Cuts would push dole to record low under poverty line

New research released by the Australia Institute today shows that government moves to cut unemployment benefits will put recipients at 32% below the poverty line .

The research also highlights staggering inequality in Australia where the 10 richest Australian families have the same wealth as the poorest 3.9 million Australians combined.

“At the time of the Sydney Olympics, a couple on unemployment benefits had enough income to put them on the poverty line. They are now 26% below it,” Executive Director of The Australia Institute, Ben Oquist said.

“Unbelievably the government plans to actually cut unemployment benefits as one the first acts of the new parliament with the removal of the clean energy supplement for all new welfare beneficiaries.

“Despite years of work and reports arguing for the need to increase the dole – including from the BCA- the government is going to cut it by $8.80 per fortnight for singles and $7.90 each for couples, sending their income to an historic 32% below the Henderson poverty line.

The cuts would affect pensioners, the unemployed, students, people with a disability and carers.

The report shows the level of financial support for the unemployed has fallen sharply since the early 90’s and is now 30% below the poverty line.

Figure 1: Government benefits versus poverty line

gov benefits v poverty line

Source: TAI calculations based on based on data from the Melbourne Institute of Applied Economic and Social Research (various years) Poverty Lines: Australia, June Quarters. 

“The Coalition’s position is contrary to the growing consensus across business and the community sector calling for income support to be increased, not decreased.

“Business groups, from KPMG to the BCA, recognise that unemployment benefits have reached such chronically low levels that it is diminishing opportunities to effectively bring people back into the workforce.

“But the Coalition seems intent on cutting Australia’s shamefully low welfare support. It’s cruel, out of touch and will not benefit the Australian economy.

The cuts would see a single pensioner hit for $366 dollars per year (see table 1).

Table 1: Rates of the clean energy supplement for selected government payments

Living Situation

Proposed cut

Newstart single, no children

$8.80

Newstart Single, with a dependent child or children

$9.50

Newstart Partnered

$7.90 (each)

Age pension single

$14.10

Age pension partnered

$10.60 (each)

Parenting payment single

$12.00

Parenting payment partner

$7.90

“In contrast, the pre-election budget gave tax cuts exclusively to the highest income earners.

High income earners were given a $315 a year tax cut in addition to those on more than $180,000 having the budget repair levy cut.

“A policy which gives more to the richest while cutting support for people below the poverty line will only increase inequality in Australia,” Oquist said.

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Media Enquiries

Anna Chang Communications Director

0422 775 161

anna@australiainstitute.org.au