FlagPost

Flagpost is a blog on current issues of interest to members of the Australian Parliament

Parliamentary Library Logo showing Information Analysis & Advice

Filter by

Date

Syndication

Tag cloud

Who is on Newstart?


Given the current Senate Committee inquiry into the adequacy of the allowance payment system for jobseekers and others it is perhaps worth considering what sort of people are reliant on these payments? Recent data released by the Department of Families, Housing, Community Services and Indigenous Affairs enables us to explore the characteristics of those receiving these allowances as at June 2011.

What allowances are people receiving?

The major payment for jobseekers is Newstart Allowance (NSA). Other payments with more than 10 000 recipients which are currently linked to the NSA rates are Partner Allowance (PA), Widow Allowance (WA) and Parenting Payment (Partnered)(PPP).

PA is no longer open to new entrants, while new entrants to WA are restricted to those born on or before 1 July 1955. PPP is available to those who have a child aged under 6 (or under 16 if on Parenting Payment prior to 1 July 2006), whose partner is receiving an income support payment or who has a very low income.

Student allowances (Youth Allowance (Student), Austudy and ABSTUDY) and payments for unemployed people under 22 (Youth Allowance (other)) are paid at similar rates to NSA, but are not directly linked in that they are set and indexed separately.

What are the characteristics of those receiving these allowances?

Of the 527 480 people who were receiving NSA in June 2011, 59.5 per cent were male. 15.5 per cent were aged under 25, with a further 13.3 per cent aged between 25 and 30. However there were nearly as many recipients aged over 50 as under 30. The age distribution differs for men and women. For men, 31.2 per cent were aged under 30, compared to 23.6 per cent over 50, while for women, the situation was reversed, with over 30 per cent aged over 50 compared with around a quarter under 30.

All of the 46 500 people (mostly women) in receipt of PA and WA in June 2011 were aged over 55. Most (91.5 per cent) of the 117 754 on PPP were women and more than three-quarters of recipients were aged between 20 and 39.

In total, of those receiving payments at the NSA rate more than a quarter (27.8 per cent) were aged over 50. Almost 1 in 6 (16.5 per cent) of the total recipients were women aged over 50.

There were slightly more women than men (53.8 per cent to 46.2 per cent) on student payments while the reverse was true for the young unemployed (47.6 per cent are women compared to 52.4 per cent men). Not surprisingly, nearly all those receiving student allowances (96.5 per cent) were aged under 30, with less than one per cent aged over 50. By definition, all those on youth unemployment payments were under 22.

How long are they on income support?

In a recent interview, Bill Shorten, Minister for Employment and Workplace Relations, Financial Services and Superannuation, said ‘…there is the difference on the Disability Support Pension to the Newstart Allowance. The theory behind that has been that the Newstart Allowance is for people who are in between jobs. Whereas the Disability Support Pension is a pension for people who have a permanent impairment full stop…’

On this basis it would be expected that those receiving NSA would have a shorter duration on payments than those receiving pensions. This is certainly true with 37.3 per cent of NSA recipients having been on income support for less than 12 months, and only 20 per cent on payment for more than 5 years, compared with Disability Support Pension where more nearly three-quarters of recipients in June 2011 had been on income support for over 5 years, and only 5.6 per cent for less than 12 months.

Again the story was slightly different for men than women. Only 16.5 per cent of men on NSA had been on payment for over 5 years, compared to 25.6 per cent of women. Recipients of the other NSA-linked payments (the majority of whom are women) also had much higher proportions who had been on payment for over 5 years—including all those on PA, 64.3 per cent of those on WA and 37.8 per cent of those on PPP. These proportions are all higher than for Carer Pension (which is paid at the higher pension rate) where only 34.0 per cent have been on payment for more than 5 years.

Of those receiving Parenting Payment (Single), which is paid at a rate part way between NSA and the Pension rate, 54.9 per cent being had been payment for more than 5 years. It is worth noting that this includes all those on ‘saved’ arrangements, who will be transferred to NSA from 1 January 2013 if legislation currently before Parliament is passed.

Conclusion

In summary, while a significant proportion of the NSA population are young, single and not on income support for an extended period, this stereotype is not true of the majority of those reliant on NSA. In particular there is a substantial group of women aged over 50 who are long-term income recipients receiving payments at the NSA rate, and this will increase if current proposals regarding Parenting Payment are implemented.

The reality is that for many of these older women, particularly those who have been on income support for many years, the current allowance will support them until they reach Age Pension age, rather than as a temporary measure until their next job. As noted in the joint interagency submission to the Senate inquiry ‘…some single recipients appear to be under more financial stress, particularly as a result of housing costs…..For these groups, it may not be easy to live on the basic rate of Newstart Allowance for a prolonged period.’