Key aims for Australia’s economy and society can be summarised as ‘prosperity and fairness’. These represent ‘the size of the pie’ and ‘how the pie is sliced up’.
This report, commissioned by the Australian Council of Social Service (ACOSS), considers the impact on both prosperity and fairness of boosting a range of allowance payments.
The proposed policy change is a ‘catch up increase’ of $75 a week – an extra $10.71 a day for more than 770,000 people: the least well off in Australian society.
The gap between the living standards of average Australians and those who are on these allowances has widened sharply over the past quarter of a century. And it continues to widen. That wasn’t an accident: it was what policy has been geared to do.
A key driver of average living standards is wages. But these allowances examined in this analysis are indexed to prices rather than wages. And that’s a problem because, over time, wages grow faster than prices.
Accordingly, the nation’s policy settings ensure that those Australians who are on allowances have seen their living standards squeezed relative to average living standards.
The impact on Australia’s economy
Lifting these allowances would have both prosperity and fairness impacts.
The fairness impacts dominate, but there are prosperity points to consider too. Deloitte Access Economics used our Horizon macroeconometric model of the Australian economy to model a lift in allowances that is effective immediately. The direct cost of the Federal budget is about $3.3 billion a year…
SOURCE: ACOSS. “Raising Newstart and Youth Allowance would boost jobs, wages and inject millions into local communities.” ACOSS, September 2018.
Produced by the librarians at the Brotherhood of St Laurence in Melbourne, Australia