Post by Banjo on Feb 26, 2014 11:44:05 GMT 7
Even conservatives say the dole is too low
THE right-wing economist handpicked by former prime minister John Howard to set the minimum wage has declared the dole is too low and warned that giving people so little to survive on is causing desperation and depression.
Joining an unlikely conservative push for a rise in the Newstart Allowance, Ian Harper argued its level was now so low compared with disability pensions and the basic wage that even ''hard-hearted conservatives'' were alarmed at the lack of compassion.
Fellow conservative economist Judith Sloan argued at the recent tax summit that the dole was no longer adequate, particularly for those stuck on it for a long time.
The dole is now $245 a week, compared with $375 for the disability pension and $590 for the minimum wage. Professor Sloan said that gap would continue to grow without changes to the law, because the dole is indexed by inflation yet pensions are tied to faster-growing wages. By 2015, the dole would amount to just a third of the disability pension.
Professor Harper, who chaired the Fair Pay Commission set up by the Howard government under WorkChoices and is now a partner at Deloitte Access Economics, said he was ''on the same page'' as Professor Sloan on raising the dole. ''It's too low now,'' he told The Sunday Age.
''You'd want to fix it so that when the minimum wage gets raised, it grows proportionally too. When unemployment is falling, the people on the Newstart Allowance are the people who are among the most difficult to find a job for and simply making their living standards less viable compared [with] the community doesn't make a lot of sense. These guys are getting a lot less.''
Paying the unemployed so much less than people on disability pensions also created a perverse incentive, he argued.
''When your living standards are going down like that, people get desperate and depressed. The system is out of kilter. And if they stay on it long enough, they get depression and then they're moved on to the DSP [disability support pension].''
Professor Sloan was also a member of the Fair Pay Commission under WorkChoices. In that role, Professor Harper said they both were eager to ensure that the minimum wage was high enough above the dole to provide a strong incentive for work and keep the maximum number of people in jobs.
''[Yet] the greater that distance [between the minimum wage and the dole], the more harm you were doing to people who lose their jobs. If they lose their job, a person gets condemned to an unemployment benefit that hasn't moved at all under either government.''
The whole idea of having a minimum wage was that it acted as a safety net to ensure a basic standard of living, he said.
''No one is pretending life on the minimum wage is all beer and skittles, and yet the unemployment level is a fraction of that,'' he said.
''At one level, the conservative says, well, there is an incentive to get a job, but everyone - even the most hard-hearted conservative - knows there are people unemployed for no fault of their own and there should be compassion.''
A rise of $50 a week in the dole would cost the budget $1 billion a year. Professor Sloan urged the government to build a coalition of support for a rise in the dole.
''If you start to build up the case, if you can get someone like me on side, you just tell the shock jocks to piss off. They'd spend $245 on a meal. And the thing about that is you can confront them. Most people would say, gosh, that can't be right, it's so low.''
Forcing people to run down their own assets to such a low point before they qualified for the dole - so they had no real fund for emergencies - was ''really lousy'' and ''just mean'', she said.
mschubert@theage.com.au
Read more: www.smh.com.au/national/even-conservatives-say-the-dole-is-too-low-20111015-1lqm6.html#ixzz2uOs0FfCM
THE right-wing economist handpicked by former prime minister John Howard to set the minimum wage has declared the dole is too low and warned that giving people so little to survive on is causing desperation and depression.
Joining an unlikely conservative push for a rise in the Newstart Allowance, Ian Harper argued its level was now so low compared with disability pensions and the basic wage that even ''hard-hearted conservatives'' were alarmed at the lack of compassion.
Fellow conservative economist Judith Sloan argued at the recent tax summit that the dole was no longer adequate, particularly for those stuck on it for a long time.
The dole is now $245 a week, compared with $375 for the disability pension and $590 for the minimum wage. Professor Sloan said that gap would continue to grow without changes to the law, because the dole is indexed by inflation yet pensions are tied to faster-growing wages. By 2015, the dole would amount to just a third of the disability pension.
Professor Harper, who chaired the Fair Pay Commission set up by the Howard government under WorkChoices and is now a partner at Deloitte Access Economics, said he was ''on the same page'' as Professor Sloan on raising the dole. ''It's too low now,'' he told The Sunday Age.
''You'd want to fix it so that when the minimum wage gets raised, it grows proportionally too. When unemployment is falling, the people on the Newstart Allowance are the people who are among the most difficult to find a job for and simply making their living standards less viable compared [with] the community doesn't make a lot of sense. These guys are getting a lot less.''
Paying the unemployed so much less than people on disability pensions also created a perverse incentive, he argued.
''When your living standards are going down like that, people get desperate and depressed. The system is out of kilter. And if they stay on it long enough, they get depression and then they're moved on to the DSP [disability support pension].''
Professor Sloan was also a member of the Fair Pay Commission under WorkChoices. In that role, Professor Harper said they both were eager to ensure that the minimum wage was high enough above the dole to provide a strong incentive for work and keep the maximum number of people in jobs.
''[Yet] the greater that distance [between the minimum wage and the dole], the more harm you were doing to people who lose their jobs. If they lose their job, a person gets condemned to an unemployment benefit that hasn't moved at all under either government.''
The whole idea of having a minimum wage was that it acted as a safety net to ensure a basic standard of living, he said.
''No one is pretending life on the minimum wage is all beer and skittles, and yet the unemployment level is a fraction of that,'' he said.
''At one level, the conservative says, well, there is an incentive to get a job, but everyone - even the most hard-hearted conservative - knows there are people unemployed for no fault of their own and there should be compassion.''
A rise of $50 a week in the dole would cost the budget $1 billion a year. Professor Sloan urged the government to build a coalition of support for a rise in the dole.
''If you start to build up the case, if you can get someone like me on side, you just tell the shock jocks to piss off. They'd spend $245 on a meal. And the thing about that is you can confront them. Most people would say, gosh, that can't be right, it's so low.''
Forcing people to run down their own assets to such a low point before they qualified for the dole - so they had no real fund for emergencies - was ''really lousy'' and ''just mean'', she said.
mschubert@theage.com.au
Read more: www.smh.com.au/national/even-conservatives-say-the-dole-is-too-low-20111015-1lqm6.html#ixzz2uOs0FfCM
