Government rejects criticism of Newstart

The Australia Institute says Newstart is the third-lowest unemployment benefit in the OECD for a newly unemployed minimum wage worker (ABC News/Michael Janda)

The Morrison Government has defended the Newstart allowance as it faces criticism sparked by research showing it is one of the lowest unemployment benefits in the developed world. Source: The Guardian.

Facing calls for a $75 a week increase, which would cost $3.3 billion a year, the Department of Social Services said the Australian social security was a “safety net” that “differs markedly from the social insurance approaches of most OECD countries”.

In a submission to a Senate inquiry into Newstart, the Government said it intended to “focus on strengthening the balance sheet and reducing debt” once the budget returned to surplus and pushed back against criticism the payment was indexed to the consumer price index.

The accounting firm KPMG is among organisations that have put the spotlight on indexation of the dole, telling the Senate inquiry Newstart would be only $90 per week today if it was benchmarked to inflation after World War II. Newstart is currently $279.50 for a single person.

But the Government argued tying benefits to inflation was a “widely-used approach to ensuring that payment rates maintain their value in real terms”.

“For example, Canada, the United Kingdom and the United States generally adjust social security benefits according to changes in the CPI for a preceding period.”

Analysis by the Australian National University academic Peter Whiteford has found Newstart is the second-lowest payment in the OECD for a short-term unemployed person on two-thirds the average wage and the lowest when housing benefits are included.

Analysis from the Australia Institute, also provided to the inquiry, said Newstart was also the third-lowest unemployment benefit in the OECD for a newly unemployed minimum wage worker. It also said Australia performs “relatively poorly in terms of maintaining the unemployed when compared with poverty lines”.

But the Government dismissed the comparisons, saying most countries required contributions from employers and employees or were paid for by higher taxes.

It has remained steadfast in its opposition to an increase to Newstart, but did increase the age pension through changes to deeming rates.


Morrison Government defends Newstart amid criticism it is among lowest welfare payments in OECD (The Guardian

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