Newstart traps people in poverty and many employers say it acts as a brake on searching for jobs. That’s why the Business Council of Australia called for an increase as long ago as 2012. No one thinks the pension is generous, but Newstart at around $40 a day is now $20 a day lower than the age pension.
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KPMG’s submission to the Senate inquiry said that Newstart should be increased by nearly $100 a week, arguing the low rate of the payment “tears at our inclusive social contract”. They state: “Where the objective for Newstart is that it should be sufficient to meet the basic needs of a person who is required to spend time and money actively seeking work, it is hard to see how it can achieve this objective at less than two-thirds of the amount deemed to be reasonable for an age pension recipient who would have no such obligations."
While all those receiving Newstart would love to get a job or pick up work from time to time, increasingly a job is not the sole solution to escaping poverty. In 2015-16, nearly 970,000 people who had wages as their main source of income were still living in poverty. That’s due to a combination of slower wage growth and the rise of part-time, insecure or precarious work, where there just isn’t enough work available.
The latest ABS unemployment numbers for August 2019 tell us more than 1.1 million Australians, or around the same number of people who live in Adelaide, are under-employed, meaning they can’t get as much work as they’d like. This is in addition to the more than 700,000 who are officially unemployed.
While interest rate and tax cuts don’t seem to be boosting our flagging economy, raising Newstart by $75 a week would provide a much-needed stimulus with every dollar spent, especially in regional areas that are doing it tough in the worsening drought. This Anti-Poverty Week, raising Newstart isn’t only the right thing for our federal government to do, it's the smart thing to do.
Toni Wren is the executive director of Anti-Poverty Week, which started on October 13.