Let’s be clear about what the Turnbull government wants. Internal intrigues notwithstanding – Peter Dutton’s inclination to spread his wings and Julie Bishop’s equal and opposite inclination to clip them – the objective of the next couple of months is plotting a path to political recovery.



The aim is to set some bedrock, then begin to claw back lost ground. In that environment, pesky strictures such as fiscal rules are so yesterday.

While the government is behind in the polls, and on its worst days can barely mask its internal ambitions and animosities, over on the Labor side there is concern the political contest has tightened in recent months.

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There is an instinct that what happens over the next two or three months will determine the outcome of the next federal election.

So what we see right now is a bunch of politicians very focused on short-term imperatives. Of course portfolio work is going on, and doggedly in some cases, but all eyes are also on the politics, and specifically the politics of the second half of 2018. Not for the first time, the long game is hostage to the short one.

While it’s always very unwise as a commentator to suggest you know the character of a budget you haven’t yet seen, this one feels simple, and deliberately so. The focal points of next Tuesday would seem to be income-tax cuts, infrastructure spending, and bits and pieces, including in health and aged care.

It feels like a “please like me” budget.

But lost in the “please like me” mix, though, is one glaring policy item requiring attention.

There is no indication from the government that the Newstart payment will be increased next week. Perhaps we’ll get a surprise next Tuesday – one can be ever hopeful – but right now, it doesn’t look like it.

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Just some basic facts to orient us in the debate. The maximum Newstart payment is currently $272.90 a week for a single unemployed person without children. For singles with a dependent child or children it’s $295.20. Just to plot another point in a mental graph, the national minimum wage is currently $694.90 a week.

If you’ve been around long enough, you’ll know we’ve been running around in circles on this issue for at least a decade: a seemingly unending cycle of expert reports, ignored by politicians, followed by people saying stupid things, followed by people trying to counter the stupid things that get said.

Back in 2012, we learned that governments had been sitting on advice since 2009 that there were growing discrepancies between unemployment benefits and other government allowances because of the different methods by which the payments get topped up. Also in 2009, the Henry review of taxation recommended the benefit be increased by about $50 per week.

It’s probably not necessary to remind anyone it’s now 2018, right?

To call the lack of action on dealing with Newstart a disgrace and a failure of the system doesn’t even begin to cut it.

Boosting the payment isn’t about some bleeding heart agenda, about ensuring that every benefit recipient has a lollypop and a pony and a shoulder rub – it’s about being rational.

Despite various politicians declaring blithely at various times that they could live on $40 per day, that’s just crap.

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I know there are people in Australia who resent other people for claiming benefits, egged on by governments who like to prosecute policy debates in this area by following the time-honoured methodology of the page one welfare cheat smash-up in the Daily Telegraph.

If you are one of these folks discomfited by the idea of your fellow citizens on welfare, my presumption is you’d like them to get a job. I reckon it’s pretty self-evident that would be a positive development for the benefit recipients and the economy.

But imagine trying to get a job interview when you can’t afford credit for your mobile phone, or presentable clothes to wear for a conversation with the prospective boss, or petrol to get yourself across town, and when you lack the networks to overcome your disadvantage.

The poverty trap is obvious. The low rate of the allowance becomes a tangible factor in whether or not you can successfully find work.

This has been the core of the business and economic case for boosting Newstart, articulated very clearly by a range of players in recent years, and as recently as this week, by the respected economist Chris Richardson, who noted the payment had failed to keep up with national living standards for more than a quarter of a century.

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As well as the payment working against the capacity of recipients to find work, there’s another hard-headed argument in favour of a top-up at a time when incomes are being squeezed by low wages growth and the rising cost of living – there would be a modest boost to consumption if the payment went up, which would be beneficial to the economy.

If you think about it for all of two seconds, the case really is compelling.



The government will tell us next week there is sufficient revenue to bake in income-tax cuts and lower tax rates for big companies, citing the little known economic theory known as better out than in. If the government’s own logic holds, it’s a bit hard to comprehend why a boost to Newstart doesn’t qualify for the same attention, except of course, if you think there’s no votes in it.

Again, we can all cross our fingers for a budget miracle.

But the Turnbull government has thus far rejected calls to increase the payment on the rationale that it doesn’t want to encourage people to be content with the stipend and stop looking for work, and also on the basis that Newstart recipients get other forms of income support.

The argument from a succession of social services ministers has been that things aren’t really as dire as the bleeding hearts of the welfare lobby would like to suggest, which strands the conversation firmly in pantomime mode, and conveniently avoids engaging with the expertise in the social services sector and the broad-based coalition in favour of change.

Labor makes the right noises, but thus far has avoided making any concrete commitments.

Now why would that be? Well, the main reason is that boosting Newstart (depending on how much it was increased by, and whether it was also then subjected to regular adjustments) would cost the budget about $3bn a year.

That’s a big whack of cash at a time when Labor wants to reserve fiscal room to offer voters its own version of the income-tax cuts the Coalition will bowl up next week. If it has to account for a particular Newstart increase, its room to move narrows.

What were we saying again about the short term and the long term?



– Katharine Murphy is Guardian Australia’s political editor