Read The Times Australia

Daily Bulletin

New budget standards show just how inadequate the Newstart Allowance has become

  • Written by: Peter Saunders, Research Professor in Social Policy, UNSW
image

It’s long been accepted that the level of Newstart Allowance for the unemployed is too low. The Henry Tax Review proposed an increase of “about $50 a week” in the payment for single people to restore parity with the couple rate. Several community organisations, including the Australian Council of Social Service, have called for similar changes over time.

But if the couple rate is also too low, this would reduce – not remove – the underlying inadequacy.

Our new research allows these and other income inadequacies to be estimated using a budget standards approach – that is, by calculating how much income a family needs to achieve a certain standard of living.

New budgets have been derived for families with the main (male) breadwinner either in full-time work and receiving the minimum wage, or unemployed and receiving Newstart. They cover single people, couples with no, one and two children, and a sole parent with one child. The first child in each family is a six-year-old girl and the second child is a ten-year-old boy.

The budgets for low-paid families vary between A$597 per week (single person) and $1,173 per week for the couple with two children. The corresponding weekly budgets for unemployed families are $434 and $930.

Comparing the new budget standards with the incomes provided by the social safety net for each family allows the adequacy of these provisions to be assessed.

These comparisons show the minimum wage for a single person is $62 above the low-paid budget standard. However, the safety net incomes for couple families with or without children all fall short of the new standards by between $9 and $89 per week.

For unemployed families, the Newstart-based safety net incomes are well below the unemployed standards in all instances: $96 per week below for a single person, $107 for a couple, and $126 for a couple with two children.

How reliable are these estimates?

The budget standards approach involves deriving how much money a family needs to buy the basket of goods needed to achieve a particular standard of living.

The method has a long history in Australia. It dates back to when Justice Higgins used it as the basis for setting the living wage in the Harvester judgment in 1907.

The standard underpinning our new budget standards is the Minimum Income for Healthy Living standard developed in the UK. It is designed to allow each person to lead a fully healthy life in all of its dimensions, with implications for what people consume, own and do. It also means omitting items like tobacco products, too much “junk food”, and excessive consumption of alcohol, that are inconsistent with healthy living.

Any attempt to assess adequacy is fraught with difficulty. This reflects the elusive nature of adequacy itself, which is hard to give precise meaning to.

The Harmer Pension Review emphasised that it should reflect “prevailing community standards”, but what these are and how they are identified is open to interpretation.

Rather than retreat in the face of this uncertainty, the budget standards approach has met the challenge head-on by identifying the items required to reach the Minimum Income for Healthy Living standard.

What this means

The new standards suggest that while the minimum wage may be adequate for some low-paid workers, this is clearly not the case for Newstart Allowance, which is woefully inadequate.

An increase well in excess of $50 per week is urgently needed, but so too is an independent mechanism for regular review and adjustment of its adequacy. Something similar to what the Fair Work Commission uses to set the minimum wage would be an obvious place to start, since that seems to work.

Improving and maintaining the adequacy of the incomes received by low-paid workers and the unemployed should be an integral part of any concerted effort to tackle overall economic inequality.

Authors: Peter Saunders, Research Professor in Social Policy, UNSW

Read more http://theconversation.com/new-budget-standards-show-just-how-inadequate-the-newstart-allowance-has-become-82903

Business News

Why Modular Content Is Transforming Modern Marketing Teams

Modern marketing teams are expected to produce more content than ever before. They need to support websites, landing pages, email campaigns, social channels, product pages, sales enablement material...

Daily Bulletin - avatar Daily Bulletin

Everything You Need to Know About Getting Support from Optus

Whether you've been an Optus customer for years or you've just switched over, at some point you'll probably need to contact their support team. Maybe your bill looks different from what you expected. ...

Daily Bulletin - avatar Daily Bulletin

The Marketing Strategy That’s Quietly Draining Sydney Business Owners’ Bank Accounts

Sydney businesses are investing more in digital marketing than ever before. The intention is clear. More visibility should mean more leads, more customers, and steady growth. However, many business ...

Daily Bulletin - avatar Daily Bulletin

Why Mining Hose Solutions Are Essential For High-Performance Industrial Operations

In environments where the ground itself is constantly shifting, breaking, and being reshaped, every component must be built to endure. Mining operations are among the most demanding in the industria...

Daily Bulletin - avatar Daily Bulletin

The Reason Talented Teams Underperform

If you’re in business, you might have seen it before. A team of capable and smart people just suddenly slows down, and things start spiraling out of control. On paper, everything looks perfect, but ...

Daily Bulletin - avatar Daily Bulletin

Why More Aussie Tradies Are Moving Away From Paid Ads

Across Australia, a lot of tradies are busy. There’s no shortage of demand in industries like plumbing, electrical, landscaping, and building. But being busy doesn’t always mean running a smooth or...

Daily Bulletin - avatar Daily Bulletin

Why Careers In The Defence Industry Are Growing Rapidly

The defence sector has evolved far beyond traditional roles, opening doors to a wide range of opportunities across technology, engineering, intelligence, and operations. This is where defense industry...

Daily Bulletin - avatar Daily Bulletin

Strategic partnerships to enable global acceleration for Aussie fashion brands: SHEIN Xcelerator launches

SHEIN Xcelerator is introducing a more agile, demand-led operating model, allowing brands to scale while retaining control over creative direction and identity. For fashion brands, the pressure t...

Daily Bulletin - avatar Daily Bulletin

Tips for Avoiding Probate Delays

Probate can be a lengthy process at the best of times, and delays often compound the stress that comes with managing a loved one's estate. Many of those delays are avoidable with the right preparati...

Daily Bulletin - avatar Daily Bulletin

The Daily Magazine

Australia’s Best Walking Trails and the Shoes You Need to Tackle Them

Australia is not short on spectacular walks. You can follow ocean cliffs in Victoria, cross ancien...

Why Pre-Purchase Building Inspections Are Essential Before Buying a Home in Australia

source Have you ever walked through an open home and started picturing your furniture, family d...

5 Signs Your Car Needs Immediate Attention Before It Breaks Down

Car problems rarely appear without warning. In most cases, your vehicle gives clear signals before...

Ensuring Safety and Efficiency with Professional Electrical Solutions

For businesses in Newcastle, a safe and fully functioning workplace remains a key part of day-to-d...

Choosing The Right Bin Hire Solution For Hassle-Free Waste Management

When it comes to managing waste efficiently, finding the right solution can save both time and eff...

Why Cleanliness Is Critical In Childcare Environments

Children explore the world with curiosity, often touching surfaces, sharing toys, and interacting ...

What to Look for in a Reliable Australian Engineering Partner

Choosing an engineering partner is rarely just about technical capability. Most businesses can fin...

How to Choose a Funeral Home That Supports Families with Care

Choosing a funeral home is rarely something families do under ideal circumstances. It often happen...

Why Premium Coffee Matters in Modern Hospitality Venues

In hospitality, details shape perception long before a guest consciously evaluates them.  Lightin...