Newstart Allowance is inadequate.
There is growing concern in our community that the Newstart Allowance for unemployed people is inadequate. Australia is a prosperous nation, but now has one of the lowest unemployment payments in the developed world.
How unemployment benefits began
When unemployment benefits were introduced in Australia back in the 1940s they were meant to be a short-term payment before people found a job. The payments were lower than pension rates and tight conditions were attached to them, including a willingness to work.
The job market in that era was very different from today's complex modern economy - full time employment for a largely male workforce prevailed.
Changes in our economy include more long-term jobless
Over the past 30 years or so, the job market has changed dramatically, with a decline in manufacturing, a rise in part-time jobs and technological and demographic change. The costs of housing and energy have risen sharply, while wages growth has stagnated.
Long term unemployment has grown, especially for mature-age job seekers who tend to remain unemployed for twice as long as those aged 25 to 54.
Yet, the base rate of the Newstart Allowance has not increased in real terms since 1994 - almost a quarter of a century.
Stark gap between Newstart and pensions
The Newstart payment was excluded from an increase to pensions in the 2009 federal budget, and is indexed to prices only, unlike pensions which are indexed to wages. This means that over time the gap between the Newstart Allowance and pensions such as the Age Pension and the Disability Support Pension has widened.
Single unemployed receive as little as $279.50 a week - that’s $39.93 a day
For a single unemployed person, with no children, aged 22 or over, the Newstart Allowance is just $559.00 a fortnight or $279.50 a week. If they are renting privately they can also receive Rent Assistance of up to $137.20 a fortnight, which is payable if their rent is more than $305.33 a fortnight.
Low payments make hunt for jobs harder
Such a low payment makes it harder for unemployed people to seek work, for example by being able to pay for public transport and clothing to attend job interviews. It also hurts their ability to secure proper housing and, broadly, to live with dignity in a country with our standard of living.
Importantly, inadequate unemployment benefit payments also undermine Australia’s social cohesion, which affects all of us in the community. This issue needs to be addressed as a priority.
- 'Reclaiming social security for a just future' by Dina Bowman. Danielle Thornton and Shelley Mallett proposes five principles to guide our social security system - Brotherhood of St Laurence, 2019
- Deloitte weekly economic briefing by David Rumbens from Deloitte Access Economics says Newstart should be increased: Newstart needs a new lease on life
- Media release: CEDA report April 2018.
- New budget standards show just how inadequate the Newstart Allowance has become – Social Policy Connections – Sept 2017
- Budget Standards: A new healthy living minimum income standard for low-paid and unemployed Australians – UNSW Social Policy Research Centre – August 2017
- "Them" and "us": the enduring power of welfare myths – Peter Whiteford, Inside Story – March 2017
- Business Council of Australia recommends increasing Newstart to Senate Inquiry into the allowance payment system– August 2012
- Brotherhood of St Laurence’s research on work and economic security
- Brotherhood of St Laurence calls on parties to commit to Newstart benchmark before September election – May 2013
- Australian Government information on Newstart Allowance
Share the Pie!
The Share the Pie! campaign highlights the low level of unemployment benefits. It’s an initiative of the Brotherhood of St Laurence and members of the Committee for Melbourne's business and civic leadership program, Future Focus Group.
Find out more.