Call For Henry to Overhaul Income Support and Introduce one Payment Rate

15 April 2010

ACOSS is calling for the introduction of a single base payment rate for all people of working age on income support to fix problems in the current system where some people are paid $120 per week less than others.

In a report released today, ACOSS says payments to over 2 million Australians – disability support pensioners, carers, sole parents, unemployed people and students – should be overhauled.

Base payments would be topped up for extra costs, such as rent, disability, caring, education and training. Couples would receive 1.5 times the single rate.

“What’s the sense in paying people in the same circumstances different amounts?” said Clare Martin, CEO, ACOSS. “One level of payment for all people of working age would be simpler and more equitable.

“Top-ups for job search and training costs, like phone bills and text books would act as an immediate encouragement for unemployed people to seek work or training.

“The Henry Review is a once-in-a-generation chance to achieve these reforms and we encourage the Government to look closely at our proposal. The Government currently spends about $30 billion per year on these payments.

“The base payment would be based on a Minimum Standard of Living – what it actually costs to live basically, but decently, in Australia. That’s likely to be more than the $230 per week a single unemployed adult receives on the Newstart Allowance.”

“We owe it to low-income Australians to put into place a safety net that is straightforward and responsive to people’s changing needs over time,” said Ms Martin.

“There are penalties built into the current system which discourage people from seeking work. For example, a person on a disability support pension faces a drop in their weekly income of $120 per week if they decide to move into work but end up on unemployment payments.

“We propose that income tests be redesigned to encourage more people to take on part-time and casual work. For example people could average their income over more than a fortnight when they get a casual job.”

The paper, Out of the Maze: a better social security system for people of working age, has been released today ahead of the Henry Review into tax and transfers. Download here.

Media Contact: Clare Cameron, ACOSS – 0419 626 155