Welfare recipients in poverty

MORE than 330,000 Australians could be living below the poverty line, despite being paid the Federal Government's Newstart and Youth Allowances, a new report has found.

A group of church organisations, including the Salvation Army, released a report on financial hardship on Monday.

The report found the vast majority of people receiving the fortnightly Newstart and Youth Allowances were living below the OECD poverty line once living costs were taken into account.

Figures from the Australian Bureau of Statistics from June 2012 show the real number of people on the welfare payments was 332,032.

Church leaders will on Tuesday front a parliamentary inquiry in Canberra which is investigating whether the welfare system is doing enough to support those in need.

The report is part of a growing chorus of submissions to the inquiry calling for an increase in the Newstart and Youth Allowance payments, on the basis that the $244 a week for single unemployed people is 40% of the minimum wage.

While the overall poverty rate in Australia sits at about 13.8%, among those living on government welfare the rate rose to 75%, the report reads.

Nearly half of those on welfare benefits (some 46.8%) remained unemployed in part due to the low level of government assistance.

Anglicare Australia executive director Kasy Chambers said the current rates of Newstart and Youth Allowance were inadequate to cover the most basic costs of living in Australia.

"The report suggests that this hardship persists and worsens the longer people are stuck on these payments," she said.

Catholic Social Services Australia executive director Paul O'Callaghan said not only did the current payments not encourage people to look for work; the low level was actually preventing many people for seeking work.

The report also made several recommendations for change to the inquiry.

These included raising the dole by $50 a week, addressing problems in the tax system for the nation's poorest and improve services for long-term unemployed people.

The Senate inquiry held its first public hearings in Melbourne on Monday, with more planned in Canberra on Tuesday.

Key findings:

  • Households where the unemployment benefit is the main source of income were more than five times as likely to be in poverty.
  • Nearly half (46.8%) of jobless households were in poverty for at least two years.
  • After housing costs, jobless people had disposable incomes of $242 a week, a quarter of the national average.
  • Rates of financial stress and deprivation are much higher amongst unemployed households.
  • Almost 40%of these households experience at least three forms of financially driven deprivation (out of six) compared to the all households average of 8.7%.Recommendations:
  • Lift unemployment benefits by $50 a week.
  • Address anomalies in the tax transfer system, as advocated in the Henry Tax Review.
  • Establish an independent commission to set adequacy benchmarks.
  • Lock in support for jobseekers in deeply disadvantaged areas.
  • Expand wage and subsidy schemes.
  • Make VET work for the most disadvantaged job seekers.

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