Newstart slipped well behind pension, say ANU academics

Professor Peter Whiteford said Newstart had almost always been lower than aged and disability pensions, but 20 years ago it was 92 per cent of the pension. Now, it is just 61 per cent.

Prof Whiteford and Associate Professor David Stanton, from the Australian National University's Crawford School of Public Policy, have also compared Newstart to median household income, the average male wage, other pensions and unemployment payments overseas, finding is lagging further behind on every measure.

Over 25 years, Newstart had fallen from around 45 per cent of the minimum wage to just under 40 per cent. It has fallen from 46.5 per cent of median household income in 1994 to 31 per cent in 2015-16 - or from "a little way" below the poverty line to "a long way below".

Twenty-five years ago a person on Newstart received a little more ($9 more) than someone on the 10th percentile of incomes. By 2015-16, they were $126 below someone on the 10th income percentile.

Prof Whiteford said the trend was very different for pensioners, whose benefits had increased by 49 per cent in real terms since the turn of the century. Newstart had remained virtually constant - and for people relying on Newstart the situation was made worse by cuts to parenting payments and family tax benefit and fast-rising rents.

The single Newstart payment is $559 a fortnight and the single aged pension of $850. Prof Whitehead's figures showing a $360 difference include the supplements given to each.

Australia's payment was also well behind other countries. Comparisons were not straightforward, since most other countries paid a percentage of past earnings when someone became unemployed, a payment that fell away over time.

But in 2001, Australia ranked 10th highest in the OECD, paying an unemployment benefit that was 49 per cent of median household income. By 2018, Australia's rank had dropped to 19th, paying just 34 per cent of median household income.

A combined submission from government departments said Australia targeted a higher proportion of its social security spending to low income households than others in the OECD.

And it emphasised the need for the government to keep the budget balanced, especially with more pressure to come from an ageing population.

It released data showing 686,300 people were on Newstart in March, down 82,000 in three years. Just over half of people on Newstart are aged 45 or older, with more than a quarter aged 55 or older. The average time on Newstart was 159 weeks, or just over three years.

Prof Stanton gives evidence to the Senate inquiry on Thursday.