Reviewing the adequacy of income support payments

The Government has recently announced the establishment of an Economic Inclusion Advisory Committee, which will, among other things, consider the adequacy of income support payments prior to the next budget. This follows numerous calls for increases in such payments over recent years.

Most considerations of income support adequacy have focussed on allowances, and in particular the main unemployment benefit JobSeeker Payment (formerly Newstart Allowance), rather than on pensions (which include the Age Pension, Disability Support Pension (DSP) and Carer Payment). This is because the pension rate was increased substantially in 2009 following the Harmer Review and also due to differences in indexation, meaning that pensions have increased faster than allowances. The $50 per fortnight (pf) increase in JobSeeker Payment implemented in 2021 has slightly reduced the gap, but the current typical maximum rate for a single person on JobSeeker is $677.20 pf compared to $1,026.50 pf for a single Age Pensioner (Services Australia, A guide to Australian Government payments: 1 December 2022 to 31 December 2022, pp. 14 and 23).

While the recent increase was generally welcomed – although it was accompanied by cessation of the Coronavirus Supplement – it was criticised by the Australian Council of Social Service (ACOSS) as ‘measly’ and a ‘decision that shows a complete lack of humanity and empathy’. The Business Council of Australia has also called for reform of the way payment rates are adjusted to narrow the gap between JobSeeker Payment and pension rates to ‘help reduce some of the barriers that prevent unemployed people getting a job’.

There have been several reviews of the adequacy of payments by Parliamentary Committees over the past decade.

The Senate Education, Employment and Workplace Relations Committee 2012 inquiry into the adequacy of Newstart Allowance and related issues concluded:

On the weight of evidence, the committee questions whether Newstart Allowance provides recipients a standard of living that is acceptable in the Australian context for anything but the shortest period of time (p. 52). 

However, the Committee’s preferred solution was to improve the support for recipients to enter the workforce rather than to increase the allowance (p.54).

On the other hand, the 2020 Senate Community Affairs Committee inquiry on the same topic recommended ‘the Australian Government immediately undertake a review of the income support system to ensure that all eligible income support recipients do not live in poverty’ (Recommendation 2). In particular, it recommended reviews of Parenting Payment (Single) and Family Tax Benefit Part B (Recommendation 20) and of Youth Allowance policy and rates (Recommendation 23). The 2019 House of Representatives Select Committee on Intergenerational Welfare Dependence also recommended reviewing the adequacy of payments for young people and for single parents (Recommendation 14), while the 2022 Senate Select Committee on Job Security recommended the Government ensure ‘that the JobSeeker payment is sufficient to help unemployed Australians focus on upskilling or obtaining employment’ (Recommendation 5).

In its February 2022 report, the Senate Community Affairs inquiry on the purpose, intent and adequacy of DSP expressed concern about ‘the overwhelming evidence that the DSP is inadequate and that people relying solely on this payment are too often living in poverty’ (p. 106).

Several of these inquiries noted that financial stress is a particular issue for income support recipients in the private rental market, despite being able to claim Commonwealth Rent Assistance (CRA) to help with rental costs. CRA for a single person paying at least $337.54 pf in rent is $151.60 pf, while a couple with 1 or 2 children receive $178.36 pf if they pay at least $500.60 pf in rent (Services Australia, A guide to Australian Government payments: 1 December 2022 to 31 December 2022, p. 37). However, in September, the average JobSeeker Payment household was paying $511.01 pf in rent, while the average for those on Parenting Payment (Partnered) was $779.24 pf, both well above the rent ceiling.

The result is that 45.7% of CRA recipients are spending at least 30% of their income on rent, with 17.4% spending over 50% (Productivity Commission, Report on Government Services 2022, Housing and homelessness, Tables GA.13 and GA.14). This is even higher for those households with a member aged under 25, where 29.5% are spending over half their income on rent. In contrast, only 0.5% of low income households in public housing and 6.0% in community housing are spending more than 30% of their income on rent (Productivity Commission, Housing, Tables 18A.22 and 18A.24).

These issues led to the 2020 Senate inquiry into Newstart recommending a review of the adequacy of CRA (Recommendation 3), while the 2022 inquiry into DSP was ‘concerned that CRA is completely inadequate and that it does not reflect contemporary housing costs in Australia’ (p. 107).

The new Committee will only have a limited time to prepare its first report for consideration in the 2023-24 Budget, however it does have previous reviews to build on.


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

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