This article is more than 2 years old

This article is more than 2 years old

Bill Shorten says a Labor government would pursue a “root and branch” review of Australia’s welfare payments after a leading economist called for Newstart to be increased by $50 a week.

A senior partner at Deloitte Access Economics and renowned budget conservative, Chris Richardson, has called on the Turnbull government to boost the Newstart unemployment payment in next week’s budget, saying it had become “embarrassingly inadequate” and warned history would judge Australians harshly if it wasn’t fixed.

He said the Newstart payment – which equates to $38.98 a day for a single person – hadn’t kept up with national living standards for more than a quarter of a century, and Australia shouldn’t be proud of setting aside so little to support its most vulnerable.

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“If we had to nominate the single standout fairness failure in Australia in 2018, it is undoubtedly our embarrassingly inadequate unemployment benefits,” Richardson wrote this week.



“Newstart hasn’t kept up with national living standards for more than a quarter of a century, shrinking sharply as a share of average and minimum wages, and relative to the age pension. And it’s set to shrink even further, as it is indexed to prices rather than wages.

“We should add $50 a week to these payments, and immediately index them to wages. That would be $3bn well spent.

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“As you know, we are huge fans of budget repair. And we remain so. But budgets aren’t just about debts and deficits: how well we tax is vital to our prosperity, while the quality of the spending we make is vital to fairness.”

With less than a week to go before the federal budget, Shorten has promised a future Labor government would review the welfare system, saying no one could live on $40 a day.

The maximum Newstart payment is currently $272.90 a week for a single unemployed person, but the cost of essentials such as housing, groceries, energy, transport and clothing is a minimum of $433 per week, according to the Australian Council of Social Service (Acoss).

“I do think there’s a real problem for the government payments for the people at the very bottom of our society,” Shorten said on Wednesday. “That is why Labor has proposed having a root and branch review of Newstart and like-minded allowances and payments.

“Who on earth amongst the government or anyone in the parliament could live on the Newstart allowance?”

Acoss says there are roughly 647,000 receiving the single rate of Newstart and Youth Allowance, and 55% of people who receive Newstart live below the poverty line.

Newstart has failed to keep pace with the national minimum wage, which is currently $694.90 a week for 38 ordinary hours work.



The chief executive of Acoss, Cassandra Goldie, said she was “delighted” with Richardson’s contribution to the debate because Coalition and Labor governments had let the problem fester for too long.

“We have persistently been calling for an increase in Newstart,” she said. “Since the global financial crisis, successive treasurers have introduced policies to move more and more people on to Newstart and off the higher pension arrangements … so they’re denying more people access to the disability support pension and the single parenting payment.

“The gap is about $170 a week, a huge difference between the disability support pension and being on Newstart.”

Goldie said Richardson’s proposal to boost the payment by $50 was still less than was required and called for a $75 rise.

She said a single person on Newstart (plus rent assistance) actually received $96 per week less than the minimum budget needed to afford basics such as housing, meals, and bills, so while Newstart should increase by $75 per week, Rent Assistance should also be increased by $20 per week for a single person.

She said a single unemployed person renting privately should really receive a $95 per week rise so they’re not in poverty.

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Independent South Australian senator Tim Storer has backed Richardson’s call for a $50 increase, saying it’s a good place to start.

Australia should establish an independent mechanism to regularly review and adjust Newstart, he said, in a similar way to the Fair Work Commission setting the minimum wage, which would take away responsibility from the government.

Greens senator Rachel Siewert agrees with Acoss that the “woefully low” Newstart payment should be increased by $75 a week.

“The government has spent years vilifying people on income support – this needs to stop and this budget the government needs to recognise that payments need to increase,” Siewert said. “Keeping those without a job living below the poverty is unconscionable.”

The employment minister, Michaelia Cash, was asked if Newstart’s $40 a day was “cruel” to people on unemployment benefits.

“We focus very much on getting people off welfare and into work. The best form of welfare is a job,” she told reporters.

With Australian Associated Press

