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Drop the 'dole bludger' tag and increase Newstart

Opinion

Increasing unemployment benefits will not only improve the standard of living for many Australians, but modelling shows it will stimulate local business and boost job numbers and the economy, argue Peter Gill and Michael O’Neil.

Print article

The unemployment benefit, Newstart, has not increased in real terms since 1994, nearly 25 years ago.

But the genesis of this entrenched inequity occurred two decades earlier when Victorian (Liberal) Premier, Rupert Hamer, urged governments to “tighten controls against bludgers on unemployment benefit”.

Two years later, in 1976, The Bulletin magazine shortened the descriptor to ‘dole bludger’ and it’s been part of the political lexicon ever since.

This derogatory description has been defining community attitudes and political responses to the unemployed for more than forty years.

But with Australia’s financial support for its unemployed citizens now the lowest of the 36 OECD countries and, at $278 a week, lagging the aged pension by $174 a week, it’s time for a major re-think.

The dole bludger description, which has served well those political parties that have taken a punitive approach towards the unemployed, no longer aligns with community attitudes nor the daily reality of thousands of job seekers.

An Essential Research poll, commissioned by the Australian Council of Social Services (ACOSS), reported last month that 72% of those surveyed supported an increase in Newstart.

These respondents joined a raft of advocates within the ranks of social services, unions, philanthropy, and business, urging the Federal Government to ‘raise the rate’.

Far from being a ‘transition’ payment that supported workers as they moved from one job to another, as it was originally envisaged, Newstart is now supporting increasing numbers of long term unemployed.

In the decade to 2019, the number of Newstart recipients who were unemployed for between 52 weeks and 104 weeks (plus those of more than 104 weeks) increased from 7,996 to 17,359 in South Australia alone.

And, according to Anglicare Australia’s 2018 Job Availability Snapshot, there are eight people chasing every single low skill, entry level job in South Australia, almost double the national average.

So, how to recast the political consideration of Newstart given the Federal Liberal Party’s refusal to consider an increase and the Labor Party’s commitment only to ‘review’ the unemployment benefit if it gains office on 18 May.

The Salisbury Local Government Area (LGA) would experience an increase in disposable income of $33 million with the Onkaparinga LGA ($31 million), Playford LGA ($28 million) and Port Adelaide Enfield LGA ($26 million) also being major beneficiaries.

The starting point should be to reframe the payment of support to job seekers in ‘economic’ rather than ‘welfare’ terms.

A research report by Deloitte Access Economics published last year, which examined the impact of a $75 a week increase, went a long way towards redefining how Newstart should be considered.

Deloitte Access Economics noted that, in going to recipients who are either just above or below the poverty line, the additional cash would invariably be spent on food, rent and other living essentials.

The additional spending would provide a stimulus to the economy creating jobs (12,000 nationally by 2020-21), wages growth (up 0.2%), additional Commonwealth and State tax revenue (up a total of $1.25 billion) and a bigger economy (increased by $4 billion).

The State-by-State breakdown of Deloitte Access Economics’ data reveals the extent to which the areas of highest unemployment would benefit from a $75 a week increase in Newstart and Youth Allowance.

The Salisbury Local Government Area (LGA) would experience an increase in disposable income of $33 million with the Onkaparinga LGA ($31 million), Playford LGA ($28 million) and Port Adelaide Enfield LGA ($26 million) also being major beneficiaries.

With its smaller population and higher unemployment rate relative to the Eastern States, South Australia benefits most in terms of additional economic output per capita, with $70 per person compared to NSW ($47), Victoria ($53) and Queensland ($56).

Deloitte Access Economics data suggests more than 700 jobs would be created in South Australia if Newstart and the Youth Allowance were increased by $75 a week.

Commenting on their analysis, Deloitte Access Economics’ Ben Guttmann and Chris Richardson noted that “the most compelling reasons to adopt this reform revolve more around fairness than they do around prosperity”.

“Any given dollar spent on this policy proposal would have a very tightly targeted fairness impact, with the overwhelming bulk of relative improvements in disposable income going to Australia’s lowest income families,” they said.

And that’s the nub of it.

Fairness should be at the heart of our society. Lengthy periods languishing on unemployment benefits erodes a person’s confidence and motivation and diminishes their skills and capability.

Society has a responsibility to counter this malaise, for example, with effective public teaching institutions that provide the relevant skills and experience and enhance a person’s chance of employment. But in recent times SA TAFE, and some of its interstate counterparts, have not met that obligation.

In the broader fabric of our community, institutions like banks should be founded on a core set of values that encourage and support initiative and enterprise. But, as the banking Royal Commission has recently shown, many of Australia’s financial players have been motivated simply by narrow self-interest and greed.

Corporate elites, vested interests and self-serving Members of Parliament more concerned with the game of politics rather than developing and delivering good public policy, have captured our political establishment and compromised good government in Australia.

There is no more graphic example of this than the fact that the single rate of Newstart, at $278 a week, falls so far short of the $434 a week estimated by the University of NSW in 2017 to buy the basic necessities of life – food, housing, transport, healthcare and household services.

The 18th Century philosopher, Adam Smith – often described as the ‘Father of Economics’ –maintained the foundation for effective commerce, trade and wealth creation was a proper functioning civil society. Central to that society was a respect for individuals, families and public and private institutions.

The unfairness and inequity in Australian society suggest we are a long way short of Adam Smith’s aspirations and beliefs – a figure whom many who walk the corridors of power in Canberra and elsewhere would profess to admire.

Australia’s inequity must be addressed – a $75 a week increase in the Newstart and Youth Allowance would be a good place to start.

Peter Gill & Michael O’Neil are from the South Australian Centre for Economic Studies, University of Adelaide

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