Tony Abbott has endorsed the Gillard government’s decision to move single parents from the parent payment scheme to Newstart, commenting in January: “On the fundamental principle, I want to make this very clear, the best form of welfare is work and if we want to most help the families of this country we should encourage more families where at least one parent is working. So, on the basic principle of encouraging people back into the workforce — well, I support that.”

In the 2010 Coalition Election Policy — reiterated in its 2013 ‘Our Plan‘ precis — Abbott pledged to introduce five new policies intended to address employment participation:

  • The introduction of a job commitment bonus for Australians aged 18 to 30 who, after a period of unemployment of 12 months, find a job and keep it for a further 12 months;
  • The provision of a jobseeker relocation payment, intended to encourage the unemployed to take up jobs in regional areas in return for a payment of up to $6000;
  • The introduction of a seniors’ employment incentive payment to encourage employers to hire workers of 50 years of age or older;
  • The introduction of paid parental leave; and
  • A commitment to the Australian Employment Covenant.

Recent comments by opposition families spokesman Kevin Andrews have indicated that the Coalition is willing to support an increase in the Newstart Allowance: “If Newstart is increased, it should not be a long-term entitlement without concerted efforts on the part of the recipient to find work. The ALP has cut training funds, which effectively means people will find it even harder to get the job they are seeking … First and foremost, the Coalition, should we be elected to office, will need to look at the books and determine what is realistic, possible and appropriate.”

The Greens:

The Greens’ social welfare policies are based on four broad principles: a guaranteed adequate income, the right to access adequate resources to allow full participation in society, access to housing, health, education and social services and an adequately resources community and social services sector to create inclusive communities and deliver evidence-based social services.

Rachel Siewert’s bill was designed to increase the Newstart Allowance by $50 per week to fulfil the principles of the Greens’ Party Social Services Policy. An increase in the payment by $50 a week would cost the government between $8 billion and $15 billion. The Greens have also introduced a bill to reverse the financial impact of the cuts to single parent payments pushed through by the Howard and Gillard governments.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey

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