Sucks to be unemployed in the Lucky Country

Via Paul Kelly today:

The symbolism of inequality is the new fashion in our politics. What better illustrates inequality than the low level of Newstart payments, long denounced by all and sundry? Yet when the test came, the proposal to increase Newstart was repudiated 45-11 in a Senate vote 10 days ago.

What is going on? Surely the politicians are serious about inequality? Surely they are not promoting inequality for self-serving electoral purposes? Surely Bill Shorten means what he said?

In his speech to The Australian-Melbourne Institute conference last month, the Opposition Leader called point-blank for a new focus on inequality as “the biggest threat to our health as an economy and our cohesion as a society”. This is an extremely dubious claim.

It certainly serves as a brilliant framing for Labor’s political strategy. The Senate debate on the bill introduced by Greens senator Rachel Siewert on August 10 to increase the Newstart payment by $110 a fortnight is a window on to our gesture politics and hypocrisy.

…This was moral superiority on steroids. But Cameron then did a U-turn. In an apologia made for cynics, Cameron revealed the ALP policy position. “I’d dearly love to see an increase to Newstart but this bill isn’t the right way of going about it,” he said. The bill, he said, was never going to pass. It was “a stunt by the Greens”. And he was right. Money bills must originate in the lower house.

The Greens, Cameron said, were giving poor people “false hope” and, horror upon horror, they were doing this “for their own political purposes”. Labor had the right idea — in office it would establish an inquiry into the adequacy of Newstart. Ah, an inquiry — that’s what this outrage was about. Labor joined the Coalition in voting down the bill at the second reading on August 14. How dare the Greens play politics with Newstart by seeking to increase it!

The Greens were making a ritualistic statement. But the import of this event is the chasm between Labor rhetoric and action. Despite truckloads of self-righteousness from Labor about the nation’s single biggest problem it refused to cast even a symbolic vote for a higher Newstart. It raises huge expectations on one hand but fails to deliver on the other.

Why? There is a very sound reason. Take a look at the cost.

The cost of the Greens’ proposal is $2 billion a year and $8bn across the forward estimates, twice the revenue Labor says it will recover from its crackdown on trusts. Labor knew that if it voted for the Greens bill it would be pledging an additional $8bn across the forward estimates. Given the extent of Labor’s current commitments, that would have been fiscal and political madness.

New research today shows just how desperately unemployment benefits need to rise, from UNSW’s Social Policy Research Centre:

• New family budget standards have been produced that reflect changes in Australian society and advances in research methods and data availability since the mid-1990s.

• The new weekly low-paid budget standards vary from $597 for the single adult to $1,173 for a couple with two children (a 6 year-old girl and a 10 year-old boy).

• The corresponding budgets for the unemployed families vary from $434 for the single adult to $940 for a couple with two children.

• For low-paid couple families, the costs of the first and second children are around $137 and $203 a week, respectively.

• For similar unemployed families, the corresponding costs are $106 and $174 a week, respectively.

• The combined cost of the two children is around $340 a week (or $170 per child) for low-paid families and $280 a week (or $140 per child) for unemployed families.

• The budget standards for low-paid families are between 22% and 47% above a poverty line set at 50% of median income, while those for for unemployed families are very close to the poverty line (except for the sole parent family).

• Existing social safety net provisions as at June 2016 provided an adequate income floor for low-paid single adults receiving the minium wage and working full-time but not for those with a partner or children.

• For those out of work and reliant on Newstart Allowance the safety net provisions fall short of the budget standards estimates by $96 a week for a single person, $58 a week for a couple with one child and $126 a week for a couple with two children.

And the latest OECD comparisons from 2014 show just how mean we are, especially to youth:

It gets a bit better for married couples:

I’m all for incentivising productive effort but that’s not the same thing as punishing the vulnerable.

Given youth unemployment is 14% and underemployment is 30%, this discussion looks like more War on Youth to me.

Sucks to be unemployed in the Lucky Country.