Minimum wage rise will strengthen economy and reduce poverty: So would an increase in Newstart Allowance

The decision by the Fair Work Commission today to increase the minimum wage by 3% will help reduce poverty and revive the economy.

ACOSS is calling on the government to follow the minimum wage decision with an increase to the Newstart Allowance of $75 per week. Newstart is less than half the minimum wage.

ACOSS Director of Policy Jacqui Phillips said: “More must be done to or spur a slow economy, and the most effective way is to raise the incomes of low income earners.

“As with a pay rise for low paid workers, an increase to Newstart will go straight back into struggling local economies as people on low incomes spend the money on basics like food and rent.

“Raising Newstart is a more effective and less expensive way to deal with economic downturn than the government’s high-end tax cut package.

“The government has committed to modest tax cuts in July, which have been supported by the Opposition. However this is not the time for Parliament to commit to much larger tax cuts for high income earners in 3 to 5 years time.

“We should consider whether the budget can afford those tax cuts, and their impact on the economy, closer to their introduction in 2022 and 2024.

“The priority right now is to strengthen the economy and relieve the worst hardship.  The RBA’s signal that they plan to cut interest rates is welcome but we can’t rely on reductions in already low interest rates to do all the heavy lifting for the economy.

“As well as higher Newstart payments, the government should consider a boost to public investment, including in affordable housing and congestion-busting public transport.

“With interest rates at 50 year lows, and housing construction cooling, now is the right time for governments to fill the gap in growth-generating investment.”