Since parliament has resumed three Liberal members - Dean Smith, Russell Broadbent and Andrew Wallace - have joined a group of Nationals calling for an increase in the A$40 per day Newstart unemployment allowance.
Labor has already committed itself to both an inquiry and an increase, although it won’t specify the size of the increase. The Greens have introduced a bill that would increase Newstart by A$75 a week.
Defending the current level of Newstart on Monday, Finance Minister Mathias Cormann told the ABC’s Sabra Lane that the payment was “transitional”.
LANE: Could you live on 40 bucks a day?
CORMANN: The Newstart allowance which is I guess, what you are now raising is a transitional payment for…
LANE: It is, and you’ve diverted straight away. Could you live on 40 bucks a day?
CORMANN: Newstart allowance is a transitional payment. It is a payment that is increased twice a year. It is indexed twice a year. Most Australians who are on Newstart allowance are on that payment for a very short period.
This is not a transition payment anymore. The employment situation in this country has changed from when the unemployment benefits first came in, and it’s certainly changed since 1994. People have to survive on this payment long-term.“
These allowances are not designed as a long-term payment for people, and this is shown by the fact that around two-thirds of job seekers who are granted Newstart exit income support within 12 months.
So what’s the truth? Are most Australians who go onto Newstart on it for only a short time, or are most of those who are on Newstart on it for a long time?
Short term, or long term?
In the same 12 month period, 274,113 Australians left Newstart, 212,320 of them out of the income support system altogether.
If most of those who went on it in that year also went off it in that year then the government would be correct in saying that "two-thirds of job seekers who are granted Newstart exit income support within 12 months”.
But it would leave most of the rest of the 732,100 Australians on Newstart on it for an increasingly long time.
The table below shows that in June 2016, 73% of Newstart recipients were classified as long-term (one year or more), up from 71% the previous June.Source: DSS
Graphically, it is possible to see that in June 2016, there were both
fewer Australians on Newstart than in the previous year (more had left Newstart than taken it up), and
a greater proportion of them on it for more than a year
Number of Newstart recipients by duration on income support, ‘000
- ^ increase (www.theguardian.com)
- ^ inquiry and an increase (www.smh.com.au)
- ^ A$75 a week (www.theguardian.com)
- ^ very short period (www.financeminister.gov.au)
- ^ live on Newstart (www.abc.net.au)
- ^ the bill (bit.ly)
- ^ not believe what the government says (bit.ly)
- ^ responded (is.gd)
- ^ DSS Payment Trends and Profile Reports (data.gov.au)
- ^ 257,494 (bit.ly)
- ^ FactCheck Q&A: is a week's worth of Newstart equal to what a politician can claim for one night in Canberra? (theconversation.com)
- ^ Source: DSS (bit.ly)
- ^ Source: Department of Social Services (data.gov.au)
- ^ International Encyclopedia of the Social Sciences (www.encyclopedia.com)
- ^ “scarring” effect (www.iza.org)
- ^ Department of Social Services (data.gov.au)
- ^ FactCheck: do 99% of Newstart recipients also receive other benefits? (theconversation.com)
- ^ compliance burdens of job search (www.acoss.org.au)
Authors: Peter Whiteford, Professor, Crawford School of Public Policy, Australian National University