Former Deputy PM Barnaby Joyce is one of many leaders calling for raises in Newstart.
Former Deputy PM Barnaby Joyce is one of many leaders calling for raises in Newstart.

Newstart inquiry to stir call for increase

THE Morrison government has repeatedly batted away a growing swell of support for an increase to Newstart, an unemployment benefit that has not seen a real increase for a quarter of century.

Such demands for an increase are likely to be reignited when a Senate committee begins an examination into the adequacy of Newstart next week.

There have been widespread calls to increase the Newstart payment beyond its twice yearly indexation, from welfare and business groups, economists, the Reserve Bank, federal Labor and the Greens, as well as former Nationals leader Barnaby Joyce.

In its submission to the inquiry, professional services firm KPMG calls for Newstart to rise from $277.85 per week for a single person to $370 per week, which would move it up to 50 per cent of the national minimum wage,

"This would still allow room for a significant financial incentive for moving into even the lowest-paid work for three or more days per week," it says.

It argues Newstart should support the unemployed in finding a new job by providing sufficient funds to eat to a healthy standard, keep a roof over their heads, maintain clothing appropriate for job interviews and travelling to attend interview and Centrelink appointments.

KPMG believes Newstart does not adequately meet these objectives at present.

"If Newstart allowance does not achieve these things, then it undermines the ability for the Newstart program to get people back in to sustainable employment within the shortest reasonable timeframe, and prolongs the period over which the Newstart allowance must be paid," it says,

In 1994, Newstart represented around 30 per cent of the average weekly wage of those employed in the retail and accommodation/restaurant sectors - traditionally the lowest paid sectors in the Australian economy.

Those sectors today earn around $1,180 per week.

Raising Newstart to $370 per week would lift it back to around 30 per cent of the average weekly wage of those sectors.

KPMG estimates with 700,000 to 710,000 people receiving Newstart, an increase to $370 per week would cost the federal budget around $3 billion to $3.5 billion a year.

It notes the government is anticipating a budget surplus of around $7 billion in 2019/20, increasing to $11 billion, $17 billion and then $9 billion in the outer years.

"Australia has a choice about whether to apply a portion of this surplus to increasing Newstart, instead of paying down government debt," it says.

The Senate Standing Committee on Community Affairs' inquiry into Newstart starts on October 10 in Canberra.

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