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Is it time to raise the rate of income support?

Date published: Thursday 19 July 2018

Category(ies): Feature

BY MELANIE TAIT
@MelanieTait

The statistics are grim: 55% of people who are on Newstart Allowance are living below the poverty line. One in six Australian children under the age of 15 are living in poverty. All together, nearly three million Australians are negotiating their lives and finances below the poverty line daily ($426.30/week for a single, $895.22/week for a family with two children).

Those living on the limited means the allowances provide have reported having to make budget decisions which pit healthcare against petrol and food and extreme social isolation, as we’ll learn more about below.

Recently, there has been a nation-wide push for the Government to ‘Raise the Rate’ of income support payments, spearheaded by the Australian Council of Social Services (ACOSS). This campaign is supported by a wide range of unlikely allies including the Business Council of Australia, National Australia Bank, and KPMG, who have all recognised that the current inadequacy of income support payments is causing Australians to fall into poverty.

The hard reality
Natalie (25 years from Melbourne)

“The crushing feeling of poverty is weighing up whether keeping the lights or the internet connected and I’m sick of that feeling.”

Natalie has a severe disability which makes it impossible for her to engage in full time employment.

She’s been negotiating the Centrelink system for nearly ten years now, and she’s exhausted by it.

Her $503.80 doesn’t go very far in Melbourne for Natalie – it covers her rent, bills and provides a “fairly tight food budget”.

As well as having to make decisions between paying her electricity bill or a medical bill, Natalie’s social life is very limited due to the strict budgeting income support forces her into.

“Going to the movies or to drinks with friends is something I have to save up for more than a month in advance.”

She’s been given support to get into the workforce, but she’s not able to maintain the standards Centrelink sets, due to her permanent disability.

After a clerical error by Centrelink, she found her Disability Support Pension revoked and thousands of dollars of payments held, forcing her into severe debt and homelessness.

“I’m still fighting to restore my pension, and I can’t trust the stability of my financial or housing situation.”

Natalie wants to see income support raised to a living wage.

“I’d like to be able to buy a packet of crisps without stressing about whether I can afford it. I just want to have enough to live, not barely survive.”

Lars (20 years from Hobart)

“I once ran out of toilet paper so instead of buying some more I just went to public toilets for a week.”

Hobart is a particularly difficult place to be on income support for students. Part-time work is gobbled up in moments by a hungry, under-supplied workforce. Many young people are renting ancient homes with inadequate, expensive heating.

Lars, currently studying at university, is at least a little ahead of the game in that his home is provided by his family, but the flip side of that is it limits his youth allowance.

The $260 he gets per fortnight is spent on food mostly (noodles and canned soups) with the occasional beer and book.

Any other needs – electricals, furniture, clothes – are serviced by the local nearby tip shop.

Occasionally this income is supplemented by delivering pizzas for Dominos. It’s also put into his bank account each fortnight with a side order of guilt:

“Sometimes I worry about money and feel pressure that the way I live pathetic. Maybe they should be giving all the money I get to some single mother where she can use it for something good.”

Lars is one of the lucky ones. He sees an end to it when he finishes his studies and is able to get a job.

Holly (37 years from the Sunshine Coast)

“I get so stressed about social events blowing my budget that I avoid going out and seeing people.”

Holly started negotiating life on income support two and a half years ago when she had her son.

It’s a juggle that’s meant she and her son live week to week on $550. It goes on food, rent, occasional day care, second hand clothes and the rare social event. Petrol is something that has to be carefully considered, and some days she’ll not use the car to conserve it.

“It’s hand to mouth every fortnight. By the time we’re a week in we have almost nothing left. There’s no financial buffer zone if something goes wrong, no extra money to do anything out of the ordinary.”

As a single mother, it’s the social aspect of life on income support Holly finds most suffocating.

“We can’t eat out. We can’t travel. The other day I met my friend in the park which was lovely and free and we took a picnic. But then we lingered until dark and she suggested we spend more time together and go get a takeaway with the kids. My budget for the fortnight hadn’t factored in $15 for a cheap takeaway so I had to decline and go home to cook instead.”

Solutions

A first step to immediately address the difficulties faced by those in income support is to increase the payment amount. The dollar value of income support payments has not increased in real terms in 24 years, and the numbers currently informing the calculation of income support payments are based on modelling done over 20 years ago. 

Even former Prime Minister, John Howard, recognises the need for an increase stating earlier this year: “I was in favour of freezing [Newstart] but I think the freeze has probably gone on too long.”

Social service organisations across the country are also agitating for a change in how the rates of income support amounts are decided – including Baptist Care Australia. An independent commission would be able to set income support payments that are sufficient to provide for people’s basic needs, balanced with providing incentives to return to work where that’s possible.

Such a process already exists with the Fair Work Commission’s Expert Panel setting minimum wages. Similarly, the Commonwealth Remuneration Tribunal sets standards relating to the salaries and benefits paid to federal politicians.

Poverty has serious impacts on the health, education and long term prospects of both children and adults. Poverty has serious economic and social impacts on Australian communities, and taking action will bring a tangible return on the investment.