The Australian Council of Social Service (ACOSS) has recently published two reports with Jobs Australia and Deloitte Access Economics, respectively.


Faces of unemployment

The report by ACOSS and Jobs Australia is the first in a series of reports on unemployment, to highlight the enormous challenges hundreds of thousands of people face in finding decent paid work or more hours in Australia. The report brings together information and analysis on who is unemployed, people receiving Newstart Allowance, job vacancies, and changes in the labour market affecting unemployed people.

Launching the report, Dr Cassandra Goldie, CEO of ACOSS said: “There has been a disturbing growth in long-term unemployment, with almost two thirds (64%) of people on Newstart allowance receiving it for one year or more. This is the result of serious and long-standing policy failure” owing to “a growing mismatch between people’s skills and what employers need, discrimination, including against older workers, and a lack of investment by governments in quality employment services”. As long as Australia spends less than half the OECD average on employment assistance, she noted, appropriate solutions will be hard to find.

Key findings

  • 44% of those unemployed long-term were on these payments for over 2 years and 15% for over 5 years
  • 49% of long-term recipients were over 45 years old
  • 29% had a disability
  • 11% were of Aboriginal & Torres Strait Islander background
  • 16% were principal carers of children, including sole parents, and
  • 21% were of culturally and linguistically diverse backgrounds.

(Source: Media release | Read the report)


Analysis of the impact of raising benefit rates

The Deloitte Access Economics report, commissioned by ACOSS, considers the impact on both prosperity and fairness of boosting a range of allowance payments. The proposed policy change is a ‘catch up increase’ of $75 a week – an extra $10.71 a day for more than 770,000 people: the least well off in Australian society.

Australia’s challenge, the report notes, is that the key drivers of average living standards are wages. However, the allowances examined in the analysis are indexed to prices rather than wages. This is problematic because, over time, wages grow faster than prices. Hence, the nation’s policy settings ensure that those Australians who are on allowances have seen their living standards squeezed relative to average living standards.

Using its Horizon macroeconometric model of the Australian Economy, Deloitte Access Economics finds that lifting these allowances would have both fairness and prosperity impacts, with a direct cost to the Federal budget of about $3.3 billion a year.

Key findings

In nominal dollars, the size of the Australian economy (“the prosperity dividend”) would lift by some $4.0 billion because of extra spending, meaning that the size of the economy initially increases broadly in line with the initial income injection of $3.3 billion. The boost to the economy would tend to fade over time.

Nonetheless, the report highlights that the most compelling reasons to adopt this reform revolve more around fairness than they do around prosperity, because the boost would flow to the poorest of the poor in Australia. While it expects every region in Australia to benefit from the government increasing these payments, some regions doing it toughest would be clear winners from this boost to the economy. Total disposable incomes could be expected to increase across all local governments, including:

  • Townsville, QLD ($35 million)
  • Morton Bay, QLD ($65m)
  • Central Coast, NSW ($46m)
  • Wanneroo, WA ($28m)
  • Brisbane, QLD ($134m)
  • Fairfield, NSW ($51m)
  • Launceston, TAS ($16m)
  • Alice Springs, NT ($7m)
  • Playford, SA ($28m)
  • Mornington Peninsula, VIC ($16m)

Increasing the Newstart and Youth Allowance by $75 per week, ACOSS CEO Dr Cassandra Goldie affirms, is “the right thing to do as a matter of social justice”, but it will also “provide the necessary economic boost regional economies so desperately need”.

(Source: Media release | Read the report)

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