The government needs to urgently consider the recommendations of the Henry Tax Review to bring the unemployment benefit in line with higher paid pensions, says leading welfare expert Professor Peter Whiteford from the Social Policy Research Centre(SPRC).
Professor Whiteford's call follows an OECD warning that the $234-a-week NewStart allowance is the lowest of 30 member nations.
The gap between NewStart and age, sole-parent and disability pension rates have widened since 1997 when the Howard government indexed pensions to average male weekly earnings and NewStart indexed to the consumer price index.
"Newstart for a single person is now only 45 per cent of the after-tax minimum wage," says Professor Whiteford. "The disability pension is already more than $230 more per fortnight than the unemployment benefit."
Research from the SPRC found that Newstart recipients were likely to miss out on what other Australians considered life essentials.
Twenty-three per cent lacked a decent and secure home, 28 per cent were unable to pay utility bills, 56 per cent lacked $500 in emergency savings, 17 per cent could not afford medicines, and 45 per cent could not afford dental treatment. The most affected were single people who were privately renting.
Professor Whiteford says the discrepancy between the pensions made the Disability Support Pension increasingly more attractive to jobless Australians.
"I don't think the systems being rorted - but if a person's been looking for work for a few years and they have a health problem, then the incentive to be redefined as disabled becomes greater and greater," says Professor Whiteford.
"If both the OECD and the Henry Review see this as a problem, then it needs to be resolved through an extensive review of unemployment and housing assistance in Australia."
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