There seems to be growing momentum for a Newstart raise. We take a look at some of the big claims around the welfare payment
“For many unemployed people, Australia not only doesn’t have one of the best safety nets in the world, it has one of the worst.”
That’s the finding of an analysis of Newstart by the Australian National University’s Prof Peter Whiteford – and comes despite Scott Morrison’s claim in May that Australia’s safety net is a world-beater.
There appears to be more momentum now for an increase to Newstart, Australia’s $277.85-a-week unemployment benefit, than there has been for quite some time.
Guardian Australia has assessed some of the claims around Newstart previously, such as the tricky suggestion that 99% of Newstart recipients get other payments.
But there is still more to say. So consider this, Newstart facts, part two.
Most other OECD countries have an insurance system in which people’s benefits are paid as a percentage of their last wage, while Australia’s payment is a set rate.
Whiteford took the “replacement rate” of each country and, using an Australian who had lost a salary that was two-thirds of the average wage, found that Newstart was the second-lowest payment in the OECD.
When he included rent assistance, which about 40% of people on Newstart get, compared to other nation’s housing benefits, Newstart is “the lowest payment in the OECD”.
That’s the finding of an analysis of Newstart by the Australian National University’s Prof Peter Whiteford – and comes despite Scott Morrison’s claim in May that Australia’s safety net is a world-beater.
There appears to be more momentum now for an increase to Newstart, Australia’s $277.85-a-week unemployment benefit, than there has been for quite some time.
Guardian Australia has assessed some of the claims around Newstart previously, such as the tricky suggestion that 99% of Newstart recipients get other payments.
But there is still more to say. So consider this, Newstart facts, part two.
How does Newstart compare to the rest of the world?
Whiteford’s analysis, which first appeared in a piece for Inside Story, used OECD data to compare Australia’s unemployment benefit against other nations.Most other OECD countries have an insurance system in which people’s benefits are paid as a percentage of their last wage, while Australia’s payment is a set rate.
Whiteford took the “replacement rate” of each country and, using an Australian who had lost a salary that was two-thirds of the average wage, found that Newstart was the second-lowest payment in the OECD.
When he included rent assistance, which about 40% of people on Newstart get, compared to other nation’s housing benefits, Newstart is “the lowest payment in the OECD”.
A department spokeswoman noted that other OECD nations measured eligibility “based on past income, contributions or taxes paid during a person’s working life”.
“In many overseas countries eligibility and rates of payment are determined by how much an individual has contributed to an insurance-based arrangement while working,” the spokeswoman said. “In a number of instances these payments are also time-limited.
“Australia’s payments continue until an unemployed person finds a job unlike a number of OECD countries where the assistance a person receives can reduce or stop even though they remain unemployed.”
Even taking someone who had been on Newstart for five years, Whiteford found Australia was still “below the OECD average” and behind countries such as New Zealand, France, Germany and the UK.
How long do people stay on Newstart?
If you’ve been following the debate around Newstart at all, you might be wondering how two-thirds of people can move off Newstart in less than 12 months, as the government says, while 64% are on it longer than a year, as welfare groups point out.The difference is in two data tables prepared every six months by the Department of Social Services. Or, as Whiteford puts it, the difference between “stock and flow”.
The one the government cites takes all the people who have gotten onto the Newstart payment between January-December 2017. It then counts how many have exited the payment within 12 months. Of the 376,031 “entries”, there were 226,530 “exits”, or 63%.
The other data table takes all Newstart recipients on the government’s books at a point-in-time, say December last year, and measures how long they have been on the payment.
Crucially, that measure takes in people who have been on the payment much longer, even as long as five or 10 years. That table is reproduced below.
“There is a lot of short-term movement but then there is also a fair number of people who are there for a long period of time.”
What if Newstart was indexed to wages, like the pension?
In 1997, the Howard government effectively froze Newstart, tying it to inflation while the pension is pegged to wages. (Howard has since said it’s time to increase Newstart.)That has resulted in six-month increases such as the $2.35 a week extra delivered last year to Newstart recipients like Kylie Ruxton, who labelled it “laughable”.
The ANU’s Assoc Prof Ben Phillips has mapped out how Newstart has fallen behind the pension and average weekly earnings for Guardian Australia. He says Newstart should be pegged to wages.
If CPI measures the cost of living, what’s the problem?
“The CPI applies to a fixed basket of goods and services and adjusts prices down, often quite significantly, for quality change,” says Phillips. “These adjustments don’t reflect the true cost of living for Newstart recipients locking them into a living standard from the 1990s.”Phillips points out that now mobile phones and internet access are an essential part of life, and necessary for the unemployed to fulfil their job search requirements.
“In the 1990s this was not the case,” he says.
So Newstart has hardly risen. What about your politician’s salary?
Some have suggested social security payments should be set independently, just like our politicians’ pay, which is decided by the remuneration tribunal.So how do the two compare since politicians last increased Newstart in real terms in 1994?
Then, the rate of Newstart was $143.20, which is $261.16 in today’s money. That equals $7,446.40 for the year or $13,580.32 in real terms. It’s now $14,448.20.
While the increases for politicians have mostly been in line with wages (starting from a much higher base), in 2012 MPs and senators got a $50,000 yearly pay bump.
Newstart was 10.8% of a politician’s salary in 1994, and it is now 6.85%.
Between 1994 and today, while Newstart increases have been pegged to inflation, a federal politician’s base salary has increased by $85,776.37 in real terms.
No comments:
Post a Comment