Increasing income support

No Australian should live in poverty

Many current income support payments are less than half the poverty level. One in 200 people are homeless in Australia and many more are struggling with sky-high rents.

About 9 per cent of Australians (around 2.2 million people) are currently experiencing income poverty, and three per cent of Australians – roughly 700,000 people – have been in income poverty for at least the last four years.
People living in single parent families, Indigenous Australians, people with low educational attainment, the long-term unemployed, and people with disabilities or other long-term health conditions are most likely to experience protracted income poverty.
Productivity Commission, Is Australia becoming more inequal? report

Everyone should have enough to cover the basics, but right now, people struggling to get by on the $46 a day JobSeeker rate are being forced to make heartbreaking decisions between paying their rent, putting enough food on the table, or getting the medical services they need.
We need to raise the rate of working-age payments to at least $70 a day so that everyone has enough to cover the basics while going through tough times.
Raise the Rate, ACOSS

Payment	Current
JobSeeker*	$46
Youth allowance*	$38
Disability support pension*	$70
Aged pension*	$64
Parenting Payment – Single	$63
Minimum wage	$110

(*Approximate rate/day for recipients living alone with no dependents)

Our plan

Raise income support payments for people living independently to the Henderson poverty level which is ~$90 / day.

Make optional the Cashless Debit Card imposed largely on First Nations communities

Rationalise the bureaucratic income support systems so they are fairer, more integrated, and streamlined

Stop harassing people in need with complex procedures and pointless job application requirements

Raise the minimum wage by 5% to help low-income families struggling with the high cost of rent, food, and services.

Lift the Commonwealth Rent Assistance cap by 30%

The theory underpinning the impossibly low JobSeeker payment is that low unemployment payments are a necessary incentive for encouraging people into employment. Australia has the lowest unemployment payment in the OECD and, as the Australia Institute points out, if the theory is correct, we should also have the lowest unemployment rate. Australia’s 4% rate of unemployment is lower than OECD average but by no means the lowest.

To be counted as unemployed there are a number of criteria. One is that if for some reason you are unable to start a new job immediately you are not considered unemployed. People are considered employed if they do one hour a week of work. 3 million Australians are not actively looking for work but that does not mean they didn’t want to work. Youth unemployment is 8.3%.

Everyone should have enough to cover the basics, but right now, people struggling to get by on the $46 a day JobSeeker rate are being forced to make heartbreaking decisions between paying their rent, putting enough food on the table, or getting the medical services they need.

We need to raise the rate of working-age payments to at least $70 a day so that everyone has enough to cover the basics while going through tough times. Raise the Rate, ACOSS

Data from the Household Income and Labour Dynamics in Australia – Hilda Survey February 2021 found:

POVERTY DEPTH

The poorest couples in Australia survive on less than $270 per week.
Nearly one million Australians – around 5.8 per cent of the population – are living in severe income poverty with incomes below 30 per cent of the national median income after housing costs.
Of the 750,000 children living in poverty, over 190,000 are experiencing severe poverty.
Over a quarter of single parents are in poverty, with one in ten experiencing severe poverty.
Poverty is more pronounced for women than men, with larger gender differences in rates of poverty for young women and women aged 55 and over.

HOUSING

High rental costs have increased poverty among renters.
1.5 million renters in Australia are in poverty, with the poorest families left with no more than $150 per week after housing costs are paid.
The maximum Commonwealth rent assistance is $71.40 per week, compared to private sector rents of at least $300.
Rental costs have increased over the last five years by $100 per week in Canberra and by at least $50 per week in Sydney, Adelaide and Perth.
The maximum rate of rent assistance has increased by $6.10 per week over five years.
53.8 per cent of people who rent from a government housing authority are in poverty.
The poverty rate for people in social housing has fallen by 6.7 percentage points over the last two years.

UNEMPLOYMENT

Joblessness is a key driver of poverty, particularly for single people and people living in large families.
Nearly two thirds of single jobless people and 55 per cent of single parents without jobs have incomes below the ‘standard’ poverty line.
JobSeeker payments are currently $388.35 per week including rent assistance and the energy supplement.
Around 105,000 unemployed people are in severe poverty in Australia.
An increase of $25 per day in the JobSeeker base rate combined with $30 per week extra in rent assistance would virtually eliminate severe poverty in Australia.

A LIFETIME OF HARDSHIP

Persistent poverty is shown to be damaging to health and wellbeing.
575,000 people have been in poverty for at least five of the last ten years.
330,000 single people and 250,000 single parents have been in poverty for at least five of the last ten years.
115,000 people have experienced financial hardship consistently for a decade or more.
People in poverty for at least five of the last ten years are 3 times more likely to suffer acute mental stress compared to people who are never in poverty.
The psychological trauma from persistent poverty rises more steeply for women than for men in most age groups.

EMPLOYMENT

One in five people in poverty are in low paid employment.
One in eight agriculture workers and 10 per cent of workers in accommodation and food services have earnings below the poverty line.
Poverty rates fell by 6 percentage points among casual workers who remained in employment during COVID-19.
There were 220,000 fewer casual workers in 2020 than 2019.
Poverty rates for casual workers dropped between 2019 and 2020 by a far greater margin for workers in organisations that were able to claim the JobKeeper payment.
Poverty rates dropped to 9.4 per cent in 2020 for casual workers in organisations where no JobKeeper payments were claimed, but to 5.6 per cent for workers in companies that claimed JobKeeper.
Average weekly earnings for casual workers rose from $616 per week in 2019 to $754 per week when their employers were able to claim JobKeeper, but to only $650 per week when this was not the case.

CHILDHOOD POVERTY

Poverty scars children and affects their economic, social and health outcomes in adulthood.
People who come from a poor family experience inferior economic outcomes and poorer mental and psychological health.
People who experience childhood poverty are up to 8 percentage points more likely to remain in poverty in adult life.
The probability of employment is up to 11 percentage points lower for children who experienced poverty in childhood compared to those who did not come from a poor childhood background.
Young adults who experienced poverty in childhood are significantly more likely to suffer from nervousness or feel unhappy with their lives for up to 10 years after leaving home.
Targeted strategies to reduce poverty will deliver economic returns, and positive social, psychological and health benefits.

This government has driven tax cuts for high-income earners, tax breaks for investors, subsidies for fossil fuels, and increased house prices. Meanwhile those less fortunate have been victimised by the cashless welfare card. The government used RoboDebt to punish citizens knowing their methods were unlawful and it was forced to fund $1.7 billion in repayments, legal fees, and compensation. However, for those caught up in the scheme, it was a highly stressful experience. No apology or explanation of any sort was forthcoming.

The current approach to welfare is not only mean – it smacks of treating people as undeserving regardless of their circumstances. The rich are getting richer get richer and the poor get poorer and this appears to be intentional. The wealth of the top 20 percent of Australians has grown 68 percent in the past 15 years, compared to 6 percent for the bottom 20 percent. Inequality among younger Australians has grown faster than overall inequality.

We accept that controls are needed to ensure taxpayers’ money is correctly targeted but the needs of people in poverty must be met and they must be treated with dignity and care.

It is the Government’s intention to continue with the Cashless Debit Card system in what are largely First Nations communities. It works by restricting 80 percent of the social security payments received to using approved stores and online merchants. It was established as a trial however the first evaluation was criticised by stakeholders and the Australian National Audit Office found:

‘ … it is difficult to conclude whether there had been a reduction in social harm and whether the card was a lower cost welfare quarantining approach’.
ANAO

For many First Nations people, the cashless debit card is stigmatising and demeaning and there is evidence of it increasing dependence on welfare.

The 2020 crisis support payments made during the Alpha wave of Covid – JobKeeper, JobSeeker, and the Coronavirus Supplement – helped businesses and people survive. They halved poverty and significantly reduced inequality.

For people in households on the JobSeeker payment, poverty dropped from 76% in 2019 to 15% in June 2020.

This research shows that the COVID support payments changed lives,”
The government’s decision to take away the Coronavirus Supplement and JobKeeper after lockdowns eased in late 2020 without an adequate substitute, and later, to exclude people on the lowest income support payments from the COVID Disaster Payment and prematurely end that payment, locked more people into poverty.
Scientia Professor Carla Treloar, Director of the Social Policy Research and the Centre for Social Research in Health at UNSW

The Disaster Payment was paid in September 2021 but was narrowly focused on people who had lost paid work and over 80% of those on the lowest income support payments were denied the payment.

In the case of Job Seeker & Youth Allowance, recipients should be encouraged to engage in education, training, volunteering, and sporting activities where these are appropriate and reasonably available. This would benefit the job seeker’s mental and physical health without being an unreasonable burden.

Our Economy for People platform details our proposed changes to our tax system that reduce tax rorts for the wealthy.

Other Relevant Platforms

Affordable Housing – not investor tax breaks that push up prices.
Aged Care – not private profit.
Reducing Gambling Harm – cutting advertising, extending self-exclusion.
Tax Reform – including $37,000 Tax Free Threshold.
Health – including DentiCare.

References

The cashless welfare card may not be quite the success it seems (SMH, 2017)
Cashless debit card: review fails to find proof Coalition welfare scheme reduces social harm (Guardian, 2021)
Why is the government trying to make the cashless debit card permanent? Research shows it does not work (The Conversation, 2020)
Raise The Rate website (ACOSS)
Services Australia website
Business.gov.au – The minimum wage
ACTU calls for Annual Wage Review 5% increase (ACTU, Mar 2022)
Out of the Maze: A Better Social Security System for People of Working Age (PDF. ACOSS, 2010)

Image above N-IUSSP