People on lowest payments in the worst financial stress

New data released by the Australian Bureau of Statistics shows people trying to survive on the lowest income support payments are in the worst financial stress. This underscores the need for allowances such as Newstart and Single Parenting payments to be increased as proposed by both the Henry Review and the OECD, according to the Australian Council of Social Service.

“It is simply unacceptable for a rich nation like ours to allow those at the bottom, who are clearly the most disadvantaged, to fall further into poverty. Yet this is precisely what we are witnessing in Australia,” said ACOSS CEO Dr Cassandra Goldie.

“The latest ABS Household Expenditure Survey shows that for a person living in households where the main source of income is government pensions and allowances, those on the lower paying allowances such as Newstart and Family Support Payments, are experiencing the highest level of financial stress.

“People on Newstart Allowance, who are forced to live on just $34 a day, are particularly at breaking point, with 79% reporting three or more indicators of financial stress. They are closely followed by people on Parenting Payments (77%).

“One third to one half of these groups reported not being able to afford a special meal once a week or to have friends or family over for a meal once a month, something the rest of us take for granted. The majority reported being unable to raise $2000 for something important if it should arise.

“Sadly this picture is not surprising when you consider the fact that the gap between people on the lowest income payments (Newstart and sole parents) compared to those on pensions has been increasing for a long time.

“Because the Government indexes allowance such as Newstart and sole parenting payments differently, these groups receive lower increases when payments are indexed two times each year, as is about to happen on Tuesday (20 September).

“The maximum rate of age, disability and carer pensions, as well as veterans’ income support recipients, will increase by an extra $10 a week, compared to a $6 a week increase for people on Newstart and Parenting Payments Single.

“Whilst ACOSS obviously welcomes the indexation increases as crucial in helping Australia’s 3.4 million people on pensions meet cost of living increases, it is distressing that people on Newstart and sole parenting payments have been left to fall behind.

“Effectively this means that the gap between allowances and pensions continues to go up and up. From Tuesday the difference between Newstart Allowance and pensions for a single adult will be $131 and the difference for a sole parent will be $111.

“At this rate the OECD predicts that Newstart Allowance will be worth just half the value of the pension by 2040, and this is the reason why the international body has repeatedly called on the Australian Government to raise allowance payments.

“This growing disparity simply must be addressed as a matter of urgency, especially with 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.

“Unless the base rate of allowances is increased and indexed at the same level to meet the growing costs of essentials like rent, utilities and food, the accelerating difference in payment levels will lead to greater hardship and more people falling into poverty,” Dr Goldie said.

Media contact: Fernando de Freitas – 0419 626 155

Household Expenditure Survey, Australia: Summary of Results, 2009-10
(see table 11: Financial stress indicators 2009-10 ) Australian Bureau of Statistics Click here >> 

             ACOSS graph showing the widening gap between pensions and allowances (September 19, 2011)

Payment rates

(per week)








(Jul-Sep 2011)

Single pension





Single Newstart Allowance





Gap between pension and Newstart Allowance





Sole parent on Newstart Allowance





Gap between pension and sole parent on Newstart Allowance