Newstart debate must focus on people not politics

A new report from University of Adelaide economists has added to the national debate about the Newstart Allowance, arguing that Newstart should be increased by as much as $120 a week and urging politicians to address the issue with maturity.

The report, Newstart Allowance: is it time to raise it?, by the University’s South Australian Centre for Economic Studies (SACES), urges governments to take a more innovative approach to long-term unemployment.

The report highlights that the majority of long-term unemployed are older Australians. It says an increase in Newstart would reduce the poverty gap for unemployed people, better resourcing them to find work.

SACES Executive Director, Associate Professor Michael O’Neil, says governments should concentrate on giving unemployed people the skills and support they need to get jobs, rather than making the unemployed easy targets for political point scoring.

“Recent comments in politics illustrate an all-too-pervasive notion of the jobseeker as ‘dole bludger’, a recipient who is portrayed as a drain on the taxpayer and the Budget, and who is undeserving. This is despite the fact that many unemployed individuals have a long work history, have paid taxes, and often through no fault of their own find themselves unemployed. A good example of this is the thousands of car workers who lost their jobs when Australia’s automotive manufacturing industry collapsed,” Associate Professor O’Neil says.

“A different attitude and approach is required by governments, which have tools available to them that could be used to good effect. These include facilities for further education and training; incentive payments for employers who sponsor new staff and training; and regional, community and industry initiatives that address intergenerational barriers to employment.

“Some of the most innovative and successful training and job placement programs our centre has evaluated in recent times include skills training, employment placement with post-placement support, employment involvement, and community organisation involvement in addressing regional unemployment,” Associate Professor O’Neil says.

The Newstart Allowance currently stands at $278 a week. The SACES report recommends an increase in Newstart of between $80 and $120 a week.

In a detailed analysis, SACES examined the relationship between the Newstart Allowance and Average Weekly Earnings since the introduction of Newstart in 1991.

At its current level of $278 per week – a figure that has been indexed only for inflation in the past 25 years – Newstart as a percentage of Average Weekly Earnings has fallen from 23.5% to 18.8% for males and from 35.3% to 27.4% for females.

“If the relativities between Newstart and Average Weekly Earnings had stayed the same, the Newstart allowance would now be $347 and $356 per week for males and females respectively, compared with the current rate of $278 a week,” Associate Professor O’Neil says.

After comparing the Newstart Allowance against various financial and social indicators, Associate Professor O’Neil says SACES concluded that the allowance should be increased to between $360 and $400 a week.

“An increase of between $80 and $120 per week would be justified on the basis of equity for the recipients and in reducing the poverty gap many Newstart recipients face, while it would also help the unemployed to be better resourced for finding paid employment,” he says.

“There would appear to be general agreement on the need to raise the Newstart Allowance from a wide range of stakeholders, including from the business community, the welfare sector, academics and researchers, and the wider community.

“Only the Federal Government stands outside this accord.”

The SACES report on the Newstart Allowance will be forwarded to the Senate Standing Committee on Community Affairs, which is conducting an inquiry into the adequacy of the Newstart Allowance and related payments.

The analysis of the Newstart Allowance is the latest major piece of research undertaken by SACES for the SACES Independent Research Fund, a collaborative venture between SACES, the University of Adelaide and prominent members of the business community.