Articles – The Centre for Independent Studies

Morals and money: why Newstart can't gain traction as an election issue

Simon Cowan

27 April 2019 | The Canberra Times

One contentious issue that has much motivated activists, but received relatively little attention from politicians in the election campaign, is the adequacy of Newstart as a welfare payment.

ACOSS has run a campaign for several years to raise the base rate of Newstart from its current level of just over $14,000 a year to a more substantial amount. This campaign has gathered support from a number of places, including the BCA.

It has been presented as a moral challenge: that a wealthy society should do more for those in poverty. The rate of Newstart has also been negatively contrasted with the rate of the age pension, as the Newstart payment is far lower.

So why has this campaign received relatively little support – even from Labor, which has merely promised a review post election?

Behind this lack of support are both political and policy reasons that should lead activists to consider alternatives to address adequacy issues.

First, voters aren’t highly motivated by it. Voters traditionally have been far less supportive of welfare for the “undeserving poor”, like the unemployed, than they have for age pension recipients for example.

Voters believe – whether true or not – that rorting of Newstart is widespread. They also believe that unemployment benefits are a major cost of the welfare system, despite costing a third as much as the age pension.

The fact there is so little support politically for the campaign itself is evidence that raising Newstart is a relatively low priority for voters.

This is perhaps a jarring conclusion, especially given the perceived impact (on Twitter at least) of attacks on Liberal politicians over whether they could live on the base rate of Newstart.

Yet, in many ways the question of whether one could “live” on the base rate of new start actually misses the point.

Though much attention is focused on the long-term unemployed who “live” on Newstart, most people still transition on and off the payment within 12 months.

Which means for the average Newstart recipient it functions largely as it was intended to: as a short-term transition payment, supplemented by savings and credit – not a payment designed to be lived off for several years.

The design of Newstart as a transition payment is as much a reflection of economy history as it was a policy choice. For much of the history of unemployment benefits, involuntary unemployment was basically unknown.

If you were unemployed long term, it was either because of something you had done that made you unemployable, or because you chose not to work.

In other words long-term unemployment was seen primarily as a moral failing.

Particularly for men, the expectation was that you would be employed for the overwhelming majority of your working life; and if you became unemployed, you would diligently and rapidly secure new employment.

This attitude persists today and – though not as correct as once it was – it persists because there are elements of truth in it.

There is no doubt that involuntary unemployment has emerged as a more serious issue in recent decades.

However it remains the case that a proportion of the long-term unemployed have either rendered themselves unable to work (for example through drug or alcohol abuse), are such poor employees that it is impossible for them to hold down a job, or have made life choices incompatible with stable employment. Some don’t want to work.

And these people seem to be among the more visible, at least if you watch Struggle Street, for example.

There is no doubt that involuntary unemployment has emerged as a more serious issue in recent decades.

While it is arguably wrong to seek to view welfare in these moral terms, the fact the campaign to increase Newstart is itself couched in moral terms, makes it hard to avoid having this moral debate.

Especially when the campaign to increase Newstart is combined with arguments to reduce the mutual obligation requirements, including the number of jobs unemployed people should apply for.

Even though there are genuine questions of the effectiveness of these obligations, again they have a moral component that resonates with voters.

If you argue there is a moral burden to increase Newstart, you inevitably open the question of the moral right to Newstart, and the obligations that come with it.

It may be that those seeking to raise Newstart would have more success with a different strategy altogether.

Specifically, they should split the arguments over mutual obligations and the adequacy of the base rate into two separate cases.

Rather than raise the base rate and remove the obligations, they should look at a long-term unemployed supplement that makes living off Newstart easier. This supplement should have more onerous mutual obligation attached.

For those transitioning on and off Newstart, especially if they are unlikely to end up long-term unemployed, the mutual obligation components should be fewer, but the payment should be treated as a genuine transition. For these workers, there is no pressing need to increase the base rate.

This has two impacts. First the cost of increasing Newstart is substantially less.

Second the burden of mutual obligation is removed from those who see little benefit from it.

Importantly, this negates or neutralises the moral arguments against increasing Newstart. Voters would be reassured that those receiving supplements would have a genuine obligation to look for a job and get off welfare.

It may be that ACOSS and others convince the next government to raise the base rate of Newstart. However, given how long the current campaign has lasted – without success – it may be that a new approach is needed.

This approach should acknowledge the genuine moral concerns at the heart of the adequacy of welfare, rather than pretending the only moral approach is to spend more and tax more.

Simon Cowan is research director at the Centre for Independent Studies

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