May 17, 2014
National Affairs Editor
Kerry Arch at home in Wyndam Vale with sons Seamus and Lucas. Photo: Eddie Jim
As Joe Hockey was delivering his budget speech on Tuesday night, Taylor Clarke-Pepper was settling down to dinner: two-minute noodles and a glass of cordial.
The struggling, unemployed 20-year-old ate the frugal meal on her lap, alone at home, while the Treasurer unveiled a fiscal blueprint that, if implemented, will radically reshape the social safety net, and could leave her destitute.
”I was just completely shocked,” says Clarke-Pepper, who describes her small one-bedroom apartment in Wollongong as ”dirty, stained carpets, barely any furniture, and a half-dingo next door who scares me”.
Illustration: Matt Golding
News had filtered through to her via social media that those under 30 on unemployment benefits could be denied any payment for up to six months.
”It’s horrible. It’s so hard even now. At the end of every fortnight, you have no money left. So many times, I’ve had to go to charity and friends to help me out with food and bills.”
The impact was no less keenly felt among sole parents. Facebook pages lit up with despairing and disturbing messages.
Wollongong’s Taylor Clarke-Pepper, 20, says employment is scarce. Photo: Kirk Gilmour
”So with this budget, I’m screwed!” said a post on one forum. ”I’ve considered taking my life over everyday struggles now, let alone when these changes happen … Anyway my point is, do I try and save for a big all weather tent NOW!! Or give up and take my kids with me!!”
The fear among Australia’s most vulnerable is palpable and no one feels the blowtorch of the budget more than the young, unemployed or sole parents. But almost all Australians, one way or another, will feel a hit in the hip pocket.
Millions of households will lose thousands of dollars a year as welfare benefits are slashed, new payments are introduced for a GP visit, university fees are increased and taxes are lifted.
New markers for society have been laid down. A child is no longer deserving of government support after they turn six; but families are expected to support their unemployed children until they are 30. You will be expected to work until 70. A household income of $100,000 is the new well-off, the level at which a family loses benefits.
The belt-tightening, says Hockey, is in the national interest. Spending has been unsustainable, the bedrock of the economy threatened by the fiscal mess created by the former government. ”The age of entitlement is over. It has to be replaced, not with the age of austerity, but with an age of opportunity,” he said during his budget speech.
Economic modelling of the changes, however, suggests there is another moniker for the era ahead – the age of inequality.
”What’s so striking about how the budget affects people is that so much of the impact is felt by low and middle-income people, particularly families with kids,” says Ben Phillips from the National Centre for Social and Economic Modelling (NATSEM).
”The heavy lifting to claw back the surplus is being done by the people in the most precarious position.”
While those families in the bottom quintile (or 20 per cent) of income earners see an average 5 per cent reduction in disposable incomes, those in the top quintile barely register a decline, down just 0.3 per cent.
Phillips, one of the country’s leading modellers, did the analysis at the request of Labor but says his conclusions were reached independently. He says single-income families with two kids and earning between $50,000 and $100,000 could lose more than $6000 a year, once all the changes – and the abolition of the schoolkids bonus – are factored in.
Sole parents working part-time or on benefits, stand to lose more than $3000 per year. For a young unemployed person who loses the Newstart allowance for six months, the forgone benefits are more than $7000. During that time, they will have no income and will have to rely on the charity of others.
Asked how he would cope in such circumstances, Hockey told ABC radio: ”I would expect to be in a job, that would be the starting point.”
For Taylor Clarke-Pepper, who lives in a region with one of the highest youth unemployment rates in the country, finding a job is not so simple. Nor is relying on family to pick up the slack.
She was ”kicked out of home at 17” and already has an insight into life with no income looking for a job.
”There was a problem dealing with Centrelink [when I lost my job], so I didn’t get the dole for three months. I’d just got a credit card so I put everything on that. Rent, food and public transport. I would apply for 30 jobs a week and I’d be lucky to get one reply back by email saying no.
”It was devastating. It was extremely difficult. There’s 17 per cent unemployment for youth here. You just find yourself becoming very depressed.”
In three months, she racked up a debt of $4000. ”Six months like that, with no income, would be truly horrendous. I couldn’t imagine how I could live through that again.”
There are a raft of people exempted from the denial of benefits, including the long-term unemployed, disabled and carers of children and others.
Minister for Social Services Kevin Andrews points out that the six months embargo on payments will be reduced by one month for every year a person has been employed before they became unemployed.
But there are anomalies. A 28-year-old parent, the sole breadwinner, who becomes unemployed would not qualify for an exemption, as his or her partner would be considered the carer of their children.
According to research by Australian Council of Social Service, about 100,000 young unemployed will be affected by the change.
Another hit on the young jobless is to move the unemployed under 25 on to the lower youth allowance, a fall in income of $46 a week to $207.20 for a single over 18.
Prime Minister Tony Abbott wants to do no less than ”change the culture and mindset of young people”. Certainly, this is a budget that aims to change the country.
For Hockey, it’s ”about the sort of country that we want to be in the years and decades ahead. It’s about the value we impart.” Those values, he says, are enterprise, hard work, self-reliance and equality of opportunity.
But Toni Wren, a social policy analyst, says the idea of ”equality of opportunity” is a furphy. Even as the stick is being applied to spur the young into employment, the programs that help them transition into employment are being slashed. All up, 10 skills and training programs ill be slashed for a $1 billion saving over the budget estimates.
”When you take the two together, removing income support and closing great employment and skills programs, it’s pretty shocking what they are doing,” she says.
Wren is also bemused about the axing of these programs, many of which have 90 per cent success rates in getting clients work, while the government maintains a school chaplain program that costs $245 million over the forward estimates.
For sole parents, the picture is hardly less bleak. Where once they got a family payment for kids up to the age of 16, that has been cut to those under six. Changes to indexation will further trim the benefit in future years.
Kerry Arch, a single mother of two teenage boys, 13 and 16, reckons she will lose more than $3000 a year, or 10 per cent of her income. ”I don’t understand why, as single parents, we are getting punished all the time,” she says, pointing out that sole parents were moved from the parenting payment to the lower NewStart allowance last year.
The change affected 84,000 sole parents, who lost up to $120 per week. ”Single mothers are more likely to work than [those with their partner’s] money. We want to work.”
Indeed, the NATSEM analysis shows that as people move up from low incomes towards middle incomes, they lose out under the welfare changes, seeing a larger part of their family benefits reduced. ”The mantra has been learn or earn, but as you earn more, you lose more in many cases,” says Phillips.
The Prime Minister explained the measure was to spur more female participation in the workforce, but the structure of the welfare changes acts as a disincentive.
Arch angrily notes that Abbott’s paid parental scheme remains government policy, paying half of the mother’s income for six months, capped at a $50,000 payout but available to any mother earning $100,000 and above who leaves employment to have a baby.
”Why do the rich need to be paid to have babies?” says Arch, who runs an online self-help group and information service for sole parents. ”People are talking about suicide and taking their child with them. I’m telling them it’s not happening until 2015 and it’s not a done deal.”
Labor, the Greens and Clive Palmer have all condemned the changes to family payment and youth unemployment benefits, among others, making them very difficult to get through Parliament, even when the new Senate convenes in July.
Whatever the fate of the budget, it is an attempt to fundamentally recast the social welfare system.
It pushes the burden of surviving through difficult times back on to individuals and, especially, families at a time when those under 35 living with their parents continues to rise as young people grapple with astronomical housing prices and rents in many cities.
Families have always been the bedrock of social cohesion, argues Graeme Hugo, a geographer from the University of Adelaide, but relying on them too much can be fraught. ”The family isn’t available equally to everybody, and families have different resources,” says Hugo.
He notes that older people, facing lower indexation of pensions and the rise of the retirement age, are now increasingly fending for themselves as divorce rates have their impact and smaller numbers of children leave them less options for support.
”Those starting to retire now have less children than those a generation ago, and often they are simply not able to help because they live somewhere else.” Professor Hugo supports the rise in the retirement age, noting life expectancy for a male over 50, for example, had increased by an astonishing nine years since 1970.
And the government will pay employers up to $10,000 for hiring someone over 50, but the program is notable as an oasis of spending amid the slash and burn of other employment and skills programs.
At the core of the revamp, is that Australia’s budget position is unsustainable and if action isn’t taken now, it will be worse. Welfare spending, notes Hockey, is 35 per cent of the budget and couldn’t be exempt.
All Australians needed to contribute to the ask of fiscal repair. ”We are asking them to contribute because if we contribute now, we will build great things for our nation,” said Hockey.
The government also argues that the total tax take is down in the budget and the abolition of the carbon and mining taxes – still to pass Parliament – will benefit all families facing cost of living pressures
But, in terms of household incomes, the removal of the two taxes has very little impact, argues NATSEM’s Ben Phillips.
”The positive impact of removing the carbon tax is dwarfed by the changes that hit low-income people in particular,” he says.
While the government talks of sharing the burden, the deficit repair levy on people earning more than $180,000 will be abolished after three years. ”The wealthiest 40 per cent are largely unaffected and by 2017 and 2018 they are ahead,” says Phillips.
It is a very different story for those less well-off, who will see the financial impost on them grow rapidly from 2016 and beyond. Louise Williams, who runs the single mothers’ Facebook forum where the suicidal message was posted, said they are not uncommon.
”We get lots of them. We don’t always put them up because we don’t want them to be a trigger but we always give them support and put them in touch with someone who can help them. We bring food or point them towards mental health counsellors, all sorts of things.
”We got so many people this week who are at breaking point, on the brink of crisis. We tell them they are not alone.”
Source : The Sydney Morning Herald