Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

I table an explanatory memorandum relating to the bill. I seek leave to have the second reading speech incorporated in Hansard and to continue my remarks.

Leave granted.

The speech read as follows—

In a world that is getting harsher, it is government’s role to make things easier for all Australians. Punishing job seekers by condemning them to poverty is not contributing to the caring society that the majority of Australian want for themselves or for their children.

The Australian Greens recognise that single people living on Newstart and Youth Allowance are the ones who are the most disadvantaged by Australia’s current income support system. The maximum single rate for Newstart was $246.30 in September 2012; $140 less per week than the rate of payment for singles (including the fortnightly pension supplement) on the age and disability pensions. The maximum rate of payment for Youth Allowance (living away from home) was $203.75 in September 2012; $42.55 less per week than the single rate of Newstart.

The Social Security and Other Legislation Amendment (Caring for People on Newstart and Other Measures) Bill 2013 will give effect to the Australian Greens commitment to increase the base payment rate by $50 per week for single people living on Newstart and Youth Allowance (living away from home). The bill will also index other social security allowance payments and pensions to the higher of CPI, MTAWE or the pensioner and beneficiary living cost index. This will ensure that the gap between pensions and allowance payments does not continue to widen.

Raising the single rate of Newstart by $50 per week, will bring relief to almost a million households on the very lowest rates of income support, including single parent families, by increasing the amount of financial support they receive on a fortnightly basis. The bill will also ensure that the single rate of Newstart is finally increased to two-thirds of the combined couple rate, as recommended by the Henry Tax Review and 2009 Harmer Pension Review.

The focus on singles is based on evidence that these households are the most at risk of poverty. The ACOSS Poverty Report 2012, which drew on 2010 census data, found that single people generally faced a significantly higher risk of poverty than couples (25% to 9%) while 25.3% of single parent families with children are living in poverty compared with 8.4% of couples with children. This reflects in part the economies of scale available to people living with partners.

As well as assisting people out of poverty, the key reasons for increasing the base rate of Newstart and Youth Allowance include:

(a) the extended length of time that many recipients spend on the payment;

(b) the cost of living pressures faced by those in receipt of the single rate of the allowance; and

(c) the growing gap between the pension and allowance payment types due to different methods of indexation.

A recent inquiry by the Senate Education, Employment and Workplace Relations Committee examined cost of living pressures for allowance recipients including housing, food and the costs of searching for work and concluded its section on the adequacy of allowance payments by stating:

"On the weight of evidence, the committee questions whether Newstart Allowance provides recipients with a standard of living that is acceptable in the Australian context for anything but the shortest period of time."

The inquiry was also presented with evidence from Centrelink that 42% of new recipients of Newstart each year do not transition quickly back into the workforce.

Similarly, many Youth Allowance recipients are expected to be in receipt of the payment for an extended period of time while they complete their studies or look for work. Recipients on Youth Allowance have access to better employment income arrangements, which allow Youth Allowance recipients to build up their income bank or gain working credits and earn more per week before their payments are reduced. However, a single person on Youth Allowance is still on a significantly lower payment than any other allowance recipient and highly likely to be in receipt of the payment for an extended period of time.

The call for an increase in the base rate of allowance payments has received widespread support from not only welfare and social service groups but also from business groups, unions, various economists and members of parliament. The Business Council of Australia argued in its submission to the Inquiry into the adequacy of allowances payments that there is a need for an increase in the Newstart Allowance on an ‘adequacy and fairness basis’ and that ‘there is concern that the low rate of Newstart itself now presents a barrier to employment and risks entrenching poverty

The government has acknowledged on a number of occasions that it is not easy for a person to live on the current rate of Newstart allowance. However, the suite of measures that have been introduced by the current Government so far have been inadequate to address the level of need that those on the lowest rates of payment experience while they study or look for work.

For example, the new Income Support Bonus will offer eligible singles the equivalent of around $4 extra a week as a lump sum twice annually. Those who receive it will still be in receipt of payments that are $130 below the poverty line.

Other supplements have been made available to some allowance recipients, but those supplements reflect the higher costs incurred by the recipients, such as illness, high private rental costs, or the costs of raising children and do not resolve the inadequacy of the base payment.

This bill will directly assist single people living on Newstart and Youth Allowance for an extended period of time by providing them with a more stable, adequate base income.

The gap between the allowance and pension payments is increasing. Between March and September of 2012, the gap between Newstart and the pension (including pensioner supplement) rose by $7, because of the use of different indexation methods. Newstart Allowance is indexed to movements in the Consumer Price Index (CPI) in March and September each year and Youth Allowance is indexed to the CPI once a year in January. Pensions are indexed twice a year (in March and September) by the greater of the movement in the CPI or the Pensioner and Beneficiary Living Cost Index (PBLCI)—an index designed to better reflect the price changes affecting pensioners - and the rise is also benchmarked to Male Total Average Weekly Earnings.

The effect of differences in indexation is that pensions have, since 1997, been increasing in line with wage rises or the CPI while allowances have increased only in line with the CPI—and over this period, wages have generally increased at a greater rate than prices.

The Henry Taxation Review examined the long term impact of this difference in indexation methods and found that:

"… some difference in the level of payments can be justified on the basis of differing needs and presenting different incentives to different groups … Harder to justify is the fact that rates of pension and allowances are not merely different, but the gap between them is widening … If the current indexation arrangements remain in place, it is likely that by 2040, a single pensioner would be paid more than twice as much as a single unemployed person. A continuous decline in Newstart Allowance against community standards would have major implications for payment adequacy and the coherence—in terms of horizontal equity—of the income support system."

This bill will address the widening gap, by ensuring that these classes of payment are all indexed by the same methodology and that they are in line with changes to both prices and wages.

A $50 increase to the base rate of eligible payments will ensure a fairer, and more straightforward social security system and immediately reduce the extent to which Australian people are living in poverty. Better indexation will help maintain the value of an increase into the future.

I commend the bill to the Senate.

Debate adjourned.