Pensions up, but little cheer for many as Newstart payments fall further behind

Joint media release, ACOSS and National Welfare Rights Network, 20 September 2014

A new analysis of social security payments reveals that the single Newstart Allowance paid to over half a million Australians continued to fall in value when compared with both the minimum wage and the pension. Two leading national community welfare groups today warned that the declining relative value of some payments means increased poverty and social division.

In a joint statement today Dr Cassandra Goldie, CEO of the Australian Council of Social Service (ACOSS) and Maree O’Halloran, President of the National Welfare Rights Network (NWRN) said that: “Addressing the $170 a week gap between pensions and allowances is the most critical task that the Government’s Welfare Review Taskforce must address.

“Employment goals around people with disabilities will not be achieved until the Government addresses structural problems with the payments system. These problems are at the heart of legitimate fears held by people with a disability that if a new job does not work out that they will be shunted onto the Newstart Allowance, which is now currently $8,800 a year less than the pension.

“Reports that the Government may consider up-front investments to assist young people facing complex health and personal issues are welcome but people also need an adequate income here and now.

“While today brings good news for around 3.7 million pensioners who will receive an extra $10.70 a fortnight from an indexation increase (from September 20); it is not so good for people struggling to keep their head above water on the $37 a day Newstart payment.

“Because pensions and allowances are indexed differently, people on Newstart, widow, sickness, partner and parenting payment partnered allowances will only receive a $5.10 a fortnight indexation increase in their payment from today.

“There are currently 695,000 people on the Newstart Allowance. Three in four are single, and are struggling to meet their weekly daily expenses on the maximum rate of just $257.80 per week (from today).

“These new rates of income support payments this quarter highlight deepening fault lines in Australia’s social security arrangements.

“The rate of the Newstart Allowance relative to the minimum wage is near its lowest level since 1990. The Newstart Allowance has fallen from 54 per cent in 1996 to 40.2 per cent of the National Minimum Wage, which now stands at $640.90 per week.

“This means that people relying on allowances are falling behind community living standards, and underlies the importance of indexing payments to wages. Current proposals to index pensions to prices would inevitably see pensions falling behind community living standards over time and should be opposed.

“The maximum payments for a single pensioner is now $854.30 a fortnight ($22,212 per year). Unemployed people on the single Newstart Allowance receive much less, at $257.80 per week, or 40% less than the pension.

“But unemployed people aren’t the only people being short-changed by today’s indexation changes. Young people on Youth Allowance and Austudy get nothing, and their even lower payments are indexed only once a year, while pensions and allowances are indexed every six months. The 114,700 single parents raising children on the maximum Newstart Allowance will receive a small increase of a mere $2.75 a week. Being pushed onto Newstart means that these families are now $81.20 a week or over $4,222 a year worse off, compared to Parenting Payment Single.

“The artificial divide between pensions and allowances must be addressed by increasing the rate of allowance payments and indexing payments consistently to wages to prevent more people falling further and further behind the rest of the community. Anything less is not the genuine welfare reform that this country needs.”
Media contacts:

ACOSS Media Adviser: Fernando De Freitas 0419 626 155

NWRN Policy and Media Officer: Gerard Thomas 0425 296 882