ACOSS responds to Labor’s living wage policy, calling for it to be partnered with an increase to Newstart

26 March 2019

The federal Opposition’s living wage policy, announced today, is a sensible step, which must be partnered with an increase to Newstart in order to effectively reduce poverty and boost the economy.

ACOSS CEO Cassandra Goldie said: “Both an urgent $75 per week rise in Newstart and a substantial rise in minimum wages are the fundamental steps we must take in any serious effort to reducing poverty.

“We have consistently argued before the Fair Work Commission that minimum wages should be based on a benchmark ‘decent’ living standard.

“We welcome Labor’s proposal that the Commission set such a benchmark, and then work towards it, taking account of economic conditions.

“This is a sensible approach that sets a clear goal for lifting low pay rates without compromising the Commission’s independence.

“While we welcome Labor’s living wage proposal, we urge both Labor and the Government to finally commit to a long-overdue increase to Newstart of $75 per week, which has broad support from the community, economists, business and the union movement.

“We need government and business to both play their part for people on the lowest 40% of incomes – both people relying on income support and wage earners, who in reality are often the same people at different stages of life, sometimes week to week.

“Newstart is less than $15,000 a year and the wage is $37,400 a year, which after tax is about double Newstart Allowance and only about half the income received by a middle-income, full-time wage earner.

“People on the lowest incomes – including Newstart and minimum wages – must spend the money they receive to cover the very basics like food and rent, so boosting their incomes is a far more effective way to bolster economic growth than more tax cuts.

“More tax cuts now mean cuts to the essential services such as health, education and disability services that are vital to low-income households.

“Increasing Newstart and the minimum wage would increase consumer spending, creating new jobs; while at the same time, a stronger Newstart would give people the support they need to get through tough times and into these jobs,” Dr Goldie said.