Ideas@TheCentre
Government savings driving dole growth
The number of people who have been on the $245 per week Newstart Allowance for more than a year has increased from about 270,000 in July 2009 to 350,000 in July 2012 – an increase of 80,000 people over three years.
But behind these figures lies an even bigger problem – the majority of these individuals have some kind of exemption from job-search requirements.
The number of jobseekers – or people on Newstart who are required to look for work – has remained relatively flat – increasing from about 155,000 to 164,000 over the three years to July 2012.
By comparison over the same period, the number of people who have some kind of exemption from job-search requirements has increased by about 70%, from 104,000 to 176,000.
This growth has been partly matched by an increase of 50,000 in the number of people engaged in training or education, which has more than doubled in three years.
More troubling is the 250% increase (from 13,841 to 35,114) in the number of long-term Newstart recipients who are classified as ‘incapacitated.’
Growth in these figures should not come as a surprise to the government because increasing the number of people on Newstart has been a deliberate consequence of some of their welfare-to-work policies.
For example, the government announced more than $400 million in savings by adding the requirement that some DSP applicants will have their ability to work tested before they can receive the $370 per week DSP. Tougher DSP impairment tables will also result in more people being on Newstart for longer.
This trend is likely to continue given the Gillard government’s 2012 announcement of nearly $700 million in savings over four years from increased participation requirements for Parenting Payment (PP) recipients – the savings are largely the result of people receiving PP moving on to the less generous Newstart payment.
The government has already ruled out an ‘immediate’ increase in the dole. This is not surprising – more than $1 billion in savings and a significant part of the government’s welfare-to-work strategy are dependent on more people being on Newstart for longer.
But it is clear that something needs to be done about the skyrocketing number of people who are exempt from job-search requirements – if people on the dole are not required to look for work, they will stay on the dole for longer. Addressing this issue should be the government’s first priority instead of increasing the base rate of Newstart Allowance.
Andrew Baker is a Policy Analyst at The Centre for Independent Studies.
