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Gap Between Pensions and Newstart Growing: Analysis

23 September 2014 at 11:50 am
Lina Caneva
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.

Lina Caneva | 23 September 2014 at 11:50 am


Gap Between Pensions and Newstart Growing: Analysis
23 September 2014 at 11:50 am

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.

The Australian Council for Social Services (ACOSS) joined the National Welfare Rights Network (NWRN) to warn that the declining relative value of some payments means increased poverty and social division.

In a joint statement Dr Cassandra Goldie, CEO of ACOSS and Maree O’Halloran, President of the 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,” they said.

“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.

The statement comes as Minister for Social Services Kevin Andrews announced that pensions would increase for the second time this year.

“Up to $11.50 extra a fortnight will go into the accounts of single age pensioners, while age pensioner couples will receive up to $17.40 extra a fortnight,” Andrews said.

“While Labor continues its appalling campaign of misleading the community with false and alarming claims relating to pensions, we have made sure rises occur in March and September every year.

“The September increase will see total pension payments for people on the maximum rate increase to $854.30 a fortnight for singles, and $1,288.00 a fortnight for couples.

“Newstart Allowance, Parenting Payment Partnered, Widow Allowance, Partner Allowance and Sickness Allowance will increase by $5.20 a fortnight for singles and $4.70 each for couples (including energy supplement).”

Goldie and O’Halloran said there was a growing gap in pensions and Newstart payments.

“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,” they said.

“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.

“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.”

Lina Caneva  |  Editor  |  @ProBonoNews

Lina Caneva has been a journalist for more than 35 years. She was the editor of Pro Bono Australia News from when it was founded in 2000 until 2018.

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