Lin Thorp (Tasmania, Australian Labor Party) Share this | Hansard source

The Gillard Labor government's effective financial management over recent years has meant that we have got through the worst of the global financial headwinds with strong fundamentals. Life is significantly more comfortable for many, thanks to continuing wage growth, record low interest rates and reduced prices on many items. Unfortunately, the same cannot be said for unemployed Australians who are forced to survive on little more than $35 a day or $245 a week for a single person without dependants. It should come as no surprise then that the gap between the rich and the poor in Australia has opened up dramatically, threatening to trap the most vulnerable and disadvantaged Australians on the poorer side of the great divide. In fact, Australia has one of the lowest unemployment benefits, as a percentage of the average wage, in the developed world. The situation has become so bad that the OECD itself has pointed out that the low level of Newstart raises issues about its effectiveness.

The Newstart payment is currently 45 per cent of the net minimum wage, having fallen from 54 per cent around 15 years ago. At the same time there has been significant growth in the basic costs of living. In the last five years capital city rents have increased at twice the rate of inflation and electricity has climbed up to 56 per cent from 2005 to 2010—and we all know it has not stopped rising since then. With these pressures it is little wonder that unemployed Australians can find themselves caught in a spiral of disadvantage, falling further and further into debt just to get by.

In some areas, the average cost of renting alone can exceed the entire Newstart allowance, making private rent close to impossible. As a result it is common to find job seekers forced into rooming houses that can be not only demoralising but downright dangerous. Drug use and alcohol problems can be common and violence not infrequent. In some of these places up to 10 adults can be forced to share a single bathroom. With these sorts of conditions I find it hard to imagine how people could possibly be able to get up and prepare to tackle the job hunt each day. A survey by the Australia Institute in April 2012 found the average amount considered necessary to meet weekly living costs is $454. This figure is almost double what is paid to unemployed people in this country.

In this environment it is not surprising the recent Newstart inquiry yielded so many stories of individuals who find themselves going backwards by hundreds of dollars per fortnight—and that is the healthy ones. Many thousands of others find themselves with crushing healthcare bills on top of their daily living costs. For the September quarter last year, the Melbourne Institute of Applied Economic and Social Research defined the poverty line for a single person living alone as $483.51 per week, including housing. This equates to close to $70 a day, almost double the rate we expect our job seekers to subsist on.

Another measure of poverty we can look at, which perhaps paints a clearer picture, is the multiple deprivation model. Rather than analysing income in dollar terms, this model looks at whether a person can access essentials—things like a substantial meal at least once a day, an annual dental check-up, warm clothes and bedding if it is cold, a separate bed for each child, a washing machine, secure locks on doors and windows, presents for family and children at least once a year and heating in at least one room of the house. These are things I am sure all of us in this place would consider non-negotiable requirements of life. On this measure, a full 61 per cent of households whose main income source is Newstart would fall under the category of multiple deprivation in that they are unable to access at least three of those elements. To my mind, this is simply unacceptable.

But whichever way you cut it, and whichever measure you choose to use, one thing is clear: we are putting hundreds of thousands of unemployed Australians at risk of a life of poverty and we are significantly limiting the available opportunities to break free of this life. A life where so much mental energy is expended on avoiding eviction, repossession or disconnection does not leave a lot of room for job hunting. There are many case studies that show people on Newstart can be left with as little as $35 a week to buy essential items such as food, transport and clothing. For so many, the search for work is relegated to second place after mere survival—not to mention the costs of the job search itself. When basic bills cannot be met, there is little chance job seekers will have money to spare for phone calls, transport, petrol, suitable clothing and haircuts—things that may actually increase their chances of securing work. Newstart recipients are also unlikely to be able to pay for training or upskilling to increase their attractiveness to employers.

At this point, Mr Acting Deputy President, I think it is time for a little myth busting. The decision to retain the current level of Newstart is often justified by the regularly sprouted, but entirely false, statement that if Newstart were raised it would provide a disincentive for unemployed people to join the workforce. Even if the rate were increased by the full $50 a week, $295 a week could hardly be considered comfortable living. Even if they gained work on the minimum wage, a Newstart allowance recipient would double their after-tax income. I am sure you will agree that is still a pretty powerful incentive to continue on the job-hunting trail.

This feeds into the second damaging and demoralising myth that has somehow spread its tendrils into the public debate: that unemployed people do not want to work, that they are somehow actively conspiring to rip off the system and live off the public purse as long as they can. Nothing could be further from the truth for the vast majority of job seekers. Who wouldn't want to attain a better life for themselves and benefit from the dignity that work provides? I have seen many young people in their late teens and 20s forced to make less than ideal decisions about where and how they live as a direct result of not being able to survive on Newstart. Crowded and/or inappropriate living circumstances militate against a young person's attempts to find work and move forward with optimism for the future.

Not only is the myth of the dole bludger unhelpful; it denies unemployed people basic human respect and further exacerbates the demoralisation that unemployment can bring. At this point, I think it is salient to ask, 'What are unemployment benefits for?' Are they solely a payment to stave off starvation and homelessness? Or are they, as the name suggests, a means to give people the support they need to make a 'new start' in life? Do we want to condemn people to a life of poverty—a life where they are forced to rely on the public purse for survival? Or do we want to give them the dignity and respect of a fair living allowance that will provide the security of meeting their basic needs so that they can continue to seek opportunity in life?

Most of the arguments against raising the Newstart rate have purely fiscal origins. Ironically, by not acting, we are potentially setting ourselves up for a much greater strain on the public purse over time. Firstly, as I have outlined, the chances of job seekers having the financial, mental or emotional wherewithal to successfully gain work are reduced when their basic living needs are not being met. And we know that the longer unemployed people stay on benefits, the less likely they are to secure and maintain work. Of course, this increased cost must be borne by the welfare system. According to the Department of Education, Employment and Workplace Relations, six in every 10 Newstart recipients end up on the payment for more than 12 months. Perhaps, if we paid job seekers a reasonable wage, we could shorten this time significantly.

The health system is likely to bear a greater financial burden if we keep Newstart at its current level—and not just as a result of Newstart recipients relying solely on the public health system. As we have seen, Newstart recipients are less likely to be able to afford fresh, healthy food, making them more prone to illness. Secondly, we know that unemployment takes a tough mental toll, with unemployed people more likely to suffer from depression and other psychological consequences. This is further exacerbated as the time on benefits extends and people feel increasingly trapped and despondent. Similarly, the current rate of Newstart drastically limits recipients' ability to participate in their communities or maintain a social life as they may not be able to afford transport or phone calls, let alone a coffee at a cafe or a trip to the movies. This social isolation can lead to further psychological concerns and an increased likelihood of physical illness, which must be treated through the public health system.

The justice and law enforcement system can also suffer if people turn to criminal acts in desperation. Higher crime rates would mean further resource demands could be made on the police service. Courts could become further clogged. And the lives of job seekers could be irrevocably worsened if they are charged. All these factors can be multiplied if short-term unemployment slips into long-term unemployment. Disadvantages and barriers to employment can become entrenched and much, much harder to solve. Further down the track, this can result in generational unemployment, where children grow up never knowing what it is to have a working parent, and find it hard to incorporate the world of work into their perception of their own futures. So it is clear that saving $50 a week now is a false economy that risks massive imposts on budgets across the public sector for many years to come—not to mention the obvious and unacceptable toll on the lives of individuals who are forced to live this way.

This Labor government has implemented some important and progressive policies to create jobs and grow the productive capacity of the economy—and I applaud them wholeheartedly. But it is not enough. We can and should do more by increasing the rate of Newstart by $50 a week, and we need to do it in the upcoming May budget. This is a change that is not only unanimously supported by the community sector; it was recommended by the Henry review. The Business Council of Australia has also recognised the low level of Newstart. On the issue, council chief executive Jennifer Westacott got it very right when she said:

Entrenching them into poverty is not a pathway back into employment.

I am very sorry that the Senate inquiry into Newstart rates did not find in favour of increasing the rate of the allowance. However, it is worth recognising some of the additional senators' comments to the committee report. I applaud my colleagues Gavin Marshall and Alex Gallacher's comments on the inquiry:

Labor senators took note of and were impressed with the quality of evidence presented on the inadequacy of Newstart Allowance throughout this inquiry. Multiple respected welfare groups and professionals with extensive experience in the social security field presented the committee with a clear, well-argued message which could not be ignored: the real value of Newstart Allowance has receded so significantly that it is exacerbating poverty and becoming an impediment to employment for many.

It was also clearly stated in the inquiry's additional comments that:

Labor senators lend their in-principle support to an increase in Newstart Allowance, and note that many in the welfare sector advocate an increase of $50 per week, as explained in the committee report.

It is often said that the gauge of a good society is how it treats its most vulnerable and disadvantaged members. And I have always believed that providing support and opportunity for our nation's most disadvantaged citizens is at the core of Labor's mission.

The Australian Social Inclusion Board chair illustrated the problem of the increased gap between the haves and the have-nots very effectively when she said:

We've managed to put people on the moon. We've managed to eradicate terrible diseases of the past. We've just put that robot on Mars …

Don't tell me we can't find somewhere safe and secure for people to live.

Don't tell me we can't solve the problem of children going to bed hungry.

While a modest $50 weekly increase in the rate of Newstart will not solve the multiple levels of disadvantage facing so many thousands of Australians, it will provide a much better foundation from which to start. I urge my colleagues to recognise the importance and urgency of this critical move.