OECD unprecedented call for Australia to increase unemployment benefits payments

15 November 2010

The national community services peak body, ACOSS, has welcomed an unprecedented call from the OECD for unemployment benefits to be lifted in Australia, and the removal of ‘inactivity traps’ through social security and tax reforms to improve work incentives.

“The latest OECD Economic Survey clearly acknowledges that the present inequality between the payment levels of unemployment benefits, when compared with the age pension for example – now a staggering $135 per week – is grossly unfair,” said Australian Council of Social Service CEO Dr Cassandra Goldie.

“These findings are similar to the measures recommended in the Henry Tax Review that would substantially improve fairness and incentives for people to return to work.

“ACOSS is arguing for an increase in the single Newstart Allowance of $45 per week, raising it from the current $231 to $276 per week.

“We also support proposals by the Henry Tax Review to ease the income test on Newstart Allowance which discourages part time work, especially among sole parents. People on Newstart currently lose practically 60 cents of their allowance for every dollar earned.

“ACOSS acknowledges that this is a complex and sensitive area especially for people already on payments but urge the Government to commit to improving equity and simplifying the system as we head into community consultations over the Henry Report proposals.

“We support the general thrust of the latest OECD report recommending an overhaul of our tax system, though remain strongly opposed to its call for an increase in Australia’s Goods and Services Tax and to extend it to food.

“We know that lower income earners spend a larger proportion of their household income on the necessities of life such as food, rent, energy, and clothing, which would all become a lot dearer if the GST was increased and extended.

“What the OECD didn’t point out is that countries with higher GST rates generally have substantially more generous social security systems.

“ACOSS does not believe the case has been made for an increase in the GST. It would make the system less fair not more efficient.”

See ACOSS paper – Out of the Maze: a better social security system for people of working age

Media contact
Fernando de Freitas
ACOSS – 0419 626 155