It’s time to raise Newstart to tackle growing inequality in Australia: ACOSS Poverty Report

21 October 2011

The Australian Council of Social Service is calling on the Commonwealth Government to commit to increase income support allowances like Newstart as recommended by the Henry Review, in order to tackle the growing gap between the rich and poor in Australia.

To mark Anti-Poverty Week, ACOSS today released an update of its Poverty Report bringing together all the latest measurements of poverty and inequality. “The evidence is mounting of a growing divide with more people hitting hard times and falling into poverty,” said ACOSS CEO, Dr Cassandra Goldie.

“There is widespread consensus that the paltry payment levels for allowances such as Newstart, Parenting Payment Single, and Youth Allowance is one of the principle reasons for increasing hardship and poverty in our rich country. This was highlighted at the recent Tax Forum in Canberra where participants almost unanimously agreed that the Newstart Allowance of $35 a day is simply not enough to live on.

“Economists Judith Sloan from National Seniors Australia, and Professor Ian Harper, who chaired the Fair Pay Commission set up under the Howard Coalition Government, have come out to say that it is too low. Professor Harper warned that giving people so little to survive on is causing desperation and depression.

“They confirm the earlier findings by the Henry Review Panel and the OECD, both of whom recommended that the level of income support for people who are out of paid work be increased.

“It is everyone’s right to have access to paid work, and, when looking for paid work, to have income support to live with dignity. Our social security system is failing to provide people with this basic guarantee, plunging people into poverty.

“And there is now an irrefutable volume of evidence pointing to a growing gap emerging between the haves and the have-nots in Australia. Perhaps the most stark is recent Australian Bureau of Statistics data showing that the wealthiest 20% of households in Australia increased their average net worth by 15% in the past 5 years compared to just 4% by the poorest 20%.

“The bottom 20% had an average net worth of only $32,000, just 1% of total household wealth. The richest 20% by contrast accounted for 62% of the whole country’s wealth, or an average of $2.2 million per household.

“We know that approximately 2.2 million people or 11% of Australians lived in poverty in 2006 – the latest date for which statistics are available. This was up from 10% in 2004 and 8% in 1994. However community groups working on the ground with the most disadvantaged and people struggling on low incomes have been consistently reporting a worsening situation.

“Only in August the annual Australian Community Sector Survey reported that more people are turning to community groups for help, leaving services unable to meet demand. The survey provides the most comprehensive picture of how the non-government community services sector is travelling, and this year showed a 12% increase in assistance provided by agencies. It revealed that 1 in 20 people were being turned away, a 19% increase on the previous year.

“Our Poverty Report shows that one of the main causes of this growing inequality is the shutting out of a disadvantaged subset of people from the jobs market, despite declining unemployment rates. There are large numbers of people who are out of paid work or only have a few hours of work per week and have to rely mainly on social security payments such as Newstart for their income.

“ACOSS maintains that the growing disparity between people on Newstart Allowance and those on pensions like the DSP, which now stands at $131 a week, must be addressed as a matter of urgency. This is especially imperative given the real likelihood of a substantial increase in the number of people going onto Newstart Allowance as a result of the Government’s planned changes to the eligibility criteria for DSP. There are already over 100,000 people with disabilities on the Newstart payment.

“We urge the Federal Government to listen to the overwhelming consensus emerging – not only among the entire community sector – but also unions, academics, economists, the Henry Review and the OECD. We call for a commitment to a $50 increase in single payment allowances and to index allowances the same way as pensions.

“ACOSS understands the current political reality and budgetary constraints, however, we believe the time has come to address this pressing issue. We feel the $1b cost is modest and not significant enough to blow the budget bottom line. It could be funded almost immediately by Government action to close business loopholes and shelters that we estimate cost at least $20 billion in forgone revenue every year.

“This important step would almost overnight lift around one million Australians out of the worst forms of deprivation. It would also go some way to address the growing divide between the rich and poor which is greater than ever before. The price of not acting is to condemn many more people to poverty and the margins of our society,” Dr Goldie said.

Media Contact: Fernando de Freitas – 0419 626 155

ACOSS Poverty Report 2011 >>
ACOSS media releases on income support payments reform >>
ACOSS Paper – Beyond stereotypes: Myths and facts about people of working age who receive social security