Newstart recipients' standard of living going backwards, ABS data confirms

| 08.08,19. 01:50 PM |

Newstart recipients' standard of living going backwards, ABS data confirms

Photo: The inflation rate for welfare recipients is 1.9 per cent, versus 1.6 per cent overall. (ABC News)

There is no reprieve for those who say life on Newstart is tough, living on $40 per day, with the latest data from the Australian Bureau of Statistics showing things are getting even tougher.

"Their standard of living has gone backwards," Deloitte Access Economics partner Nicki Hutley said.

"In real terms, for them alone, their money is not able to buy as much this year as it could last year."

There are roughly 722,000 people on Newstart. Singles receive about $278 a week or less than $40 a day.

The payment is indexed each year so it increases to keep pace with inflation, as measured by the Australian Bureau of Statistics (ABS) Consumer Price Index.

This is meant to stop people on Newstart seeing a fall in their living standards.

The problem now is that ABS figures show the cost of living for those on the welfare payments is rising faster than it is for the rest of the population.

You may ask "doesn't everyone have the same cost of living?" Not quite.

The ABS gives each section of the community a separate inflation rate known as Living Cost Indexes (LCI).

For example, the LCI for Newstart recipients is 1.9 per cent over the past financial year, compared to the average (CPI) of 1.6 per cent.

"It's because of the types of goods people on Newstart can afford to purchase," Ms Hutley explained.

"Housing is one of their largest items, so for a lot of these people it's the types of goods they're purchasing.

"They're not out there buying a lot of clothes or electronic goods — things that are coming down in price."

In short, the vast majority of the weekly and monthly costs facing those on Newstart are necessities and these costs are currently generally rising at higher rates.

The ABS reported that the largest contributor to the 1.9 per cent rise was the cost of transport (+ 4.5 per cent), driven by automotive fuel.

Healthcare costs are also rising faster than most other expenses faced by the community.

'I can't meet the obligations for myself or my family'

Single dad Robert McClintock, 46, has been on Newstart for six months and said he could not look after his family.

"Mentally, it's very challenging," he said.

"It's very disempowering to know that I can't look after myself — I can't meet the obligations for myself or my family, so the mental strain is the most significant one."

Mr McClintock said, even with a little bit of occasional work to supplement his government allowance, his expenses generally added up to more than his income, meaning he was forced to eat into his savings to buy many everyday items.

"Socially, it's very disconnecting because there is no opportunity, due to cost, to actually go and socialise, other than maybe meet someone in a park," Mr McClintock said.

The stress of social isolation and unemployment made for a heavy emotional burden.

Until recently, Mr McClintock was receiving regular therapy from a psychologist, but he could not afford that anymore.

"I can't really put it into words," he said.

"There are days where I can't afford to see a psychologist, or see a doctor, because it just means there's no food on the table."

Government 'focused on job creation'

The Government has thus far rejected an increase in Newstart, beyond the current CPI indexation.

Treasurer Josh Frydenberg said that was because it was keeping pace with inflation and 99 per cent of Newstart recipients were also on other government benefits.

About 40 per cent of singles on Newstart get rent assistance — of up to $9.80 a day — providing they are paying more than $21.40 a day in rent.

The Government also pointed to jobs figures showing about two-thirds of people on Newstart moved back into work within 12 months.

The Prime Minister acknowledged the Newstart allowance was modest but insisted the best form of welfare was a job.

PM asked Families and Social Services Minister Anne Ruston to comment on the figures that suggested many on Newstart were now actually seeing a declining standard of living.

Ms Ruston was not available for an interview, but a spokesperson issued a statement saying:

"No-one is saying it's easy to get by without a job, which is why the Morrison Government is squarely focused on job creation to help working-age Australians gain financial independence," the statement said.

"Newstart recipients are automatically entitled to a Commonwealth Government concession card, which provides access to a range of health concessions including bulk-billing and cheaper prescription items."

Pressure building for Newstart increase

Both former prime minister John Howard and Reserve Bank governor Philip Lowe have thrown their support behind an increase in the Newstart allowance.

The Council of the Ageing and the Australian Council of Social Service (ACOSS) are among dozens of organisations lobbying for the payment to be increased by $75 a week.

Deloitte Access Economics put the original economic modelling together that produced the $75 figure.

"To say that we are not looking after the most vulnerable members of our community, you know I really feel very uncomfortable about that," Ms Hutley said.

"I feel very strongly that we need to do something about it."

Mr McClintock has this message for the Government.

"We elect our leaders to look after us," he said.

"When I hear our Prime Minister say that there is absolutely no chance that Newstart is even going to be considered for a raise, that's not a leader looking after the weak and vulnerable."


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