Abstract

There is currently a policy debate about whether the value of the Australian unemployment benefit (Newstart) should be increased. On the one hand it is argued that Newstart is not sufficient to cover basic living costs and thus many of those on the payment experience high rates of poverty and hardship and that it creates an incentive for recipients to seek to move onto higher rate payments (ACOSS 2019). It is also argued that the level of Newstart is so low that recipients cannot afford to look for work (Harris 2019, Business Council of Australia 2019) and that it has flow on effects in terms of a range of adverse social outcomes including homelessness and crime. On the other hand, it is argued that Newstart is designed to provide short-term financial support during periods of unemployment (The Australian 2019), that having Newstart at a substantially lower rate than other social security payments creates a stronger financial incentive to find paid employment and that the budgetary impact of raising the rate of Newstart is not warranted.¹

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