It’s time to raise the Newstart rate

15 October 2019
Raise the rate for good campaign logo

Sacred Heart Mission  joins community services providers to call for an urgent increase to Newstart and other allowance payments across Australia.

Following the inquiry into the adequacy of Newstart and social assistance payments in September, Cathy Humphrey, CEO, says an increase to Newstart and related payments is one of the single most effective ways to reduce poverty and homelessness in Australia.

“The rate has not been increased in real terms for 25 years, while living costs have skyrocketed,” Cathy says.

“The amount of poverty and homelessness in our community is alarming; more than 116,000 Australians are experiencing homelessness on any given night, and we know the inadequacy of allowance payments is a key contributor to this.

“It’s time to raise Newstart to a liveable payment, which means people can focus on getting suitable, paid work, rather than risk falling through the gaps.”

Sacred Heart Mission supports the Australian Council of Social Service (ACOSS)’ recommendation the Federal Government raise maximum rates of allowance payments for all single people by a minimum of at least $75 per week, with indexation, and as soon as possible.

Since Newstart was last increased in real terms (after adjusting for inflation) in 1995-1996, Australia and the world has undergone a transformational change in the way people live, work and interact with each other.

According to the Australian Bureau of Statistics, in 1995-1996, the median weekly cost of private rent in Australia was $139, compared to the median weekly cost in 2017-2018 of $370 per week. This is an increase of 166 per cent, and in major cities the median rent is far greater than the national average.

“Newstart is currently set at $279.50 per week – which is nowhere near enough to meet basic housing needs today,” Cathy says.

“For Newstart to work it needs to be enough to cover the basics to allow people who are looking for work, or studying and sometimes going through hard times like illness or injury, to live with dignity, and without the stress of dealing with debt.”

Though Commonwealth Rent Assistance (CRA) is an additional payment designed to help with housing costs for income support recipients, at a full rate of only $69 per week, it’s nowhere near adequate enough to help meet people’s basic needs. In order to be eligible for CRA, you need to be spending at least $123.20 per week on rent, and for every dollar you spend up to $307.20, you receive 75 cents of CRA.

If a single person’s rent is exactly $307.20 per week, and they receive the full rate of $69 of CRA as well as Newstart, they would be left with $41.30, or $5.90 per day to cover basic necessities; food, bills, transport and clothing.

This is a stark contrast to the commonly-used measure of housing affordability at 30 per cent of income; rent would have to be below $83.85 per week to be considered affordable, and would mean ineligibility for CRA.

“We also support ACOSS’ recommendation to increase CRA by a minimum of 30 per cent – or $21 per week for singles,” Cathy says.

“CRA must be responsive to local housing market conditions, to actually help people to obtain and stay housed.”

A recent study by Anglicare found there were no homes available for rent in any major city in Australia which were affordable for someone on Newstart. This places vulnerable people out of the market and into homelessness.

Every day, around 400 people attend Sacred Heart Mission’s two Engagement Hubs, which provide access to the necessities of life; nutritious food, showers, laundry facilities and medical assistance. The hubs also connect and refer people to Sacred Heart Mission case management services and other specialist services.

“Our staff witness first-hand how the current rates of allowance payments are so minimal, recipients are living well below the poverty line,” Cathy says.

“Many of our service users live on an allowance payment and cannot meet their daily survival needs without assistance from us and other similar services.

“It is not possible for someone to be able to genuinely seek and obtain employment, and to maintain social inclusion in society, without their basic needs being met.

“This also contributes to long-term reliance on government assistance.”

Monash University recently highlighted an increase in health issues and hospital admissions for people on income support in comparison to wage earners, and a lower likelihood of accessing health professionals who do not bulk bill.

“This pattern is backed up by international research, and should be of significant concern to the government,” Cathy says.

“Essentially, by raising the rate of Newstart and other allowance payments, the costs to the health system due to poverty and disadvantage will be reduced.”

Sacred Heart Mission is hopeful the Senate will recommend an increase to Newstart and other allowance payments, after the recent Parliamentary inquiry into the issue.

Join the campaign or contact your local MP using the Parliamentary Directory and tell them why you want to see an increase to Newstart.