So, the Morrison Government has announced an $18 billion stimulus package to combat the coronavirus.
While the unemployed languishing on Newstart will receive tiny one-off payments of $750, they once again were largely overlooked by the federal government, which sees pensioners, small businesses, and tradies as more worthy of report.
Let me explain, once again, why the Morrison Government should have included a large ($75-plus a week) lift to Newstart in its stimulus package.
First, the equity considerations.
The rate of Newstart is pathetically low and has not received a real increase since the early-1990s. It has fallen well below the Aged Pension and wage growth, including the minimum wage:
Newstart is now around 30% below the poverty line:
And Australia’s unemployment benefits are the equal lowest in the developed world:
On equity considerations alone, lifting Newstart is a no-brainer. More so when you consider the economic arguments.
When it comes to immediate economic stimulus, you would be hard pressed to beat lifting Newstart.
Australia’s unemployed are among the poorest residents and virtually every dollar received by lifting Newstart would be spent immediately. Therefore, it would be the strongest form of demand-side stimulus, which is exactly what the economy needs.
Newstart stimulus could be implemented almost immediately, i.e. within the fortnightly welfare payment cycle.
Finally, the Australian economy is facing a protracted downturn, with the unemployment rate likely to spike. Lifting Newstart will provide a safety net for these workers as well as an automatic stabiliser for the economy, thus preventing a broader downturn.
Sadly, the only thing stopping the Morrison Government from lifting Newstart is blind ideology. And the Australian economy, not just the unemployed, will suffer as a result.