Budget 2018 - You Can't Survive On $39 A Day - Hope 103.2

Budget 2018 – You Can’t Survive On $39 A Day

Anglicare's Susan King says people on New Start simply can't live on $39 per day. Nicholas Gruen CEO of Lateral economics explains that the current link between infrastructure spending and politics s is not the best way to decide spending priorities.

By Anne RinaudoTuesday 8 May 2018Open House InterviewsFinance and BusinessReading Time: 12 minutes

Listen: Susan King and Nicholas Gruen in conversation with Stephen O’Doherty 

The welfare sector – groups like the Brotherhood of St Laurence, Anglicare, St Vincent de Paul, and ACOSS – have long sought an increase in social security payments.Those groups are most concerned about people on New Start allowance – the dole. The Newstart allowance has not been increased in real terms for almost a quarter of a century. The maximum allowance for a single person is $545.80 a fortnight. 

On Open House, Anglicare’s Susan King said people on New Start simply can’t live on $39 per day. Nicholas Gruen CEO of Lateral economics then explains that the current link between infrastructure spending and politics s is not the best way to decide spending priorities. It may be better to allow communities more say in where money goes.

These people are shockingly disadvantaged

Impossible to live on New Start Allowance

The New Start allowance equates to $39 per day which all of the charities say is just not enough to get by on – especially with rents at very high levels. Their call for an improvement is to be expected but the charities have garnered some fellow advocates for a rise from some slightly unexpected quarters.

The head of the Business Council, Jennifer Westacott agreed it’s impossible to live on the New Start allowance .“A lot of these people are shockingly disadvantaged.” Conservative economist Deloitte Access Economics senior partner, Chris Richardson declared fixing the social service allowances was a higher priority than budget repair. However, the liberal MP Julia Banks – who lists five properties – including three investment homes – on her interest register – said she could live on $40 a day.

People struggle to put a roof over their head

Rent is unaffordable

The most recent Anglicare report into housing affordability, the Anglicare Rental Affordability Snapshot released last week, found just three of 67,000 rental listings in the whole of Australia were affordable for someone on a Newstart allowance. For highlights from the main report go here. Scroll down to the end of the page to find out more about the situation in different regional areas across the nation .

Rent a bed in a shared room

Hope 103.2 is proudly supported by

Susan King, Head of Advocacy and Research for Anglicare Australia,  told Stephen O’Doherty on Open House that the Anglicare Rental Affordability Snapshot this year showed that renting in the private market is simply unaffordable for people on low incomes. “In the private rental market there is nothing affordable for a single person on Newstart or Youth Allowance in Sydney, Canberra, Melbourne, Adelaide, Darwin or Perth. This a national problem with less than 6% of rentals in the private market affordable for those on welfare or low incomes.” she says.

More women over 50 risk homelessness

Extreme Hardship

Susan King is deeply concerned about a new trend highlighted by the Snapshot this year. “Instead of renting a room in a share house. it is now rent a bed in a share room!” You pay $150 to $200 for that. This is the first time that renting a bed in a shared room has come up in the report as a big issue.  Anglicare’s priority is looking after people who are experiencing extreme financial hardship – who are really struggling to put a roof over their head” she says.

There are worrying signs that more people are struggling to keep a roof over their head. According to Susan King, “We have two particular groups coming through our doors we are especially concerned about. One is older women over 50 we find they are becoming increasingly at risk of homelessness. The other group is the very disadvantaged people experiencing intergenerational poverty.”

They turn to churches and charity for help

Churches can be bridges to community

With the government about to change the limited support for people waiting for decisions on claims for asylum which Open House has been reporting on recently, there are many more people facing tough times. “In six weeks or so those asylum seekers will be declared work ready and they will turn to churches and other charity for help.” says King “Churches are an amazing source of social capital or social cohesion. They can be bridges to community. They are more innovative and help people to flourish”

Huge gap between other payments and dole

Penny Pinching decades ago has caused this crisis

Nicholas Gruen, CEO of Lateral economics, says the low level of New Start goes back to a decades old political decision. “I think I’m right in saying it was the Hawke Keating labour government that decided to penny pinch on the dole by indexing the dole to the CPI rather than wages. Everything else, like the old age pension was indexed to rising wages.”

Over a bit more than a couple of decades this has now produced a huge gap between most welfare payments and the dole. Next time you step over a homeless person ask yourself if that’s a good idea.because the amount of money you get on the dole is very very difficult to live on and it’s causing a huge amount of suffering” he told Stephen O’Doherty on Open House.

When push comes to shove business want tax cuts

It is a bit surprising when business groups start championing an increase in welfare payments but Nicholas Gruen, who also agrees New Stat is appallingly low, says we need to realise that companies will always look after their own bottom line first. “Even business leaders have said it’s not enough  money so they have lent their passive support to raising it . Of course when push comes to shove they are in there arguing for company tax cuts ahead of raising the dole. raising the dole is one of the most important things to do.” he says.

Politics gets in the way

According to Nicholas Gruen a surplus should not exist for its own sake but as a prudent measure against future economic problems. “In fact that’s the point of running a surplus in the good years to try to  lean into the wind during a downturn.  Those surpluses need to be operating surpluses so they shouldn’t relate to investment. Unfortunately we take account of those things but we do it in a way that is driven by accounting conventions and political imperatives.” says Gruen

We should invest according to evidence and need

Gruen believes big political announcements of infrastructure projects don’t actually give the community the best result and those decisions are much more difficult and nuanced than what politicians promise to stay popular. “The Turnbull government has mad a lot of announcements about infrastructure. In Melbourne recently Malcolm Turnbull promised to fund a train from Tullamarine Airport. I’m not here to tell you that a  bad idea, but we shouldn’t be litigating these things as part of a political campaign. We should be trying to invest infrastructure money according to evidence, according to need and those needs are quite complex.” says Gruen

The demise of Friendly Societies

Our current expectation that Government do all the work of infrastructure building and social housing and other things for social good is not the way things always were. He says some of that work used to be done by Friendly Societies and Mutuals that were closer to the community and more in touch with need. “I’ve been reading a book called ‘Austerity Britain’ and I should read another on post war reconstruction in  Australia. After WWII government’s decided to get into building social goods and in doing so they crowded out Friendly Societies and things like that” says Guren.

Quick tricks from politicians won’t solve it

“I look on the establishment of the welfare state as a great thing. It is probably not the case that we should just get the government to build houses and there is a lot of skill in learning how to do that well.  The political debate is had at such a crude level, that we need this or that … (but)  It is not a yes or no question . There are ways in which we are losing social capital and that’s a pretty serious thing. Asking politicians to come up with quick tricks to solve it is probably asking for trouble.”

Community involvement is key

There is a lot that can go wrong when communities are not in the decision making process believes Gruen, “Governments are the agents of the community but when they build things and get in their bureaucrats and get everyone to go on a list it doesn’t necessarily work. You get a place 20 miles from where you live and 40 miles from your work. Those are the sort of dysfunctions that happen and we have to be more sophisticated than that.” Gruen says.


Doesn’t even bring home the 2-minute noodles

Budget leaves people on low incomes worse off – SVDP

The St Vincent de Paul Society says this year’s Budget locks in future spending cuts and leaves people on the lowest incomes worse off.

“If you’re locked out of a job or in an insecure job, this Budget doesn’t even bring home the two-minute noodles,” said Dr John Falzon, CEO of the St Vincent de Paul Society National Council in a media release.

Cuts to income tax and company taxes erode the progressive nature of our tax system and punch a massive hole in government revenue. These cuts will inevitably lead to more spending cuts to essential services, meaning more out-of-pocket expenses for low and middle-income earners.

No action on dole, homelessness

“This is an irresponsible budget that will leave unemployed people, underemployed people, students and those struggling to pay high housing costs worse off,” said Dr Falzon.

“Critically, the Budget has failed to lift unemployment payments, nor is there any action to address homelessness and Australia’s housing affordability crisis.”

 Struggle for survival gets harder

Modest cuts to income tax for low and middle-income earners will not offset rising costs of living and underinvestment in social and affordable housing, increased out-of-pocket expenses for medical services and aged care, and the lack of adequate and fairly funded education at all levels.

“Each of these failures leads to increases in out-of-pocket expenses which makes the struggle for survival just that much harder. For some the consequences will be homelessness and destitution. In a wealthy country such as ours we can do better than this,” said Dr John Falzon.

You don’t build a nation up by tearing people down

Tax cuts at expense of most deprived

“Over the past four budgets the Government cut $15 billion from social security and community services, and billions more are in the pipeline. It is unconscionable to be pursing massive tax cuts while these spending cuts stand, and people on the lowest incomes continue to go without food or secure housing.”

“If you want to build a nation you’d start with a jobs plan, instead of a putting-the-boot-into-the-unemployed plan.

“You’d lift Newstart and other low payments for the people this government persists in tearing down, because you don’t build a nation up by tearing your people down.

“And you don’t reduce inequality by doling out tax cuts to corporations whilst promising a return to surplus that can only come on the back of cuts to expenditure that will hurt everyone bar the wealthy.”

Chronic shortage of affordable rentals

What is the Anglicare Rental Affordability Snapshot?

Every year, Anglicare Australia tests if it is possible for people on low incomes to rent a home in the private market. Anglicare Rental Affordability Snapshot takes a snapshot of the thousands of properties listed for rent on realestate.com.au. Anglicare then test whether each property is affordable and suitable for people low incomes.

What did the Anglicare Rental Affordability Snapshot Find?

This year’s Snapshot surveyed over 67,000 rental listings across Australia and found that there is a chronic shortage of affordable rentals across Australia:

  • 485 rentals were affordable for a single person on the Disability Support Pension
  • 180 rentals were affordable for a single parent with one child on Newstart
  • 3 rentals were affordable for a single person on Newstart

What are the solutions?

The supply problem is specific: we need more homes that are affordable for people on low incomes. The solution is for governments to invest in low cost social and public housing specifically aimed at people on low incomes. This can be achieved through a combination of direct purchase or head-leasing of existing properties from the private market and re-leasing of such properties to people on low income, and the construction of more public and community housing where it is needed in particular areas, such as regional and remote Aboriginal communities. Anglicare Australia strongly supports the call by Everybody’s Home for the purchase, lease and construction of an additional 500,000 homes by government that meet the needs of people on low incomes over the next 10 years.

People sacrifice food, medical care to afford rent

What the Anglicare Rental Affordability Snapshot says

“…renting in the private market is simply unaffordable for people on government income support, meaning that to have a roof over their head, people on very low incomes are having to sacrifice other essentials. Sadly, this is no surprise to us.

We know that many people on low incomes are avoiding becoming homeless by sacrificing other basic living needs to pay the rent – things like eating enough, using public transport, heating or cooling their home, or seeing a doctor when they need to. Many approach Anglicare agencies for help with emergency food relief, financial counselling and emergency assistance to pay essential bills such as electricity. However, for the poorest in our communities, there is a limit to the number of ways they can try and afford rent when their income is so little. This is why the number of people who are homeless in Australia has risen significantly.

Simply put, current government policies mean that billions of dollars more of public funding goes towards supporting housing investors, rather than ensuring everybody, including people on low incomes, has a home. …….But these policies haven’t worked. The result is that thousands of Australians have been priced out of either renting or buying. People on the lowest incomes, who only have the option to rent, are the hardest hit.

The federal government spends billions more on subsidising wealth accumulation for property investors than it does on public housing and homelessness services. We need to reverse this situation, and act now to create enough affordable and secure homes for people on low incomes, including those who are already homeless.

The housing crisis has gone on for so long in Australia that people can be forgiven for thinking that the problems are either insurmountable, or will take decades to fix. The good news is that this is not true. In fact we have strong data and information about how our housing system is broken, and how to fix it relatively quickly. 

Changing the system to put people first, starting with those on the lowest incomes, will help quickly increase the number of homes that are affordable to rent and re- shape the market overall. Anglicare Australia is a proud member of the Everybody’s Home campaign, which has identified the key steps that need to be taken to both end homelessness and provide enough affordable homes to rent and buy for people on low income over the next 10 years.”

Billions spent keeping wealthiest wealthy

The Cost of Privilege Report

Anglicare Australia is also calling on the government to take urgent action on tax breaks and concessions in the budget. The Cost of Privilege,  a report commissioned by Anglicare Australia and prepared by Per Capita highlights the unfairness of the tax system.  The report, released in March this year, show how  Australia’s current housing tax concessions – negative gearing and capital gains tax exemption – favour the wealthiest and encourage property investors, at the expense of people trying to buy or rent a home. 

“This research shows that each year, a staggering $68 billion in taxpayer dollars is spent keeping the wealthiest households wealthy. That is greater than the cost of Newstart, disability support, or any other benefit,” said Anglicare Australia Executive Director Kasy Chambers.

The Cost of Privilege report finds that tax exemptions on private healthcare and education for the wealthiest 20% cost over $3 billion a year, superannuation concessions to them cost over $20 billion a year, and their Capital Gains Tax exemptions cost a staggering $40 billion a year.

“Compare that to the annual cost of Newstart, which costs just under $11 billion a year.

To listen to our Open House podcast of this story click the red play button at the top of the page, or you can subscribe to Open House podcasts in iTunes and they will appear in your feed.