Labor Will Regret Newstart Debacle


It was all, apparently, a mistake.

Centrelink, the Australian Government’s vast benefits and pensions bureaucracy, had sent computer-generated letters to approximately 84,000 sole parents, telling them to destroy their Health Care Cards. Those affected are being moved off the Parenting Payment, the government pension for single parents raising dependent children over the age of eight, and on to Newstart, the current term for the dole.

It was a cruel blow for those already affected by this mean-spirited decision, which will see many lose around $130 a fortnight. That’s a lot of money for a family struggling to keep its head above water — as many families with a sole parent undoubtedly are.

Fortunately for those affected, Centrelink’s letter was wrong. Sole parents won’t have to cut up their Health Care Cards, and they will remain eligible for the various concessions to which these cards entitle them, such as cheaper public transport, bulk-billing at their local GP, and discounted prescriptions at their pharmacy.

"I’m disappointed that it’s occurred, particularly given the fact that we’ve made such effort to treat people properly and to explain their rights and their entitlements under the new arrangements," Human Services Minister Kim Carr told the ABC.

Mind you, the Government is apologising for the bungled letter — not for cutting single parents’ benefits. Indeed, the embarrassment over the Health Care Cards bungle only highlights the difficulties the Government faces in explaining its decision to cut the benefits of sole parents in the first place.

Exactly why the Government has decided to slash the benefits of more than 80,000 single parents has never really been adequately articulated (the Opposition, by the way, voted for the measure too). The last time someone from the Government did attempt to was on New Year’s Day, when Families Minister Jenny Macklin told journalists at a media doorstop that, "we have far too many children growing up in Australia where nobody is working" and that these changes would lead to more single parents going back to work.

Macklin pointed to changes made the Parenting Payment under John Howard in 2006, saying that, "as a result of the changes that were made back in 2006 we have seen more single parents going back to work." Labor opposed that measure at the time.

Even for Jenny Macklin, one of the Government’s worst performers, this was something of a new low. When a Labor cabinet minister (the Families Minister, no less) justifies welfare cuts by referring to similar cuts made by John Howard’s government, it’s not an encouraging signal for defenders of Australia’s increasingly threadbare social safety net.

The logic of the justification is difficult to follow. As the Australian Council of Social Services points out, sole parents are already required to look for work. "The official evaluation of the 2006 Welfare to Work changes found no evidence that dropping parents to lower payments increased their employment prospects," ACOSS writes in a briefing paper (pdf).

Later in the ill-fated press conference on 1 January, a journalist asked Macklin if she could live on the dole. "I could," she stated forthrightly, a remark that mysteriously appears on the official ministerial transcript as "(inaudible)". Her remarks enraged welfare advocates, and the airbrushed transcript was widely ridiculed in the media.

Macklin’s gaffe was minor enough, but it shows she’s out of touch. Newstart’s current payment rate of $492 for a single person is manifestly inadequate. The payment rate of Newstart has not been indexed at the same rate as the pension since the mid-1990s.

It’s true that the Government indexes the dole. But many costs have risen more steeply than general inflation — such as rents in capital cities, and energy bills. As a result, Newstart has steadily declined in comparison with the costs of everyday life. ACOSS summed up the view of most when it argued, in its submission to last year’s Senate inquiry on the issue of welfare payment rates, that "maximum single rates of allowance payments are inadequate to meet basic living costs and prevent poverty and material deprivation".

The issues for sole parents being moved to the dole are more than simply financial. Newstart involves onerous responsibilities for recipients to look for work in order to keep receiving the payment. The endless round of meaningless Centrelink interviews and dole diary paperwork could even hinder sole parents looking to pursue an education or find flexible work appropriate to their family responsibilities.

Veronica Sheen, a researcher at Monash University, summarises the issues in this fine article in The Conversation. Sheen’s research with sole parents — backed up by a large literature on the Australian labour market — established that "it was simply very difficult to sustain a ‘good’ job, generally a full-time job, while being the only parent".

She quotes a tertiary-educated single mum from one of her studies, who told her in an interview that "the thing that stands out for me is that regardless of how many skills you have and how many degrees you have, or how ambitious or motivated you are, you have to compromise your ambitions because you are restricted by your child caring and rearing role because that is your first priority".

The Government knows this, of course; Government members sat on the Senate inquiry on the adequacy of welfare payments, and heard plenty of damning evidence about the difficulties of making do on penurious government benefits. But the decision to punish sole parents was taken nonetheless, almost certainly because Labor was desperately seeking budget savings in order to meet its doomed pledge to deliver a surplus in 2013.

As we now know, the budget will almost certainly be in deficit come May anyway. Labor is now going to have to live with the consequences of its unnecessary austerity drive.

In fact, Labor’s difficulties on this issue may be just beginning. Welfare groups and social advocates are gearing up for a sustained campaign on the Parenting Payment cuts. It’s a campaign that will hurt Labor politically, and perhaps electorally as well. These benefit cuts directly attack a key Labor constituency, potentially damaging the ALP’s support-base. They also undermine Julia Gillard’s strategy of contrasting herself to Tony Abbott on women’s issues.

These sorts of campaigns have a habit of snowballing in the community, as support builds at the grass-roots level. All in all, it’s the sort of thing Labor strategists could do without in an election year.

As for parents who will now have to make do with $130 less a fortnight, their concerns are far more immediate. For their sake, let’s hope the Government reverses this decision.

Ben Eltham

Ben Eltham is New Matilda's National Affairs Correspondent.