Newstart indexing inadequate, says ACOSS

The gap between the Newstart allowance and the age pension is rapidly increasing, placing Australians who are at the bottom of the ladder in serious financial stress, according to the Australian Council of Social Service (ACOSS).

The unemployment benefit for a single person in Australia is $474.90 per fortnight, or $34 per day - compared with the age pension fortnightly payment of $729.30 per fortnight.

The gap is likely to increase in the future, because the age pension is indexed to the average male wage - whereas the Newstart allowance is linked to the lower consumer price index.

The Government should heed the advice of both the Henry Review and the OECD and increase the Newstart allowance and the single parenting payments, according to ACOSS chief executive Dr Cassandra Goldie.

"Unless the base rate of allowances is increased and indexed at the same level [as the age pension] to meet growing costs of essentials like rent, utilities and food, the accelerating difference in payment levels will lead to greater hardship and more people falling into poverty," Goldie said.

She added that at the current rate, the OECD has predicted the Newstart allowance will be worth just half of the age pension in 2040.

"Whilst ACOSS obviously welcomes the indexation increases as crucial in helping Australia's 3.4 million people on pensions meet cost of living increases, it is distressing that people on Newstart and sole parenting payments have been left behind," Goldie said.

The latest Australian Bureau of Statistics Household Expenditure Survey found that 79 per cent of people on the Newstart allowance reported three or more indicators of financial stress, said Goldie.