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Increase in payments is ‘affordable’ and urgent to reduce poverty and unemployment in Australia

12 February 2013

The Australian Council of Social Service says increasing low paying income support payments such as Newstart is affordable and urgently needed to stem the worrying trend of growing poverty and inequality in Australia, and significant barriers to employment. 

"We've heard some wild figures bandied around in recent days. The fact is the actual cost is modest and affordable, and absolutely critical if we are to prevent more people falling into poverty in our country," said ACOSS CEO Dr Cassandra Goldie.

"In our Budget submission ACOSS has costed an increase to the single rate of allowance payments, including Newstart and Youth Allowance, at $600 million in this financial year and $1.5 billion in 2014-15. We've also proposed fixing indexation arrangements to prevent allowances falling further behind pensions. This has been costed at $200 million in this financial year and $300 million in 2014-15, bringing the total cost to $800 million this year and $1.8n billion overall in the next financial year.

"This figure is more or less in line with the Australian Greens figure of $2 billion a year, or $8 billion over four years, not the $13.1 billion contained in the Federal Finance Department's estimates. The department's figure is misleading as it includes other costings for things that are not being called for.

"ACOSS understands the current fiscal constraints, however, this modest cost is well and truly affordable. Moreover it is vital if we are to begin to tackle what's becoming a worsening picture in Australia.

"The most recent ABS measure of income distribution shows the share of equivalised household income for low income households fell by 0.7 (a 6.7% change) and high income share rose by 2.6 (6.9% change), form 1997-8 compared to 2007-8.

"Preliminary figures extracted from the Household, Income and Labour Dynamics in Australia surveys by the Melbourne Institute of Applied Social Research published recently, show there was a 2.2 per cent increase in inequality from 2009-10 to 2010-11. Using a scale to measure income inequality, where zero is perfect equality and one is perfect inequality, in 2010-11 the figure - called the Gini coefficient - was 0.325. The previous year it had been 0.318, and the year before that 0.305.

"Our own Poverty in Australia report released late last year revealed 2.2 million people living in poverty in Australia, including one in six children. The report found the proportion of people in poverty rose by approximately one third of a percent from 2003 to 2010. Significantly it found that people at highest risk are the unemployed and those on income support payments. 

"This deteriorating picture is also reflected in reports from leading charities and community welfare organisations who are struggling to keep up with demand for their services.

"We simply cannot wait any longer to deal with what's fast becoming a looming problem. It's time for bipartisan support to deal with this issue. It's about priorities, and we call on all major political parties and the Independents to agree on increasing the allowance payments for singles by $50 a week as recommended by the Henry Tax Review in 2010.

"People who are unemployed are now averaging two years before getting back into paid work. One of the key reasons is that people are so impoverished that they cannot sustain the effort needed to secure paid work, including addressing skills and retraining and other measures. We are also concerned that the Government appears to have frozen on the most successful programs to assist people back into the paid work force, through paid work experience.

"Currently people living on Newstart for example are living about $74 below the poverty line. The modest increase would still leave them below the poverty line. It would however make a big difference in their lives and reduce growing poverty and inequality in our nation," Dr Goldie said.

Media Contact: Fernando De Freitas 0419 626 155

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