While minimum wage goes up, Newstart languishes in poverty, creating a big hole in our safety net.


Nearly two million of Australia’s lowest paid workers this week received a CPI-plus rise of at least $15.80 per week when the Fair Work Commission increased the minimum wage. Good on them. It was a win for the great Australian safety net.

In a separate decision, the commission provided relief for perhaps more than 500,000 low-paid workers in supermarkets and fast food chains when it ruled employees at Coles had been drawn unfairly into deals that took their pay below the award rate.  This shows there are checks and balances on exploitation when we have efficient regulators and a vigilant media.

A few weeks ago, millions of Australian pensioners received one of their twice-yearly adjustments which benchmark their payments against a percentage of total average weekly earnings.

Yes, the great Australian social safety net is in place. But there is a big hole in it.

But for over 800,000 people are slipping through the hole into poverty and oblivion. There has been no real increase in the Newstart/Youth Allowance for more than 20 years. As a result these payments are now sitting 50 per cent below the current Australian poverty line.

Unlike with the minimum wage and pensions, there is no regular tribunal, framework or process to assess whether Newstart/Youth Allowance are adequate to live on. It has been shrinking by neglect.

The consequence of not adjusting Newstart or Youth Allowance payments become particularly stark as Australia goes through the most severe housing affordability crisis in memory. Forget home ownership in this election debate, the dire shortage of public housing is a national crisis. A recent study by Anglicare showed that people on either Newstart, Single Parent Allowance or Youth Allowance could not access any affordable rental accommodation in any capital city in Australia. Allowance provides no hope of its recipients achieving the most basic human need – shelter.

Observations that these rates are now causing social and domestic harm to families have come from unlikely quarters such as the Business Council of Australia and KPMG.

The Fair Work Commission on Tuesday ruled that the national minimum wage will increase to $672.70 a week, from 1 July. In comparison unemployed people on the Newstart Allowance are eligible to receive $263.80 per week, and up to an additional $65 per week in rent assistance. This is nearly 50% below the 2015 Australian Poverty Line of $517 per week for single people, and 40% less than the current minimum wage.

Whilst the age pension for a single person continues to widen between it and Newstart.

Once close to each other, the pension and Newstart began to diverge in 1991 when the government pegged the single pension to 25 per cent of male total average weekly earnings and left unemployment benefits pegged to the consumer price index. The gap widened again in 2009 when the Rudd government lifted the peg for the pension from 25 per cent of male earnings to 27.7 per cent.

The 2010 Henry Tax Review found that if the existing arrangements continued, by 2040 a single pensioner would be paid “more than twice as much as a single unemployed person”.

Fair Work Australia justified its minimum wage decision by stating the relative position of low-paid workers had deteriorated over the past decade. Imagine what terms the Commission would use for in the relative position for people on Newstart or Youth Allowance. Going down the plug hole comes to mind.

In an election based on arguments on dribble-down economic theories, neither party has mentioned the P word (poverty), nor have they said what they are going to do to adjust benefits to ensure they do not fall further behind basic living standards.

Maybe if Turnbull and Shorten approached the thinking through the eyes of a child. More than 600,000 children are now living in families where neither parent is working. The amount that is being offered for families to raise their children while they are unable to find work is at such low levels it is directly harming children, often on the wrong end of the dynamics in these families, being asked to go without in school in sport or at home.

This is not just a debate about what is an adequate level of income for an adult or parent looking for work it is now whether this is system abuse upon children due to the paltry income their parents are receiving.

The politics of reluctance by Governments to front this policy space in fear of rewarding unemployment needs challenging. The Henry Report stated that ‘there is room to increase these payments without significantly weakening work incentives. A single adult on Newstart Allowance who obtains a full time job at the minimum wage would more than double their disposable income’.

Australia can do this better. Let’s not have a double standard whereby low paid workers get an income adjustment for to keep in touch with real costs of living, whilst those who can’t or don’t work are left behind to fend for themselves. No wonder this election so far seems irrelevant to everyday life for many of the poor, the young or the struggling.

Our leaders should abandon their hypocrisy in claiming they are delivering fairness to families or maintaining the great Australian safety net while this anomaly continues.

Moreover, if things don’t change, our leaders will be creating an Australian underclass that will now be perpetuated by inter-generational poverty.

I can almost hear them saying ‘tell someone who cares’.