Wednesday, June 27, 2012

Start your engines. The Newstart inquiry is Go!

Government and opposition senators have sided with the Greens to bring on an inquiry into Australia’s $35 per day Newstart unemployment allowance, one of the lowest in the developed world.

To report by November, the inquiry will examine the adequacy of the allowance as an income support payment and as means of funding jobsearch. It will also examine the gap between Newstart and the pension which has swelled to the point where Newstart is just 70 per cent of the pension and is on track to slide to 50 per cent.

Newstart is increased twice-yearly in line with the consumer price index, the pension is increased in line with average male earnings. Each pension increase is now more than twice each Newstart increase.

“The review is long overdue,” said Greens Senator Rachel Siewert who herself attempted to live on $17.15 per day earlier this year, her calculation of the Newstart allowance after rent.

“We haven’t had anything like this since the Henderson Poverty review in the 1970’s. It will examine some of core assumptions of including whether widening the gap between the payment and the minimum wage has really been an effective incentive into work.”

“We need to identify the failings of a system that sees around two thirds of people on Newstart stay on it for more than a year. Central to this is the adequacy of the payment itself.”

The move for an inquiry was carried on the voices.. with neither Labor nor Coalition senators prepared to object. In the past the Labor has taken a hard line on Newstart, arguing it is a temporary payment with a low rate designed to encourage people to get off it.

Senator Siewert said the inquiry would examine whether the low rate encouraged Newstart recipients to instead have themself classified as disabled to get the much higher disability pension.

The five-month inquiry will also examine allowances tied to Newstart including those for students and carers.

In today's Sydney Morning Herald and Age

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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