Both Judith Sloan and Ian Harper argue that Newstart Allowance is too low, particularly for recipients who are long-term unemployed. In the late 1980s, the Social Security Review also argued for an increase in unemployment payments. The review’s authors wrote:
… immediate priority should be given to bringing rates of payment to pension levels. There is absolutely no justification which can be given for providing a lower rate of payment to single individuals, whether short-term or long-term unemployed, who must not only support themselves but engage in active job search and maintain the mobility and social contacts necessary to ensure against labour market marginality (p292).
Some people argue that the disability pension needs to support people for long periods of time, while unemployment allowances are (or should be) a short term payment to tide people over between jobs. But in the aftermath of the global financial crisis, the number of people receiving Newstart long-term increased sharply. Even as employers were complaining of skill shortages, a significant number of people seemed to be trapped on income support.
We have to understand that the dole, unemployment benefits, Newstart, it was there as a short-term transitional payment and in that sense a low payment makes some sense, but if people are unemployed for a long period of time the issue of adequacy really becomes important and indeed their ability to successfully find employment becomes important.
There’s no clear boundary that distinguishes the job prospects of long-term Newstart recipients from those of disability pensioners, yet the difference in payment rates is startling — $486.40 per fortnight for single Newstart recipients and $689 for Disability Support Pensioners.
In the 1980s long-term unemployment emerged as a major issue. According to the authors of the Social Security Review, the rise of long-term unemployment undermined the legitimacy of the distinction between the short-term purpose of payments to the unemployed and the long-term purpose of payments to people with disabilities. Now we’re having the same debate all over again.