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$3 Centrelink increase slammed: ‘Won’t make a difference’

·3-min read
Rental house keyring and sign at Centrelink.
The low base rates of many Centrelink welfare payments mean many low income households are struggling. (Source: Getty)

The Federal Government’s boost to rent assistance and other Centrelink payments has been criticised as inadequate by some experts.

On Monday, the Federal Government announced its twice-yearly increase to Centrelink payments in line with inflation.

Under the welfare increase, rent assist payments will increase by $3 per fortnight to $145.80 for singles, $3.50 to $171.50 for families with up to two children and $3.92 to $193.62 for families with three kids or more.

The Australia Institute’s Matt Grudnoff said these sorts of increases are not enough given the low base rate for these payments.

“An extra $3 a fortnight is not going to make any difference to people's rental payments,” he said.

He said rental rates haven’t yet seen the same rises as house prices, with the latest ABS figures showing residential property prices rose 23.7 per cent in the last 12 months.

However, he said rents traditionally follow house prices.

“And so this problem of underpaying of employment and pensions and all the other welfare payments is only going to get worse,” Grudnoff said.

Welfare payments should be indexed to wages, not inflation

As well as upping rent assistance, this month there will also be increases to pension payments, carer's payments and JobSeeker, among others.

Social Services Minister Anne Ruston spruiked the payment rise on Monday and said the payment was “the largest increase since 2013”.

Opposition leader Anthony Albanese criticised these statements as spin, arguing that the rise will not keep up with the increasing costs of living.

Grudnoff said one of the reasons welfare recipients are falling behind is because they are linked to the consumer price index (CPI), which is a measure of household inflation.

He said you can index against inflation or wages.

“So wages are generally considered to be what you index something to if you want to keep up with people's expectations. Whereas just linking it to inflation comes with a number of problems,” he explained.

The first is that inflation is measured from an average household.

The problem with using the average household as a yardstick is the average Australian household spends a lot more on luxury goods than the average household relying on welfare, Grudnoff said, but the cost of essential goods rises 10 times faster than the cost of luxury goods.

“So they tend to fall behind,” he said.

Australia has relatively high retiree poverty rates for an OECD nation, with renters particularly vulnerable to falling into poverty.

Grudnoff said that’s in large part because the aged pension is so low.

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