I have been putting off writing this blog for a while but somehow, I feel there is a story here that needs to be told.
I recently heard of a lady in her late 50’s saying how hard it is to survive on social security benefits. In this case, the lady receives the Newstart Allowance. She does volunteer work a couple of times each week to meet her mutual obligation requirements, and lives in a nice, albeit small, free-standing house in a desirable suburb, provided by the State housing authority. She also spends time caring for her aged mother who lives in a nearby retirement village.
After paying her rent – which is certainly below the market rate for similar property available in the private rental market, she was saying she only has $80 to live off for the week.
When I heard this, I thought that something was amiss and surely the numbers were wrong.
So, I did some digging.
The Newstart Allowance for a single adult, with no dependent children, is currently $555.70 per fortnight. This rate increases to just $600 for people aged 60 or over, once they have been receiving benefits continuously for a period of nine months. This lady also receives a rental assistance of $137 per fortnight.
After paying her rent, there is a total of just on $170 per week to cover all other expenses including power, phone, insurance, food, clothing, and the costs of running her small car.
In fact, even putting housing aside, we are talking about living on a total of $24.28 per day.
Now this is a little more than the $80 per week originally mentioned, but it is still a very modest sum to be living on.
After hearing this story and putting a few numbers around it, I was prompted to look at the 2018 Poverty in Australia Report[1] produced by ACOSS and the University of NSW.
The poverty level is 50% of median household disposable income. And, in the report, poverty occurs when a household’s disposable income (after tax) falls below a level considered adequate to achieve an acceptable standard of living.
After taking housing costs into account, the poverty level for an adult living alone is $353 per week. Newstart Allowance equates to $277 per week, before considering housing costs.
For someone surviving exclusively on the Newstart Allowance, their income is considerably below the poverty line.
What is the answer?
In the recent lead up to the Federal Election, one political party proposed an increase in the Newstart Allowance of $75 per week ($150 per fortnight). That would certainly be welcomed by many, if not all recipients of the Newstart Allowance.
However, is simply increasing the rate of Newstart Allowance enough?
From where I sit, I feel that we could be doing more to wean people of social security benefits by encouraging them to become more actively engaged in the workforce, even if it is just part-time work. While people receiving Newstart are required to meet certain conditions, including looking for work or doing voluntary work, people seem to be left pretty much to their own devices.
If people were to re-engage with the work force, they would not only benefit financially – they still may be receiving some income support to supplement their employment income – but they will also enjoy a greater sense of self-worth by knowing they are contributing to their own financial well-being.
Perhaps I am just being far too simplistic in my outlook.
As far as the lady featured earlier is concerned, she has options that would improve her financial position out of sight. But is she willing to take the necessary steps? Sadly, I feel that many people in this situation simply adjust as best they can and resign themselves to the belief there is no way out.
At this time of the year, with winter upon us, perhaps we should be turning a thought to those who are doing it tough, particularly those living rough. How can we help?
[1] Davidson, P., Saunders, P., Bradbury, B. and Wong, M. (2018), Poverty in Australia, 2018. ACOSS/UNSW Poverty and Inequality Partnership Report No. 2, Sydney: ACOSS.