Financial Counselling Sector tells Senate Committee that we need to Raise the Rate  

A joint submission from FCA and the State/Territory financial counseling agencies to a Senate Inquiry into the adequacy of Newstart adds yet more evidence to the need to “raise the rate”.

Our submission [1] focuses on the devastating effects on people due to the inadequacy of Newstart. It also includes a compelling analysis of a survey conducted by the Victorian peak body for financial counsellors that documents the lived experience of Newstart clients.

Financial counsellors work with people who have money and debt problems. Many of these people receive a Centrelink income and are struggling to survive. People report that they regularly don’t eat so they can pay for basic needs such as rent, gas and electricity bills. When people on Newstart have loans they can’t repay, creditors come knocking threatening legal action, escalating stress levels.

The current approach to income support payments is entrenching poverty. With statistics showing there are at least three job seekers for every job available, the government has an obligation to provide income support for people who are unemployed.

The poverty that results from inadequate income support leads to social isolation, which has terrible effects on people’s mental wellbeing, and poor physical health due to poor nutrition. Australia is a fair society, and fairness means not wanting people to live in poverty. People do not choose poverty.

Take Jean, who worked in aged care until the stress of the job became too much and she had a breakdown at the age of 59. She couldn’t afford her car payments or do anything socially so she became very isolated. This exacerbated her poor health. An increase in Newstart would enable her to make her car payments, regain contact with people and give her more chance to find work.

Income support payments must meet basic needs. Leaving people living below the poverty line is not fair.Nor should their life be made even more stressful by being required to sign up to compliance activities.

The recommendations we make include:

• adopting fairness as an underpinning principle in decisions about the level of income support payments;
• the need to increase Newstart payments by at least $75 per week;
• the need for an independent body that can set and review income support payments to ensure they remain adequate into the future; and
• A re-design of the Cashless Debit Card so that it is opt-in only.

For more information, contact Fiona Guthrie, CEO of Financial Counselling Australia,
on 0402 426 835.

[1] Financial Counselling Australia (FCA) is the peak body for financial counsellors in Australia. FCA’s members are Financial Counsellors Association of WA; South Australian Financial Counsellors Association; Financial Counsellors Association of Queensland; Financial Counsellors Association of NSW; Financial Counsellors ACT; Financial and Consumer Rights Council; and Financial Counsellors Association Tasmania. This is a joint submission from all of these associations.