News this morning that workers at a Ford car plant in Melbourne might be temporarily stood down because of problems with a supplier provides an opportunity to consider whether unemployment benefits in Australia are adequate to cover the cost of living. It follows the decision by Toyota to lay off 350 workers at its Altona plant last week.

Through no fault of their own, these car workers are facing an uncertain employment future and many may need to turn to the safety net provided by the Newstart Allowance.

But just how much of a safety net is it?

The current Newstart Allowance is set at $489.70 per fortnight for a single adult with no children. If you’re single with dependent children you will receive $529.80 per fortnight and if you’re partnered you will each receive $442 per fortnight. Varying rates of rental assistance may be available.

Let’s put it another way: some recipients of Newstart Allowance need to make ends meet on as little as $245 per week.

It’s hard to imagine that the Ford and Toyota workers will find it easy to cover the cost of their mortgage, fuel, electricity and perhaps things like school fees. Why then does the debate around unemployment benefits in Australia often so quickly descend into name-calling and allegations of ‘dole bludging’?

In a new survey conducted by The Australia Institute we asked how much money a single adult needs to meet the cost of living. Respondents indicated that on average $454 per week is required – almost twice the amount currently received by Newstart recipients. When asked how much a single unemployed adult should receive per week from Centrelink, respondents indicated that on average $329 per week would be desirable. That is, an increase to the Newstart Allowance of $84, which is more than the $50 called for by the Australians Greens and even more than the $80 suggested by the Institute in 2009.

Survey respondents were also asked how their spending patterns would likely change if they were required to live on Newstart Allowance. The vast majority of people said that they would drive their car less (83%), use less energy (77%), buy less fresh food (63%) and be less likely to go to the doctor (45%) and spend money on education and training (47%), which could help their chances of finding employment.

The role of unemployment benefits is to insulate people from the severe financial hardship of going to work one day and discovering that they no longer have a job. At a time when the Parliament gifts the wealthiest five per cent of Australians are receiving $10 billion worth of superannuation tax concessions each year and the mining industry enjoys more than $4 billion per year in government subsidies and concessions, it’s hard to understand how an increase in the Newstart Allowance is so contentious.

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