Monday, June 25, 2012

At last. An inquiry into Newstart!

The vote is on Tuesday

The Greens will today push for a Senate inquiry into Australia’s notoriously low Newstart unemployment allowance and are quietly confident they get the numbers.

The $35 per day allowance is one of the lowest in the 34-nation Organisation for Economic Co-operation and Development. The OECD said in 2010 it was so low as to raise questions about its effectiveness in “enabling someone to look for a suitable job”.

Once close to the pension, Newstart has been indexed differently since 1997. The Henry Tax Review found that if the indexation arrangements continued by 2040 a single pensioner would be paid “more than twice as much as a single unemployed person”.

The Greens motion has been drawn up by Senator Rachel Siewert who earlier this year attempted to live for a week on $17.15 per day, her calculation of the Newstart allowance after rent.

After setting aside money for power, gas, bus tickets and payments to keep a phone connected in order to receive offers of work she was left with $10.11 a day for food and other expenses.

The motion sets up a Senate inquiry to report by November 1 on the the “adequacy of allowance payment system for job-seekers and others”...

The Greens have spoken to members of other parties about the inquiry and believe it will get support when it goes to the vote on Tuesday.

An Age survey of government backbenchers in May found that one quarter believed NewStart was too little to live on - a stance backed by business representatives including the chief executive of the Business Council Jennifer Westacott who wrote earlier this year that entrenching people into poverty by expecting them to live on $35 a day was “not a pathway back into employment”.

But lifting Newstart by $50 per week as called for by the Council of Social Service would be expensive, costing $1.2 billion per year.

The Greens motion would allow the inquiry to also examine allowances tied to Newstart such as those for students and carers. The inquiry would be explicitly asked to examine whether the $102.80 per week gap between Newstart and the pension encourages people who should be classified as unemployed and looking for work to have themselves reclassified as disabled pensioners unable to work.

"The inquiry will provide an opportunity to examine some of the core assumptions of the allowance payment system - including whether widening the gap between the payment and the minimum wage has really been an effective incentive into work, the length of time spent on allowances by different cohorts of people and the profile of long term Newstart recipients,” Senator Siewert told The Age.

The government has resisted calls to lift Newstart to nearer the pension saying it was intended to be only a temporary payment whereas the pension was intended to be ongoing.

However in March Treasurer Wayne Swan acknowledged there was “a case about the gap that has opened up,” and in the May Budget his ‘spreading the benefits of the boom’ package included a twice yearly $105 supplement for Newstart recipients worth an extra 57 cents per day.

The Greens are prepared to negotiate about the terms of the inquiry but say they must include the adequacy of Newstart.

In today's Sydney Morning Herald and Age

Draft Terms of Reference

Inquiry into the adequacy of the allowance payments system

That the following matters be referred to the Employment, Education and Training References Committee for inquiry and report by 1 November 2012:

A) The adequacy of allowance payment system for jobseekers and others, with particular reference to;

i) The adequacy of the Newstart payment as an income support payment for jobseekers and the adequacy of all other allowance payments that support a range of recipients who study or provide care;

B) The appropriateness of the allowance system as a support into work, with particular reference to;

i) The effectiveness of the payment as an incentive into work;
ii)The effectiveness of the allowance payment system in facilitating transitions between working and other activities such as studying, caring and retirement or in the event of illness or disability and in helping or hindering recipients to overcome barriers to employment
iii)The impact of the differences between pensions and allowances on the transition between working and other activities;

C) The impact of the changing nature of the labour market, particularly the rise of insecure work and decline of unskilled jobs, on the;

i) Nature and frequency of individual interaction with the allowance payment system;
ii) Over and underpayment of allowances to recipients.

Australian Greens Newstart Background Briefing

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