The Anti-Poverty Network South Australia released this statement on May 11.
This year marks the 21st anniversary of the last time Newstart Allowance was raised in real terms.
Since the 1994 federal budget, when Newstart was raised by a mere $2.95, the level of the payment has stagnated, falling increasingly behind the rest of community, and creating widespread poverty for unemployed people.
Newstart, at $259 a week, or $37 a day, is the lowest unemployment payment in the developed world. It is more than $140 a week below the poverty-line (50% of median income). Even with the maximum rate of Rent Assistance, job-seekers are still over $90 a week below the poverty-line. Newstart is now only 18% of the average wage, and 41% of the minimum wage.
Anti-Poverty Network SA spokesperson Pas Forgione said: “The low rate of Newstart profoundly impacts on the well-being of unemployed people, with 40% of Newstart recipients unable to pay their bills on time or see a dentist, 46% only able to afford second-hand clothes most of the time, and more than half unable to raise $2000 in the event of an emergency.
“And with government data indicating there are roughly five job-seekers for every job, Newstart is not a short-term payment. More than half of the 750,000 unemployed people in Australia, through no fault of their own, are stuck on the payment for long periods, simply because there are not enough jobs to go around.”
A survey of 600 Newstart recipients by the Australian Council of Social Service (ACOSS) highlighted the extent of financial hardship faced by jobseekers. It found 44% of those surveyed reported having unsustainable levels of debt, owing more than they could afford. Many also reported turning off heating and cooling save money.
As well, 32% reported skipping meals over the past year; 25% suffered from “housing crisis” and were spending more than 50% of their income on housing; 20% reported not having enough money for essentials like housing, food, and electricity; and 63% reported that their income had fallen behind the cost of living over the past two years.
Raising Newstart is affordable. The increase could be easily funded through budgetary measures that would not only affect small groups of people but would raise significant amounts of revenue.
Savings generated from scrapping negative gearing ($15 billion saved), eliminating superannuation tax concessions for those on high incomes ($10.5 billion), and closing various tax loopholes for big business, could fund the long-overdue increase to the payments, will billions of dollars leftover.
These figures dwarf the cost of raising Newstart: increasing the payment by $100 a week, to allow it to reach the poverty-line, would cost roughly $4.5 billion a year. A $50 a week increase, called for by ACOSS, the Australian Council of Trade Unions and the Business Council of Australia would cost half of this figure.
Forgione said: “There is no excuse for not raising Newstart. It is affordable, it is the right thing to do, it will allow job-seekers greater access to the resources needed for not only a decent quality of life, but also allow them to more effectively search for work, as business groups have acknowledged.”