Prior to the introduction of Newstart policy, there were some means available for the unemployed to get help in order to get the minimum livelihood support. Before the depression of 1930, people used to get support through charitable bodies and some sort of help from the State governments. In 1943, the Curtin government announced benefits for some categories including the unemployed ones. From 1945 to 1988, there were large recipients of the benefit because the policies and testing were not tough. Therefore, in 1991, Newstart policy came with the work test in which people had to prove that they tried to get suitable work but unable to find the one (Arthur 2020). The major issue that led to the introduction of this policy was the misuse and exploitation of earlier benefits that were received by the unemployed people. Thus, Newstart policy was introduced with many obligations on the part of the beneficiaries along with other terms and conditions.
Newstart social policy or Newstart allowance was introduced in 1991 by the Hawke Labor Government. This policy was a part of the broader set of transformation that replaced the unemployment benefits at that time. This policy majorly encompassed payments bifurcated under two heads. The first set of payments included Job search Allowance which was available for the people who were unemployed for less than 12 months or aged under 18. Another set of payment included people who were unemployed even after 12 months (Booth and Pollard 2020). There were two conditions of the policy that the beneficiaries needed to abide by certain supplementary obligations and also to sign an agreement.
The agreement states that the beneficiaries will undergo some activities that will help them to enhance their job projections. As part of the key development of the policy, in the year 1996, Howard Coalition Government merged Newstart allowance and Job search allowance into one payment system which was called Newstart allowance (Karády and Nagy 2019). Further, in 1998, the younger recipients of the Newstart allowance were moved into the New Youth Allowance. As of now, the people who want to receive this allowance have to meet certain conditions. The conditions encompass that the person must be 22 years but also under age pension age. Additionally, the person must be looking for paid work (Some exceptions to this condition), he/she should satisfy the limit of income and asset test and also must be prepared to fulfil the requirements of mutual obligation.
In 2013, Kevin Andrews, minister of social services commissioned the review of this policy which was headed by Patrick McClure. The report of the review in 2015 suggested that there is a problem with this policy (Arthur 2020). It does not show whether the people with limited capacity to work can avail the allowance for a longer period or not. Thus, they recommended payments at three different rates. The upper tier is for the people who have a limited capacity of work due to any kind of disability and thus, they can remain on the allowance for a longer period. Further, the middle tier is for the people who have moderate limitations concerning their work capacity or the ones who have dependent children. The last tier is named as the foundation tier which includes people who have no limitations and full capacity for the work. It also states that the foundation tier cannot be lower than the existing allowance in Newstart policy.
The 2017-18 budget reflected name change for the policy which can be categorised under a broader set of transformations. From 20 March, 2020 the policy has been replaced with JobSeeker Payment (Arthur 2020). As per the government's announcement, seven current working-age payment would be either merged or stopped. These seven payments included Newstart Allowance, allowance for sickness, allowance for widow, partner allowance, pension for wife, Bereavement Allowance and Widow B Pension. The changes also include the transfer of Sickness Allowance recipients and some of wife pension recipients to JobSeeker Payment.
Youth Allowance and JobSeeker payment would make new arrangements for people who received Bereavement Allowance (Australian Government 2020). In addition to this, the people who are newly bereaved will be eligible to receive three times of a fortnight’s pay and that too in the first fortnight itself and thus, other allowances will not be given. People who will be transferred to Age Pension include beneficiaries of Partner Allowance, Widow Allowance, widow B pension and some candidates from the wife pension. The government also started to phase out Widow B pension form the year 1987 and widow allowance from 2005. For new entrants, 1995 was the closure year for wife pension and 2003 for partner allowance.
Moreover, conditions and payment rates will remain the same for the ones who are transferred from Newstart allowance to JobSeekers payment (McCashin 2019). Furthermore, all the recipients will not be required to search for some depending on certain conditions and in some circumstances like serious illness, beneficiaries are not required to work at all.
Key issues and issue drivers
Some issues and issue drivers have been identified in the policy. The first issue is that the policy does not define up to what extent or duration; people with different capacities can avail the benefits. It means that not all people with no work are the same. Some people remain unemployed because of their physical disability which can either be major or minor. Further, some people cannot work as they were unable to find a suitable job despite having the capability. These issues had not been considered in Newstart policy and are addressed in the new reform which is called JobSeekers payment.
The new reform defines three tiers for the eligibility of people regarding the benefits and their extent (Australian Government 2020). Apart from these, some findings show that the unemployment benefits given in the Newstart policy are only 75 per cent of the actual needs to afford the real basic needs. Beneficiaries need at least nearly $100 boost a week to afford the basic needs (The Guardian. 2020). The chief executive of Acoss told that it can be said a kind of cruelty from the Government’s end that the policy cannot even help people afford their basic needs. This can be understood as one of the causes for the poverty level in Australia.
Secondly, the allowance offered to the people has not increased in real terms in the last 25 years and thus, inflation has not been considered. This is a loophole in the policy that has not been given attention by the authorities. Therefore, it can be said that the unemployment benefits are falling continuously in real terms which are making the policy the least generous unemployment policy in the world. When compared with the poverty line benchmark, it has been identified that the policy is not even sufficient to fulfil the gap.
Therefore, it has become a serious issue that the incentives and allowance in the policy must be increased. The average duration that people spend on Newstart has also increased from the time of its start. It was 110 weeks in September 2014 whereas it increased to approx. 159 week in September 2018 (The Guardian. 2020). It reveals that the people are now in the need of a longer duration of unemployment benefit. Thus, all these factors must be duly considered while introducing any kind of change. As the government has replaced Newstart allowance with JobSeekers payment, some of these issues are expected to be resolved.
According to Richardson (2019), every person deserves and has the right to health and well-being of both him and his family members. The adequate standard of living consists of food, shelter, clothing, medical facilities and sufficient social service. As per the policy, there is a terrible need to explore Australian poverty and Newstart social policy for the sake of Australian citizen’s welfare. Newstart has not been adjusted since march 1994 but at the same time, the whole world was moving on. After the debate on the Henderson poverty line concept, there has been a continuous argument that the dole must be increased by at least $75 per week to meet the requirements of standard living. However, the government had not listened to those arguments and just moved away by saying that Newstart is a temporary arrangement when people keep shifting between jobs.
On the other hand, government’s own data revealed that people spend an average of 156 weeks on dole. Meanwhile, victims were blamed as job snobs and their payments were also cancelled. This instance shows the government's inefficiency to meet the requirements at the same time when it considered the natural rate of unemployment consistent with the full employment level of unemployment. Moreover, some cruel people suggests that instead of increasing the allowance, low dole acts as a stick to make the people employed again. This argument does not hold good and proves as cruelty for the beneficiaries. The paper concludes that boosting Newstart will help to reduce both poverty and inequality and it will also have a positive impact on other aspects of the economy.
In the words of Phillips et al. (2019), there has been a substantial change in income and poverty since the mid-1990s, however, no substantial increase in the unemployment allowances are observed. The main aim of the paper is to throw light on how financial stress, poverty and disposable income for households have been changed from the period of 1993 to 2018. The findings of the author are quite similar to those of Richardson but it is more specific in terms of analytical figures. The major argument covered under the policy highlights that the pay scale of the policy is so low that people cannot even afford their basic needs and thus, leading to poverty and hardship for them.
Further, in such hardship, it also becomes impossible to look for work or afford the same. Adverse social outcomes of this difficulty can be seen in terms of crime, hostility and homelessness. On the other hand, it has also been stated that Newstart is made for providing short term unemployment benefits to the workers and the low budget will act as a catalyst to find paid employment. There is no warranty to raise the pay rate in budgetary terms. In terms of eligibility, some changes are incorporated which says that those people who received high pension earlier are now not eligible for the same and will receive Newstart now. Some of the changes include tight rules for disability support pension and to shift single parents with the old dependent children. In the last quarter, the value of Newstart has fallen significantly when compared with other policies like disability support pension and age pension.
As per Collie et al. (2019), more than 1.4 million people in Australia rely on either the Newstart allowance (NSA) or Disability Support Pension (DSP). Global evidence highlights that people who receive these benefits suffer from poorer health on an average when compared with those who are engaged in paid employment. This is a unique study because it is one of only a few studies that researched the impact of these policies on the health of people. The mental and behavioural health of recipients of both policies suffers significantly when compared with the paid wage earners.
Thus, it also acts as a barrier to find any suitable employment in such condition. The data to come to this conclusion was received from the National Health Survey (NHS), 2014-15 edition. A survey was conducted across urban, rural and remote areas of Australia. The major finding of this study suggests that one of the opportunities to improve the employment prospect of these beneficiaries can be addressed by improving the health of the recipients. Health can be improved by focusing on the determinants of health and providing targeted health services to all the recipients.
The key findings from the evaluation of the policy suggest that the policy is effective to address the needs of the recipients only up to some extent. It is unable to meet even the basic needs and leads to a poor standard of living. The findings can be derived from several government and non-government sources because it is quite evident that now it is time to raise the Newstart allowance so that the issue of poverty can be addressed efficiently.
Strengths of the policy
As many people in Australia need government support to lead their life either due to disability or not having any source of income. Thus, Newstart helps all those people to at least have a source of income and meet their needs. The policy acts as a support system for them in their hard times (Surdu 2017).
Newstart policy came as a more reasonable policy than the earlier ones. The policy first ensured through work test that people have tried their best to find a suitable work before applying for the allowance. Thus, the deserving people can get the benefit and the ones who are capable can try their best to find paid employment. In this manner, it is advantageous to both the government and the common people. The government can have less burden of the dole because capable people try for employment and common people are also benefitted because they put their best efforts to earn money on their own.
Earlier policies were misused and exploited which created the need to introduce Newstart policy. Thus, these issues have also been addressed. Benefits of this policy come along with certain obligations on the part of the recipient. It states that the beneficiaries have to undergo some activities to give the assurance that they are trying to get paid work (Marston et al. 2017). It will help them to become self-dependant and also will reduce the burden for the government. Only after reviewing some aspects, allowances are given to the candidate and thus, ensure fair distribution of the benefit.
Weaknesses of the policy
Along with the strength, several weaknesses have also been found in the policy which led to the criticism of Newstart policy at the global level. Further, this policy has also been replaced by Job Seekers payment. Some of the points that show the weaknesses of the policy are as follows:
The allowance given to the beneficiaries under the policy is not sufficient to fulfil the basic needs of people. Thus, it can be contributed to one of the causes of increased poverty and financial stress in Australia. Moreover, the allowance is so less that it acts as a hurdle for the beneficiaries to find a suitable job.
Adverse impact on health
The insufficient dole has resulted in poor mental, physical and behavioural health of the people who are receiving the allowance as compared to the ones who are engaged in paid employment (Brennan 2018). Thus, it shows shortcomings from the policymakers end that they proved to be inefficient in quantifying the basic needs in monetary terms. Since the time policy has been introduced, there has been no adequate raise in the dole and it also did not consider inflation. Therefore, even though the lifestyle has changed and the living standard has improved in Australia, those relying on Newstart are still poor and have a poor living standard. Furthermore, the average time on the allowance has also increased as compared to the earlier years and thus, people are compelled to live on less money for a longer duration (The Guardian 2019). This is a major issue that resulted in a fire of policy's criticism.
Crime and homelessness
The policy has made the people poorer and helpless which is the catalyst for crime and homelessness (Brennan 2017). Social issues are rising because of the ineffective and inefficient social policy which demands a clear action for society’s welfare.
No difference between capacities to work
There is no difference in the policy for the people who have different capacities to work and thus, require different allowance. This issue has been addressed in the JobSeekers Payment.
Arthur, D. 2020. JobSeeker Payment: a quick guide. Parliament of Australia.
Australian Government. 2020. Social Security Guide. https://guides.dss.gov.au/guide-social-security-law/1/2/1/10
Booth, S. and Pollard, C.M., 2020. Food insecurity, food crimes and structural violence: an Australian perspective. Australian and New Zealand journal of public health, 44(2), pp.87-88.
Brennan, F., 2017. Towards an economy that works for all. Eureka Street, 27(20), p.7.
Brennan, F., 2018. Newstart needs a new start. Eureka Street, 28(8), p.13.
Collie, A., Sheehan, M.L. and Mcallister, A., 2019. The Health of Disability Support Pension and Newstart Allowance Recipients.
Karády, V. and Nagy, P.T., 2019. A New Start: Years of Transition After 1945, Sovietization and Its Aftermath. In Sociology in Hungary (pp. 65-91). Palgrave Pivot, Cham.
Marston, G., Stafford, L., Chamorro-Koc, M., Beatson, A.T. and Drennan, J., 2017. Seamless Journeys to Work for Young Adults with Physical/Neurological Disabilities. Stage 1 Report: Disability employment policy and program influences on education-to-employment transition for young adults.
McCashin, A., 2019. Jobseekers: Conversion from Passive to Active?. In Continuity and Change in the Welfare State (pp. 239-252). Palgrave Macmillan, Cham.
Phillips, B., Gray, M., Joseph, C. and Webster, R., 2019. Research Note: Newstart and other Government Allowances: Incomes, Financial Stress and Poverty.
Richardson, D., 2019. Adequacy of Newstart.
Surdu, I., 2017. Policies for supporting individual wellbeing and prosperity: a crucial aspect of human security. Revista Română de Studii de Intelligence, (17-18), pp.95-110.
The Guardian. 2019. Newstart analysis reveals huge leap in amount of time people spend on dole. https://www.theguardian.com/australia-news/2019/oct/21/newstart-analysis-reveals-huge-leap-in-amount-of-time-people-spend-on-dole
The Guardian. 2020. 'Senseless cruelty': peak welfare body pushes for $95-a-week increase to Newstart. https://www.theguardian.com/australia-news/2020/jan/30/senseless-cruelty-peak-welfare-body-pushes-for-95-a-week-increase-to-newstart
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