The committee received extensive evidence in relation to the negative impacts of the rates of income support payments on communities, the charity and community services sectors, government services and budgets, and local economies.
In particular, the committee heard that the failure to increase Newstart is putting resource and financial pressures on emergency relief services and other community services.
The view shared by many submitters is that the onus of supporting people on working-age payments has shifted from the Commonwealth government to individuals, charities, community services organisations and other levels of governments.
For example, St Vincent’s Health Australia contended that hospitals, charities, community service organisations, and other government agencies are regularly picking up the real cost of supporting Newstart recipients.
This chapter first examines how individuals make significant contributions to support people on income support payments. Secondly, the chapter focuses on the impacts of the overall increased demand for services and emergency relief assistance on organisations.
Then, the chapter explores the impacts on the social fabric of communities, local government services as well as state and territory services and budgets.
Finally, the chapter discusses the impacts on local and regional economies, and the anticipated economic benefits of an increase in the rates of income support payments.
Many Australians support people on income support payments who experience poverty. They do it either directly by helping their kin or friends in need or through volunteering and donating funds and goods to charities.
The committee received evidence that people on income support payments have to rely on family and friends to cover some basic expenses and survive.
On many occasions, inquiry participants who receive income support payments told the committee that they found asking family and friends for help often difficult, embarrassing and demeaning.
Friends and family regularly help out with bills and are often instrumental in ensuring that people don't become homeless.
A 61 year old widow who lived on her superannuation before receiving Newstart explained her housing situation:
My daughter and her family moved in with me as I could not afford the rent anywhere and if it was not for her I would be on the streets.
Craig who is 51 years old and has been both on Newstart and the Disability Support Pension over the last few years told the committee:
I've only managed to keep a roof over my head and the electricity turned on through the generosity of family, which is an awful position for anyone to be put in, especially at my age.
Friends and family also help through covering other costs such as food, car registration and health-related expenses. For example, Annie Nelson commented that she had the 'good fortune' to have a mother who could cover some of her medical costs to enable her to get well and gain employment again. She concluded:
We are told that Newstart is adequate and is assisting people to gain employment. It is my mother who has assisted me. Clearly, not Newstart.
Margaret Talent, a 61 year old recipient of Newstart living in rural Victoria relies on her children's support:
My adult children have also been bringing me meals […] They have also bought me a mobile phone to keep contact with the outside world. I feel like a burden on them. They can't afford to be carrying me and I can't keep relying on handouts.
Private individuals also talked about having to regularly seek financial help or borrow money from family and friends to cover their living expenses.
For example, the 100 Families WA project found that 52 per cent of the families that participated in its survey sought financial help from friends or family during the year prior to the survey.
A 59 year old woman on Newstart told the committee that she has to borrow money from her family to cover the costs of medical treatment for her lung cancer:
If I have to pay for specialist visits, tests, medicine or anything out of the blue I have to borrow from my family. I insist on paying them back as they also have their own financial struggles. It often takes months to repay.
Volunteering by income support recipients
Income support recipients themselves often help others in need through volunteering for charities. They do it by choice or because of the compliance requirements attached to their payments.
Alarmingly, for those who wish to volunteer, the inability to cover the costs of transport can impede their ability to make a valuable contribution to charitable activities, including emergency services:
I am a volunteer firey. I can walk there for training if I have to. […] I have the paperwork to be a volunteer ambo too, but the stations that need help are an hour away - and that puts that idea in jeopardy.
COTA pointed out that volunteers on income-support payments are deterred from volunteering because of the 'personal expenses incurred, lack of reimbursement for out-of-pocket expenses and burdensome administrative requirements'.
Inquiry participants highlighted that the current level of income support payments are driving people to increasingly rely on community services and charities.
In order to feed themselves, have a roof over their heads, wear clothes or run a car, income-support recipients routinely seek help from charities. They also seek support for other services such as health and disability support services, financial counselling or pre-employment services.
Demand for emergency relief assistance
According to submitters, there has been a significant increase in recipients of Newstart and related payments seeking emergency relief assistance.
A recent survey of people living on Newstart undertaken in Victoria by the Financial and Consumer Rights Council found that 84 per cent of respondents had accessed emergency relief services in the past 12 months.
Mark who works for the Addison Road Community organisation, told the committee:
I am involved with the food pantry there, amongst other projects. We're feeding around 1,300 families a week. It's a food rescue and food security program. The numbers there have doubled across the last year. I think it's a pretty telling thermometer to the struggles people are having with unemployment, with Newstart and with poverty more generally.
Turning people away
Due to the increase in demand for emergency relief assistance, many charities have to turn people away as they do not have enough capacity and resources to meet the demand.
For example Reverend Professor Peter Sandeman, CEO of Anglicare SA told the committee that his agency has to turn away people by 11.00am as they're already 'booked up' and explained:
It's when the appointments for the day fill up. All providers work on fairly similar systems. People turn up, they're placed in a queue, and then, at a certain time, all appointments are taken. That roughly equates to all money being taken. All the resources are taken, roughly. So we run out of ability to help long before the queue is exhausted. […] They have nowhere to go. It's as simple as that. […] It's oversubscribed.
Similarly, Ms Brianna Casey, CEO of Foodbank Australia said that Foodbank does not have enough food and groceries to provide for those in need.
An Emergency Relief Coordinator at Mission Australia working in WA stated:
We get about 500-800 calls for assistance per week asking for emergency relief or other similar support. We can only take about 15 appointments a day and we just don't have capacity to help them all. Most of the people that call us are on Newstart or Youth Allowance.
Income support recipients also mentioned that they cannot access emergency relief assistance each time they need help, as charities are either already at capacity or have put access restrictions in place to limit the number of visits an individual can make over a defined period, generally three months.
Sector under financial pressures
Charities may have a range of income streams to fund their activities, including federal and state funding, benefactors, donations, and income from fundraising, events or business ventures such as op shops.
However, many small local charities do not get government funding and solely rely on volunteers and donations from individuals and businesses.
In addition to the evidence in relation to charities not being able to meet the demand for emergency relief, community service providers argued that the low levels of income support payments are resulting in community services having to do more despite usually being underfunded.
Due to the large amount of support provided by charities to assist people on income support payment, the Community Industry Group contended that the current policies on income support payments 'may be regarded as a form of cost-shifting to the charity and not-for-profit sector'.
As many charities and not-for-profit organisations providing support services to people on income support payments receive state or territory government funding, the Tasmanian Council of Social Services expressed the view that the increased demand on services is resulting in cost-shifting from the Commonwealth to states and territories' budgets.
Similarly, the Centre for Excellence in Child and Family Welfare Inc. noted that because the shifting of costs from the Commonwealth to state-funded services is largely hidden, it is difficult to determine the 'true cost and impact of the inadequacy of Newstart on families, service providers and communities.
Benefits of an increase on the sector
Submitters noted that one of the economic benefits of an increase of the rates of income support payments would be relieving pressure on charity organisations and enabling them to focus on other disadvantaged groups.
According to Per Capita, with an increase of Newstart and related payments, the ability to focus on other disadvantaged groups would likely reduce demand on the healthcare system, law enforcement and emergency services.
State and territory governments
Inquiry participants, who talked about cost-shifting from the Commonwealth to state and territory government budgets, argued that states and territories provide significant subsidies to address the inadequacy of Newstart.
For example, the Western Australia Council of Social Service and Financial Counsellors Association of Western Australia stated:
The failure of the Commonwealth Government so far to increase the rate shifts significant costs on States and Territories, creating greater need and demand for essential housing-support systems, emergency relief and the provision of community services.
The ACT Government contended that state and territory governments do their share of supporting income support recipients through concessions and subsidies such as driver licence discounts, rental bonds, health or utilities concessions.
The Victorian Government submitted it has made significant investment in supporting long-term jobseekers who rely on Newstart, through the Jobs Victoria Initiative.
The ACT Government called for the Federal Government to 'do more' to provide adequate income support for those on Newstart, pointing out that 'ensuring an adequate living for Newstart recipients cannot be done by state and territory governments alone'.
The Victorian Government highlighted the benefits of adequate levels of Newstart on government services:
Adequate levels of Newstart would assist disadvantaged Victorians and Australians to participate in and contribute more fully to society, while also reducing the demand on Commonwealth and State Government services in areas such as housing, health and the justice system.
The Australian Local Government Association (ALGA) explained that poverty within the community creates additional demands on local government services.
The combination of disadvantage and the inadequacy of income support payments also places increased burdens on local government services.
It also impacts the social fabric of communities. The Central Coast Council's view quoted below was similar to many of the local councils that submitted to the inquiry:
While payment of Newstart and Youth Allowance is a federal government responsibility, it is at a local level where the effects of poverty are felt. Social issues such as unemployment, homelessness, lack of affordable housing, poverty and domestic violence have significant impacts on many residents within the […] community.
Housing stress and homelessness
Local councils submitted there has been a rise in housing stress and homelessness in their communities because of the inadequate rates of income-support payments.
For example, at a public hearing in Elizabeth, all three mayors of councils located in areas of high unemployment in the Adelaide region told the committee that they have seen an increase in rough sleepers in their communities.
To support residents, some councils such as the City of Salisbury have stepped in to address housing stress in their community:
On the housing front, we also have a strategic property portfolio. […] We work closely with developers in areas, and we've got a number of developments where we've been able to make available, through that strategic property arm, low-cost housing for our community.
The impacts on the whole community cannot be underestimated. For example, Ms Samuel Wainwright, a Councillor from the City of Fremantle reported that the rise in homelessness can create tensions in the community and triggers calls on local councils 'to clean up the streets'.
Investing in support services
Local governments have invested in providing support to people on income support payments or low-incomes. They often provide discounted or free services ranging from transport and waste disposal to practical home support and assistance with resume writing.
Many local councils have also invested in developing and running innovative programs that directly support people on income support payments. For example, the City of Melbourne has invested in a dedicated social worker to work in its libraries to provide support services to people at risk such as those experiencing homelessness.
The City of Playford provides a number of services to support people on Newstart or on a low income, including through their two food co-ops and pre-employment programs.
Calls for an immediate increase
ALGA contended that, in many cases, local governments are left addressing the impacts of an inadequate safety net on a daily basis, and added:
This is in effect cost shifting from the Australian Government, which raises over 80 per cent of Australia's tax revenue, to local governments who raise only 3.6 percent of the nation's tax revenue.
ALGA advised the committee that, at the 2019 National General Assembly of Local Governments, the following motion was supported:
The National General Assembly calls on the federal government to significantly raise Newstart, Youth Allowance and all underfunded social security payments and that all payments be indexed at the same rate as the pension as this has been recognised as an absolute minimum standard of living.
All the local government councils that participated in the inquiry also strongly advocated for substantially increasing the rate of Newstart and other related income support payments.
Local and regional economies
As many small businesses rely on local trade, unemployment and low rates of income support payments are negatively impacting local businesses. This is particularly felt by businesses operating in disadvantaged areas and regions recovering from natural disasters.
Regional Development Australia Tasmania noted that the negative impacts are felt by regional businesses, small and large and that an increase in payments would have a positive flow-on effect to the local economy.
Benefits of an increase
Many submitters commented on how an increase in income support payments would directly benefit regional economies.
At a public hearing in Perth, Mr Chris Twomey, Leader, Policy and Research at WACOSS stressed to the committee that an increase to Newstart and related payments would immediately stimulate local economies:
[…] we know that every dollar that someone on a low income earns goes straight into essential goods and service — goes straight into the local economy.
Per Capita expressed the view that increasing income support payments would act as 'a well targeted employment creation stimulus' because the money will be spent locally, increasing the turnover of local businesses, which then would result in the creation of new employment opportunities, particularly in places of high unemployment where the increase in spending would be the greatest.
Submitters pointed out that, according to Deloitte Access Economics, an increase to Newstart and related payments would especially greatly benefit regional Australia because of the greater number of people receiving allowances in these areas, and the fact that people would spend the majority of their income locally.
The Country Women's Association of Australia is of the view that an increase to Newstart and related payments would greatly benefit regional and remote areas where the economic conditions are continuing to deteriorate because of the drought.
The evidence discussed in this chapter reinforces the findings of chapters 2 and 3 of this report. The Jobseeker Payment and Youth Allowance are not fit-for-purpose. They do not provide an adequate safety net for those who are unemployed.
Individuals, charities and community services have stepped in to overcome the gaps in funding and provide some temporary relief to those who live in poverty because of their inadequate income support payments. The relief and support provided by the generosity of individuals and the charity and community services sectors do not and cannot supplant the role of the social security system.
Charities and emergency relief assistance
The committee is concerned that the charity sector is under increased financial pressure due to the demand for emergency relief assistance and other important support services. Turning people away suggests that the sector is no longer coping.
The committee acknowledges that federal, state and territory governments provide funding to the charity sector to deliver services that provide a social safety net. The level of funding is clearly not enough to address the lack of resources of many charities delivering essential services, including emergency relief.
The committee is of the view that the most efficient way to reduce some of the resource and financial pressures experienced by the sector is through a direct increase of the JobSeeker Payment and Youth Allowance payment rates. This would enable charities delivering emergency relief assistance to focus on those who have fallen through the cracks of the social security system, to respond to disasters such as the recent bush fires, drought and flooding, and focus their resources on individuals in crisis.
Local governments are inherently attuned to community needs and priorities. They see first-hand the impacts of federal, state and territory governments' social policies and programs. The fact that local councils have passed a formal motion at the 2019 National General Assembly of Local Governments to significantly raise all underfunded social security payments, including Newstart and Youth Allowance is another clear signal that there is a need to immediately raise social security payments for those unemployed and start a broader review of the income support system.
Costs of current polices on income support payments
The committee notes evidence that current policies on income support payments have resulted in cost-shifting from the commonwealth to other governments' budgets and the not-for-profit sector. The real cost of the current policies to other government agencies such as health, state, territory and local governments, and the not-for-profit sector is unknown, but likely to be significant.
Submitters mentioned on numerous occasions the negative impacts of current social security policies on regional and local economies. However, the economic shortfall on local economies has not been quantified.
The committee is of the view that an economic-impact study of the costs of the current income support policies to the community services sector, other government agencies and the economy should be undertaken by the Productivity Commission.
The committee recommends the Productivity Commission consider undertaking a study of the economic impacts of the income support payment policies on the not-for-profit sector; other federal government agencies; state, territory and local governments; and local economies.