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Newstart comparisons ‘misleading’

10 September 2012

The Australian Council of Social Service today rejected as misleading a comparison in a Federal Government submission which has resulted in media reports stating that people on Newstart with children receive more money than the minimum wage.

The Government Departments' submission to the Senate Inquiry wrongly implies that the overall ‘package' of income support available to families with children, when you include supplementary payments such as Family Tax Benefits and Rent Assistance, is more than they would get on the minimum wage.

"This comparison is misleading because it ignores the fact that families on a single fulltime minimum wage also receive the same supplementary payments as an unemployed family, which means they actually have 10% to 25% more income, not less," said ACOSS CEO Dr Cassandra Goldie.

"Any comparison of the incomes of unemployed and minimum wage-earning families that ignores this is highly misleading.

"This comparison has led to some media reports that couples on Newstart with children are receiving $300 above the minimum wage. This is factually correct but misleading and belittles the enormous struggle of people trying to live on Newstart payments, especially if they are also raising children.

"Supplements are only paid to people facing extra costs such as children and private rents, and in most cases they do not cover those costs. The facts are that:
• A single adult on Newstart Allowance gets $245 a week ($35 a day),
• If that person rents privately they get up to another $60 a week but the rent for a one bedroom flat is typically more than $150 in most major cities.
• If they have 2 primary school age children they get another $250 dollars but that's hardly enough to raise 2 children on your own.

"Some people on Newstart Allowance also receive minor supplements such as the $3 per week Pharmaceutical Supplement, but the reality is that they miss out on many of the larger supplements pensioners get: they don't for example receive the $30 per week Pension Supplement or the $10 per week Utility Allowance, and very few receive the $31 Pensioner Education Supplement.

"Try as people might to twist the figures, the cold hard fact is that single people on Newstart Allowance are living in poverty and are even worse off than minimum wage earners. The gap between Newstart Allowance for single people or sole parents and the income they would get on the minimum wage is around $150 to $200 a week, even for those receiving Rent Assistance and family payments.

"There is widespread acknowledgement that the single rate of Newstart is simply not enough for people to live on and needs to be increased by at least $50 a week to help lift them out of worsening poverty and into a position to get into paid work.

"Media reports about couples on Newstart are a diversion that's not relevant to our push for a $50 increase in payments for single people and sole parents.

"It's time we moved away from demeaning and divisive arguments of the ‘deserving' and ‘underserving' and got on with the job of assisting people in the greatest need from slipping further into the margins," Dr Goldie concluded.

Media Contact: Fernando de Freitas - 0419 6261 55