Newstart Allowance is the Centrelink income support payment for people who are unemployed. For a single person without dependent children it is currently $245 a week (plus up to $60 in Commonwealth Rent Assistance if they rent in the private rental market).
A client of The Benevolent Society, called Sam, who was on Newstart for years explains how the low rate of payment hindered her ability to find work:
“To present for job interviews I had one set of good clothes, that I bought in a second hand shop, and I wore that to every interview. I was embarrassed because I couldn't afford to get my hair cut. It costs money to travel to interviews, even on a concession card. It got even more difficult when my washing machine broke down and I couldn’t afford to repair it,” Sam said.
General Manager Social Policy and Research, Annette Michaux said people surviving on the Newstart Allowance struggle to meet regular expenses and can’t save for bigger expenses like car registration and insurance, replacement of furniture or whitegoods, or major health and dental care. Costs associated with looking for work, or doing training, may also be prohibitive.
“This inability to meet regular expenses, let alone save, forces people to rely on credit cards or high interest loans, which can rapidly push them into a cycle of deepening debt,” Ms Michaux said.
“Ultimately, this can lead to entrenched poverty, and affect their mental wellbeing and self esteem – in turn making it harder to get into the workforce.
“Almost one-fifth of Newstart recipients have been out of the workforce for more than a year, and if you have been out of the workforce for a long time, there are usually underlying reasons.
“If we don’t provide people with intensive support to address these issues, and adequate payments to help them eat properly and keep a roof over their heads, we’re not going to be able to help them into jobs.”
Sam found that on Newstart she was only able to afford starchy foods like pasta and white bread, which her doctor advised had caused her blood sugar to increase too high.
“I had to borrow money from friends to get me through the fortnight, and when my payment came through, I'd be behind again, because I had to pay back what I'd borrowed," Sam said.
Ms Michaux said The Benevolent Society was particularly concerned about the impact of the low rate of Newstart Allowance on children, especially as the number of parents on Newstart is due to increase in January.
“The biggest cause of child poverty in Australia is parents not being in paid employment, and children who grow up in poverty are less likely to have stable housing, more likely to have poor literacy skills and behavioural or emotional problems, and often go on to be unemployed themselves,” Ms Michaux said.
“From January 2013, many sole parents will have their payments reduced by $118 a fortnight, as they are moved from the Parenting Payment to the Newstart Allowance, and they will also be able to earn only $31 a week before their payment is affected, while they could previously earn up to $88.30 plus $12.30 for each additional child per week’ and still claim their full payment.
“With around half of the sole parents on the Parenting Payment already working part-time, shifting them onto the Newstart Allowance will not be an incentive to work, it will simply reduce their total income and further entrench them in poverty.”
The Benevolent Society will present evidence to the Senate Community Affairs Committee today, based on its submission which calls on the Australian Government to:
Increase the Newstart Allowance and all other allowance payments by a minimum of $50 a week, and index the payments in the same way that pensions are indexed
Hold a comprehensive inquiry into the allowance payment system
Increase the maximum rate of Commonwealth Rent Assistance in line with the recommendations of the Henry Tax Review, and index it to actual rents
Make the participation requirements less onerous for highly disadvantaged unemployed people who face multiple barriers to gaining employment, and provide holistic intensive and individual support to this group
Increase the amount recipients of Newstart can earn from employment before their allowance reduces, bringing it in line with pensions
Increase the Newstart Allowance and other allowance payments before 1 January 2013 to minimise the negative impact on families who will be shifted from Parenting Payment onto Newstart Allowance from this date.
Media Contact: Carolin Wenzel 0411 766 682