Tuesday, November 16, 2010

NewStart is $231 and shrinking relative to other benefits. Can anyone else see a problem?

Australia Institute
It's plain enough to those of us piling off NewStart onto the Disability Pension never to work again

So fast is the unemployment benefit shrinking relative to other benefits that by the middle of the century a single unemployed Australian will receive just one third of the age pension.

The calculation from the NSW Social Policy Research Centre comes on top of a warning from the Paris-based Organisation for Economic Co-operation and Development that the so-called NewStart allowance is already so low as to raise "issues about its effectiveness" in supporting the unemployed and helping them to find jobs.

Previously close, the NewStart and pension rates began diverging in 1997 when the Howard government indexed pensions to moves in male total average weekly earnings but left NewStart indexed to the consumer price index.

A one-off $1690 jump in the single pension in 2009 increased the gap further.

The OECD says a single unemployed Australian on NewStart now receives only 68 per cent of the pension.

The Treasury Intergenerational Report assumes pensions will rise 4 per cent per year on average for the next four decades but NewStart allowances only 2.6 per cent. Professor Peter Whiteford from the University of NSW says that if that happens NewStart will shrink to "little more than one-third of the pension" and just 11 per cent of the male wage...

"It is making the Disability Support Pension increasingly more attractive," he told the Herlad. "If they have been looking for work for a few years and have a health problem the incentive to be redefined as disabled gets greater and greater."

The Council of Social Services yesterday called on the government to bridge some of the gap by immediately lifting NewStart $45 per week to $276.

"If an a international organisation such as the OECD can see a problem with the size of Australia's unemployment benefit there must really be a problem," said President Cassandra Goldie said adding that Henry Review had reached a similar conclusion.

The OECD paints a picture of one-way traffic from NewStart to the Disability Pension saying more than one-third of taking up the disability pension do so from NewStart, but that most of those leaving it do so when they die or move on the age pension.

Employment Minister Chris Evans had little sympathy for the OECD's arguments yesterday, saying through a spokesman the best way to help the unemployed was "to assist them to find employment, not to increase income support payments".

Published in today's SMH and Age

OECD on NewStart

Whiteford - Architecture and Outcomes of the Transfer System

Related Posts

. Could you live on $32 a day?

. Lets' put it another way - could you live on $11,682 per annum?

. Extrapolation is fun