Thursday, March 29, 2012

How bad are Australia's unemployment benefits? Bad and getting worse.

A report on inequality to be delivered to Treasurer Wayne Swan this morning will label Australia’s welfare system one of the best and most efficient in the developed world, with the exception of unemployment benefits which are the worst relative to community standards and shrinking.

The report, to be unveiled just after Mr Swan takes the stage at the Council of Social Service annual conference in Sydney finds family payments for the low paid Australians are the highest in the OECD. But the Newstart unemployment benefit is the lowest as a proportion of the typical wage.

“Unemployment payments fell from 46 per cent of median household income in 1996 - a little below a conventional relative poverty line - to 36 per cent in 2009-10, a long way below such a poverty line,” University of NSW professor Peter Whiteford says in the report.

Whereas NewStart and the age, disability and carers pensions were once roughly similar, different methods of indexation adopted in 1997 mean the gap is now more than $230 per fortnight, with a single unemployed person getting only 65 per cent of what he or she would get as a disability pensioner.

“This gap cannot narrow over time, it can only grow,” the report says. “The result - if actually continued for 40 years - would be that in 2050 a single unemployed person would be receiving a payment of about 11 per cent of the average male wage, compared to 20 per cent now. An unemployed person would be receiving a payment that was little more than one-third that of a pensioner.”

Newstart increases in line with the consumer price index while pension payments increase with average male wages. The Centrelink website says this means Newstart grows “in line with increases to the cost of living” but the claim is false because the cost of living for beneficiaries has been climbing faster than the CPI...

“Since 1998 the special analytical price index for beneficiaries has risen by about 5 per cent more than the CPI, meaning using this measure their real incomes have fallen,” Professor Whiteford says in the report.

Although Australia’s employment to population ratio is one of the highest in the OECD, prior to the global financial crisis Australia had one of the highest concentrations of joblessness in households where no one works. Around half of Australia’s jobless were living in completely jobless households compared to 22 per cent in the United States and 20 to 30 in much of Europe.

Asked about the pension and Newstart at the National Press Club this month Mr Swan acknowledged there was “a case about the gap that has opened up,” but said: “How we can deal with that in the longer term is a difficult one given that the fiscal pressures and so on the government is facing”.

In today's Age

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