Unemployment benefits loan scheme?

Issue 

By Carla Gorton

The Howard government's plans to shift the cost of social spending from government to individuals will bring about a major increase in the personal indebtedness of low income earners.

Students got a taste of this user-pays approach when the previous Labor government introduced the Higher Education Contribution Scheme (HECS) and the optional loans scheme for Austudy recipients. University students who incur the current rate of HECS and take out the maximum Austudy loan graduate with a $30,000 debt for a three-year degree.

The Liberals appear to want to extend this mechanism. According to Grant Thoneman from the Welfare Rights Centre in Adelaide, a non-optional loan scheme for unemployment payments has even been rumoured. Such a scheme would allow the government to maintain the current level of unemployment benefits, but individuals would incur a personal debt for the amount received, which they would have to repay if and when they began work.

While still only a rumour, the loans proposal is not so far fetched given the Coalition's other policies. The controversial two-year ban on Social Security payments for migrants came into effect as of April 1 without legislation.

The Department of Social Security has also announced two major policy changes from April 1 which severely restrict special benefit payments for new migrants. New migrants will be eligible for this benefit only if they are in financial "hardship" as a result of "a significant change of circumstances after arrival, for reasons beyond the control of the migrant". "Hardship" has been defined to ensure that migrants will be eligible only when they are down to their last $350.

According to Maureen Germein, from the Flinders University Welfare Office, these policy changes are contrary to the current law and may be found illegal if challenged in court.

The government has also moved to toughen the Newstart activity test, expected to save $331 million over the next three years. These savings can be made only by increasing the number of people who are denied payments for failing to comply with activity agreements. Last year more than 100,000 people were "breached" for an average of four weeks. Statistics released by DSS and DEETYA show that 26% of those on the Youth Training Allowance were breached in 1995.

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