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Increase Newstart to help the economy: University of Adelaide

Lachlan Maddock
— 1 minute read

An increase in the Newstart allowance (NSA) would be good for jobseekers and the economy, according to a report from the University of Adelaide.

The report – Newstart Allowance: is it time to raise it? – calls for an increase to the NSA to fight chronic underemployment and unemployment.

The NSA is no longer substantial enough for jobseekers to subsist on due to the Howard government’s decision to benchmark NSA to inflation rather than wages. 

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The ratio of NSA to federal minimum wage (FMW) is now only 37.5 per cent. 

“If the relativities between Newstart and average weekly earnings had stayed the same, the Newstart allowance would now be $347 and $356 per week for males and females respectively, compared with the current rate of $278 a week,” said associate professor of economics Michael O’Neil.

“An increase of between $80 and $120 per week would be justified on the basis of equity for the recipients and in reducing the poverty gap many Newstart recipients face, while it would also help the unemployed to be better resourced for finding paid employment.”

The under- and unemployed are a significant economic drag, with a lack of rewarding work resulting in reduced household consumption and consumer confidence. 

Underemployment and unemployment also mean a loss of human capital, a decrease in tax revenue, and an intensification of social problems. 

An increase in NSA, deployed alongside a variety of other schemes, including sponsorship and job training, would see more people able to access more lucrative and rewarding work, with a corresponding benefit to the economy. 

In turn, this would provide long-term benefit to the economy and reduce use of services like the NSA. 

“A different attitude and approach [are] required by governments, which have tools available to them that could be used to good effect,” said Professor O’Neil.

“These include facilities for further education and training; incentive payments for employers who sponsor new staff and training; and regional, community and industry initiatives that address intergenerational barriers to employment.”

 

Increase Newstart to help the economy: University of Adelaide
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