Government deserts unemployed, poor

Issue 

On January 27, a day before heading off to the exclusive Swiss ski-resort of Davos for the World Economic Forum, deputy PM Julia Gillard met with representatives of charities and social service providers to discuss improving government support for the unemployed.

At the end of the meeting, after dispensing tea and sympathy, Gillard packed her winter woollies and left the charities without one extra commitment, apart from an agreement to hold a another meeting in the future.

In stark contrast to the swiftness with which it spends billions to bailout corporate profits hit by the global economic downturn (witness the $4 billion pledged to ensure credit for commercial building projects), the government failed to address welfare groups' call for an increase in unemployment benefits.

Gillard also failed to commit to any relaxation of Howard-era welfare-to-work policies that penalise unemployed people with payment suspensions of up to eight weeks for administrative breaches.

Government estimates released in November last year predicted that the number of unemployed would increase by 150,000 in mid-2010. Given the accelerating pace of the economy's decline, this is now widely believed to be a wild underestimation.

Welfare groups are calling for a significant boost to the federal government's welfare and unemployment services.

In a detailed submission to the federal government's 2009-10 budget preparations, the Australian Council of Social Service (ACOSS) called for a big increase in government spending.

Increase the dole

In order to "prevent hardship and stimulate economic growth" among the people most likely to be hit hardest by the recession, ACOSS called on the government to increase the Newstart Allowance (the dole) by $30 a week — to $255.

The single pension rate is $281. ACOSS is also calling for the extension of the $500 utility allowance (currently paid only to pensioners) to all welfare beneficiaries. It argued that the maximum rate of Commonwealth Rent Assistance should be increased by 30% (around $15 a week).

The ACOSS submission — titled Social Inclusion and Economic Security — also calls for a redirection of subsidies to child care by, "folding the 50% Child Care Tax Rebate into Child Care Benefit by increasing the base rate, which is the fairest way to help parents meet the cost of child care".

The proposal would see the government paying a standard subsidy for all child care, rather than allowing providers to dictate the subsidy through their pricing. The submission also calls for extra federal money to fund the building of not-for-profit childcare centres in areas of unmet demand.

ACOSS called for increases in funding for specific programs in Indigenous communities and questions the dismantling of the federal Community Development Employment Projects in remote communities.

Its submission also called for increased funding to public transport infrastructure projects — particularly in socially disadvantaged areas.

ACOSS argued for "a major boost to the construction of public and community housing". The submission calls for the establishment of a $7.5 billion Affordable Housing Growth Fund to be spent over four years to increase the stock of public housing by 30,000 by 2012.

However, a report released by the Australian Institute of Health and Welfare on January 27 showed that existing waiting lists for public housing had grown to 200,000 people. With growing unemployment, an extra 30,000 dwellings will not be enough to do more than soak-up some of the additional demand.

The plight of the long-term unemployed is particularly difficult during an economic downturn, ACOSS laments.

"Prolonged unemployment creates severe financial hardship. It is also socially harmful, leading to severe health problems, family breakdown, and the entrenchment of social exclusion in the worst affected communities."

The ACOSS solution is that the federal government pay for more "paid work experience" under a program where bosses are subsidised 100% (or more if they offer training) of their wage costs to give a long-term unemployed person "paid work experience" for six months.

ACOSS's proposal would mean offering long-term unemployed people as free labour to business, with no guarantee of a lasting job at the end of the six months.

In return, unemployed people would receive the training wage, which, depending on the "training", can be almost as low as the federal minimum wage of $543.78 per week.

Minimum wage

In a statement released on January 27, the Brotherhood of St Laurence called on the federal government to increase the Low Income Tax Offset (LITO) from $1200 to $1500 at July 1 2009.

This would effectively increase the tax-free threshold for low income earners to $16,000. While this measure, initially floated by the Australian Industry Group (AID), will marginally ease the tax burden on low-income workers, it must not be seen as an alternative to lifting wages.

The editorial of the January 28 Australian, while applauding the AID's call for the increase in the LITO argued that, if granted, it gives the government a pretext to freeze the federal minimum wage.

"By leaving the pay of low-income workers unchanged in its mid-year decision, the [Fair Pay Commission] could keep more of the most vulnerable workers in jobs", the editorial argued.

However, the "link" between increasing wages and higher unemployment levels is as unproven as the link between increasing government handouts for business and job creation.

Freezing wages and giving bosses wage subsidies to offer "work experience" will not necessarily increase the number of jobs. The only certainty is that it will boost corporate profits.

Increasing the rate of the dole is long overdue. However, pensioners also are grossly underpaid. Bridging the gap between unemployed people and pensioners must mean far more than both groups sharing in poverty.

As a matter of urgency, all government benefits must be raised at least to the level of the Henderson Poverty Line — $378 a week for a single person as at June 2008, according to the Melbourne Institute of Applied Economic and Social Research.

The call from ACOSS for increased government spending on socially necessary infrastructure — whether childcare centres, public and social housing stocks or public transport, is welcome.

If the money is to do more than fatten the profit margins of existing construction companies, however, the projects must remain in public hands throughout.

Workers and residents must have a say in determining what is built and where, so that the spending not only benefits "the economy" but disadvantaged communities also.

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