OECD joins growing call for increase in Newstart Allowance

11 December 2012

The Australian Council of Social Service has welcomed the Organisation for Economic Co-operation and Development’s (OECD) recognition that an increase in Australia’s unemployment benefit is needed to reduce the growing gap between the value of Newstart Allowance and other welfare benefits. 

The OCED’s ‘Activating Jobseekers: How Australia Does It’ report released today says that Australia has the second highest employment rate of OECD G20 countries, at 72.5%, just after Germany (72.7%), and one of the lowest unemployment rates in the OECD. It also confirms that Australia has a low rate of working-age dependency on income replacement benefits, and spends relatively little on labour market programs.

“Although the OECD appears to paint a positive picture of the effectiveness of Australia’s employment services system, it clearly recognises that the single rate of Newstart Allowance is now too low,” said ACOSS CEO Dr Cassandra Goldie.

“The OECD recommends a reduction in the gap between Newstart and pensions which has blown out to $140 a week because of different indexation arrangements. ACOSS has long argued that Allowances such as Newstart should be indexed to wages like pensions, not the lower measure of the Consumer Price Index.

“The Henry Tax Review panel also recognised the need to reduce the payments gap, and it advocated an increase in the Newstart payment, equivalent to $50 per week, for single people – the same increase that pensioners received in 2009.

“We see this as urgent if we’re going to prevent more people falling into poverty in Australia. We know that people living on these payments simply cannot make ends meet on $35 a day. The base rate of Newstart hasn’t been increased in nearly 20 years. There’s no need for ‘caution’. Increasing low paying income benefits must be a key priority in the 2013 Budget.

“This is the overwhelming consensus in Australia today – from business groups, unions, economists, the Henry Tax panel, the entire community sector, and more than 70 submissions to the recent Senate Inquiry.

“ACOSS supports the OECD recommendation for strengthening incentives for employment services providers to help the most disadvantaged people into jobs. The report says that ‘the jobseeker caseload has become more skewed towards the most disadvantaged’ confirming our calls for greater assistance for long-term unemployed people.

“The OECD recommends increases in fees for employment service providers to work with the long term unemployed, saying this ‘would encourage providers to invest more in training and hard-to-place jobseekers’. Currently providers only receive between $500 – $1000 to assist long term unemployed people with training and work experience, which is simply inadequate.

“ACOSS supports other recommendations in the report, including cutting red tape for employment services by simplifying requirements for data entry and reporting, and the need to ensure incentives and assistance measures ‘to counteract any cyclical rebound of unemployment’,” Dr Goldie said.

Media Contact: Fernando de Freitas – 0419 626 155

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