Newstart poverty crisis: Raise the rate now

With permission of Alan Moir,

It is fast becoming a recognised fact — almost a truism — that the Newstart Allowance is too low. For unemployed people trying to get by on about $300 a week ($277 without rent assistance, $227 for those under 21), this is not news.

Likewise for those who are unable to work because of illness or disability but are forced onto Newstart due to the difficulty of accessing sickness or disability payments.

Newstart payments have not risen since 1994 — not something that can be said about the cost of living. The cost of housing, particularly in capital cities, has skyrocketed. Low Newstart rates are a significant reason for the growing homelessness crisis.

But while this reality has long been painfully clear to the unemployed — and supportive friends and family who often fill the gap caused by inadequate social services — politicians and the corporate media are also starting to notice.

The Senate passed a motion on July 24, moved by the Greens, stating Newstart is too low.

Labor has made a subtle shift in its stance and now supports a review of Newstart for the purpose of raising the rate. Prior to the May federal elections, Labor’s policy was simply for a review.

Even some Coalition politicians have said Newstart should be raised.

Not that this means things are about to change.

The Coalition government is digging its heels in, arguing it will prioritise raising the Aged Pension over Newstart (as if it were impossible to do both) and falling back on the myth that unemployment is caused by the unemployed being unwilling to work.

Prime Minister Scott Morrison inanely yelled “How good are jobs?” and claimed that Australia's unemployment payments are “world beating”, when in fact they are the lowest in the OECD. Deputy Prime Minister Michael McCormack called on the unemployed to move to rural towns, falsely claiming that there are high-paying jobs in regional Australia, when unemployment is generally higher in those areas.


While Labor is now saying Newstart is too low, it is refusing to name an amount by which it should be raised. While it voted for the July 24 Senate motion, it voted against a previous Greens' motion proposing a $75 weekly raise.

The $75-a-week rise proposed by the Greens is in line with what the Australian Council of Social Service (ACOSS) has been campaigning for.

However, ACOSS’s Pas Forgione has made clear that a $75 raise is just a first step — not an end point.

While some Labor MPs have broken ranks and even tried to outbid the Greens — Michael Freelander, member for the Western Sydney electorate of Macarthur, has proposed raising it to $400 a week — most are sticking with the party's line of remaining vague.

An even more notable shift has occurred in the corporate media. While the myth of the lazy dole bludger remains a staple, stories allowing people on Newstart to speak for themselves and highlighting the hardships caused by low payments and Centrelink’s compliance regime have become significantly more common.

This is in large part due to the efforts of grassroots campaigning by the poor.

Grassroots campaign

The Anti-Poverty Network in Adelaide set the agenda with its campaign to raise media visibility and get local councils to support raising Newstart. It inspired similar groups to be established in Perth and Brisbane that, together with the Australian Unemployed Workers Union (AUWU) and ACOSS, have also been campaigning on the issue.

Recent media coverage has revealed that the compliance regime causes as much hardship as the low rates. Payments are frequently suspended or stopped for minor infractions or due to mistakes by Centrelink. Homelessness is not viewed as a valid reason to be exempt from requirements.

Since the privatisation of the Commonwealth Employment Service (CES) in the 1990s, ever-increasing powers have been given to private agencies — mainly for-profit and religious organisations — that are paid to police the unemployed.

Newstart recipients are forced to apply for at least 20 jobs a month (agencies can arbitrarily raise this number); attend useless courses that are nothing more than lectures by overpaid motivational speakers; attend appointments for purposeless and humiliating meetings with case managers; and do Work for the Dole.

Often no choice is given to what Work for the Dole programs people are forced into. Peoples’ work experience and qualifications are not taken into account and health issues are ignored.

The prevalence of religious agencies means that LGBTI jobseekers can be forced to do Work for the Dole for homophobic outfits such as the Salvation Army.

The system is also racist. Aboriginal people in remote communities have more Work for the Dole requirements. Furthermore, Aboriginal people have been subjected to “cashless welfare”, where payments take the form of a debit card that can only be spent in certain shops and on certain commodities, thereby greatly increasing financial hardship.

The government is threatening to extend “cashless welfare” to everyone on Newstart.

Coalition and Labor governments have used the same lies they use to keep Newstart low to repeatedly make the compliance regime more draconian. The main lies are that most people are only on Newstart for a short period and that there are jobs available if only the unemployed could be motivated to get them.

In reality, the average length of time on Newstart is three years and AUWU data shows there are more than 15 job seekers for each job vacancy.

Real solutions

The system is expensive. This, along with the compliance regime causing employers to be inundated with applications from unqualified jobseekers, means even some ruling class voices are joining the call to raise Newstart, including Reserve Bank governor Philip Lowe and Business Council of Australia chief executive Jennifer Westacott.

However, the system benefits employers as a whole by putting downward pressure on wages. Cuts to penalty rates are easier to enforce if it is almost impossible to survive while being unemployed. For this reason the campaign needs to intensify.

In the immediate term, Newstart needs to be raised to, at least, the poverty line ($433). The compliance regime needs to be ended. Businesses and religious outfits should not be paid to punish the poor; instead the CES should be recreated.

In the longer term, the economy needs to be re-imagined. While the system is based on the assumption that long-term, full-time jobs exist, the reality is that such jobs are increasingly being replaced with short-term, part-time subcontracted jobs.

Moreover, employment is detached from social need. There is something wrong with a society where looking after the sick and elderly are among the lowest-paying jobs.

In the federal election, the Coalition and Labor both equated the mining industry with job creation. The jobs created in this industry are mainly short-term “fly-in fly-out” jobs that have devastated rather than benefitted local communities, often creating mental health issues for workers themselves.

Plus there is the obvious problem of making employment dependent on creating an ecological holocaust.

On the other hand, if saving humanity from the coming climate apocalypse was given higher priority than corporate profits, we could create a huge number of jobs in, among other things, renewables and building an adequate public transport system.

[Tony Iltis is a member of the Socialist Alliance.]