Is Youth Allowance higher or lower than it’s ever been? > Check the facts

Who: “We are still putting more into student income support, the week by week payments, than have ever been paid to students at university before.” Julia Gillard.

The Claim: Under a Labor government Youth Allowance payments are higher than they have ever been.

The Facts: While it is true that the Youth Allowance payment is at an all-time high when measured in dollar figures, this measurement is misleading since it does not take inflation into account. Youth Allowance is indexed to the Consumer Price Index (CPI), a measure of inflation, which means that it does not increase in real terms.

Discussion of evidence: The current Labor government has continued the policy of indexing Youth Allowance to the CPI. This means that in real terms (taking into account inflation) the payment has not increased.

The indexation of the payment to the CPI has been found to be inadequate and many of those living on Youth Allowance are living below the poverty line.

An alternative index to CPI is Male Total Average Weekly Earnings (MTAWE), a standard measure for wage earnings.

Since 1997 the Age Pension has risen in line with the higher of either MTAWE or the CPI. As a result the Age Pension has increased at a greater rate than the Youth Allowance. For example, between 2005 and 2011 MTAWE rose by 23 per cent while CPI rose by only 17 per cent.

The gap between the CPI and wages means that the incomes of those receiving Youth Allowance fall behind the rest of the community.

If governments wish to increase Youth Allowance in real terms and relative to community standards, indexing the payment to MTAWE would be more effective than retaining the policy of indexing it to CPI.

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