Anti-poverty activists demand Newstart rate be raised

August 13, 2018
In terms of meeting the subsistence needs of the unemployed, Newstart has fallen well behind where it stood almost a quarter-century ago.

The Newstart Allowance received by Australia’s jobless (if they are lucky enough to get it) has a base rate of $273 a week. The last time it was raised relative to the Consumer Price Index (CPI), the standard measure of inflation, was in 1994.

Last year, the Melbourne Institute of Applied Economic and Social Research calculated the poverty line for a single adult at $510.71 a week (including housing costs). That corresponds to a present figure of about $521.

This means Newstart is now $248 a week below that miserably low poverty line.

In terms of meeting the subsistence needs of the unemployed, Newstart has fallen well behind where it stood almost a quarter century ago.

Anti-Poverty Network SA (APNSA) has been campaigning for a substantial rise to Newstart for many months. Its activity has included preparing submissions to a Select Committee on Poverty convened by South Australia's Legislative Council.

APN activist and Green Left Weekly contributer Renfrey Clarke put in this submission to the committee.


Unemployment benefits in Australia are indexed to the CPI. They are supposed to keep pace with inflation.

Does this mean that the living standards of Newstart recipients have stayed more or less constant since 1994, when the federal government last conceded a real (after inflation) increase?

A little research shows this is not the case.

The consumption patterns of people living on Newstart (current base rate $273 a week) are sharply different from those even a little better off. When you are on Newstart, just a few items make up most of your outlays.

The latest Cost of Living Update, issued by the South Australian Council of Social Service (SACOSS) on August 6, details the weekly budgets of five Newstart recipients. Across these budgets, rent, groceries and electricity together make up more than 69% of total spending.

How have those costs (rent, food, electricity) changed, in real terms, over the past few decades?

According to Australian Bureau of Statistics figures, private renters between 1994-95 and 2013-14 experienced a 62% rise in average weekly housing costs, after adjusting for inflation.

About 40% of Newstart recipients get a (modest) rent allowance. But this is indexed to the CPI, not to rent rises.

It is true, of course, that the general rise of 62% in real rents may be greater than the rise for small rooms in remote suburbs. But still, the figure is highly indicative.

What about food?

Mercifully, food price rises have stayed close to the CPI throughout the decades since the mid-1990s.

As for electricity, we all know how those prices have soared in recent years.

Retail electricity prices generally matched rises in the CPI from the mid-1990s until 2007. Then, they went wild.

Quoting Australian Competition and Consumer Commission figures, the Guardian reported last October 15 that between 2007-17 residential electricity prices around the country rose by 63% on top of inflation.

That’s bad enough — but we are in South Australia.

The above-cited SACOSS report found that since December 1994, Adelaide electricity prices have risen by 292%, compared with a rise of 80% in the CPI — that is 212% above inflation.

To offset this, Newstart pays an Energy Supplement of $4.40 a week.

So, when measured against the subsistence needs of the unemployed, Newstart has not remained constant in real terms since 1994.

In fact, it has declined drastically. See if you can afford to turn on a heater when you are trying to live on $39.70 a day.

If you are on Newstart, in recent times federal governments have granted you permission to freeze. That is if you are not surfing the couches of relatives and friends, after being evicted due to uncompensated rent rises.

Time, perhaps, for the South Australian government to call on Canberra to raise the rate of Newstart?

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