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We Need to Talk About the Dole

Rent is skyrocketing and life is more expensive than ever—so why hasn't our national unemployment benefit increased since 1995?

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Oct 31 2017, 11:35pm

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The last time dole payments increased, Paul Keating was Prime Minister and Coolio was number one on the ARIA charts. It was 1995, effectively the last year anyone could be unemployed and enjoy the same standard of living as someone receiving a retirement pension or working a minimum wage job.

Over the past two decades, Newstart has remained the same while everything else has changed. The payment ($538.80 per fortnight, if you're lucky) has been adjusted annually in line with prices of goods and services, but crucially it hasn't been indexed to average Australian weekly earnings—which have skyrocketed since the mid-1990s. Nor has it been adjusted to compensate for greatly increased rent prices in every capital city.

"Since 1995 the incomes of most working people have increased by about 50 percent in real terms," Peter Whiteford, a professor at ANU's Crawford School of Public Policy, explains to VICE. "Newstart recipients are getting the same real income they did more than 20 years ago but most other people have improved their income. So the gap between people on Newstart and most other people of working age has widened."

The federal government is well aware that life has become more expensive since 1995. The national retirement pension, for example, has been increased in line with the average total weekly earnings of men (they earn more than women!) since 1997. The only major increase to Newstart payments, 2013's Clean Energy Supplement, was actually taken away when the carbon tax was abolished in 2016.

Is any of this a problem? Well yeah, probably so. Economists, The Business Council of Australia, KPMG, the Unemployed Workers Union and the Australian Council of Social Service have all argued that Newstart payments should increase.

They've done so for a few reasons.

THE DOLE BLUDGER MYTH

Maybe all those Melbourne dolewave bands don't help the cause, but Australians tend to either romanticise or criminalise people living off unemployment benefits (see: drug testing welfare recipients). Neither perspective makes much sense, because it's extraordinarily hard to live off dole payments alone—let alone qualify to receive them in the first place.

"The idea that people are living a life of luxury on [Newstart] doesn't make sense," Whiteford explains. "You obviously do want people to have incentives to work so that when they get a job it's clear that they're better off, and that's an issue governments have to take into account. But because the gap between having a minimum wage job and living on Newstart has widened so much, there's actually no problem with the incentive to work. If you're able to get even a minimum wage job you're much, much better off than if you were on Newstart."

Pauline Hanson recently argued that unemployed people aged under 25 should wait four weeks before being eligible for the dole. But many of them will be doing that already: Centrelink's notoriously long processing times combined with liquid assets tests (people who have done the right thing and accrued a few thousand dollars in savings while employed have to wait up to 13 weeks to receive Newstart payments) make the whole process extremely convoluted. Even when someone successfully makes it onto the Jobseeker payment, they'll be forced to attend regular classes and group job application sessions—and report their income and job applications every fortnight or risk being cut off. Work for the dole and PaTH internship schemes rarely lead to fulfilling or full time work—they've also been found to be racially discriminatory.

Newstart isn't designed to help people find jobs they're suited to or qualified for. It's designed to be so difficult and time-consuming and meagre that recipients will find it easier to live off it than on it.

UNDEREMPLOYMENT VERSUS UNEMPLOYMENT

A young middle class white Australian who has jumped through enough hoops to somehow sign onto Newstart is probably doing so to supplement their part time or casual income. Firstly because the dole payment is so low that it barely covers rent, and secondly because we're in the throes of a wide-scale national youth underemployment crisis. Youth underemployment (having some form of job but not receiving enough hours) is at its highest level in 40 years. Eighteen percent of Australians between 15 and 24 years old are working less than they want to be.

These are the notorious "dole bludgers" that the government (and Pauline Hanson) is talking about—but their situation is complex. The system, at best, is designed to obtain them another part-time minimum wage job that will supplement their income and get them off Centrelink benefits. Full-time work remains elusive.

But the people who fare the worst on Newstart are those who are totally unemployed, and have been for some time. They're probably living outside of major metropolitan areas, and are disadvantaged for other reasons too—perhaps lack of educational qualification, or chronic health issues.

"These people who are long term unemployed are at the end of the queue," Whiteford explains. "Because if you've had a prolonged period of unemployment then employers tend to think, well, this might not be the person I'd place highest on my list of applicants."

HOW MUCH DOES IT COST TO (BARELY) LIVE?

A single person on Newstart is receiving payments less than 40 percent of the minimum wage in Australia. It's a scary figure, especially given that looking for work is expensive and time-consuming. It requires buying new clothes, travelling, accessing the internet. These aside from everyday living costs: buying food, paying rent, paying bills.

Back in 2012—and nothing has changed since then—The Business Council of Australia lodged a submission to a Senate inquiry into the adequacy of allowances for jobseekers that "the rate of the Newstart Allowance for jobseekers no longer meets a reasonable community standard of adequacy and may now be so low as to represent a barrier to employment" because trying to survive on $35 a day "is likely to erode the capacity of individuals to present themselves well or maintain their readiness for work."

It's not hard to see why this might be. Living off Newstart and $60 a week of rent assistance might tide people over for a few months between jobs, if they've got the education and experience to attain new employment. But those who are less qualified or who live in more disadvantaged, low-opportunity areas will get stuck in a cycle of poverty. The Business Council submitted that those out of work for long periods of time "greatly increase the risk of homelessness" and that, once homeless, job seekers are "severely disadvantaged in their ability to maintain active job search and present themselves decently for job interviews."

Whiteford agrees that homelessness is a risk for people living solely on a Newstart allowance. But more worrying, he says, is the rising cost of living in capital cities that forces jobseekers to live outside of metropolitan areas with cheaper housing where "job opportunities are nowhere near as strong." These are the people who will live on Newstart for years rather than months. And the longer they're out of work, the harder it is to obtain. Someone commuting from an outer suburb with a spotty resume will rarely be the most appealing candidate, especially in the current ultra-competitive labour market.

SO WHAT NOW?

Experts have been arguing for years that Newstart payments should be increased, but successive governments have not listened. In fact, the federal government in recent years has shown it will do anything but increase dole payments: force Newstart recipients to complete humiliating "internships" at supermarkets, test their urine for drugs.

Fact is, because many Australians have such a low view of "dole bludgers", it's unlikely a government will ever publicly express sympathy for them. And with less than 800, 000 people living on Newstart in the first place, they're not a large or powerful enough group to be worth appealing to in the lead up to an election.

Still, if nothing changes, unemployment and underemployment figures are only set to get worse. Something may have to give.

"Unless governments make a conscious decision to do something in the budget, they'll just continue to diverge," Whiteford says. "It's that failure to do more than what's automatically happening that's caused the problem to continue to grow."

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