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Lucky Country for Some

Friday, 1 February 2013
Author: John Spoehr, The Adelaide Review

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A 'newstart' is needed on income support in Australia, as the unemployment rate and the Aussie dollar are set to rise.

Could you live on $35 per day and should we expect others to? Thousands do and many more are set to over the next 12 months as unemployment rises, driven by global instability and the high Australian dollar. For the vast majority of Australians, unemployment and underemployment are an involuntary experience. Many have few alternatives available to them while others find the jobs they are looking for. Personal support and further education and training help many. Whatever their circumstances all Australians deserve to live decent lives. The foundation for this is a fair income support system - one that is linked to a much more pragmatic view about cost of living in the 21st century.

The meagre Newstart allowance of $245 per week is not only out of step with what it costs to live a decent life in Australia, it entrenches poverty. Average weekly earnings in Australia are around five times greater while the poverty line (inclusive of housing costs) for a family of four is around $880 per week. It is time that it was increased significantly to lift rather than dampen the spirits of those who are forced to endure difficult times unemployed and have responsibility caring for others. Australia should aspire to be a nation that measures its success by the wellbeing of all who live in it, not just the success of those who are privileged. We must provide much greater support to those who are least advantaged, those who are the victims of workplace closures, layoffs and restructuring. We do nothing to dignify the lives of others by offering them allowances that fail to alleviate hardship and lift them out of poverty.

We do no favours to the economy by dampening the purchasing power of Australian income support recipients. The opposite is true. As cost of living pressures bite further into low income household budgets, those households will spend less in shops on food and clothes, placing further pressure on the retail sector in Australia and increasing demand on non-government emergency assistance providers (funded by government). Low income households tend to consume more locally produced goods and services than higher income earners, generating positive balance of payments pressures at a time when we need it.

If the Australian economy wavers in 2013, which it may well do in the face of sustained global instability, then these pressures will intensify. More Australians will be dependent on income support, further dampening domestic consumption. A vicious cycle of self-reinforcing decline will result if the Australian and State governments fail to bridge the investment gap.

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Associate Professor John Spoehr (email)
Executive Director
Australian Workplace Innovation and Social Research Centre (WISeR)
The University of Adelaide
Business: (08) 8313 3350