Monday, August 22, 2011

Try living on NewStart. It's getting harder. ABS figures show so.

$237.45 per week and not keeping pace

The buying power of Australia’s unemployment benefit is shrinking.

New figures compiled by The Age show in the past ten years the purchasing power of the fortnightly Newstart allowance has slipped $22 at a time when the buying power of the fortnightly pension has soared $175.

The difference is because of a large one-off jump in the pension in 2009 and because the pension increases in line with average male earnings while Newstart increases in step with the lower consumer price index.

The single unemployment benefit is now just $474.90 per fortnight. The single pension - once identical to the unemployment benefit - is now a much higher $729.30 per fortnight.

Projections prepared for the Henry Review show Newstart shrinking to a mere third of the pension by 2050 unless the rules are changed.

Cost of living figures released by the Bureau of Statistics show Newstart recipients even more disadvantaged than the comparison suggests.

Living costs for Australians on allowances other than the age pension climbed 4.6 per cent during the past financial year at a time when the consumer price index climbed 3.6 per cent... Living costs for Australians on allowances have outpaced the official rate of inflation in all but two of the past ten financial years.

The cumulative effect means the buying power of the unemployment benefit is falling, despite the claim on the Centrelink website that Newstart is adjusted “in line with increases in the cost of living”.

False advertising from Centrelink
“It is galling and simply appalling that the government publishes data on the cost of living for benefit recipients, and then fails to take note of the results and raise payments to job seekers,” said Gerard Thomas of the Welfare Rights Centre.

“The last time the rate of unemployment benefit was raised beyond the consumer price index Clinton was President of the United States, the internet was just an idea and mobile phones were rare and the size of bricks.”

Tougher rules due to start in January will cut the number of Australians assessed as eligible for the disability support pension by around 40 per cent pushing more Australians onto Newstart.

The Organisation for Economic Co-operation and Development warned in November that the single rate of Newstart had fallen below the poverty line, raising “issues about its effectiveness in providing sufficient support for those experiencing job loss or enabling someone to look for a suitable job”.

The Australian Council of Social Service wants the size of NewStart discussed at the October tax summit.

A spokesman for employment minister Chris Evans said the Government recognised being on Newstart was “no easy ride”.

“That’s why our first priority is to help people get a paid job,” the spokesman said.

While the budget had left the single Newstart formula unchanged it had eased the income test for principle carer parents on Newstart.

Published in today's SMH and Age

The OECD on Newstart

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