House debates

Monday, 28 May 2012

Private Members' Business

Newstart Allowance

11:30 am

Photo of Adam BandtAdam Bandt (Melbourne, Australian Greens) Share this | | Hansard source

I move:

That this House:

(1) resolves that Newstart payments are too low and should increase by $50 per week; and

(2) calls on the government to find an appropriate savings measure to fund this increase.

When a newspaper reported yesterday that this motion was being debated today, I received an email from someone who said: 'As a long-term two-year underemployed 60-year-old who can now only manage to get a few hours per week casual work since my full-time position with a major telco company reached its use-by date—then that position was handed over to a younger person who was paid less, this being a typical private enterprise workplace practice—I wish you every success with your motion to lift the dole by $50 per week. There are many thousands of us underemployed 55-pluses who are trying to live on the miserable Newstart allowance. We are not dole bludgers, just victims of the casualisation of the Australian workforce. Thank you.' They then signed off the email.

One of the key reasons that more and more Australians are backing the Greens is that they realise we are now the party that is about looking after people. Many people feel the old parties have given up this core value, and nothing could illustrate this better than their failure to provide an adequate welfare safety net. An adequate safety net should allow people to live with dignity, even when facing some of the toughest times in their lives. When people lose their jobs, we have an obligation to help them. When people lose their jobs, they need an adequate safety net to catch them. Our safety net is meant to be Newstart, but Newstart is too low. It is woefully, horribly, utterly too low. The single rate for Newstart recipients is $244 a week. That is less than half the minimum wage—45 per cent—and it is more than $130 under the poverty line. After paying their rent, recipients can be left with just $17 a day—$17 a day for all other expenses including utilities, transport, food, personal care and job-seeking costs. That $17 must also be used to save for other major expenses such as maintaining a car, replacing whitegoods or surviving a health crisis.

Newstart is just not enough to support people while they try to find a job. It affects their ability to search for work, particularly if they already face other barriers such as age, disability or education, as many long-term recipients of Newstart do. Unfortunately, more than 60 per cent of the people who find themselves on Newstart are on it for more than 12 months. Trying to live on such a small income for an extended period of time dramatically impacts on these people. Their world often becomes a cycle of stress, debt, low self-esteem and social isolation that gets harder and harder to break out of. We are condemning the unemployed to poverty. Half of all people on emergency food relief are on Newstart, and nearly half of households on Newstart have not been able to pay a utility bill in the past 12 months. Forty per cent of people on Newstart cannot access essential dental treatment. The situation is unacceptable.

The Greens want to increase Newstart by $50 a week to help address this crisis and, if this motion was passed, it would mean parliament shares our policy. The complacency of the old parties in leaving people to languish in poverty or trapping them in debt is unacceptable. In detail, the Greens would raise Newstart and other allowances by $50 per week, as recommended by the peak welfare body the Australian Council of Social Service. We would also index all allowances to the higher of either average male wages or the consumer price index, in line with pension payments.

Increasing all allowances by $50 right now would cost approximately $1.2 billion in the first year according to costings that have been provided by ACOSS. The Greens have a number of revenue-raising measures that would allow for this important reform including abolishing the billions of dollars worth of subsidies given to the fossil fuel industry, maintaining the 30 per cent tax rate for big business or a more comprehensive mining tax. The recent budget did not address the issues for the most vulnerable Australians. In fact, it seeks to drive more people, including single parents, on to Newstart. The benefits of the boom cannot be said to be equally shared unless we direct those benefits to the most vulnerable in our community. We can and should guarantee them an adequate income and the support they need to overcome their multiple barriers to employment.

This country cannot call itself a just country if we do not do that. I note that last year even Ian Harper, the economist hand-picked by former Prime Minister John Howard to set the minimum wage, declared that the dole is too low. Judith Sloan also argued at the tax summit last year that the dole was no longer adequate. Jennifer Westacott, the Chief Executive of the Business Council of Australia, noted that entrenching Newstart recipients 'into poverty is not a pathway back into employment'. In recent weeks, some government backbenchers have backed the Greens' call for an increase. With this motion we now have the opportunity to use this parliament to drive this important reform. I hope that when we come to a vote next sitting Thursday people will join me in supporting people not poverty. A crucial measure of whether a society is just, democratic and sustainable is whether it guarantees an adequate income safety net for all its citizens. It is time we did so and I commend the motion to the House.

Photo of Kelvin ThomsonKelvin Thomson (Wills, Australian Labor Party) Share this | | Hansard source

Order! Is the motion seconded?

Photo of Andrew WilkieAndrew Wilkie (Denison, Independent) Share this | | Hansard source

I second the motion and reserve my right to speak.

11:36 am

Photo of Jamie BriggsJamie Briggs (Mayo, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | | Hansard source

I rise to oppose very strongly the motion by the member for Melbourne. I am not surprised that Senator Lee Rhiannon has already begun moves to unpick the new leadership arrangements in the Greens after hearing that contribution to this parliament, because I think even Senator Rhiannon realises that the ideological insanity of the positions that the member for Melbourne wants to take this country into are beyond the pale even for such a well-renowned former communist. What we have here is the Greens with absolutely no understanding of how the economy works and how the federal budget works. What you have heard from the member for Melbourne is that the House should simply, as the motion says, increase the Newstart and other allowances—he does not include the other allowances in the motion, but he has added that in his remarks—by $50 per week, and he calls on the government to find appropriate savings. He then lists a series of assertions about big miners and more tax for them, because somehow if you tax mining companies more they will remain prosperous and they will continue to pay that amount of tax. I think it shows why we saw the Government Whip yesterday start to leak out news that he is moving, because he knows that an association in a coalition with this party is destroying the Labor Party that the Government Whip loves. He knows that the association out there in his seat up in the Hunter with this ragtag bunch of economic illiterates is killing the Labor Party that the Government Whip has come to love. He knows that this stuff is just fanciful, as are so many of the other Greens' policies.

I had a chance to have a quick look this morning on the Greens' website. I am sure that the Government Whip will join me in acknowledging some of these policies and their approaches are far beyond the pale. For instance, take the heading 'Global Economics':

… the Greens will remove Australia from existing bilateral free trade agreements where possible;

and further, they will—

… support abolition of, unless radical reform can democratise, the IMF, World Bank and WTO.

The impact on Australia of removing ourselves from the bilateral trade arrangements and the additional unemployed people that would result from that are beyond comprehension, certainly beyond the comprehension of the member for Melbourne. That policy alone would add thousands and thousands and thousands to the unemployment queues. It would add thousands and thousands and thousands in additional commitments for the federal government's budget.

It also gives an ideological perception or understanding that somehow the government can regulate people into wealth, that somehow the government can increase the dole or the Newstart allowance and this will give people the best opportunity to fulfil their lives. Of course it will not. The best way to give people their best opportunity to fulfil their lives is to create the circumstances where the economy will create jobs and people who do find themselves in the unfortunate circumstance where they are out of work will be able to find work more quickly through deregulating how the government involves itself in the economy. We know that government regulation holds businesses back from employing Australians. Increasing the amount of tax that businesses have to pay for this ideological nonsense from the member for Melbourne and his friends holds people back because businesses have got less cash and less opportunity to employ more Australians and get them away from the dangers of being stuck in the welfare trap for a lifetime.

In parts of Northern Adelaide, for instance, we have seen what happens when you have generational welfare dependency. I congratulate the member for Wakefield on the work that he has done in his electorate in identifying that, if you have generational dependency on government, you end up with generational problems including increased crime. You take away the prospect of a better life for Australians by encouraging them to stay in this welfare trap.

This is really the most insidious part of this motion, and I am sure that the Government Whip will support this move by us to oppose this motion. He knows that this economic claptrap from the Greens will vandalise our economy if they continue in this coalition with this government. That is why the Government Whip is starting to say privately that we need to end this government now. It is destroying our country's future. This is another example of a motion that should not be supported by this House. (Time expired)

11:41 am

Photo of Joel FitzgibbonJoel Fitzgibbon (Hunter, Australian Labor Party) Share this | | Hansard source

I congratulate the member for Mayo on his best effort to politicise this debate, a very important debate, I believe, because as members of this place we must constantly and with excessive vigilance keep our eye on the capacity of people to live—to feed themselves, to house themselves and of course live a normal life. The member for Melbourne's motion proposes a number of increases in welfare payments and in particular an increase of $50 in the Newstart allowance, or what people more commonly know as the dole.

When I was selected here in 1996, I was asked what my priorities were. In response I stole an old Neville Wran line that said there were only three issues in politics: 'jobs, jobs and jobs'. The best thing we can ever do as elected representatives to give people a leg up to ensure that they can house and feed themselves, and provide an opportunity to prosper in life, is to give them a job. When I was elected in 1996 the unemployment rate in my electorate was in excess of 10 per cent—I think around 13½ per cent—and of course youth unemployment was probably in the order of 30 per cent. Today the national unemployment rate is less than five per cent, something I would not have dreamed I would see in this place in my time. But even more surprising and more rewarding is the unemployment rate in my electorate which is now just 3.5 per cent, an amazing outcome which shows how far we have come.

What frustrates me is that, notwithstanding that very low unemployment rate and the additional diversity we have in our economy and the growth rate we have in our economy, I still have pockets where you will find large numbers of unemployed people, typically young people. Nothing frustrates me more, as the local member representing a seat with an unemployment rate of 3½ per cent, than to see kids sitting around my shopping centres with baseball caps on backwards, idle and not participating in the labour market. My very strong view is that we have a once-in-a-generation opportunity to break the cycle for those who have never known either their parents or their grandparents to work. They have never known what it is like or simply just do not understand the concept of setting an alarm clock to wake to go to work each morning. We will not shift people out of this cycle by providing additional incentives to stay unemployed. As a government we are doing a range of things. We do not let kids leave school now unless they have got further education or a job to go to. We are investing $3 billion in skills to ensure that Australians have the opportunity to take up those jobs that are on offer because of the health in our economy, unlike that of many of our OECD partners. We need to continue to focus on that goal. We need to get those kids out of that cycle. We need to put people into work.

I am advised that the proposal being put forward by the member for Melbourne amounts to a cost of some $13 billion over the forward estimates. I ask myself: what else could we be doing with that $13 billion? I would much rather be spending it on further investments in young people in particular to get them into work, to get them job ready, to get them skilled. We have seen this weekend the controversy over skilled migration. The controversy is there because we simply do not have the people and the skills to fill these jobs locally. What a tragedy that I still have kids sitting around idle, that I have retrenched workers at Hydro aluminium, but we still have not positioned ourselves sufficiently to ensure we can fill those jobs available in the mining sector. I understand the sentiments of the member for Melbourne; I know this motion is well motivated. But, again, I do not think you get people off unemployment by giving them an additional incentive to stay there.

11:46 am

Photo of Alan TudgeAlan Tudge (Aston, Liberal Party) Share this | | Hansard source

Why are we debating this motion today and this year? Why are business leaders calling for Newstart to go up today? Why are some welfare agencies calling for Newstart to go up today? Why, given that Newstart has not changed that much over the last few years but has been indexed according to CPI across all of those years? The reason is that the cost of living has been going up so dramatically over the last five years under the Labor government, particularly many of the essential costs which lower income people bear as a greater proportion of their income than other people do. We know that, for example, electricity costs have gone up 66 per cent; water, 59 per cent; gas, 39 per cent; and child care, 21 per cent. Many of these costs have been due to government policy.

Given these essentials have been going up so rapidly, I can understand the call from the member for Melbourne and calls from others for an increase in the dole because its value may have diminished over time—and it will, of course, diminish further once the carbon tax is in play come 1 July. But I do not support this motion as it stands, firstly, because our priority should be addressing the cost-of-living pressures for everyone, particularly by ditching the carbon tax and the mining tax, lowering general taxes and making our economy more efficient so that cost-of-living pressures are downwards for everybody. That should be the most important priority.

The second priority should be to make it easier for those people who are unemployed to get access to work. That means looking at our industrial relations framework and making it easier for employers to employ people who are on the dole, to give them a chance and yet have the flexibility, if it is not working, to reasonably lay them off under a fair framework. We know that the current regime does not provide that incentive, so that should be our second priority rather than increasing Newstart.

Thirdly, I do not believe that there should be any increase in the dole without some broader reforms to the welfare system, particularly an increase of the magnitude which the member for Melbourne is talking about. These reforms should be governed by the guiding principle that Newstart should be an adequate safety net but it should not become a disincentive to work. This is critical. Newstart is a safety net for people who are facing tough times, but it should not be a destination of choice. So I believe that if we are to move unemployment benefits in any way upwards, then that must be accompanied by some tougher actions to ensure that all able-bodied people are encouraged to work.

I am from the school of tough love. People of course must be supported to get work, but if they do not take a reasonable job offer then we must be clear about cutting off their welfare payments. I do not believe that we do anybody a service by allowing them to stay on welfare when there is a viable choice for that person to take. Ultimately, the longer a person sits on unemployment benefits, the more incapacitated they will become over time. That leads to welfare dependence and incapacitation. I think it is also the proper right of a taxpayer to say, 'We're happy to support unemployment benefits, but people have to take responsibility to take a job if one is available there.'

In a similar vein, we need to create greater incentives for longer term unemployed people to move to take work. We know that there are many jobs in some parts of Australia which are going begging and there are other parts of Australia where there are many people who are unemployed. Critically, I think we need to create the incentives and the culture for people who are unencumbered to move to where the jobs are.

Finally, we need to introduce greater reciprocity into welfare payments for able-bodied people. There is a social contract with the dole: we will make payments to unemployed people to support them during tough times but we expect responsibility in return—responsibility to give back through a work for the dole program and responsibility to be a good citizen if the taxpayer is supporting their existence.

11:51 am

Photo of Andrew LeighAndrew Leigh (Fraser, Australian Labor Party) Share this | | Hansard source

The issue of movements from welfare into work is one that has long concerned me. It was the reason that I chose 12 years ago to study overseas, researching on the topic of poverty and inequality, looking at the issue of how to move people from welfare into work and the relative effectiveness of interventions such as government jobs, wage subsidies and training programs. It is important that we make that transition from welfare into work as straightforward as possible, particularly for families with children. We know that there are intergenerational cycles of joblessness and we know that high-quality programs that increase employment are at the core of a civilised society.

The Henry review, in approaching the issue of income support payments, wrote of the iron triangle of means testing. The triangle was payment adequacy, program affordability and the incentive for self-support. In the Henry review a great deal of attention was given to the effective marginal tax rates faced by income support recipients. It was an issue that Labor focused on a great deal while in opposition. The Treasurer and the Minister for Families, Community Services and Indigenous Affairs spent many years focusing on the issue of high effective marginal tax rates. Thanks to much of the advocacy from Labor in opposition, those effective marginal tax rates have been decreased.

Today we are debating the appropriate level of the Newstart allowance. I do not think any of us in this House would argue that the current level of Newstart is generous. But the Henry review argued that there ought to be a difference between levels of pensions and levels of what were called 'participation payments', of which Newstart is one. The Henry review argued for restructuring income support into three categories: a pension category, a participation category and a student category. It argued that pensions would be paid at the highest rate in recognition that people eligible for them are likely to rely on them fully for a long time. Participation payments would be paid at a lower rate to maintain incentives to work, the Henry review argued. The Henry review further argued that while there ought to be a difference between the levels of those payments, the same indexation levels ought to apply to all three sets of payments.

The challenge for those of us in considering a question like the level of Newstart payments is twofold. The first is that, as I read it, the bulk of the evidence suggests that higher unemployment benefits have the effect of decreasing transitions from income support into work. This effect is not as large as some have claimed and there are theoretical reasons where you might think it could go the other way—for example, if someone is having difficulty affording the costs of work. But the bulk of economic evidence—and I tend to go where the evidence tells me—papers such as Peter Fredriksson's and Martin Soderstrom's and the work of Anthony Atkinson and John Micklewright, seems to go in that direction. At the same time, we know that while we would like the Newstart payment to be a temporary payment, a significant number of Australians are on the Newstart payment for long periods of time. From memory, the Henry review reported around one-quarter of Newstart recipients have been on the payment for over two years. The issue of adequacy is therefore a large challenge.

If we had substantially more money in the budget, I would see no reason to oppose this measure. I would ideally like to be in a position in which we had the waves of tax revenue that were flooding into this country in mining boom mark I. But we are not in that situation at the moment, and so worthy measures, such as this one, sometimes do not get supported.

11:56 am

Photo of Craig KellyCraig Kelly (Hughes, Liberal Party) Share this | | Hansard source

I rise to speak on the motion moved by the member for Melbourne which states:

That this House:

(1) resolves that Newstart payments are too low and should increase by $50 per week; and

(2) calls on the Government to find an appropriate savings measure to fund this increase.

Certainly those on the Newstart allowance, receiving just $245 per week, are finding things very difficult under this government. Just have a look at how some of the everyday costs of living have increased under this Labor government since it came to power in the December quarter of 2007. Health costs have increased by 25 per cent, education costs have increased by 31 per cent, gas is up 31 per cent, water and sewerage costs are up 59 per cent, and electricity, something that no-one in our country can live without, is up an incredible 66 per cent. And that is all before the effect of the carbon tax which will push up the cost of everything.

The best thing we can do for those on the Newstart allowance is to provide them with the hope, opportunity and dignity of obtaining and securing an ongoing job. But the only way that we can do that is by having business conditions for the private sector, especially small business, that enable them to get out and invest by starting new businesses to create real jobs. But this government, with the full support of the Greens, is doing the opposite. It is increasing red tape for small business and now has decided to burden them with the carbon tax. The greatest crime that can be perpetrated on those on the Newstart allowance is to impose upon the Australian economy not only a carbon tax but the world's largest carbon tax, one that will increase year after year.

As for those on the Newstart allowance, they will receive a double whammy from the carbon tax. They will face not only increasing costs of living as prices rise across the board—especially electricity costs—but ultimately the carbon tax, which is a job killer. It will simply make it more and more difficult for those on Newstart to find a job. Forget the deceptive nonsense espoused by members of the government that the carbon tax will be paid by the so-called big polluters, because we all know the carbon tax will simply be passed on to every single business in Australia through higher electricity costs. One must ask oneself if the member for Melbourne is culpable in forcing many more Australians on the Newstart allowance to pay this carbon tax than there otherwise would be.

The second point of the member's motion touches on an important issue. Indeed, the government should be delivering real savings measures as these will help those on Newstart by freeing up finance for our entrepreneurial small business people, aiding their efforts to generate the new jobs that we need. While it would take several days to detail the countless areas where government spending should be reduced—

Debate interrupted.

Photo of Kelvin ThomsonKelvin Thomson (Wills, Australian Labor Party) Share this | | Hansard source

Order! It being 12 noon, in accordance with standing order 34, the debate is interrupted. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting. The member for Hughes will have leave to continue speaking when the debate is resumed.