Increasing Newstart benefits would reduce inequality across the country. See how any changes could affect you

| 31.03,19. 07:30 PM |

Increasing Newstart benefits would reduce inequality across the country. See how any changes could affect you


Lifting the rate of unemployment benefits would bring down poverty levels and reduce inequality in Australia, according to new modelling by the University of Canberra.


New figures from the National Centre for Social and Economic Modelling (NATSEM) show a $75 weekly increase in the Newstart allowance would have the greatest impact on people between the ages of 25 and 36, who stand to gain $304 a year.


Modelling the effects across the country, NATSEM found the top five electorates to benefit from a lift in Newstart are all safe Labor seats mostly in western and south-western Sydney, including those of frontbenchers Tony Burke and Jason Clare.


On a state-by-state basis, the four electorates with the least to gain from a rise in Newstart are all held by high-profile members of the Government.


People in Tony Abbott's NSW seat of Warringah would receive an average of just $75 extra per year.


In Peter Dutton's Queensland seat of Dickson, constituents would receive an average of $123.


The following tables display the average annual difference in Newstart benefits, based on certain eligibility criteria such as a recipient's overall assets.


Biggest winners by electorate:

Welfare groups ramp up their #RaisetheRate campaign


Ahead of Tuesday's budget, welfare groups and economists have ramped up calls to raise the rate of Newstart, which has been frozen at current, post-inflation levels for 25 years.


A year ago, then Liberal MP Julia Banks ignited fierce debate after claiming she could live on Newstart's $40 a day.


Since then, an unlikely coalition of voices have come together to support the Australian Council of Social Services in its RaisetheRate campaign.


Everyone from St Vincent de Paul and the Business Council of Australia is lobbying the Government to help Australia's poorest households.


Newstart rate plunging people into poverty

Deloitte Access Economics have done their own modelling to show the impact of raising unemployment benefits by $75 a week. Economic growth and employment is higher over the long-term with a net cost to the federal Budget of $2 billion.

Deloitte Partner Nicki Hutley said it would be a better use of the Government's money than the second tranche of personal tax cuts.

"Because of the way the tax cuts package is framed, it's not aimed at the right people," Ms Hutley said.

"If you look at the second tranche due to come through, people earning up to $90,000, it's only 20 cents each."

Countries with the poorest jobless populations in the OECD

  • Canada
  • Australia
  • Estonia
  • Germany
  • Korea

Ms Hutley said people in Australia who rely on Newstart payments are the poorest of the poor.

She said Labor should prioritise a rise in Newstart ahead of efforts to lift the minimum wage.

"You cannot expect people in a first-world country like Australia to live so far below the poverty line," she said.

"It's outrageous, basically."

A study by the OECD shows that 53.5 per cent of Australia's unemployed are now living in poverty. Among 33 comparable nations, our jobless population is the second poorest in the world, beaten only by Canada.

The new NATSEM research shows that a $75 a week lift in Newstart would reduce the poverty rate in Australia by 0.8 per cent while also reducing inequality.

As Prime Minister in 1994, John Howard pegged rises in Newstart to the inflation rate.

Only just keeping pace with inflation has been considered a rate "freeze", which Mr Howard has now said ought to be lifted.

Poorest households stand to gain five times as much as wealthiest

The #RaisetheRate campaign has united 27 regional towns like Cairns, where Deloitte Access Economics estimates the economy would be $32.66 million better off with a higher unemployment benefit.

Measured in dollar terms, the new modelling by NATSEM shows that the poorest households in Australia would gain as much as five times more from lifting Newstart than the wealthiest.

ACOSS CEO Cassandra Goldie has prepared for intense lobbying efforts ahead of the election.

"The Government isn't even prepared to say there's a problem and in fact their approach to people who are relying on income support has been really brutal and heartless frankly," Ms Goldie said.

"Really nasty policies delivered on people like automation, robo-debt and people being cut off from income support by a text message."

Cairns local Peter Reay was a sustainability researcher and educator before a road accident left him with a brain injury, which eventually cost him his job.

For two months he has been surviving on Newstart's $40 a day.

It is particularly tough in a tourist town like Cairns where rents are disproportionately high.

"There have been times when I've had to do the dumpster dive," Mr Reay said.

"There've been times where I've had to look for fruit falling off trees around Cairns — so mangoes or things that are fruiting — to supplement my diet because there's just no other cash in reserve."

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