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The Newstart Allowance stalemate reflects a lack of consensus about its purpose

By Philip Mendes - posted Friday, 7 December 2018

Over the past five years, the Australian Council of Social Service (ACOSS) and other welfare groups have launched a number of campaigns to persuade Commonwealth Governments (respectively Labor and Liberal-National Coalition) to increase the Newstart Allowance for the unemployed. But to date, despite gaining support from a range of progressive and even conservative sources, this advocacy has not been successful.

Although we currently spend $178 billion per year (reported to rise to 191 billion by 2020-21) on social security and welfare payments and services, there is no consensus regarding the aims and values of our welfare state in general. This lack of common ground about objectives and rationale particularly extends to payments for the unemployed and the sick even though they constitute just over six per cent of total expenditure ($11,126 billion in 2018-19). The largest and growing proportion of our payments is devoted to aged care payments and services, and assistance to people with disabilities (over 115 billion combined in 2018-19). Yet, it is the relatively inexpensive Newstart Allowance which is the source of most political contention.

ACOSS has consistently presented three arguments in favour of lifting the rate by up to $75 per week: that an increase is necessary to raise Newstart recipients above the poverty line and prevent financial stress; that Newstart is no longer a short-term payment aimed at facilitating job search, rather an increasing number of Australians rely on the payment long term; and the low rate actively hinders the unemployed from seeking work.


But ACOSS was not able to convince the then Labor Government to include an increase in the 2013 Federal Budget. The government acknowledged that the payment rate was low and difficult to survive on, but argued that the main priority was to assist the unemployed to find employment, and that a lift in the Newstart rate could discourage the unemployed from accepting low paid jobs.

For example, the then Minister for Workplace Relations Bill Shorten argued: 'I don't accept there is a permanent underclass of people who can never work. The trick is to give people control over their own lives. Once you surrender and write people off, I think you are failing them' In other words, the Minister believed that any increase in Newstart would just encourage the unemployed to become permanently reliant on government support:

The low Newstart rate again provoked public attention in the lead up to the 2018 federal budget following calls from Chris Richardson of Deloitte Access Economics and even former Liberal Party Prime Minister John Howard for an increase. However, the then Liberal Party MP Julia Banks publicly declared in May that she could live on the Newstart rate of $40 a day.

Another Liberal Party MP Tim Wilson admitted on the Q&A program that it would very difficult to live on such a low income, but added that Newstart was meant to be a temporary trampoline that nudged claimants back into the workforce, not a comfortable hammock that accommodated people long-term. He added that every dollar given to Newstart recipients was a dollar taken from other tax-paying Australians. Linda Burney, the Labor Party's Shadow Minister for Human Services, denied that it was possible to live with dignity on $40 a day. But she would only commit to a review of the entire income support system, rather than promising an increase in the rate of Newstart. She also agreed with Wilson that Newstart was a temporary payment for those seeking employment, and not intended to be a long-term option.

The lack of consensus around Newstart payment levels is reinforced by the recent proposal by Independent MP Cathy McGowan to establish an independent Social Security Commission Bill to determine payment levels. A parliamentary inquiry is currently examining the likely efficacy of such an approach to identifying a payment rate consistent with current community expectations and living standards.


Traditionally, income support payments were viewed as a means of promoting social cohesion, relieving poverty, and enhancing opportunities for low income and disadvantaged people. This implied a belief that poverty was related to unfair social and economic structures.

Of course, there was always a diverse range of views within the major parties around finding the right balance between advancing social rights and including incentives to promote individual self-reliance. But even leading conservatives within the Fraser and Howard Coalition Governments accepted that there was a community or government responsibility to actively assist the less fortunate. However, the current government seems to construct income support in narrow neoliberal ideological terms as little more than a means of promoting workforce engagement with the aim of reducing the numbers of able-bodied workforce-age people claiming payments.

There is a lot of rhetoric about controlling and disciplining the poor via conditionality measures such as the Cashless Debit Card and the new drug testing trial and few if any statements about helping or empowering disadvantaged individuals and groups.

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About the Author

Associate Professor Philip Mendes is the Director of the Social Inclusion and Social Policy Research Unit in the Department of Social Work at Monash University and is the co-author with Nick Dyrenfurth of Boycotting Israel is Wrong (New South Press), and the author of a chapter on The Australian Greens and the Israeli-Palestinian Conflict in the forthcoming Australia and Israel (Sussex Academic Press).

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