Introduction
1.1
The committee started this inquiry in July 2019 and received evidence from submitters and witnesses up until the committee held its last public hearing on 14 February 2020.
1.2
Since then, with the emergence of the global COVID-19 pandemic, the global and domestic economic outlooks have rapidly deteriorated as governments have announced stricter mitigation measures to slow the spread of the virus.
1.3
These measures have direct and profound impacts on the economy and employment. In response to the COVID-19 outbreak, fiscal authorities in many countries have announced measures to support their economies, the sectors and workers most affected by the unprecedented shut-downs that are currently occurring.
1.4
In Australia, at the end of March 2020, the Australian Government's economic response has included measures to assist existing income support recipients and newly unemployed people. These measures include the temporary expansion of the eligibility to income support payments, the establishment of a new, time-limited Coronavirus supplement on top of existing income support payments, and two separate cash payments to social security, veteran and other income support recipients.
1.5
The committee welcomes and acknowledges these measures, which are providing assistance to working-age jobseekers to support them through the economic impact of the COVID-19. However, these measures are time-limited. This means that the context in which the inquiry took place as well as the inquiry findings are still relevant today and into the future beyond the COVID-19 crisis.
1.6
Indeed, Australia has one of the lowest unemployment benefit rates in the Organisation for Economic Co-operation and Development (OECD). Newstart Allowance, Australia's principal unemployment benefit payment (without the temporary Coronavirus supplement) , is currently set at $559 per fortnight for a single person without dependents. This is equivalent to less than $40 a day.
1.7
For some time, the adequacy of Newstart and related payments has been called into question. Across the community sector and other organisations, such as businesses and state and local governments, there is a view that payment rates have not kept up with the rising cost of living; and as such no longer provide an adequate minimum standard of living.
1.8
Indeed, up until the temporary increase of income support payments were made, the rate of Newstart has not been materially increased since March 1994.
1.9
There has been a growing call for an increase to the rate of Newstart and related payments. In recent times, the call for an immediate increase has intensified, with academics, advocates, economists and politicians of all persuasions voicing their concerns about the need for a review and increase.
1.10
It is in this context that the committee embarked on this inquiry, seeking to explore the adequacy of Newstart and related payments. In doing so, the committee examined the impacts of these payments on individuals, the community, and the economy. Further to this, the committee examined proposals for mechanisms to establish payment rates that reflect community living standards and adequately support the transition to work of jobseekers on income support payments.
1.11
Throughout the inquiry, the committee was mindful that, for many recipients, Newstart is not a short-term payment. The committee recognises that the people receiving Newstart and related payments have a wide range of personal circumstances which may affect how they interact with the income support system.
Report structure
1.12
This report consists of seven chapters, including this introductory chapter:
Chapter 1 (this chapter): provides background information on the labour market and the income support system in Australia; unemployment and underemployment figures as well as profiles of recipients of working-age income support payments.
Chapter 2: examines the definitions and measures of poverty used in Australia, and discusses the financial hardship faced by recipients of income support payments.
Chapter 3: explores how the poverty experienced by people on Newstart and related payments contribute to poor physical and mental health outcomes, as well as poorer educational outcomes and discusses how financial hardship combined with the current rules to access crisis payments is elevating risks of family and domestic violence.
Chapter 4: explores the impacts of increased demand for services and emergency relief assistance on communities, organisations, local governments and state and territory services and budgets.
Chapter 5: examines the barriers to employment faced by working-age income support recipients, in particular, the barriers that stem from the labour market, poverty, and mutual obligation requirements.
Chapter 6: examines the additional barriers to employment faced by vulnerable recipients of income support payments, including people with disability or a medical condition, older workers, single parents, individuals living in rural and regional Australia, Aboriginal and Torres Strait Islander people, and young people.
Chapter 7: explores mechanisms for managing and reviewing the rates of income support payments and considers proposals for broader reform to the social security system.
Labour market
1.13
Up until the beginning of the global COVID-19 pandemic in March 2020, the Australian Government considered that 'labour market conditions have been strong, with employment growth of about 2.1 per cent in 2019'. This rate is above the OECD average of approximately one per cent per annum; and also sits above Australia's 10-year average, which has been about 1.8 per cent for the past three years.
1.14
Prior the COVID-19 pandemic, the 2019–20 Budget did forecast employment growth to be solid over the next few years, though the rate of growth was expected to moderate to 1¾ per cent in 2019–20 and 2020–21.
1.15
At the time of its submission in October 2019, while the Australian Government considered that labour market conditions continued to be solid, it recognised that a number of groups including youth, long-term unemployed people, mature aged people, Indigenous Australians, people with disability, those who are lower skilled and those from regional areas, can experience weaker outcomes in the labour market compared with the national average.
1.16
Despite the overall steady performance of the labour market, wages growth has been slower, with the Wage Price Index increasing by 2.3 per cent in the first half of 2019, compared with inflation at 1.6 per cent in the same period.
1.17
The Australian Government noted that 'slower wage growth…reflects adjustments associated with the unwinding of the terms of trade boom' and that 'as growth in the economy picks up and spare capacity in the labour market continues to be absorbed, wage growth and inflation are expected to rise'.
1.18
The Australian Government also noted that changes to the labour market will occur in the coming years, influenced by factors including technology, globalisation, urbanisation and demographic change.
1.19
With the global COVID-19 pandemic still unfolding rapidly, it is too early to tell, given the uncertainties, what will be the full impact of the COVID-19 on the Australian labour market. On 30 March 2020, the Australian Government stated:
The virus, along with the increasing health measures to slow its spread, will have significant economic implications. […] Australia's position heading into this crisis is stronger than many, with both the IMF and the OECD having forecast Australia to grow faster than comparable economies, including the UK, Canada, Japan, Germany and France. […] There remains considerable uncertainty around the economic implication of the Coronavirus for the June quarter and beyond, but the economic shock will be significant.
Employment
1.20
The committee acknowledges that the following sections on employment and unemployment date back to December 2019 and that, due to the COVID-19 pandemic, these figures are likely to change throughout 2020. However, they do indicate trends that were relevant during the inquiry and are likely to remain relevant once the current COVID-19 crisis has eased, especially in the areas of long-term unemployment and underemployment.
1.21
In December 2019, Australia's employment participation rate was at 66 per cent. This figure has remained in the mid-60 per cent range for the last 12–24 months. Over the last decade, Australia has had an average participation rate of 65.2 per cent.
1.22
Although this figure appears steady on a national level, there is a marked difference in the participation rates of urban and rural areas. In capital cities, the participation rate was 67.3 per cent whereas a 62.4 per cent recorded participation rate was recorded in the rest of state areas.
Workforce composition
1.23
Australia's workforce currently has approximately 68 per cent of workers in full-time employment and 32 per cent in part-time employment. In 2019, 262,000 new jobs were created in Australia, of which approximately half were full-time and half were part-time.
1.24
Women's participation in the workforce has continued to grow and today, over 60 per cent of women are in paid work, compared with just over 70 per cent of men.
1.25
Since 1978, the makeup of Australia's workforce has changed significantly, with increases in participation across most age groups. Current workforce participation by age is outlined in Figure 1.1.
1.26
Notably, participation of over 55 year olds has increased from 11 per cent in 1978 to 19 per cent in 2019.
Unemployment
1.27
In Australia, full employment or the natural rate of unemployment, is generally considered to be 5 per cent. Recent figures released by the Australian Bureau of Statistics (ABS) show that Australia's unemployment rate is sitting at 5.1 per cent and has remained steady over the last three years.
1.28
Similarly to the employment participation rate, unemployment rates vary across Australia. For example, the average unemployment rate in the capital cities was 5 per cent in June 2019, below the 5.3 per cent recorded in the rest of state areas. These averages still do not show the full picture in some areas around Australia, for example, the current unemployment rate in South Australia in 6.8 per cent; and some areas within that state have unemployment rates of over 10 per cent.
1.29
This differentiation in labour market performance and employment rates at the regional level can be attributed to a number of factors, such as industry base, transport networks and infrastructure, degree of natural amenity, population size and growth, accessibility to more dynamic labour markets and the skill level of the labour force, including a region’s access to higher education.
1.30
While the rate of unemployment is an important indicator of how the labour market is performing, recently, factors such as long-term unemployment and underemployment have begun to play an increasingly important role in assessing the state of employment in Australia. These are discussed below.
Long-term unemployment
1.31
Long-term unemployment is currently defined as unemployment of more than 52 weeks duration. However, the definition has previously been as low as 13 weeks.
1.32
Between 2009 and 2016, the rate of long-term unemployment in Australia increased from 0.7 per cent to 1.35 per cent. Noting that the long-term unemployment rate is increasing at a time when the general unemployment rate has been steady, points to a level of complexity in the management of long-term unemployment.
1.33
Currently, more than 25 per cent of the unemployed have been in a state of long-term unemployment for more than 52 weeks—that is 174,900 individuals—while 96,400 individuals have been unemployed for more than 104 weeks. This number has increased significantly since 1967, when 13 per cent of unemployed people were considered to be long-term unemployed.
1.34
Further, the average duration of unemployment in Australia remains very high. It is currently 53.1 weeks for males, 48.6 weeks for females and 50.9 weeks overall, which is nearly equal to the long-term unemployment rate.
Underemployment
1.35
As with long-term unemployment, underemployment in Australia is an increasingly important factor in understanding the state of employment across the country. The ABS defines an underemployed worker as someone who is not fully employed, that is, they are a part-time worker who has indicated that they would prefer to work more hours. In September 2019, Australia's underemployment rate was 8.4 per cent.
1.36
According to Jobs Australia, many from the increasing cohort of underemployed people 'exist within the margins of the workforce'. Meaning that they are working episodically when opportunities arise and often with limited protections.
1.37
Although official job-creation statistics seem steady, according to the National Foundation for Australian Women, they have only been keeping up with population growth and labour force participation:
Once underemployment, discouraged workers, nearly one million 'marginally attached' workers are taken into account true underutilisation in Australia’s labour market exceeds 15 per cent: three times the official unemployment rate.
1.38
Issues around the changing nature of the workforce and unemployment and underemployment are examined in Chapter 5.
The income support system in Australia
1.39
Australia's social security and income support system was established shortly after federation in 1908, principally, to provide support to older Australians who were no longer able to work. Since that time, the system has seen numerous changes; however, the underlying principles of the system have remained.
1.40
The primary purpose of the income support system is to ensure a minimum standard of living for those unable to support themselves through work, savings or other means. This means that Australians are expected to use their own resources before calling on the support of the general community for assistance.
1.41
Today, Australia has a highly-targeted income support system, based on need, and funded from general revenue, including taxes collected from individuals and business. This system uses means testing to help ensure payments are targeted to those most in need by reducing assistance as a person’s income and assets increase. This system is not time limited, meaning that assistance can be accessed indefinitely.
1.42
The Australian Government has stated that:
The welfare system operates as a safety net within the context of government social and economic policy, which is designed to encourage growth and create jobs, and promote investment in education, skills, and health.
1.43
The Australian Government provides a number of different income support payments. The primary purpose of these payments is to ensure a minimum adequate standard of living for individuals and families. This policy objective is underpinned by a number of fundamental human rights, including the right to social security, contained in international treaties to which Australia is a party.
1.44
According to the Australian Government, its policy approach, which has an emphasis on poverty alleviation rather than on previous income maintenance, means that it has one of the most targeted and redistributive transfer systems in the OECD. Australia has a ‘flat’ rate structure that does not take into account previous earnings.
1.45
Social security system policy is managed by the Department of Social Services (DSS) and implemented by Services Australia.
International comparisons of unemployment benefits
1.46
The Australian social security system, in particular, its approach to working age unemployment benefits, is not directly comparable to other international examples as it has few similarities with any other systems.
1.47
In essence, international comparisons are complicated by the fact that most other countries use contributory insurance systems to assist unemployed people; for those who are unemployed for a short period, benefits are paid at a percentage of past earnings. These systems tend to provide higher rates of assistance during shorter periods out of work but often pay a significantly lower rate over the longer term. Whereas, in Australia, unemployed people receive the same level of payment for as long as they continue to be eligible.
1.48
Among OECD countries, after two months of unemployment, Newstart is the lowest unemployment benefit payment, equivalent to 39 per cent of the previous net wage compared to the OECD average of 68 per cent.
1.49
The relative rates of unemployment payments between Australia and other OECD countries after two months unemployed is set out in Figure 1.2.
1.50
Noting that Australia's unemployment benefit does not change over time, whereas the rates in other OECD countries decrease the longer an individual receives them; after three years' unemployment, Australia's unemployment payments are still amongst the lowest in the OECD.
1.51
The relative rates of unemployment payments between Australia and other OECD countries after three years unemployed is set out in Figure 1.3.
1.52
Since the beginning of the COVID-19 pandemic, governments around the world, including Australia, have temporarily adjusted their unemployment benefit systems to better assist unemployed people. New measures put in place include direct cash payments, temporary supplements, wage subsidies and other benefits. As such, the OECD countries' approaches on how they are temporarily supporting unemployed people are not directly comparable.
Social security and welfare expenditure
1.53
The social security and welfare budget funds a broad range of services and payments to individuals and families, including:
most income support payments such as pensions and allowances;
family payments such as Family Tax Benefit (FTB) and Child Care Subsidy (CCS);
funding for aged care services;
the National Disability Insurance Scheme (NDIS);
payments and services for veterans; and
assistance to Indigenous Australians that has not been included under other functions.
1.54
In 2019–20, social security and welfare expenditure is estimated to be $180.1 billion, representing 36 per cent of the Australian Government’s total expenditure.
1.55
Of this expenditure, approximately $10.8 billion (6 per cent) is allocated to assistance to the working age unemployed and the sick (i.e. recipients of Newstart and other allowances).
1.56
Social security and welfare expenditure is expected to increase by 2.2 per cent in real terms from 2018-19 to 2019–20, and by 3.6 per cent in real terms from 2019–20 to 2022–23. Budget Paper No. 1 for 2019–20 indicates that 'the most significant drivers of this growth are the assistance to the aged and assistance to people with disabilities'. By comparison, expenses for the assistance to the unemployed and the sick are estimated to increase by 1.1 per cent.
Types of income support payments
1.57
As noted earlier, Services Australia is responsible for the delivery of income support payments, as well as social, health and child support services and other payments. A list of income support payments delivered by Services Australia is available on its website.
1.58
Income support payments are broadly grouped into allowances (such as Newstart and Youth Allowance) and pensions (such as the Age Pension and Disability Support Pension). Eligibility for each pension or allowance is measured by means testing of incomes and /or assets. There are different eligibility requirements and payment rates for allowances and pensions reflecting the Australian Government’s expectations about an individual’s engagement with the labour market.
1.59
Allowances such as Newstart are paid on the basis that recipients are not expected to need income support for an extended period of time. Whereas pensions are intended for recipients not expected to be able to undertake paid work.
1.60
Since 20 March 2020, the Australian Government has introduced a new JobSeeker Payment to replace seven existing working age payments. These are Newstart Allowance, Sickness Allowance, Wife Pension, Partner Allowance, Bereavement Allowance, Widow B Pension, and Widow Allowance.
1.61
This reform to the income support system aims to 'make it easier for people to navigate [the system], and will no longer treat people who are in similar circumstances, differently'. However, these changes do not apply to Youth Allowance (jobseeker).
1.62
Further to allowances and pensions, the Australian Government provides a range of supplements to income support recipients. Principal supplements include Commonwealth Rent Assistance and the Energy Supplement. Like other payments, supplements have eligibility requirements to determine who can access them.
How payment rates are set
1.63
The rates of income support payments are set by the Australian Government. These payments are increased differently, based on the type of payment. For allowances, adjustments have focused on maintaining the value of payments, whereas for pensions, the focus has been on maintaining relativities to community living standards.
1.64
Newstart and other allowances are indexed to Consumer Price Index (CPI), a proxy measure of cost of living or purchasing power. Payment rates are adjusted in line with CPI on 20 March and 20 September each year.
1.65
In contrast to allowances, pensions are adjusted through a two-step process. First, rates are indexed using either CPI or the Pension and Beneficiary Living Cost Index (PBLCI) depending on which index gives the higher result. Following this, pensions are then benchmarked against a percentage of male total average weekly earnings (MTAWE). This means that, after indexation, rates are checked to see whether they are equal to or higher than the benchmark. If the rate is lower than the benchmark, the rate is increased accordingly. For couples, the benchmark is 41.76 per cent of MTAWE. For singles, the benchmark is approximately 27.7 per cent of MTAWE.
1.66
Over time the different adjustment methods have resulted in a growing gap between allowance and pension rates. In 1994, when the rate of Newstart was last increased, it was equivalent to approximately 90 per cent of the Age Pension at that time. Whereas Newstart today is equivalent to only 65 per cent of the Age Pension.
1.67
During periods when wages rise faster than prices, income support payments indexed using CPI alone fall in relation to incomes of the broader community. This has been the case over the past two decades, as pensions and wages have increased faster than inflation while Newstart has remained more or less the same in real terms.
Who should set the rate?
1.68
In 1975, the Commission of inquiry into poverty (Henderson inquiry) recommended payments be indexed in line with a measure of community living standards other than CPI; and suggested either an index of average earnings or an index of gross domestic product per head of population.
1.69
Since that time, successive government and other reviews have made different proposals about how the rate of unemployment benefits and pensions should be set and by whom.
1.70
For example, the Australia’s future tax system review in 2010 (Henry review) along with the Reference Group on Welfare Reform (2015 McClure review) also recommended that payments be indexed other than by CPI.
1.71
More recently there have been proposals that not only should unemployment benefit payments be indexed differently, but that there should be an independent body established responsible for determining the rates of all income support payments, including how they should be indexed.
1.72
For example, in 2008, Catholic Social Services Australia proposed an Entitlements Commission. The Commission would independently set and adjust payments at arm's length from government, in the same way as the Remuneration Tribunal and Reserve Bank of Australia. It would be guided by terms of reference and empowered to make annual determinations using a consistent methodology, to be established by the Commission through a transparent and consultative process.
1.73
More recently, the Social Security Commission Bill 2018, introduced by independent MP Cathy McGowan in August 2018, proposed the establishment of an independent Social Security Commission. The proposed commission would have reviewed social security payments as defined by the Social Security Act 1991 (excluding payments such as the Family Tax Benefit or veteran payments). It would have also conducted its own consultation and research, and made recommendations to Government, who would be required to respond.
1.74
Organisations including the Australian Council of Social Service (ACOSS), and researchers from the University of New South Wales (UNSW) have also advocated for an independent review mechanism, pointing to the Fair Work Commission expert panel that reviews the adequacy of the minimum wage and makes national minimum wage orders.
Rates of payment
1.75
The rates of income support payments vary considerably across the broad spectrum of payments that are administered by Services Australia.
1.76
There is a clear delineation between the rates of allowances and pensions; with allowance rates sitting at approximately 60 per cent of the value of pension rates. For example, as noted previously, the current maximum rate of Newstart is $559 per fortnight, while the current maximum rate of the Age Pension is $850 per fortnight.
1.77
Set out below is a summary of the principal allowance and pension rates, including an outline of the eligibility requirements for each payment.
Newstart Allowance/JobSeeker Payment
1.78
Newstart Allowance is the main income support payment for unemployed people aged 22 and over, but under the Age Pension age. To be eligible to receive Newstart, an individual must also be:
under the income and assets test limits; and
prepared to meet mutual obligation requirements.
1.79
As noted previously, the maximum payment is around $559 per fortnight for a single person with no dependents. There are different rates of payment based on the recipient's circumstances, for example, a single person with a dependent or a person aged over 60 can both receive up to $604.70. Whereas if recipients are partnered, they can receive up to $504.70 each.
1.80
The rates of payment can also vary based on whether they are a homeowner, and whether the recipient is receiving any other income. Newstart recipients must report their income every two weeks, and the rate of payment is linked to the amount of other income reported.
1.81
In order to continue receiving the Newstart payment, recipients must also meet certain requirements, called mutual obligation requirements. Individuals must satisfy an activity test by seeking work or participating in an activity designed to improve their employment prospects (such as a training course). The specific requirements for each recipient are set out in a Job Plan that can be agreed directly with Services Australia, or through an employment services provider.
1.82
If an individual does not meet their mutual obligation requirements (in part or in full), or does not report their income, their payments may be delayed, reduced, or stopped.
1.83
Newstart recipients are also eligible to apply for supplements including Commonwealth Rent Assistance and to receive an Energy Supplement.
Youth Allowance (jobseeker)
1.84
Youth Allowance (jobseeker) is a payment for young people aged 16 to 21 who are looking for work. The maximum rate is $462.20 per fortnight. To be eligible to receive this payment, recipients must be one of the following:
looking for full time work;
doing approved activities;
studying part time and looking for work; or
temporarily unable to work.
1.85
Similarly to Newstart recipients, recipients of Youth Allowance (jobseeker) are also required to report any income they earn as well as create and maintain a Job Plan.
Parenting Payment
1.86
Parenting Payment is the main income support payment for a young child's principal carer. A single parent, also receiving the Pension Supplement—which is a regular extra payment to assist with utility, phone, internet and medicine costs—is eligible for a maximum payment of $780.70 per fortnight.
1.87
An individual can be eligible for Parenting Payment if they are caring for a child under 8 years old as a single carer, or under 6 years old if the carer is partnered.
1.88
Some recipients of Parenting Payment are also subject to ParentsNext, which is a program for parents and carers who:
have received Parenting Payment for the last 6 months;
care for a child under 6 years of age; and
have not reported paid work to Centrelink in the last 6 months.
1.89
ParentsNext is delivered in two streams: an Intensive Stream in 30 locations and a Targeted stream in remaining non-remote areas.
1.90
ParentsNext participants are required to meet mutual obligation requirements. Payments may be put on hold if mutual obligations or reporting requirements are not met.
Age Pension
1.91
The Age Pension is an income support payment for older Australians. The maximum rate for a single person is $850.40. To receive the payment, individuals must be:
under the income and assets test limits; and
an Australian resident, normally for at least 10 years.
1.92
The Age Pension age is currently 66 years old. However, Age Pension is in the process of being increased to 67 years. It will increase by 6 months every 2 years until Age Pension age is 67 on 1 July 2023.
1.93
Age Pension recipients can also be eligible to receive the Energy Supplement and Pension Supplement.
Disability Support Pension
1.94
The Disability Support Pension (DSP) is for individuals with a permanent physical, intellectual or psychiatric condition that prevents them from working. There are both medical and non-medical rules that determine an individual's eligibility for the payment.
1.95
The non-medical rules require a potential DSP recipient to be over 16 years of age (and below Age Pension age); be an Australian resident; and meet an income and assets test.
1.96
The medical rules are split into two categories: manifest and general medical rules. Manifest medical rules apply if an individual:
needs nursing home level care;
has a terminal illness with average life expectancy of less than 2 years;
has an intellectual disability with an intelligence quotient of less than 70;
has category 4 HIV/AIDS; or
receives a Department of Veterans’ Affairs special rate disability pension (totally and permanently incapacitated).
1.97
A medical condition must be fully diagnosed, treated and stabilised to meet the general medical rules for DSP, which consider whether:
a condition will last more than 2 years;
a condition is fully diagnosed, treated and stabilised;
an individual has an impairment rating of 20 points or more;
an individual meets Program of Support rules, if these apply; or
a condition will stop you working at least 15 hours a week in the next 2 years.
1.98
Progressive changes to the eligibility requirements over the last decade have seen fewer individuals qualify to access DSP. Those people who do not meet the eligibility requirements for DSP can receive Newstart instead.
Income support recipients
1.99
Income support recipients represent a broad cross-section of the Australian population, in age, gender, marital status, country of birth, and remoteness.
1.100
The share of recipients across the states and territories is consistent across most income support payments. In line with population size, New South Wales, Queensland and Victoria have the highest numbers of recipients.
1.101
Demographic data on the recipients of three income support payments—Newstart Allowance, Youth Allowance (jobseeker), and DSP —is set out below.
Newstart Allowance recipients
1.102
In June 2019, 686,785 individuals were receiving Newstart. DSS data shows that of this total:
51 per cent are male, 49 per cent are female;
79 per cent are not partnered and 21 per cent are partnered;
26 per cent are aged 55 years and over;
11 per cent identify as indigenous;
74 per cent were born in Australia; and
61 per cent live in major cities, 22 per cent inner regional, 12 per cent outer regional, and 4 per cent remote or very remote areas.
1.103
A majority of Newstart recipients are on the full rate for which they are eligible.
1.104
While over 80 per cent of recipients do not earn any other income, more than half have been assessed to have a work capacity of over 30 hours per week.
1.105
Approximately 37 per cent of Newstart recipients also receive Commonwealth Rent Assistance.
1.106
An analysis of poverty in Australia undertaken by ACOSS and UNSW Sydney found that 54.6 per cent of Newstart recipients live in poverty.
Long-term recipients of Newstart
1.107
Newstart is often referred to as a short term payment; however, according to data from the DSS, the average payment duration for an individual on Newstart is 162 weeks, or over 3 years.
1.108
Whilst nearly one third of Newstart recipients are on the payment for less than one year, the majority of individuals who receive Newstart are on the payment for longer periods of time, with some individuals receiving Newstart for more than 10 years. A breakdown of the average payment duration for individuals receiving Newstart is set out in Table 1.1.
Table 1.1: Average payment duration for Newstart recipients
|
|
|
|
|
|
|
|
Number of individuals
|
226,990
(33.1%)
|
118,645 (17.2%)
|
188,245 (27.4%)
|
122,862
(17.9%)
|
30,043
(4.4%)
|
1.109
DSS data also shows that Newstart recipients are on income support payments more generally for an average of 296 weeks, or over 5 years.
Youth Allowance (jobseeker) recipients
1.110
In June 2019, 82,770 young people were receiving Youth Allowance (jobseeker). All recipients of this payment are aged between 16 and 21 years old. The maximum rate for a single person living out of home is $462.50 per fortnight. Just over 80 per cent of recipients are on the maximum rate.
1.111
DSS data shows of the total Youth Allowance (jobseeker) recipients:
51 per cent are male, 49 per cent are female;
96 per cent are not partnered and 4 per cent are partnered;
20 per cent identify as indigenous;
91 per cent were born in Australia; and
56 per cent live in major cities, 27 per cent inner regional, 13 per cent outer regional, 4 per cent remote or very remote areas.
1.112
The analysis of poverty in Australia undertaken by ACOSS and UNSW Sydney also found that 63.7 per cent of Youth Allowance recipients live in poverty.
Disability Support Pension recipients
1.113
As at June 2019, 745,673 Australians were receiving the DSP. Approximately 84 per cent of recipients are on the full rate of $850.50 per fortnight. Over 45 per cent of recipients are aged 55 years and older.
1.114
DSS data indicates that DSP recipients are:
53 per cent male, 47 per cent female;
77 per cent not partnered, 23 per cent partnered;
7 per cent identify as indigenous;
79 per cent were born in Australia; and
60 per cent live in major cities, 25 per cent inner regional, 11 per cent outer regional, 2 per cent remote or very remote areas, 2 per cent unknown.
1.115
Over 50 per cent of DSP recipients are on the payment for more than 10 years, and the average payment duration for DSP recipients is over 13 years.
Conduct of the inquiry
1.116
On 25 July 2019, the Senate referred the adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support payments in Australia to the committee for inquiry and report by 27 March 2020.
1.117
The inquiry was advertised on the committee's website and the committee wrote to stakeholders inviting them to make submissions, to be lodged by 30 September 2019. Submissions continued to be accepted after this date. The committee received 471 submissions which are listed in Appendix 1.
1.118
The committee held eight public hearings:
10 October 2019, Canberra, ACT
11 October 2019, Sydney, NSW
30 October 2019, Elizabeth, SA
1 November 2019, Alice Springs, NT
6 November 2019, Perth, WA
8 November 2019, Launceston, Tas
20 November 2019, Melbourne, Vic
14 February 2020, Canberra, ACT
1.119
A list of witnesses who gave evidence at the hearings is available in Appendix 2.
Acknowledgment
1.120
The committee thanks all of the individuals and organisations who submitted to the inquiry and appeared as witnesses.
Notes on references
1.121
References to Committee Hansard in this report are to the proof transcripts. Page numbers may vary between the proof and official transcripts.