Pressure is mounting on the federal government to hike Newstart payments to the unemployed. But an analysis of the unemployment benefits around the world shows Australia isn’t necessarily a terrible place to be out of work.
A single person in Australia who is “looking for paid work” (Centrelink’s euphemistic term for unemployment) is entitled to up to $492.60 a fortnight and could also qualify for $121 in rent assistance a fortnight.
Even the full Newstart allowance combined with rent assistance is $167.40 a week below the poverty line, which is updated quarterly by the Melbourne Institute of Applied Economic and Social Research. The most recent calculation of the Australian poverty line in October sets the minimum income at $474.20 per week including housing costs.
Australia is one of few countries where a person can remain on the dole indefinitely. Across the ditch in New Zealand the unemployed have to reapply after receiving the unemployment benefit for 12 months. A single person in New Zealand receives NZ$229.01 (A$182.74) weekly, A$127.12 less a fortnight than a job seeker on this side of the Tasman.
Australia is also one of few countries among its peers that does not charge a specific tax to employees or employers to fund unemployment benefits. In the UK, Canada, Germany and the US, employees pay to be “insured” against unemployment.
In the UK, employees pay on average 12% of their income as part of their National Insurance Contribution to be entitled to state benefits. The UK’s Jobseeker Allowance is £71 (A$108.13) weekly — significantly less than Australia’s dole, but housing benefits in the UK are more generous. Rates of housing assistance are calculated depending on location and the living status of a person, but the maximum amount for a single person is 250 pounds (A$380.74) per week.
The Canadian Employment Insurance program is not funded by the government but by premiums paid by employees and employers. In a complicated system, Canadians are only entitled to the dole if they have paid the 1.83% tax when they were employed. Their benefit is calculated at 55% of a person’s average insurable income up to C$47,400, meaning an unemployed person could receive up to C$501 (A$481.88) weekly. The period of time that a person can spend receiving the payment depends on the rate of unemployment in their province.
Unemployed Germans have access to €374 (A$473.31) monthly, only if they have previously contributed to the employment insurance scheme. This is almost half the Australian benefit, but the costs of accommodation and heating (it is Germany after all) can be paid in full “if they are reasonable“.
Although jumping through hoops at Centrelink is notoriously time-consuming and confusing, it is nothing compared to the rabbit warren of payments, taxes and food stamps in the United States. The maximum amount paid weekly changes from state to state, from US$247 (A$233) in Louisiana to a possible US$979 (A$926.47) in Massachusetts. It is unclear how many of America’s unemployed receive the full benefits in their home state as rates of payment are calculated by a person’s previous wages and employment.
In most states unemployment insurance can be claimed for a maximum of 26 weeks. Not only does the dole payment fluctuate across borders, but the taxes paid to the system and the eligibility rules to receive a payment are also state based.
The $50 a week rise in Newstart proposed by the Greens would cost the government $7.4 billion between now and 2016-17 and would leave the unemployed on the payment around $100 below the poverty line. The prospect of living on $35 a day is daunting, but perhaps not as daunting as $26 a day in New Zealand or $15 a day in Canada and Germany …
This is a good starting point,, but these raw figures need further analysis. Without factoring in purchasing power parity and drilling down into actual comparative housing and utilities assistance rates (not simply listing maximum entitlements), we are left none the wiser as to where our dole sits.
More detailed analysis please Crikey.
Thanks for an interesting article Sally.
Here are some interesting survey results:
Australia is the 2nd best place to be born in 2013 just behind Switzerland in 1st and above Norway in 3rd.
Australia is rank 15th most expensive country to live in the world still behind Germany at 14th and way behind many of the OECD countries.
Australians are the richest people, wealth per capita is double that of the Norwegians who is at 2nd place.
Australians are the happiest in the world, most content with their lives. Although one of last year’s survey also found Australians felt more insecure about their financial situations than the Spaniards. Schizo I’d say.
If someone could come up with a blend of policies, taking the best part of our current system and the best part of the user pay dole system to formulate a new one, it will be good. I don’t think a fully user paid system is good. A student who has just finished school or uni would not have paid any employment insurance. We also need to accept some inefficiency in the welfare system as sometimes people get lost for a while and take sometimes to get up and take care of themselves, just like we accept the inefficiency of our democratic system.
Other things not taken into account in our “Dole payments” are health care cards – which give access to medical treatment but discounts on Energy, Vehicle Rego etc and FTB payments.
While it is difficult to live on the dole it can be done (plenty of people do it) and it is only intended to be a safety net so of course your lifestyle wil change after losing your job which is why those who say you can only exist on the dole not live are right but they miss the point.
Interesting points Apollo.
Can I put forward another interpretation, of this comparison with overseas unemployment benefits. That it sucks to be on employment benefit here in Australia, but it sucks more to be on unemployment benefits (if you can manage it) overseas.
One thing we seem to talk little about in unemployment figures, is how nation-states run their economies with the expectations of there being unemployed and desiring an unemployment figure not of 0% (full employment) but instead somewhere around 4%.
How do when then approach our commitment to those who “must” be unemployed by that economic desire? I find the limiting of unemployment benefits problematic because what happens when an otherwise unemployable person looses financial aid? They have to get necessities from somewhere? Do they turn to crime?
Our unemployment benefits are not always forever either, just see our homeless people’s stories for the complexities of the situation. The amount of people who are long term unemployed is fairly tiny, even with a very lengthy period of available benefits (ie a negligible drain), so it makes me wonder what people are actually getting at when they demand we get tougher on welfare?