‘We need to do better’: Calls to increase Newstart as older Aussies fall into poverty

Seniors will continue to fall below the poverty line unless the government takes action to increase the Newstart allowance, experts have warned in response to a new report on the financial stance of Aussies.

In its 2020 Poverty in Australia Overview, the Australian Council of Social Services (ACOSS) claimed the freezing of Newstart allowance for 25 years has increased the level of poverty among those affected. And COTA has agreed, claiming it’s just more evidence that seniors are suffering on limited funds.

Currently, a single person with no children can receive up to $559 each fortnight with Newstart, while those in a partnership can receive a maximum of $504.70 each every two weeks. Meanwhile, the cost-of-living has continued to skyrocket, with everything from groceries, house prices, energy and transport all rising in recent years.

Although social security payments are meant to prevent poverty, according to the report in most cases people need private income above and beyond this allowance in order to escape it.

The latest report showed in March 2018, Newstart was well over $100 per week below the poverty line, with maximum single rates of the allowance sitting at $117 below the line.

Ian Yates, Chief Executive at COTA, said the findings are concerning for older Aussies, particularly those who have been forced out of the workforce due to their age and aren’t old enough to receive the Age Pension.

“More than half of the 680,000 Australians receiving Newstart are older than 45, with one in four older than 55,” he said. “We know that employers target older workers for retrenchment, and one in three have admitted that they actively and illegally refuse to recruit workers over 50.

“At the same time, changing job markets mean many older workers are being pushed out of traditional industries. As a result, older Australians on Newstart are living off a weekly allowance that’s more than $100 a week below the poverty line after years of working and saving for their future, with years to go until they qualify for the Age Pension.”

Yates also called on the government to change the Newstart rules to ensure older people nearing retirement aren’t forced to live off their intended retirement savings in order to survive. He suggested the Liquid Assets Test, which determines how much government assistance people receive, be abolished.

Meanwhile, Yates said the report’s findings also provided the government’s Retirement Income Review with some stark questions about the adequacy of the Age Pension.

“Government’s on both sides have never formally proclaimed the purpose of the Age Pension, but there’s widespread acceptance that the principal purpose of the pension is to prevent older Australians having to live in poverty,” he said. “Today’s report showing the Age Pension is just below that poverty line is also a reminder that the current Age Pension rate will not achieve that goal alone and may need to be increased.”

Yates also suggested the government adopt the European Union measure for poverty. In its report ACOSS used 50 per cent of median income as the poverty line, while the EU defined it as 60 per cent. According to Yates, if the EU measure were used in Australia, it would show that older people have the highest rate of poverty at one in four people aged 65 and above.

“Whether it’s just above the poverty line or sitting in poverty, it’s clear from this report that older Australians are doing it tough,” he said. “As a country we need to do better for all people living in or near poverty.”