A major increase to Newstart would boost the Australian economy

By Adam Carlton

Campaigners are calling for a substantial increase in the Newstart payment, anywhere from 75 to 200 percent. The argument is that the benefit has fallen so far behind the poverty line that a major increase is needed to restore any semblance of fairness.

It is also argued that it makes economic sense. A  report  from a study on welfare payments by accounting giant Deloitte, and  commissioned by the Australian Council of Social Services (ACOSS), has provided evidence that an increase of $75 per week, would provide a boost to the Australian and regional economies.

ACOSS chief executive Cassandra Goldie said the report showed that “the injection of millions of dollars into regional communities will create new jobs, lift wages and profits as well as increase the incomes of the lowest five per cent.” This means new expenditure, which would be a boost to business.

“The latter effect would result in an additional 12,000 people being in work in 2020-21,” said David Rumbens from Deloitte.

Unfortunately, this has fallen on deaf ears so far. It is said that it would kill the incentive to work. In this claim, there is a kind of recognition here that the current level of Newstart is not enough to live on. The implication is that poverty is the lever that forces people back to work. The basis of this argument is that being out of work is the unemployed person’s fault.

This ignores the structural realities in the Australian economy, where there are not enough jobs to go around and much of the workforce has been casualised. In these circumstances, penalising the unemployed is not going to create more jobs. Only a stimulus will providing a significant section of the community with more spending power will.

It works by providing a bigger domestic market for those providing goods and services. There is a flow on effect, the economy grows and there are more jobs.

The trouble is that it runs counter to the flawed proposition, which suggests that using an inadequate Newstart to put downward pressure on wages overall,  raises the income of the major investor, and this creates more jobs. If this was going to work, it would have done so by now. The point is has not worked, and it is time to find a solution somewhere else. Trickle down economics must be buried once and for all.

Another argument used is that Australia cannot afford a livable Newstart. Perhaps the truth is that this is more about priorities.  At present, handing out corporate welfare and allowing massive tax evasion at the top end are the priorities.

These are the priorities, because the established belief is that the rest of society must maintain the corporate world during economically difficult times. It is a short-term view, sacrificing the future for immediate gain.

They forget that the economy is not just about those at the top, but about all of us. A completely different way of thinking is needed. Providing a livable Newstart may not be the whole answer, but it is part of it.

On top of this, if ours is a society that values justice and equality, something that amounts to a violation of a basic human right should not be tolerated. Having  sufficient income to life an adequate life, to participate in society and not be excluded, is something we are all entitled to.