When the Gillard government proposed removing John Howard’s grandfathering of the Parenting Payment, moving parents onto Newstart when their youngest child turned six if they had a partner and eight if they didn’t, the parliament’s Joint Committee on Human Rights held a public hearing into the legislative changes.
In their report, the Committee members expressed concern ‘that the affected single parents would be able to maintain access to appropriate levels of social security support if placed onto Newstart’, and that it would be ‘premature for the government to introduce these measures’ before the completion of a separate inquiry into the adequacy of Newstart. The findings of the Newstart Inquiry were not tabled until November 2012—nevertheless, against the recommendations of the Committee on Human Rights’ interim report, the Gillard government pressed ahead with the amendment in October that year.
The Newstart Inquiry, conducted in 2012 by the Senate Education, Employment and Workplace Relations Reference Committee, questioned whether Newstart provided recipients with ‘a standard of living that is acceptable in the Australian context for anything but the shortest period of time’, while noting that more than 62 per cent of Newstart recipients at the time of the inquiry had been receiving the payment for longer than twelve months. The committee expressed ‘particular concern’ at the loss of income experienced by single parents moving from Parenting Payment (Single) to Newstart, but fell short of recommending that Newstart be increased.
In its submission to the Newstart Inquiry, the Australian Council of Trade Unions provided data which showed that the real value of Newstart has remained almost constant since the payment was introduced in 1991, when it replaced the old Job Seekers’ Allowance. Adjusted for CPI (consumer price index), Newstart was worth $233.80 a week in 1991, and just $244.85 more than two decades later in 2012. Moreover, as ACOSS stated in its own submission, Newstart has fallen from 92 per cent to 72 per cent of the poverty line, and in 2012 it represented a meagre 21 per cent of the full-time median wage.
While the real value of Newstart has hardly budged, ACOSS also noted that Newstart’s purchasing power had fallen by $8 a week since 1991, because the cost of rent and utilities has risen faster than the CPI. Indexing Newstart payments to CPI—an initiative of the Howard government—rather than to average male earnings, as aged and disability pensions are indexed, means that Newstart payments fall further behind pensions and average wages every year. Even with the addition of Rent Assistance, which the majority of Newstart recipients are eligible for, Australia has one of the lowest rates of unemployment benefit in the developed world. At the time of the inquiry, the United States—not otherwise noted for its generous welfare safety net—had an unemployment benefit that was set at 47 per cent of the average wage, while in European countries such as Germany and France unemployment benefit was 64 per cent of average earnings.
The Business Council of Australia has described Newstart as “a barrier to employment” that “risks entrenching poverty”. The OECD has expressed concern about the effectiveness of Newstart in “enabling someone to look for a suitable job”. In 2016, KPMG advocated a $50 per week increase in Newstart while a more recent report from Deloittes analyses the impact of raising benefit rates by $75 a week.
The Productivity Commission released a Research Paper on inequality in August which states that “Nine per cent of Australians (2.2 million people) lived below the relative income poverty line (half of median disposable income) in 2015-16” with “Children, lone parents, those with a disability, the unemployed and Indigenous Australians most at risk of multiple deprivation.” It also stresses that “Child poverty is of particular concern because of the damage poverty may do to a child’s development, their future productive capacity, and their life prospects more generally.”
Labor’s revised draft national platform, issued in October, states “The current rate of Newstart is too low and is a barrier to people finding work and participating in society,” promising to hold a “root and branch” review into the adequacy of Newstart and other benefits.
How many reviews will it take before they actually act on their findings?
Julia Gillard made the mistake of not addressing this problem. Will Bill Shorten make the same mistake?