Overview

Finding employment

Through its National Partnership Agreement on Youth Attainment and Transitions (see COAG 2009), the Council of Australian Governments (COAG) has made a commitment to help young people achieve their educational and training potential, and make the transition to sustainable employment. Since the partnership was introduced, participation in education has increased among those aged 16 and 17, but there has also been a rise in the number of inactive young people – young people who are not in full-time education and not in the labour market (Dandolopartners 2012).

The Australian Government, through its social security system, makes payments to eligible students and jobseekers in accordance with the government’s commitments under the International Covenant on Economic, Social and Cultural Rights (see boxed text on p.14). In November 2012, a Senate inquiry into the adequacy of Australian Government income support payments found that the single Newstart Allowance – the main unemployment allowance – ‘does not allow people to live at an acceptable standard in the long term’ (Senate Standing Committee on Education, Employment and Workplace Relations (Senate Committee) 2012, p.54). The Youth Allowance for single, independent full-time students, many of whom are in education or training for a number of years, is nearly $90 a fortnight lower than the single Newstart Allowance (Department of Human Services (DHS) 2013).

The Department of Education, Employment and Workplace Relations (DEEWR) estimates that increasing the single rate of Australian income support allowances by $50 a week would cost $2 billion a year (Senate Committee 2012, p.52). The majority report of the Senate committee inquiring into the adequacy of such payments did not advocate an increase but recommended adjustments to better support recipients make the transition from unemployment to work (Senate Committee 2012).

The majority report also noted that Australia’s income support system is ‘too complex’, that recipients and their advocates encounter many difficulties in their attempts to ‘navigate the web of entitlements, exclusions and supplements’ and, indeed, that the committee itself ‘struggled at time[s] to comprehend the material presented to it by the government’ (Senate Committee 2012, p.77). Its response was to recommend that:

‘the government assess the viability of creating an online calculator for Newstart and other recipients to enable jobseekers to easily calculate the costs and benefits of work, and the impact of work on allowances and other payments’ (Senate Committee 2012, p.vii).

This briefing considers the impact of employment insecurity, financial insecurity and complex access and compliance arrangements on Australians aged 16 to 24 who rely on the Newstart Allowance or the Youth Allowance. It brings together the research and views of a wide range of organisations with an interest in the wellbeing of young people who require financial assistance while studying or looking for work. It also incorporates material relevant to the needs of vulnerable young individuals who must find a way to house, feed and clothe themselves while meeting Centrelink compliance requirements associated with longer periods of unemployment.

Many developed countries have social insurance schemes that pay unemployed people benefits proportionate to their former wage. In Australia, however:

• payment levels are unrelated to former wages;
• income support is provided from general revenue;
• there is no limit on the length of time unemployed people can receive income support; and
• eligibility is determined on the basis of income, assets and activity tests.

Eligible people looking for work or studying full time are paid allowances, whereas those who do not work because of their age, some levels of disability or full-time caring responsibilities receive pensions. Pensions provide ongoing income, whereas allowances are viewed as transitional support. This is one reason why allowances are significantly lower than pensions. All income support payments in Australia are set around or below the Henderson Poverty Line (HPL), the primary measure of relative poverty in Australia (AHRC 2009; for more information about the HPL, see Melbourne Institute of Applied Economic and Social Research 2012).

Australian Government income support is provided through Centrelink. Payments for which young people may be eligible include:

• the Newstart Allowance;
• the Youth Allowance;
• the Disability Support Pension;
• the Parenting Payment;
• Rent Assistance; and
• the Special Benefit (see below for a brief description of the Special Benefit).

Most young people receiving income support directly will be on the Newstart Allowance or the Youth Allowance, and these are the subjects of this briefing.

Newstart Allowance

The Newstart Allowance, sometimes known as ‘the dole’, is an income support benefit for unemployed Australians seeking work who are aged 22 or older but under pension age (which currently varies according to date of birth and gender from 64.5 to 67 years). The level of Newstart Allowance payments depends on whether or not the recipient has dependent children, is married or is in a de facto relationship. In March 2013 the basic rate of the Newstart Allowance for a single unemployed person without children was $497 a fortnight, or $35.50 a day (DHS 2013). This rate was $236.70 less a fortnight than payments to single Age Pensioners at the time (DHS 2013).

People on the Newstart Allowance may also receive supplements and bonuses. For example, in 2013 they were entitled to an indexed, tax-free Income Support Bonus twice a year to assist with unexpected costs (DHS 2013). The bonus paid to single people who were in receipt of the Newstart Allowance on 20 March 2013 was $105 (DHS 2013). In March 2013, eligible recipients also began getting an indexed, tax-exempt Clean Energy Supplement, which was $8.40 a fortnight for those who were single with no children (DHS 2013). This was $5.10 a fortnight less than the supplement for single pensioners (DHS 2013).

The Newstart Allowance begins to decrease when recipients earn a specified amount of money from any paid work they undertake. In March 2013 that amount was $62 a fortnight, but an increase to $100 a fortnight from March 2014 was announced in the 2013 Budget. According to the National Welfare Rights Network (2013b), when relevant supplementary payments were taken into account, the Newstart Allowance increased by $125.30 a fortnight in the decade from 2003 to 2013.

The Australian Government believes that all unemployed Australians on income support ‘should be serious about finding work – if they want to receive income support’ (Ellis, in HRSCEE 2011, p.3). This requirement, together with a belief that income support payments must not encourage people to avoid finding work, has resulted in a complex array of tests and obligations to establish eligibility and ensure that recipients are genuinely looking for a job. In a 2012 submission to the Senate inquiry into the adequacy of income support payments, four Australian Government departments argued that an increase to the Newstart Allowance would be a disincentive for recipients to find work (DEEWR et al. 2012, p.12).

Youth Allowance

The Youth Allowance was introduced in Australia in 1998, taking the place of previous income support programs for young people. The change was intended to increase youth participation in education and training, streamline the former income support options for young people and remove disincentives for study (Szukalska & Robinson 2000, p.11). One of the basic premises under which the Youth Allowance is allocated is that until young people turn 22, parents ought to be able to support them through study, if they live at home. However, in circumstances where parents do not have the means to support their children, the government provides assistance (DHS 2012c). A longitudinal survey of Australian youth conducted by the Melbourne Institute of Applied Economic and Social Research at the University of Melbourne published in 2013 found that ‘Youth Allowance appears to act to limit any disincentives that young people from disadvantaged backgrounds face in attending university’ (Ryan 2013).

The Youth Allowance provides income support for eligible young people aged 16 to 24 who are undertaking full-time study, or participating full time in an Australian Apprenticeship or training program. It also assists some people younger than 22 who are looking for full-time work, as well as certain young unemployed people and students in a small number of other categories (see DHS 2013). Young people who receive the Youth Allowance are classified as either dependent on their parents or guardians, or independent. The Parental Income Test and Family Assets Test are used to determine whether a family is able to support the young person and to establish eligibility for the Dependent Youth Allowance (DHS 2012c). Full-time students aged 22 or older are deemed to be independent of their parents (DHS 2012c). As with the Newstart Allowance, the level of independent Youth Allowance payments may be influenced by whether or not the recipient has dependent children, is married or is in a de facto relationship.

In March 2013, the single Youth Allowance was $407.50 a fortnight, which was $89.50 a fortnight less than the single Newstart Allowance (DHS 2013) and $326.20 less than the single Age Pension. Access to supplementary payments such as Rent Assistance is more difficult, and payments are lower, for young people on the Youth Allowance, even though they have similar living costs to older income-support recipients (Mission Australia 2012). According to the National Welfare Rights Network (2013b), when relevant supplementary payments were taken into account, the Youth Allowance increased by less than $100 a fortnight in the decade from 2003 to 2013. However, recipients who are students or Australian Apprentices can now earn up to $405 a fortnight (March 2013 figure) before their allowance begins decreasing (DHS 2013). This is significantly more than single jobseekers on the Youth Allowance, whose payments begin decreasing when they earn more than $143 a fortnight (DHS 2013).

Special Benefit

The Special Benefit is available to some people younger than 16 whose financial needs are not covered by any other benefits – for example resident children whose parents are not entitled to payments (such as newly arrived migrants), and homeless full-time students younger than 16, may be eligible (Fitzroy Legal Service 2013; National Welfare Rights Network (NWRN) 2011b; Victoria Government 2013, p.24). Described by the National Welfare Rights Network as a ‘last resort safety net’, the Special Benefit is much more difficult to obtain than other allowances (see NWRN 2011b, p.2). Quoting 2010 figures from the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA), the network notes that 18.4 per cent of people on the Special Benefit were then under 24 and 8.9 per cent were under 16 (NWRN 2011b, p.3).

Employment insecurity

Unemployment and long-term unemployment are higher for young Australians than for the general population (DEEWR 2013a; Foundation for Young Australians 2011), while the percentage of young people in full-time work is decreasing and the percentage in part-time work is increasing (ASIB 2012).

Australia’s unemployment rate for people aged 15 to 24 is substantially lower than the OECD average (OECD 2012). Nevertheless, the global financial crisis had a disproportionately high negative impact on Australians aged 15 to 24, and that impact continues to be felt (ASIB 2012, p.8). In March 2013, 12.2 per cent of people aged 15 to 24 were unemployed, compared to a rate of 5.6 per cent for the general working-age population (DEEWR 2013a). The full-time unemployment rate among those aged 15 to 19 was 26.3 per cent (DEEWR 2013a):

Throughout the [last 25 years], and for both age groups [15–19 and 20–24], the percentages of young people who were not engaged in full-time education but were participating in the labour force have declined by around 20 percentage points. For teenagers, the percentage halved, from 44.1% in 1986 to 22.4% in 2012, and for 20 to 24 year-olds it fell from 79% to 60.2%. (Foundation for Young Australians 2012, p.47)

According to four government departments that made a joint submission to the Senate committee inquiring into the adequacy of government income support for people of all ages, ‘around 60 per cent of new recipients move off the Newstart Allowance within 12 months of commencement on this payment’ (DEEWR et al. 2012, p.11). However, as the Senate committee itself noted, ‘[n]ineteen per cent of allowance recipients who find work with the help of JSA [Jobs Services Australia], lose that employment within 26 weeks’ (Senate Committee 2012, p.70). The submission to the inquiry by the four government departments mentioned above also identified an ‘emerging trend of increasingly long durations on the Newstart Allowance for those who do not transition off payment within 12 months’ (DEEWR et al. 2012, p.11).

Not only is youth unemployment high but there are also diminishing opportunities for full-time work, meaning more young people in recent decades have experienced extended periods of casual or part-time work (Foundation for Young Australians 2012). Mission Australia (2012) estimates that 20 per cent of Australia’s casual workers are aged between 15 and 19. The four government departments that provided a submission to the Senate committee inquiring into the adequacy of income support attributed a large part of the increase in casual and part-time employment among those aged 15 to 24 years to the fact that ‘49.0 per cent of youth are now in full time education compared with only 29.9 per cent in March 1987’ (DEEWR et al. 2012).

However, according to the Australian Social Inclusion Board, ‘three times as many teenagers and more than twice as many young adults not in education now work part-time compared to 25 years ago’ (ASIB 2012, p.8).

Casual workers do not have secure jobs with predictable incomes and are, therefore, more likely to move in and out of unemployment. In addition, both permanent and casual part-time workers may work so few hours in a fortnight that they need to supplement their income with government allowances administered by Centrelink. Long-term unemployment, or work arrangements that are very low paid, intermittent and/or unpredictable, can also have negative impacts on health and wellbeing (Brotherhood of St Laurence (BSL) 2011a), making it difficult for people to plan their time and finances, which in turn further complicates their dealings with Centrelink (Australian Council of Trade Unions (ACTU) 2012). In addition, unemployed Australians are at risk of low self-esteem and under-confidence, particularly if they have repeatedly been unsuccessful when applying for jobs or have experienced prolonged unemployment or underemployment (Anglicare Sydney 2012).

The government has attempted to redress some of the difficulties associated with moving in and out of casual work, and to encourage jobseekers to take such work, through the allocation of Working Credits (for those in receipt of an unemployment allowance) and the Student Income Bank (for full-time students on Youth Allowance, Austudy or ABSTUDY). Credits accumulate when recipients’ income is very low and can be used to increase the thresholds at which their allowances decrease in times when their income increases. The Department of Human Services reports that this makes it easier for recipients to get their Centrelink payments and benefits back if a short-term job ends (DHS 2012b). In some circumstances, concessions and benefits may also be retained for a number of months after Centrelink payments cease (DHS 2012b).

In discussing the particular vulnerability of young Australians to downturns in the labour market, the Australian Social Inclusion Board (2012), referencing the Foundation for Young Australians, drew attention to the impact of unemployment on their future employability:

Prolonged periods of unemployment can result in loss of skills, discouragement and eventual labour market withdrawal. The experience of unemployment itself can also have negative consequences for a young person, such as loss of confidence and work experience/knowledge, which in turn may make them less employable. (ASIB 2012, p.8)

The Australia Institute (Richardson 2012) argues that the growth of casual employment is significant and may be contributing to the creation of an ‘Australian underclass’, as cycling in and out of employment can entrench reliance on income support and thus, disadvantage and poverty – a point echoed by the Combined Pensioners & Superannuants Association of New South Wales (2012).

Factors contributing to employment insecurity

The reasons for high rates of youth unemployment are complex and varied, but low education levels make a significant contribution. Of those young people who are not fully engaged in work or education, it is estimated that just under half (47 per cent) did not complete Year 12 and are not currently attempting to gain a non-school qualification (ASIB 2012).

There are many other factors that are associated with young people requiring income support due to unemployment or underemployment, including:

• factors that impact on the supply of jobs for young people, such as globalisation, technology changes, fewer unskilled jobs, and demographic and policy changes leading to increased competition from sole parents, older people and people with disabilities re-entering the workforce (see, for example, BSL 2011a);
• limited availability of active labour market programs targeted at highly disadvantaged young jobseekers who are not ‘job ready’ and face multiple barriers to employment (see BSL 2011b);
• location, particularly for people living in regional and remote communities where there are limited employment options (Mendes 2012);
• young people’s relationship with the complex and often fragmented support offered by federal, state and non-government organisations (see AYAC 2012a).
• personal issues, which may include family violence or conflict, health problems, a lack of social capital/connectedness, a lack of motivation to seek employment, alcohol or other drug problems, antisocial behavior or criminal activity (see, for example, The Benevolent Society 2012; Jesuit Social Services 2012; Mendes 2012; Welfare Rights Centre Inc. Queensland (WRCQld) 2012);
• individual characteristics, such as low levels of literacy or insufficient work experience. (NWRN 2012)

Financial insecurity

In 2010 the OECD indicated that Australia’s unemployment benefit was so low as to ‘raise issues about its effectiveness’ in providing the financial resources needed to assist Australians make the transition into employment or participate in skills acquisition, study or training (in NWRN 2012).

Social exclusion

As part of the National Partnership Agreement on Youth Attainment and Transitions (see ‘Overview’), COAG made a commitment in 2009 to address social exclusion (COAG 2009). Indicators of social exclusion include unemployment, long-term underemployment, ‘marginal attachment to the workforce’, and low levels of income, consumption, education, literacy and numeracy (Brotherhood of St Laurence (BSL) 2012b, p.1). In addition, low income can contribute to multiple disadvantage, which may include poor health and lack of support in times of crisis (ASIB 2012). After improving between 2001 and 2008, the level of social exclusion suffered by those aged 15 to 24 rose by 4 per cent in the period to 2010 (BSL 2012b, p.4).

The Australian Council of Social Services (ACOSS) believes comments by Australian leaders that stress individual responsibility for unemployment and focus on ways to increase workforce participation give the impression that dependence on income support, rather than factors such as high unemployment or intergenerational poverty, is the primary source of an unemployed person’s disadvantage (ACOSS 2010a, p.4). However, in the opinion of the Director of Monash University’s Social Inclusion and Social Research Policy Unit, Associate Professor Philip Mendes (2012), ‘the economic orthodoxy since the early 1980s has emphasized the use of monetary and budgetary policies to control inflation and limit public sector growth [which] automatically precludes any potential for full employment’. A combination of complex structural, social and individual factors (see previous section) means that some Australians who are not entitled to pensions may never successfully make the transition to regular, full-time work (Mendes 2012; see also Homelessness Australia 2012). In these circumstances, failing to provide young people with a reasonable income not only has the potential to undermine Australia’s ability to meet its commitments under the International Covenant on Economic, Social and Cultural Rights (ICESCR, see boxed text) but, according to Mendes (2012), could also have ‘adverse implications for social cohesion, and may lead to greater costs in other areas such as health care and criminal justice’.

Impacts on the ability of people already unemployed to make a successful transition to employment

In April 2013, Anglicare Australia found that single people living on the Newstart or Youth allowances could afford less the 0.1 per cent of available rental accommodation in its national catchment areas (Anglicare Australia 2013, p.11). Such results suggest most Newstart and Youth Allowance recipients wishing to live in single occupancy accommodation would have to pay much more than 30 per cent of their income to house themselves, leaving little after expenditure on other necessities for the kinds of purchases that help people make a good impression when applying for jobs and attending interviews, such as appropriate clothing and grooming, internet access, reliable transport and mobile phones.

In the 2011–2012 financial year, 23.9 per cent of clients receiving assistance from specialist homelessness services in Australia were on the Newstart Allowance and 9.3 per cent were on the Youth Allowance (Australian Institute of Health and Welfare 2012). Homelessness and ‘couch-surfing’ (see Homelessness Australia 2012) leave unemployed people without a fixed address, making it difficult for them to present well in job applications.

The Australian Government funds Job Services Australia to help jobseekers meet their obligation to apply for a specified number of jobs a fortnight. According to Homelessness Australia, however, ‘when you are reliant on less than $45 per day including the maximum rate of Commonwealth Rent Assistance to provide for all [of] what most Australians would consider the necessities of life including safe and secure accommodation, transport and ICT expenses could be the tipping point’ (2012, p.11).

Both the OECD (in NWRN 2012) and the Business Council of Australia (BCA 2012) believe that the current level of income support provided by the Newstart Allowance is not adequate to enable individuals to make the transition to self-reliance and workforce participation. The Business Council of Australia (in Creighton 2012) has argued that the payments offered to Newstart Allowance recipients are so low that they ‘[present] a barrier to employment and [risk] entrenching poverty … [as jobseekers are] severely disadvantaged in their ability to maintain an active job search and present themselves decently for job interviews’. The Benevolent Society (2012; see also The Salvation Army 2012; St Vincent de Paul Society National Council 2012) has also argued that current rates make it difficult for income-support recipients to meet costs associated with searching for work, such as paying for transport to interviews, buying appropriate interview and work clothing, and paying telephone, computer, printing and internet costs incurred to contact prospective employers.

Impacts on study

Mission Australia (2012; see also Good Shepherd Youth and Family Service and Community Information and Support Victoria (Good Shepherd) 2012) argues that the inadequacy of the Youth Allowance is worrying for young people who are studying, and especially those not living at home. This is because the payment is so low that these people are likely to have to rely on paid work, reducing the time they can devote to their studies. In addition to meeting their basic living expenses, young people engaged in post-school education or training will usually have to pay enrolment and administration fees, buy text books and other course-related materials, invest in a personal computer and pay for internet access (Good Shepherd 2012).

Centrelink provides Start-up Scholarships to full-time students in receipt of Youth Allowance (DHS 2013) to help defray these costs, but they can still be a significant burden (Good Shepherd 2012). In addition, in 2013 the Australian Government announced that it intended to replace these non-repayable scholarships with loans, which would add to the level of debt students would accrue in the process of gaining the skills necessary to make a successful transition to independence.
A longitudinal survey of Australian youth conducted by the Melbourne Institute of Applied Economic and Social Research at the University of Melbourne, published in 2013, found that the Youth Allowance substantially improves the rate of completion of tertiary studies but is also associated with financial stress (Ryan 2013):

Further, receipt of Youth Allowance appears to be positively associated with completion of both university and full-time VET courses. This does not make the act of undertaking post-secondary education and training a necessarily happy experience, however. Individuals undertaking post- secondary studies and who rely on Youth Allowance are more likely to report low levels of satisfaction with their financial position and more instances of financial distress than other young Australians. (Ryan 2013, p.43)

In a survey of more than 11,500 students by Universities Australia (2013), ‘[a] third of students surveyed said they regularly missed classes because of their jobs and 17 per cent said they regularly went without food or other necessities’. The Newcastle University Students’ Association (2012) has raised concerns that cost of living pressures are having a detrimental impact on young people’s academic achievement and long-term employability in Australia. Moreover, it is possible that there is limited compensating advantage in skills acquisition from the kind of part-time employment generally untaken by students simply to supplement their government allowances, given the finding of the Foundation for Young Australians (2011) that part-time work ‘appears to offer young workers only a slight advantage in shifting into full-time work’ (2011, p.45).

Complex eligibility and compliance arrangements

The administrative processes for accessing income support are complex and confusing, leaving young people at risk of inadvertently doing the wrong thing or failing to gain all the income support to which they are entitled (see Senate Committee 2012; House of Representatives Standing Committee on Education and Employment (HRSCEE) 2011; NWRN 2013a).

In 2012, when the Australian Youth Affairs Coalition (AYAC) asked young people about their experiences in dealing with Centrelink, they expressed gratitude for the allowances but also frustration at the difficulties they encountered in negotiating Centrelink’s payment and compliance arrangements (AYAC 2012a):

The young people were frequently critical of the contact they had with Centrelink staff about their entitlements and, in particular, were frustrated at contradictory advice, rude staff and unexpected payment cuts. The young people typically found the system confusing and did not have the eligibility criteria explained to them in a way they understood. This suggests an area for improved communication. (AYAC 2012a, p.29)

Complex eligibility and compliance arrangements may result in some people who are entitled to benefits missing out, which may lead to poverty, ill health and other harmful outcomes. The following list compiled by the Australian Youth Affairs Coalition gives an insight into the wide variety of concerns that can result in people missing out on income support:

Recurring administrative issues for the young people included:

• not knowing which payment category they fell under, or not understanding why they were receiving a certain type of payment over another;
• payments being cut off for unclear reasons or because they were not studying at an accredited institution recognised by Centrelink;
• difficulty in obtaining official identification papers and related documentation; and
• failing to update the Centrelink database so that clients had to give staff the same information multiple times. (AYAC 2012b, p.29)

The system can be especially difficult for those who are homeless or for whom English is a second language, people with mental health problems, and those with a low level of literacy (AYAC 2012a, p.29).

Complex eligibility and compliance arrangements may result in some people who are entitled to benefits missing out altogether, leading to poverty, ill health and other harmful outcomes. The consequences are likely to be disproportionately severe for those vulnerable people for whom such payments may be a primary source of income for a prolonged period in their lives rather than assistance for a shorter transition to employment (see AHRC 2009, 2012).

Making ends meet

Newstart Allowance and Youth Allowance levels have been widely criticised by service providers, young people, the Australian Council of Social Services, youth advocacy bodies such as the Australian Youth Affairs Coalition, and business groups as being insufficient to cover basic living costs (for example, ACOSS 2012b, AYAC 2010, 2011, 2012a, 2012b; BCA 2012; NWRN 2012; The Salvation Army 2012).

In 2012, Homelessness Australia compared a combination of the Youth Allowance and Rent Assistance with the fortnightly costs of five essential items likely to be required by a young person living away from home. Calculations were based on the median estimate across Australia and assumed the young person was sharing a house with another tenant (Homelessness Australia 2012). The organisation found that after meeting essential costs, a young person would be left with 75 cents a fortnight. Using a similar formula it found that those on Newstart Allowance would be left with $10 a week.

In 2010, the Social Policy Research Centre at the University of New South Wales reported that recipients of income support payments such as the Newstart Allowance and the Youth Allowance experienced material deprivation (ACOSS 2012a). In addition, it has been estimated that around 75 per cent of Newstart Allowance and Youth Allowance recipients experience poverty, defined by the OECD as living on half of the median wage in Australia (Creighton 2012).

The Benevolent Society (2012) has argued that the inadequacy of income support payments such as the Newstart Allowance means recipients cannot save any money for significant or emergency costs such as car registration and insurance, medical or dental expenses, or replacing vital household items such as white goods. As a result, many recipients of allowances must rely on credit cards or high-interest loans to meet these expenses, potentially leading to unmanageable debt and entrenched poverty (The Benevolent Society 2012; see also Jesuit Social Services 2012; The Salvation Army 2012). Inability to meet living and housing costs can also result in homelessness (Shelter NSW 2012).

Relative inadequacy

Income support policy decisions are made in the context of other considerations such as budget priorities, the need to ensure recipients have an incentive to work, financial stress indicators, and poverty in Australia relative to that existing in other countries. It is, therefore, appropriate to consider the adequacy of income support payments in the context of general community standards and typical incomes.

The ACTU agues that adequacy is a relative concept and cites a 2011 paper from the Social Policy Research Centre about the 2009 Pension Review by Jeff Harmer in arguing that Australia’s income support payments should be based on a definition of adequacy ‘that stresses the value of income support payments relative to measures of typical standards of living and community norms’ (ACTU 2012).

In 2012, the basic rate of the Newstart Allowance paid to single, unemployed people without children was approximately 45 per cent of the after-tax minimum wage – a percentage around 9 per cent lower than it was in 1996 (Whiteford 2012b).

Australia has the ninth highest income inequality of 26 countries in the OECD (ASIB 2012). The Australian Social Inclusion Board attributes this to the disproportionate residual impact of the global financial crisis on the earning capacity of young Australians coupled with an increase since the mid-1990s in the wages and investment returns of high-income earners (ASIB 2012).

Professor Peter Whiteford of the Crawford School of Public Policy at the Australian National University (2011, 2012a) calculates that, after budgeting for rental expenses, a single recipient of the Newstart Allowance with no employment income will only have $17 per day for all other costs such as food, clothing, utilities, personal care, transport, and medical and school expenses, in addition to the costs of jobseeking. By contrast, the average single Australian under 35 spends around $84 each day, not including their housing-related costs (The Benevolent Society 2012; Whiteford 2011, 2012a).

In 2011, the National Welfare Rights Network surveyed members of the broader Australian population to find out what goods and services they would give up if they were forced to live on the Youth Allowance. Almost fifty per cent said they would not visit the doctor when ill, and 60 per cent said that they would stop buying fresh food (NWRN 2011a). Forty-five per cent said they would drop out of education (NWRN 2011a).

By contrast, Ben Phillips and Binod Nepal from the National Centre for Social and Economic Modeling (in Creighton 2012) argue that unemployed Australians are relatively well off compared to unemployed people in countries such as Japan and the United States, who are offered very restricted support.

 Payment increases over 10 years

Disparity between pensions and allowances

As noted earlier, the payments for young people on the Youth Allowance and the Newstart Allowance are significantly lower than pensions, even though they face many of the same living costs. In addition, young Australians in receipt of income support who live away from home are likely to have to rent accommodation (see Homelessness Australia 2012), whereas many pensioners own their own home (see Australian Housing and Urban Research Institute 2005).

In its analysis of the 2011 Social Policy Research Centre paper on the 2009 Harmer Pension Review mentioned above, ACOSS (2012a) argues that the difference between pensions and income support is unjust, while Mendes (2012) finds that the disparity implies that the unemployed are ‘less deserving’ of support than other groups receiving it.

In 2010, the Henry Tax Review stated that the single rates of income support for unemployed people and students needed to remain lower than the pension. However, for reasons of fairness, it also recommended that they be increased:

To improve fairness, the current differences in rates of payment should be reduced by gradually increasing the single person rates of payment in the participation and student categories. The rates of payment for single people in these categories would be lower than the amount paid for single pensioners. However, there should be a consistent treatment of the amount paid to single people compared to the amount paid to couples in the income support system. Once established, the relativities in the levels of adequacy in the three payment categories should be maintained through a consistent approach to indexation. Indexing to the current community standard for pensions would involve a significant cost, so governments will need to regularly review the benchmark. (Commonwealth of Australia 2010)

The Australian Council of Social Services (2012a) calculates that implementing the recommendations of the Henry Tax Review would result in an increase to the single rate of the Newstart Allowance of $50 a week. However, apart from a small increase to offset the GST in 2000, which was also received by other income-support payment categories, the Newstart Allowance has not been increased in real terms since 1994, despite cost-of-living pressures such as food, utilities and housing costs increasing more quickly than inflation (BCA 2012).

The Newstart Allowance is adjusted with reference to the Consumer Price Index each year. However, pensions have been formally indexed since 1997 to at least 25 per cent of male total average weekly earnings (BCA 2012). From 2009, pension recipients were provided with an extra ‘safety net’ – a promise that pensions would be 27.7 per cent of male total average weekly earnings (Australian Government 2009). By contrast, in 2012 the Newstart Allowance was 65 per cent of the single pension – that is, significantly less than 27.7 per cent of male total average weekly earnings – and it is likely this gap will continue to widen (BCA 2012; Denniss & Baker 2012). The National Welfare Rights Network (2011c; see also ACOSS 2010b, 2012a, 2012b; AYAC 2011, 2012b; The Benevolent Society 2012) notes that permitting allowances to fall so far behind pensions has caused ‘entrenched and endemic levels of poverty amongst unemployed people, students and young people and some single parents and people with disabilities on Newstart Allowance’.

Incentive to work

Some individuals and organisations argue that increasing the rate of Newstart Allowance might not improve outcomes. For example, Ben Phillips and Binod Nepal from the National Centre for Social and Economic Modeling (in Creighton 2012) have suggested that increasing the Newstart Allowance will discourage people from jobseeking.

In arguing that income support allowances should not be increased, four Australian Government departments (DEEWR et al. 2012, p.9) note that Jobs Services Australia (JSA) is funded to purchase assistance to reduce vocational and non-vocational barriers to work and provide work experience to Newstart recipients. In respect of the Youth Allowance, they also point to reforms that have benefitted recipients, including reductions in the age of independence, increases in the Parental Income Test threshold and changes to the Personal Income Test that enable students to earn more money from part-time work before their allowance is reduced and to undertake seasonal work (DEEWR et al. 2012, p.9).

In contrast to claims that low levels of income support are required to ensure recipients actively seek work, The Benevolent Society argues that there is no reliable evidence that people receiving unemployment benefits do not want to work, but significant evidence that financial insecurity can hinder an individual’s ability to find employment (The Benevolent Society 2012, p.9; see also the earlier sections ‘Factors contributing to employment insecurity’, which identifies structural barriers to employment that can impede the transition of even the most ‘incentivised’ jobseekers, and ‘Impacts on study’, which refers to the potential impact excessive amounts of part-time work can have on students’ education outcomes and, thus, their ability to find secure, full-time employment when they leave education).

Navigating the bureaucratic maze

As noted earlier, the majority report of the Senate committee inquiring into the adequacy of income support allowances found that processes and procedures associated with accessing income support were ‘too complex’ (Senate Committee 2012).

Some members of the committee noted that full employment has never been achieved or promised, indicating that there will always be some people who are unemployed (Senate Committee 2012). The National Youth Commission’s 2008 Inquiry into Youth Homelessness (NYC 2008) argued that for many young people, and particularly those who are vulnerable or homeless, highly bureaucratic procedures create barriers between individuals and the support to which they are entitled. Some may have trouble providing even bank account details, suitable identification and a tax file number for the first time. According to the NYC, ‘The fact that many homeless young people present to services with no income support shows that negotiating the bureaucratic maze is difficult for them ... the main difficulty appears to be that young people who have recently left home cannot prove they are homeless or independent for the purpose of receiving benefits’ (NYC 2008, p.309).

Once in receipt of benefits, young people on the Newstart Allowance or the Youth Allowance must meet a range of obligations. Activities must be completed within a specified time, and for unemployed people these activities might include applying for a certain number of jobs, participating in paid work experience or undertaking vocational training. The number of activities that each unemployed client must complete to fulfill their obligations varies, increasing as the period of their unemployment lengthens. For example, in the first three months of being on the Newstart Allowance, clients may only have to submit an Application for Payment form to Centrelink, containing details of any jobs that they applied for within that period. This contrasts with more stringent requirements for those clients who have been unemployed long term. Those who have been out of work for more than 24 months usually have to participate in a Work Experience Phase for 11 months. People with disabilities have access to individually tailored programs to help them obtain and maintain work through Disability Employment Services.

AYAC (2012a, p.29) reports that some young people who have negative experiences or become frustrated with long waiting times turn to youth workers outside government because they don’t want to deal directly with Centrelink or need help to sort out mistakes. Although many youth workers have strong professional relationships with Centrelink staff and other organisations, the National Welfare Rights Network has found ‘the extremely complex nature of the current compliance arrangements’ a concern, not only for those who are subject to them but also for those who must administer them (2013a, p.10).

Access and compliance

As noted, in Australia, the provision of social security is conditional on meeting certain ‘mutual obligation’ and compliance requirements. The Australian Human Rights Commission has highlighted that these obligations are legally allowable given that Australia has not incorporated the ICESCR into domestic law (AHRC 2009, 2012). Those experiencing significant labour-market barriers, such as homeless people, single parents, people with disability, people with a drug or alcohol disorder, women escaping domestic violence, and young people generally, are not excused from compliance requirements (AHRC 2012). For these recipients of income support, Centrelink participation requirements can act as an additional, and significant, barrier to transitioning to employment (The Benevolent Society 2012; Jesuit Social Services 2012).

The penalties for individuals who breach their agreements with Centrelink include having their payments cut off for the period during which they do not comply with arrangements. If a young person’s circumstances change, and Centrelink is not made aware of these changes immediately, overpayments can also occur and these will need to be repaid.

Many young people on income support find the social security system difficult to negotiate and very complex, particularly in relation to their mutual obligation and ‘earn or learn’ requirements. Some also do not understand the reporting requirements and make mistakes through ignorance or confusion. The WRCQld (2012, p.6; see also Jesuit Social Services 2012) argues that despite their best efforts many people on income support ‘encounter difficulties reporting [to Centrelink]… and this can result in confusion, anxiety and greater financial stress’. Good Shepherd (2012) also reports that many of its young clients struggle to maintain benefits, particularly with respect to participating in casual employment and reporting changing income rates each fortnight.

Certain groups of young people are more likely to breach their agreements than others. Young people who become homeless are likely to find it difficult to meet their mutual obligation requirements and, consequently, to maintain their payments. For example, not having a fixed address to which letters from Centrelink can be sent will result in notices often being missed or received too late. Also, young people who are homeless are more likely to fail to apply for the mandatory number of jobs, or may miss job interviews and other commitments attached to their payments. Young people who are living in regional or remote locations are also likely to struggle to meet their mutual obligation requirements, particularly when they live in communities with limited employment opportunities (Godden 2007). These young people have to apply for jobs outside their communities, and this may be problematic if they don’t have access to the internet, or reliable and affordable transport (Godden 2007).

Some community organisations have observed that income support recipients’ engagement with Centrelink and Australian Government employment services staff can sometimes be an obstacle to maintaining payments. Like the Australian Youth Affairs Coalition (see above), The Benevolent Society (2012) observes that many of its clients report unfriendly and unhelpful dealings with staff, who do not recognise, or are not trained to support, their complex needs and situations. Some of its clients report feeling judged by staff and treated rudely. It argues that this makes engagement with Centrelink and employment services stressful for recipients, which in turn undermines their ability to maintain their benefits.

If income support conditions are breached, payments cut off and debts incurred, it is highly likely that young people requiring state assistance will fall into serious poverty, possibly becoming homeless and perhaps even engaging in criminal activity to acquire the essentials of life, such as food (NYC 2008, p.316-17; see also Good Shepherd Youth 2012; Jesuit Social Services 2012; Urbis et al. 2008; WRCQld 2012). The ACTU (2012) notes that if a Centrelink client does not pay back their debt in the prescribed time, Centrelink can prosecute, which it does quite often. For example, in 2009–2010, Centrelink prosecuted 3461 cases. In extreme cases, Centrelink prosecutions can lead to criminal sanctions, resulting in a criminal record, which further limits the recipient’s job prospects. The National Welfare Rights Network (2012) argues that there is no evidence that harsh penalties for breaches of reporting obligations have helped people on income support transition into employment. Instead, the network (2012) recommends investment be directed towards creating programs that support recipients, noting that even though mistakes are often caused by Centrelink, recipients are forced to cope with the consequences in a system that places much of the burden of proof on the client.

Amendments to social security laws in 2009 were aimed at providing greater flexibility around the penalties for young people who failed to meet their income support obligations. In August 2012, the Australian Government also introduced a mobile phone application to help students on Youth Allowance, Austudy and ABSTUDY manage these requirements. While these reforms have been welcomed, many youth advocacy and welfare organisations continue to argue for additional changes they feel are necessary to ensure social security payments are guaranteed for all people who require income support to achieve an adequate standard of living when they are unable to support themselves.

Workforce participation criterion

Young people under 22 who wish to access independent Youth Allowance must work a prescribed number of hours a week for 18 months before applying. Unions NSW (2012, p.4) argues that prospective students from low-socioeconomic or regional backgrounds are placed at particular disadvantage by this requirement and also notes that the 18-month period is problematic because it does not coincide with the university or TAFE academic year, delaying commencement by up to two years.

Young parents

In order to receive income support such as the Newstart Allowance, young women who are pregnant are expected to meet the same ‘mutual obligation’ commitments as other young people until six weeks before the birth of their child. Centrelink parenting supports only begin after the birth has occurred. This means that young women are expected to be job hunting and completing other arrangements while pregnant, as well as having to deal with potential issues such as poverty and homelessness, at a time when they need to secure stable housing, connect with the community, learn how to become a parent and receive antenatal care (NYC 2008, p.315).

Liquid assets waiting period

Unions NSW (2012) and The Benevolent Society (2012) argue that the ‘liquid assets waiting period’ is an additional barrier to income support payments for young people. Before being able to access income support payments, prospective recipients may have to serve a waiting period of up to 13 weeks while their personal savings decline to what is regarded as an appropriate level.

The National Welfare Rights Network (2012) believes it is critical that people are able to have a modest amount of savings in addition to social security payments in order to meet unexpected, emergency or infrastructure costs. In the 2012–2013 Federal Budget it was announced that this threshold had been doubled to $5,000 for singles without dependent children and $10,000 for couples or people with dependent children. While The Benevolent Society (2012) has welcomed the doubling of the threshold, it argues that the amounts are still too low and do not allow recipients to save and safeguard against unexpected multiple emergency expenses such as medical expenses or car repairs.

Students not currently eligible for support

The Newcastle University Students’ Association (2012) has observed that many higher education students in Australia are unable to access income support, yet are struggling to support themselves. It argues that the Australian Government assumes that parents will support their adult children through university, which is not always the case and can place young people under significant financial stress if they have to pay their parents rent with no supplementary support.

Income management

In some circumstances, disengaged youth receiving income support can be subject to income management. This does not reduce the amount recipients receive but changes the way they receive it. The proportion quarantined is usually 50 per cent, but may rise to 70 per cent in some cases (ACOSS 2010a, p.1). This money can only be spent on items such as food, medicine and rent. People receiving a lump sum income support payment may have their entire payment income managed (ACOSS 2010a, p.1). The National Welfare Rights Network notes that from 1 January 2013 compulsory income management will be extended to vulnerable young people in ‘income management areas’, including people under 25 receiving Crisis Payments after leaving prison, Youth Allowance recipients paid under the ‘Unreasonable to Live at Home’ provisions and people under 16 receiving the Special Benefit (2013c, p.5).

Young people can apply to have an exemption if they:

• are studying full time on Youth Allowance
• are a student apprentice on Youth Allowance
• are participating in regular paid employment
• are participating in an approved exemption activity
• have dependent children who are participating in approved activities.

Income management was originally introduced as one of a range of policies associated with the 2007 Northern Territory Emergency Response, and although it has now been extended to other areas, it still disproportionately affects Indigenous Australians. A Parliament of Australia Background Note concludes that there is an absence of adequate data related to its effectiveness or otherwise (Parliament of Australia 2012). This briefing cannot cover the subject adequately in the space available but readers wishing to learn more about the measure can find information on the websites of government departments such as DEEWR and FaHCSIA, and non-government organisations such as ACOSS, the National Welfare Rights Network and the Youth Action Policy Association.

Young Indigenous Australians

Employment

For Indigenous Australians living in very remote areas, it may be almost impossible to find work locally. As the Australian Bureau of Statistics explains: ‘Remote areas generally have an underdeveloped labour market where people often do not actively look for work and therefore are not classified as unemployed, even though they are not working and might indeed prefer to work if the labour market were different’ (ABS 2013).

In 2010, one in 10 people receiving unemployment allowances in Australia was Indigenous (ACOSS 2012b). In the same year, the unemployment rate for Indigenous Australians was 18 per cent overall, and 27 per cent for Indigenous males aged 15 or older living in regional Australia (Australian Bureau of Statistics (ABS) 2013).

Even if Aboriginal or Torres Strait Islander people do not live in regional or remote areas, they may face many obstacles to employment. For example, the Australian Social Inclusion Board cites a study by the Australian National University which found that ‘for Anglo-Saxon sounding names, the mean call-back rate for interview was 35%, compared to only 26% for Indigenous applicants’ (ASIB 2012, p.57).

In 2013 the Prime Minister’s Closing the Gap report noted that ‘the proportion of Indigenous people of workforce age who are employed in non-CDEP [Community Development Employment Project] jobs rose by 2.3 percentage points between 2006 and 2011’ (Australian Government 2013, p.14). However, when employment in CDEP jobs was taken into account, the gap between Indigenous and non-Indigenous Australian widened by 2.2 per cent (Australian Government 2013, p.32). In July 2013, CDEP and a number of other programs in remote areas will transition into a program called the Remote Jobs and Communities Program (RJCP), which the government describes in the following terms:

The design of the RJCP reflects the Government’s view that everyone who can work should work. Remote job seekers, including those on CDEP wages, will be given the personalised support they need to take up opportunities. Those who cannot get a job will participate in meaningful activities that will contribute to their communities as well as making them more work ready. (DEEWR 2013b)

The particular difficulties experienced by Indigenous Australians can be compounded if they are also young. According to data from the Longitudinal Surveys of Australian Youth, ‘among young Australians aged in their early twenties in 2010, rates of neet [neither employed nor undertaking any education or training] were more than three times higher among Indigenous youth and those with a disability (in each case around 20%) than among others (around 7%)’ (Foundation for Young Australians 2012, p.13).

Education

In addition to its focus on the broad population of young Australians aged 15 to 24, the National Partnership on Youth Attainment and Transitions has a particular interest in improving education and engagement outcomes for Indigenous young people. For Indigenous 15- to 19-year-olds, the rate of increase in vocation education and training participation since 2009 has been greater than for non-Indigenous young people of the same age (Dandolopartners 2012) and there have been small increases in retention of Indigenous students in Years 10 (2009–2011) and 12 (2010–2011). The Prime Minister’s 2013 Closing the Gap report noted that ‘[p]rogress to meet the Year 12 attainment target [for Indigenous students] is ahead of schedule’ (Australian Government 2013, p.14).

Bradley Review

The Bradley Review of Australian Higher Education, which handed down its report in December 2008, made a number of recommendations about Youth Allowance, Austudy and ABSTUDY, some of which were implemented in subsequent years. The Australian Government believes these reforms will ‘benefit students from low socioeconomic backgrounds and students who have to move away from home to study, including rural and regional students’ (DHS 2012a) and hopes they will help meet a target of 40 per cent of Australians aged between 25 and 34 having a bachelor degree or higher qualification by 2025 (Le Dow 2011).

Among the recommendations that were adopted in the years after the review was an increase in the Parental Income Test threshold, enabling more students to access the maximum rate of Youth Allowance or ABSTUDY. Another significant reform lowered the ‘age of independence’ from 25 to 22. This has been welcomed by many organisations, although some continue to lobby for the age to be lowered to 18 on the basis that young people who have the right to vote, drive and be in the armed forces should also have the right to be viewed as independent of their parents. The Students’ Representative Council of the University of Sydney (2012) argues that many students who have not moved out of home live independent lives and should be treated as such by the Australian Government. It reports that many students do not receive (or expect to receive) support from their parents, other than, sometimes, a roof over their heads.

Also as a result of the Bradley review, in July 2012 the personal income threshold for students on Youth Allowance rose from $236 to $400 per fortnight. As of March 2013 students and Australian Apprentices on Youth Allowance could earn $405 a fortnight before their income support payment starts to be reduced.

Compact with Young Australians

On 30 April 2009, COAG formulated a Compact with Young Australians – a commitment to promote young people’s participation in education and training in an environment of job scarcity and economic downturn. Legislation in individual jurisdictions has been in place since 2010. This commitment is delivered under the National Partnership on Youth Attainment and Transitions. According to DEEWR, the Compact with Young Australians includes the following:

• A National Youth Participation Requirement for all young people to participate in schooling until they have completed Year 10 (or an approved equivalent) and then in full-time (at least 25 hours per week) education, training or employment (or a combination of these) until they are aged 17.
• An entitlement to an education or training place for young people aged 15 to 24. Officially expired on 31 December 2011 as it had been embedded in state and territory policies.
• Strengthened participation requirements for young people under the age of 21 who have not attained a Year 12 or equivalent qualification to be eligible for Youth Allowance and Family Tax Benefit Part income support payments. (DEEWR 2012)

The Second interim evaluation of the National Partnership on Youth Attainment and Transitions, released in December 2012, found that the Compact with Young Australians had increased the number of 16 and 17 year olds in education. However it also found:

… little or no firm evidence that unemployed youth have shifted into education and training … This is consistent with UK research on the impact of the Education Maintenance Allowance, which concluded that financial incentives are much less successful in encouraging young people to return to study than in encouraging continued participation by those already participating. (Dandolopartners 2012, p.53)

Instead:

[t]he Compact has been associated with an increase in the number of young people who are inactive (neither unemployed nor studying), with a marked fall in the number of families of young people who are eligible for Family Tax Benefit Part A, and with a sharp fall in the proportion of young job seekers who receive income support. (Dandolopartners 2012, p.54)

In recent years, but particularly since its 2012 national conference, ‘Sharing the wealth of the lucky country’ (and reiterated at its 2013 conference, ‘Community: The heart of the economy’), ACOSS has been a strong advocate of raising income support payments, particularly to recipients of Newstart Allowance. Its 2012 and 2013 campaigns highlighted that people, including many young people, on the Newstart Allowance were living on $35 dollars a day (see ACOSS 2012b).

ACOSS continues to argue that the Newstart Allowance is inadequate for the basic necessities of life and calls on the Australian Government to raise both the Newstart Allowance and the Youth Allowance by $50 a week.

ACOSS’s campaign has been supported by a number of community organisations, including the national peak youth body, AYAC, and broader community organisations such as St Vincent de Paul, The Salvation Army and The Benevolent Society. As noted earlier, the Business Council of Australia has also given ACOSS its support and questioned the extent to which the current arrangements make it possible for recipients to raise themselves out of poverty and joblessness (BCA 2012).

The National Welfare Rights Network (2012) has also been active in campaigning for increased income support. Although it believes that meaningful employment is a powerful solution to poverty, it also believes unemployed people require sufficient income to live with dignity (NWRN 2012).

Many community organisations that support ACOSS’s campaign for an increase in the Newstart Allowance also argue that this alone will not be sufficient to combat social disadvantage and entrenched poverty among income support recipients (The Benevolent Society 2012). David Richardson of the Australian Institute (2012; see also Homelessness Australia 2012; Mission Australia 2012) asks whether the current income support system is relevant to the contemporary labour market or instead ‘reflect[s] an age in which the economy was at virtual full employment’. The Benevolent Society (2012, p.11) advocates an independent and comprehensive review of the allowance payment system, similar to the Pension Review conducted by Harmer in 2009. It argues that any review must particularly focus on the eligibility and participation requirements and income thresholds, as well as the rates of other income support payments such as Rent Assistance (The Benevolent Society 2012). Such sentiments have been echoed by Catholic Social Services Australia (2012), which believes that Australia has an obligation to ensure that wealth generated in this country benefits all citizens. It also notes that although poverty in Australia is different from poverty in developing countries, access to a minimum, community-derived standard of living that enables people to live fulfilling lives is crucial. It concludes that this can only be ensured by developing benchmarks of an ‘adequate standard of living’ and regularly evaluating whether these benchmarks are being met.

There are also calls for substantial changes to the current array of youth pathways assistance measures. For example, BSL (2012a, p.2) proposes a ‘new youth offer’ that, among other things, will reform ‘governance structures in which young people’s needs are fragmented across state and federal government departmental silos, and consequently marginalised in multiple ministerial portfolios’. Horn (2013) argues that adopting a more coherent suite of interventions that build capabilities and offer real pathways to paid work will achieve social inclusion and strengthen Australia’s economic productivity. The WRCQld (2012), for its part, argues that current transitional support by Australian Government employment services is not funded to address all barriers to transition, which means that many income support recipients ‘churn in and out of the Social Security system’. It recommends that Australian Government employment services be better connected to the wider community sector in order to improve such outcomes. More recently AYAC (2012a) has recommended stronger links between Centrelink and non-government youth support services to help young people access the income support to which they are entitled, challenge Centrelink determinations that may be incorrect and find their way to real employment opportunities.

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