Our Punitive Welfare Policies Crush The Unemployed And Keep Them Out Of Work


Low payments, waiting periods, and disempowering those without work does nothing to help them get a job. It’s cruelty without purpose, writes Owen Bennett.

Imagine for a moment that you are one of the 750,00 Australians currently unemployed.

With the auto-industry about to close its doors and the OECD having just lowered its forecast for Australia’s future economic growth, this is not an altogether trivial exercise.

First thing’s first – you need to start looking for a job. However, with 11 job seekers competing for every job vacancy this proves a tougher task than first anticipated.

Job Vacancies. (IMAGE: AUWU)
Job Vacancies. (IMAGE: AUWU)

To support yourself as you look for work, you have little choice but to apply for the unemployment entitlement, known as the Newstart Allowance.

It is not long before you discover how difficult Newstart is to live on. According to a recent study by the Melbourne Institute that Newstart allowance is $381 per fortnight below the poverty line (assuming that you qualify for the maximum rate of rent assistance).

Over the course of a year this low rate of Newstart places unemployed workers roughly $10,000 below what they need to live out of poverty.

And with Newstart only increasing in line with the CPI – the lowest type of indexation rate – it has been found that going by current trends the deposable income of Newstart recipients is set to decline over the next decade.

Clearly, if you want to survive on Newstart you need make some tough budgeting decisions to keep your head above water.

Disposable income by income group. (IMAGE: AUWU)

With rent taking up the vast majority of Newstart recipients’ expenses, cheap housing is a must for anyone on the dole.

Here, the odds are stacked against you. A recent study by Anglicare Australia found that over the last 10 years the average cost of rent has gone up 54 per cent, compared to the 31 per cent increase in Newstart over the same period. The study concluded that out of 65,614 rental properties surveyed only .02 per cent were affordable for a single person on Newstart.

To ensure you can afford to keep a roof over your head, you have no choice but to drastically cut down expenses in other areas of your life – food, transport, leisure, medicine, clothes and education costs all have to be put under the microscope.

With the average time spent on Newstart in excess of four years, this money squeeze is far from temporary as some politicians have argued.

And things are only about to get harder for those on Newstart. The Coalition government is currently proposing a one month waiting period for under 25s applying for the dole, as well as the continued expansion of the largely discredited Income Management scheme – the latter passing the Senate with Labor Party support.

Just as you are coming to terms with your new life below the poverty line, Centrelink instructs you to attend an appointment with a privately owned Employment Service Provider.

At this appointment you must agree to attend monthly appointments and apply for 20 jobs per month. A failure to attend an appointment can result in a permanent 10 per cent reduction of your Newstart entitlement.

If you are anything like the 80 per cent of other unemployed workers who are still receiving Newstart after six months you will also be required to undertake an unpaid Work for the Dole or volunteer activity for six months (25 hours per week if you’re under 30, 15 hours a week if you’re between 30 and 59).

Work for the Dole activities can range from painting, sorting rags, sweeping floors and gardening to more bizarre and humiliating activities such as sorting beads and picking clovers off grass. If you fail to attend your Work for the Dole requirement your Newstart will be suspended.

When you have completed six months of Work for the Dole you then must undertake normal Job Search activities until you are required to return to Work for the Dole six months later. This cycle will continue perpetually until you get a job, which, according to a Government-commissioned study released this week, you are only 2 per cent more likely to find as a result of attending a Work for the Dole activity.

As an unemployed worker, you will also be confronted with the well-documented bullying tactics of the largely unregulated Employment Services Industry.

Under the Government’s 4-year $6.8 billion Jobactive system, Employment Service Providers must satisfy certain outcomes to receive the public funds they rely on to function.

There is considerable evidence to suggest that this system creates a perverse incentive for privately owned Employment Service Providers to bully unemployed workers into programs to increase their outcome payments.

With the launch of the Australian Unemployed Workers’ Union advocacy hotline in October, a number of cases of unemployed workers being unfairly treated by the Employment Services Industry have emerged.

Daryl McDonald, 57, is one of many unemployed Australians who have first hand experience of the bullying tactics used by Employment Services Providers.

“I was on my computer at my Work for the Dole activity listening to music while I was working”, says McDonald, who lives in Melbourne.

“My supervisor walked past, and commented that I was listening to music. A few days later I found out that I had been penalised 10 per cent of my Newstart payment [roughly $55]for inappropriate behavior. I could not believe it. I just don’t see how they can call that inappropriate behavior. I’m a former musician so I like to have music on in the background when I work. What’s wrong with that?”

Under the government’s Jobactive system when an Employment Service Provider wants to penalise a Newstart recipients it must send a participation report to Centrelink who then make the final decision.

“I thought Centrelink would investigate their ridiculous claim but before I knew it, I received a letter informing me that my Newstart payment will be reduced by 10 per cent,” McDonald says.

He immediately appealed against the decision, which was eventually denied by the Department.

“When Centrelink told me that they would uphold their decision they just repeated the false information given to them by my job agent. It was as if the government did not investigate the matter at all.

Daryl McDonald. (IMAGE: AUWU).
Daryl McDonald. (IMAGE: AUWU).

“Because they failed to do their job, I am now down $55. What ever happened to being innocent until proven guilty?”

“I’m already collecting food parcels from church charities, so this penalty will make everything harder.”

Committed to fighting the penalty, McDonald is now in the process of taking his appeal to the Social Security Appeals Tribunal.

“Why do I have to do all this running around when they have made a mistake? This is time I would normally spend looking for jobs. It’s just ridiculous”, he says.

Daryl McDonald’s story is not an isolated case.

In September, Branka Chapman received a letter informing her that she failed to attend her appointment with Max Employment and her Newstart payment would be reduced by 10 per cent per business day until she ‘reconnects’.

This letter came as quite a shock to Chapman – not only was she not informed of this appointment, but she was not even made aware that Max Employment had been designated as her Employment Services Provider.

Chapman, 57, then appealed against the decision, but received little assistance from either the Department of Employment or Max Employment.

“I’m being given the run around. Talk to Centrelink – well I have! Talk to Max Employment – well I have! Why can’t they just do their job?”

“What about everyone else who are getting bullied by their job agent? Where are these people supposed to go?” asked Chapman, who lives in Melbourne.

Making her situation even more difficult, she is one of the 25 per cent of Newstart recipients who suffer from a significant disability – a condition that has been seriously exacerbated by her unfair treatment at the hands of the Employment Service Industry.

Since the 21st of October Chapman has been trying to transfer back to her original Employment Provider but Max Employment has failed to process her request. At the time of writing she is still cut off from her entitlement and waiting for Max Employment to process her transfer request.

Far from trying to rein in the Employment Services Industry, in September the Coalition proposed a bill to give Employment Service Providers unprecedented new powers to financially penalise unemployed workers.

At the recent Senate Committee hearing into this bill the Australian Unemployed Workers’ Union gave evidence condemning the government’s proposal to grant more powers to an already dysfunctional and punitive Employment Services Industry and called for the creation of a much-needed Government body to regulate the Employment Services Industry.

In addition, the Union also pushed for Government to take steps to ensure that unemployed workers are aware of their rights under the new system.

With unemployed workers already under attack on a number of levels, it is imperative that steps be taken to ensure unemployed workers are not placed at greater risk.

Only then can you, as an unemployed worker, be ensured your basic right to Social Security.

If you have had a problem with your Employment Service Provider, call the AUWU’s advocacy hotline on (03) 8394 5266 or email them on advocacy@unemployedworkersunion.com. If you would like to join the AUWU for free, click here to sign up.


Owen Bennett is the president of the Australian Unemployed Workers Union, an organisation dedicated to fighting for the rights and dignity of the unemployed. He is currently writing his PhD thesis on the employment services industry.