Down and out, and on the dole: why the Newstart Allowance needs a raise

Workplace Relations Minister Bill Shorten has agreed to examine Newstart rates after ruling out a raise to the dole earlier this week. AAP

Why do we have welfare policies that create unnecessary poverty?

Despite a multitude of reports, submissions, public pleas and other advocacy on the problems of Newstart (NSA) recipients, the government has been adamant - until now - that change is unnecessary. This is in spite of unusually wide agreement that most of over 600,000 people on Newstart and related payments cannot survive financially because the payments are too low to cover any levels of decent living. How this is happening was clearly expressed by Kasy Chambers from Anglicare on Tuesday last week.

When confronted with that information, responses from the two biggest political parties - and a very large slab of the commentariat - argue that the best (or only) answer is a job. It’s implied if you can’t manage on Newstart, it must be smokes, pokies, laziness or incompetence that is to blame. Beneath these arguments are the presumptions that people on the Newstart allowance who may have out-of-date work skills, caring responsibilities, or ill health don’t really want to work or contribute to the community around them - and that we have a duty to make them. The inadequacy of the allowance is thus punishment for their individual moral failings – and a necessary incentive for them to get out and get a job.

Maybe there are finally signs of some shift. Last Thursday, Bill Shorten finally agreed to look at the payment levels, albeit as a response to such pressure, rather than recognition of the problems. However, he did say that “it’s important to be clear that we care deeply and that those in Canberra who make decisions don’t have a tin ear to community concerns. It would be very, very tough living on $35 a day. And anyone in my business that denies this must surely be either heartless or utterly out of touch”.

Is this the sign that change may come? The following material examines the prejudices and their origins. Much come from assumptions about those on the payment which are quite wrong and unfair. People already draw these payments under quite restrictive conditions of eligibility and most have serious job search or other participation requirements. They become eligible because of their proven lack of access to other forms of income, including higher payments. While more than half are defined as job seekers, many others are sick or otherwise incapacitated and therefore exempted. Others are in forms of training or job related skill acquisition or have carer and other responsibilities that limit their ability to take on paid work. There are now more sole parents and people with disabilities being put onto Newstart as eligibility for other payments are tightened. These still have limits on the jobs they can find. Yet as a payment category, all of these diverse (often seriously disadvantaged people) seem to be condemned as not worthy of adequate income for a decent existence.

The statistical distributions support the diversity as is clear in the [NATSEM report](http://www.natsem.canberra.edu.au/storage/2-going%20Without%20MCP%20Report_Aug%202012.pdf](http://www.natsem.canberra.edu.au/storage/2-going%20Without%20MCP%20Report_Aug%202012.pdf) just released, done for some churches:

As of June 2012, Australia had 663,000 persons either on Newstart Allowance or job seeker Youth Allowance. Of these, the average duration on some form of income support was 2.6 years. Around one in four remain continuously on income support for more than two years (Australian Government, 2009).

A single person without children on Newstart receives a benefit of $244.85 per week3 4. This equates to around $12,766 per annum … A single pensioner receives $377.75 per week while average weekly earnings for male total earnings is $1298 per week. Newstart for singles equates to 18 per cent of average male earnings and 40 per cent of the current minimum wage ($606 per week). At 40 per cent of the minimum wage there is clearly a very strong incentive to move to paid employment.

A majority of recipients of these payments are clearly disadvantaged in many ways that derive from external factors, not from their own actions. Only 30% are on the payments for less than three months, and often have to wait before they can access the payment; most are on for much longer. The long-term recipients tend to be less formally qualified than the rest of the working age population. They may have difficulties with employers because of age, recent migration, ethnic background or forms of disability. About half of the long-term recipients are not registered with job search agencies, as job seekers expected to actively look for paid work. This suggests they are seen as too old or with issues and problems that make employment very unlikely.

The NATSEM paper shows only 10.6% of NSA/YA persons have a bachelor’s degree or higher, compared with 23% of others. At the other end, 35.4% of NSA/YA recipients have not made it past year 10 compared with 23.4% of the working age population. They also tend to suffer more ill health than higher income groups, as is shown by the most recent AIHW report, which reduces their chances of finding work. The problems of NSA recipients finding jobs are likely to become worse . Sole parent numbers are about to increase in 2013, as an extra 60,000 sole parents will shortly be transferred from their grandfathered payments. These have care responsibilities which employers don’t like. More people with disabilities are being rejected as criteria for DSP are tightened.

The coalitions of those blaming the victim are still making noises. A Centre for Independent Studies op-ed continues the assumptions despite quoting two of their usual suspects supporting a rise.

“There is growing momentum for raising the dole. Even the Business Council of Australia has joined the likes of the Australian Council of Social Service and the Greens in calling for increasing the $245-weekly Newstart allowance, saying it is a barrier to employment and can entrench poverty. This follows unlikely advocates in Judith Sloan and Ian Harper, who have both said the dole is too low compared with the $378 weekly disability support pension, or the $606.40 weekly minimum wage.

The case for a higher Newstart may be stronger for the long-term unemployed. However, any increase for this group should be accompanied by some degree of mutual obligation. After all, there is no point giving more money to people on unemployment benefits without making sure they are using that money to look for work.

A more targeted and prudent option could be a financial supplement, like a job-seeker’s bonus, where payment is conditional on meeting additional job-search requirements, or eligibility for mobility allowance and/or rent assistance could be broadened to include more Newstart recipients who meet the same job-search requirements.”

This view feeds into the assumption that the problem is always with the income recipient, rather than employer prejudices or lack of suitable jobs. The danger is that such a view plays into current beliefs that assume the jobs are there for people with no recent job experiences or certain qualifications.

At any one time, there are about 200,000 vacant jobs listed most of which are for skilled people with recent experience. The question is: why is this type of payment so politically suss? It obviously appeals to the misinformed voter prejudices. Add in the current bipartisan support for imposing income management on many of these recipients, and the stance provides convenient - if irrational - scapegoats for politicians wanting to look tough.

The political classes see more benefit in playing to media and public prejudices against “dole bludgers”, sole parents, and presumed welfare cheats than recognising that the limited jobs available are not suitable for most of these jobs seekers. They ignore the consequences of disheartening, ritualised unsuccessful job seeking and being knocked back or ignored constantly. The government maintains that raising the levels of Newstart would decrease incentives for finding work, but offer no proof that very low payments increase job search successes.

In fact, the reverse is likely as the very limited cash available means no extra money for haircuts, fares, papers, phones or other job related costs. The evidence from the social determinants of health data shows how lack of adequate income can lead to loss of feelings of agency, and therefore the confidence that is necessary to do a good job interview.

These people live on far less than is reasonable or fair. They have become part of an underclass of long-term poor who need to use food services and other welfare support systems just to survive, that has no place in a wealthy society. They inhabit a grey zone of lack of political clout, blamed for the plethora of disadvantages they suffer. As there is no evidence (here or overseas) that lowering payments and increasing conditionality leads to more effective job seeking, why build this into policy?

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