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Government policy driving dole growth

By Andrew Baker - posted Wednesday, 12 September 2012

The number of people who have been on the $245 per week Newstart Allowance for more than a year has increased by 80,000 people over three years – from about 270,000 in July 2009 to 350,000 in July 2012.

At the same time the number of Newstart recipients who have been on the payment for less than a year fell by 56,000 - from 288,000 in July 2009 to 232,000 in July 2012.

But behind these figures lies an even bigger problem - a growing number of long-term Newstart recipients enjoy some kind of exemption from job-search requirements.


It would be natural to blame the global financial crisis or the European debt crisis for the increased number of long-term Newstart recipients, but the reality is that government policy has been driving this growth.

The number of long-term jobseekers - or people on Newstart who are required to look for work - has remained relatively flat - increasing from about 155,000 to 164,000 over the three years to July 2012.

By comparison, over the same period, the number of people on Newstart who have some kind of exemption from job-search requirements has sky-rocketed by about 70%, from 104,000 to 176,000.

This growth has been partly matched by an increase of 50,000 in the number of people engaged in training or education, which has more than doubled in three years.

More troubling is the 250% increase (from 13,841 to 35,114) in the number of long-term Newstart recipients who are classified as "incapacitated" and are effectively in the 'too hard basket'.

Growth in these figures should not come as a surprise to the government because increasing the number of people on Newstart has been a deliberate consequence of some of their welfare-to-work policies.


For example, the growth in the number of people in training can be explained by the temporary operation, from July 2009 to July 2011, of a $41.60 per fortnight training supplement for Newstart and Parenting Payment (PP) recipients who hadn't finished high school.

The minister responsible at the time, Julia Gillard, described the supplement as "a modest, practical measure to ensure those most at risk of becoming long term unemployed in the days of the global recession are properly skilled when the economy begins to recover."

Well intentioned though it was, it seems all that the supplement did was exempt from job-search requirements a group of people who had been on Newstart for a very long time.

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About the Author

Andrew Baker is a Policy Analyst at The Centre for Independent Studies.

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