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Prime Minister rubbishes Newstart increase

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Prime Minister Scott Morrison has rejected suggestions that an increase to the Newstart Allowance could be in order, arguing it’s Australian pensioners who need the help more.

Labor leader Bill Shorten yesterday described the Newstart Allowance as “too low” and a barrier to employment. Labor has committed to review welfare benefits, with Shorten yesterday telling Channel 9 that a punitive approach to unemployed people doesn’t work.

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The Newstart Allowance is a benefit payment granted to unemployed people looking for work.

“Of course we want people to get off the dole and get a job, but this sort of simple view that you starve people to get them off the dole, it’s not as straightforward as that,” Shorten said.

“Our priority is to make sure people find a job and make sure that we encourage people to work, but at the same time, I’m not going to start kicking a person who is down in the head, am I?”

However, responding this morning, the Prime Minister said Labor was primarily for welfare, rather than jobs.

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“I heard the other day they were thinking of increasing the Newstart payment,” he told reporters.

“Well I’ve got to tell you, if I thought I had the money to do that, I reckon I’d be doing it for pensioners first.”

His words follow a major report released by Deloitte Access Economics last month, which found that increasing Newstart would lead to an extra 12,000 people in employment by the 2020-21 financial year, and an increase in wages.

The report revealed that the allowance’s indexation to prices, rather than wages, meant it had effectively not increased in real terms for more than 20 years. As it stands, its 700,000 recipients receive $273 a week, or $39 a day.

As a share of the Age Pension and the average, median and minimum wage, the Newstart Allowance has shrunk, the report said, with senior partner Chris Richardson describing the current amount as “unnecessarily cruel”.

However, increasing the Newstart Allowance would come at a cost of $3.3 billion a year, the report also noted.

In its 2018 budget, the Turnbull government expanded the Restart Wage Subsidy program, providing employers with financial incentives of up to $10,000 to hire workers of 50 and older. This was expanded to encourage older workers to work longer and support themselves better in retirement and was costed at $1.1 million.

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The government also announced it would put an additional $90 million into its Transition to Work program, targeting Australians between 15 and 21 at risk of long-term unemployment,

However, it simultaneously limited uni students’ access to welfare.

‘It’s mean and unjustified’: Independent economist

To independent economist Saul Eslake, the current Newstart Allowance is unjustifiably low.

Speaking to Yahoo Finance, he noted the decrease in the allowance as a percentage of the single Age Pension from 92 per cent in the early 1990’s to its current 66 per cent.

“I’m not necessarily saying the unemployment benefit ought to be lifted to the level of the Age Pension, because a lot of people who receive the unemployment benefit have access to other forms of support, but nonetheless I think it is mean and unjustified for it to be set at two-thirds of the level of the Age Pension, as it is now,” he said.

He said Age Pensioners aren’t necessarily generously treated, but they are in comparison to the unemployed.

Further, he said the debate is symptomatic of a view that young people “need to be punished” in order to be diligent about hunting for work, pointing to the Abbott government’s proposal to force unemployed people with no employment history to wait six months before being eligible for income support.

However, it’s not an exclusively Liberal stance.

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Labor is also a relatively new convert to the Newstart Allowance cause, Eslake said. Neither party stands to gain much by increasing the allowance as the vast majority of recipients live in Labor strongholds and already vote Labor.

Outside of politics, support is strong on both sides, with the Business Council of Australia and the Australian Council of Social Services (ACOSS) both in supported.

“This is not a left-wing cause,” Eslake said.

“When Labor was in office, they had exactly the same approach as the Coalition has had. Conversely, it’s not just ‘bleeding-heart liberals’, or ‘social justice warriors’, or whatever phrase from the language of the alt-right you want to pick, that think this is wrong.”

– With agencies.

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