Age Pension or Newstart increase: which one should be a priority?

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There have been suggestions this week that in March 2019, we may see a significant rise in the Age Pension, but should that be a priority for Australia?

This year there has also been a strong push to increase Newstart payments by $75 a week. Currently, Newstart recipients are living on around $272 a week on average. Many of these recipients are aged 55 and older, but not yet of Age Pension age, and are unable to find work to transition into retirement.

In the YourLifeChoices 2018 Retirement Matters Survey, we discovered that around one in five respondents have been or are receceiving Newstart payments.

Clearly $272 a week is not enough to live on, and many people are in fact subsisting on or below the poverty line – especially renters.

Full age pensioners live on around $417 a week. While this figure is not going to help many live a comfortable retirement, many older Australians who do own their home find it helps them live at least a modest retirement. That’s not to say that there are just as many older Australians living on or below the poverty line, but one cannot deny that $417 a week is a significantly higher payment than $272.

Age Pension rates are indexed to the rise in Consumer Price Index (CPI) or the Pensioner and Beneficiary Living Cost Index (PBLCI), whichever is greater. The CPI measures changes in the prices of a fixed ‘basket’ of goods and services and is used to preserve the real value of pensions. The PBLCI measures the effect of price changes in out-of-pocket living expenses for households that depend on a government payment. That index is designed to check whether recipients’ disposable incomes have kept pace with price increases.

After indexation is applied, the payment rate is then benchmarked against a percentage of the Male Total Average Weekly Earnings (MTAWE). The single rate of pension equals 27.7 per cent of the MTAWE and the couple combined rate is equal to 41.76 per cent. Once initial indexation is applied, if the payment is less than the MTAWE benchmark, it will be lifted to equal the percentage rate.

The benchmarking of pensions to the MTAWE is to ensure pensioners maintain a certain standard of living, relative to the rest of the population.

Newstart payments are simply indexed against CPI.  

The news that this year’s wage increases may next year lift the Age Pension by more than usual indexation will certainly be well received, but should we be looking at helping those who may need it a little more?

YourLifeChoices has long advocated for an increase in the Age Pension base rate, which has not changed since 2009. But the Newstart payment has not increased in real terms in 25 years.

We have one of the highest minimum wages in the world, but we also have one of the lowest minimum welfare payment rates. Newstart is not benchmarked against the minimum wage nor average male earnings. For older Australians who cannot find employment and are too young for the Age Pension, failure to better benchmark their government payments is possibly consigning them to poverty.

So, given the option, do you think the Age Pension should increase, or should those funds be put into Newstart?

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Written by Leon Della Bosca

Leon Della Bosca is a voracious reader who loves words. You'll often find him spending time in galleries, writing, designing, painting, drawing, or photographing and documenting street art. He has a publishing and graphic design background and loves movies and music, but then, who doesn’t?

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86 Comments

Total Comments: 86
  1. 0
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    how about raising the carer pittance to that of the carers who care for strangers ( hourly rate )

    • 0
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      The carer payment pays the same as the DSP & Age Pension. Or are you talking about the carer allowance? Yes, I agree that the carer allowance is a pittance, but they are the only ones who receive extra money.

  2. 0
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    Newstart seems cruel for people who cannot find a job and have tried with no success. Maybe age of unemployed is relevant as older ones would be in more distress than a teenager or very young one who can stay home with mum and dad. One size may not fit all.
    Some older workers who are unemployed are in limbo and using up their savings and super in their fifties and sixties. An employer does not have to state that age is an impediment to getting the job they simply don’t choose an older person.
    Single pensioners who are renting seem to be struggling so again individual circumstances need to be considered for elderly people.
    The amount of people seeking charity must be an indication that some people are really struggling.
    We can never judge why people are in financial distress as individual circumstances are so different.

    • 0
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      Yes, I agree. And finding myself in the situation – too young for the pension, too old to find a new job – I know quite some people who are really struggling on Newstart. What many people out there don’t know is: To be eligible for Newstart when you are over 55, you either have to apply for 20(!) jobs per fortnight which is very frustrating, or you can work 30 hours per fortnight as volunteer for organisations/charities of your joice which can be very rewarding, personally, sadly not financially. Most volunteers are on some sort of Centrelink payments. Imagine Australia without volunteers!

    • 0
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      Yes without all those volunteers we’d need to employ people wouldn’t we. Better to keep them on a pittance than create real work and jobs for people.

      Better to have 3 million workers on welfare because wages have been going backwards for decades and needing charity than to share the profits fairly.

      I’d keep applying for jobs. Millions of applications flooding the network might collapse it and finally force some sort of sane fix.

    • 0
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      Yes Rae and Paddington,
      the whole system needs to be changed. Today I met more people of older age “working for the dole/Newstart”, doing their 15 hours per week for an average of $18.63 per hour. And surprisingly we are quite happy!
      Everyone needs a purpose in life to feel happy. Flooding employers with applications is very devastating for your own wellbeing because you never get an answer, as well as for the employers who don’t take any application seriously. The so called “Job providing agencies” should be abolished for older people because they are a nuisance and with their requirements and reduce many of us to tears. They are torturing us, making us jump through hoops just to earn their money (this was mentioned in the discussion on this site before as well).
      As Adrianus said, there should be a solution for people between 55 and 67 (that’s the new retirement age!) in transition.
      As a democratic society, we have a duty to look after everyone. Politicians seem to only look after themselves and don’t have to seem an idea what is going on in the communities out there. If there are too many people suffering, there might be a revolution. It has happened in the past!
      We, the Australian people are really nice.
      But we need to live as well while we are are doing our volunteering which seems to be the only option we have for work.
      Most of us are not dole pludgers!

  3. 0
    0

    Newstart is a priority…It is too low…Job hunting is expensive and time consuming…In the end these job seekers will become tax paying workers. Stupid Pauline Hanson thinks they all don’t want to work and live on NSA for 20 to 40 years that is why they should work for the dole on farms. Australians need to vote for politicians from science, maths, IT and engineering backgrounds instead of ex lawyers and uneducated morons like Hanson.

    • 0
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      Well I would imagine most thinking people don’t listen to Pauline Hanson too much, and wish hr a speedy return to the fish and chip business or the other place she spent some time hanging out in!

  4. 0
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    A massive 84% acknowledge they could not survive on Newstart $272 a week yet only 45% and prioritise an increase in Newstart over the age pension. Reflects the nature of the 55% who felt pensioners, already paid significantly more, should be prioritised over those doing it harder.

    • 0
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      It’s called SELF-INTEREST. Farside. Please make things better for others, but NEVER prioritise others over making things better for me!

    • 0
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      It’s an idiotic poll trying to pit one group against another, hence you get such results.

    • 0
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      Farside, Newstart is meant for a 6 month term. Why should it be encouraged for longer terms?

    • 0
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      Rainey, you are right about the self-interest, I was just noting how widespread the attitude is among the respondents. It seems consistent with the selfishness so often expressed on this site.

    • 0
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      Adrianus, as far as I am aware the eligibility to receive Newstart is not restricted to a six month term hence the reason many people have been long term recipients. ACOSS recently reported almost two thirds (64%) of people on Newstart allowance receiving it for one year or more. It also found 44% of those unemployed long-term were on these payments for over 2 years and 15% for over 5 years and 49% of long-term recipients were over 45 years old. It is not a matter of encouraging Newstart but providing a welfare safety net for those who need it, a bit like the aged pension really.

    • 0
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      Only pay the job providers for successfully finding jobs for clients. The current system encourages inefficiency and lack of success.It is too expensive as well. The money would be better spent increasing Newstart than in for profit job agency pockets.

    • 0
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      +1 Rae, I wonder if there has been any review of the performance and cost/benefit of the job providers compared with the former Commonwealth Employment Service. I know people who have been to several job providers and found them next to useless with finding jobs.

  5. 0
    0

    You cannot live off an Age Pension. If you have rent to pay, food to buy, bills to pay, run a Car and have a very, very modest lifestyle even without travel involved. I feel so sorry for people on Newstart allowance. Its disgraceful, what the government thinks is enough to live on. Most people on NewStart allowance don’t eat properly. They live on Rice alone. Which is very unhealthy. While Politicians live off an income of $4000 a week. They have no clue what these people go through to make ends meet and they never meet impossible to live off $272 week. I need $600 a week to live, to pay rent, buy good food, pay my bills and run my car. I don’t smoke, drink, or gamble and have no social life very occasional I go to an $8 movie at Garden City Hoyts. Booragoon.

    • 0
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      The government treats unemployed people like s++t. and that is reflected in the lousy Newstart which is a pittance.
      In fact, the govt uses the same tactics to deny a decent Newstart allowance the same way they inhumanely treat asylum seekers…The govt just turns a blind eye to both groups, and also to age pensioners…They all simply ignored…
      But we can change all of this if we kick this LNP govt out of office at the next election…

  6. 0
    0

    Both Newstart and Pensions (Age and Disability) are woefully inadequate. I chose to prioritise the Pension as pensioners have no chance of changing their circumstances. For even those lucky enough to have acquired substantial superannuation during their working lives, the only way is down, never up. On the other hand, a young person has something very important on their side – time – time to study, time to get a job and time to save for their retirements. They will receive superannuation all their working lives whereas those now retired received it only since 1992 meaning that current retirees have had some two decades less of superannuation than today’s workers.

    • 0
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      Carol, what do those below pension age do in the meantime until they have a job and can earn superannuation? Have you thought about how events might transpire for someone over 50 who uses time to study, time to get a job and time to save for their retirement? While receiving NEWSTART or other support they must gain admission to a course and incur study related expenses. At the conclusion of study they will face bias and struggle to compete with younger graduates for opportunities to gain experience and paid employment to obtain superannuation. All the while they may still be supporting children not entitled to AUSSTUDY or YOUTH support allowances. Admittedly some retirees will have only had access to super since 1992 however many did have access to pension and super schemes for at least two decades before then. Seems to me the NEWSTART increases should be prioritised over pensions.

    • 0
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      I agree, Farside. It’s easy to assume all unemployed are young and therefore have opportunity to change their lives, but that just isn’t true in the real world.

  7. 0
    0

    My daughter has multiple disabilities and on Newstart (Drs will not sign DSP forms). I am on a wife’s pension (Equivalent to Carer’s). I have to subsidise some of her medications as they are not on the PBS. This can cost me up to $150 a month. I also cover the difference between what she get back from Medicare and what the Drs charge and also pay for her travelling costs to appointments (fuel for my car as she is not allowed to drive). Some of her Drs are over 300kms away.

    Now tell me that she doesn’t need a rise in her payment,

    • 0
      0

      She needs to have her disability recognized. Find a doctor who will sign those forms. Talk to a Centrelink social worker. You should not be in this situation.

    • 0
      0

      Tried the Social worker, no help there.
      She is not fully treated and that the end of it.

    • 0
      0

      Ah yes! Compelled to accept ”conventional” treatment that somebody else dictates is appropriate – regardless of the real merits! Been there and done that. My partner had a horrendous battle when he was denied DSP because he refused surgery to his back. A relative had the surgery and is in a wheelchair. He had extensive physio (at horrendous cost) and is about 60% improved and at least able to walk, do light lifting, etc. But of course physio is not covered under Medicare and even health insurance doesn’t cover much. The likes of OG would assert that folk like my partner should suffer in financial hardship for the rest of their lives, AND should be denied the right to use their own savings to fund their treatment but have to live on it instead (which in fact is the situation). We live among vile, disgusting, and hideously selfish people, sadly. I feel for you, Star Trekker. Wish I had answers.

    • 0
      0

      Thanks Rainey for your support.

      My daughter suffers from:

      Ehlers-Danlos Syndrome (connective tissue disorder due to faulty collagen): genetic, cannot be reversed only have joints repaired after they are damaged. She is waiting for surgery on her foot.

      Inappropriate Sinus Tachycardia Syndrome (her heart beats too fast when resting): at the moment it is controlled by 2 medications.

      Fibromyalgia: Takes an expensive drug usually for epileptics, not on PBS for pain.

      Multiple Allergies: Takes 4 anti-histamines a day. Not on PBS either.

      Allergy induced Asthma: medication on PBS

      Depression (due to pain): on large dose of medication which is also used for pain.

      She is also on Panadol Osteo (generic): not on PBS.

      Vitamin D due to the inability to go outside when hot (more than 24C) not on PBS.

      Strong pain relief for foot: slow release on PBS, Instant release is not.

    • 0
      0

      It’s ridiculous – and criminal – that she’s not on the DSP. If the Centrelink social worker didn’t help, I suggest you pay a personal visit to your local Federal Member, making sure you take all the medical documentation and your daughter with you. Lay it all out, and give him/her a comprehensive list of the costs and yours and her income and budget.

      If that fails, you need to get a local journalist on side. Find a newspaper that will front page your story. Try a letter to 60 minutes or Today Tonight. Yes, I know it’s hard to sacrifice your privacy, but it might be worth it – not just for you and your daughter, but to highlight an issue that many others struggle with.

      Keep pushing until someone acts. And go back to the Centrelink social worker, and document EVERYTHING that he/she says or does. Keep a meticulous diary of every word uttered, every action, every cost, with dates, times, and copies of every letter or document. Write protest letters to MPs, Ministers, Centrelink employees, the local newspaper.

      If there’s one thing people in power HATE, it’s paperwork – especially paperwork that might hold them to account or expose them as doing wrong. If you keep hammering with lots of paperwork and meticulous records and evidence, they will cave in just to shut you up and eliminate the risks of being exposed as wrong or cruel.

      I know one person who was refused public housing so she took a sleeping bag and rolled it out on the floor at Centrelink. When they told her to leave, she said ”I have nowhere to go. There’s a journalist outside with a camera (she’d prearranged that). If you like, I’ll ask him to photograph me rolling my sleeping bag out on the footpath outside. I will give him this record of my applications and waiting times and all the communications between me and your staff”.

      She had a public housing apartment the next week!

      It isn’t easy to fight, but it’s not impossible either. But they will walk all over you if they can.

      I wish you well, Star Trekker. PM me if there’s anything I can do to help.

      BTW. I happen to know that Centrelink is quicker to recognize mental illness as a disability than any physical ailment – so stress the depression. Maybe get a psych report?

    • 0
      0

      If you are open to it, read Anthony Williams books, “The medical medium” “Liver Rescue” Thyroid Healing” there maybe some answers for the health problems that you can help with. Order from a library if you can or e-book is cheaper.

  8. 0
    0

    newstart should be raised for those over say 55,they have little hope of employment full time,the younger one’s–there are jobs out there.Age pensioners should have a raise of around $50 weekly,the basket of goods they are talking about,would not include some things that are required.we have been on the safety net since august,find that bit extra helps a lot.Then again i know a 29 yo male working full time supporting wife and 3 kids bringing home $700 weekly,pay the $350 rent,there’s not much left!!!

  9. 0
    0

    Try increasing both. Why ask if one should be preferred over the other ? Compared with the defence budget or the cost of Foreign Aid, any increase is a pittance.

  10. 0
    0

    In my opinion we should have 2 types of Newstart Allowance. The existing one is ok for people who don’t want to work. Then for those who do want to contribute say 3 days per week, a higher payment, based on existing Newstart plus an additional amount commensurate with productivity. This additional amount could be partly paid by the private sector if the public sector is short on opportunities.
    Labor wouldn’t have the courage to implement such an idea, because it would dramatically reduce unemployment, so I call on the LNP to fight against the Unions and do something in this area.

    • 0
      0

      Where are you going to find the jobs? A lot of workers now, three million, are underemployed and would like more work. They are being topped up by Welfare payments if they have a family.

      Workers stopped sharing in productivity decades ago. There is no going back now.

      All these fascist policies have resulted in the same problems they caused in Germany prior to WW11. Designed to divide Society and very effective at doing just that.

    • 0
      0

      I disagree Adrianus. Newstart should stop completely for those who don’t want to work not maintained at the current level and certainly not increased.

      Those genuinely wanting and actively looking for work should be supported to do so and noone would disagree with that.

      Welfare is a support system not a lifestyle choice.

    • 0
      0

      KSS, what about those that cannot work due to health problems? With the change of criteria for the DSP, they have no choice but to be on Newstart.

    • 0
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      The DSP system was yet another austerity measure in the search for a budget surplus for no particularly good reason.

      There should be a limit. Retrain and find a job for a worker within 12 months or the agency has to pay back the money to the taxpayers and the Government has to find the unemployed a job or a DSP.

      For someone not disabled or ill and not requiring lengthy retraining 6 months should be the cut off.

      It’s the only way to get the employment agencies working. They are pretty useless and expensive the way they are.

    • 0
      0

      80% of workers identified as ‘underemployed’ are happy with their hours. Why try to make people work longer hours than they want?
      KSS, I agree that 12 months is long enough for an able bodied person to join a work group. With this in mind they should be cut from the teet, or get a job.

    • 0
      0

      They may be happy Adrianus but can they afford to choose and is the taxpayer making up the difference between a full time job and one chosen for convenience.

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