“Newstart” or a Dead End?

01/07/2019

C. Graham, G. Love & J.F

It may come as a surprise to the passive observer but Newstart is demonstrably insufficient. The Henderson Poverty Line seems to be the waterline in a bizarre economic underwater swim. Newstart recipients are unable to break the surface to come up for air. In the March of 2016, the poverty line sat at $1049.78 with recipients receiving $658 a fortnight. Newstart recipients were $391.78 per fortnight away from breaking the surface and escaping poverty. This doesn’t take into account other factors such as actual living costs. Have things gotten better? The distance between those on Newstart and poverty in the more recent June 2018 quarter was $347.98. $33 isn’t a whole lot of difference. You could treat yourself to some nice takeout before returning to a dark life of poverty.

The ACOSS report Poverty in Australia 2018 found that 13.2% of people live below the poverty line. The poverty line is defined as those living on below 50% of the median income. That’s something to worry about as capitalism leads us into an era of plummeting wages. This is an issue that will only get worse without the political will to right the ship. Instead of political will, the government prefers to shift the goal posts and lower the official poverty line. Thousands can be “lifted from poverty” by simply lowering the standard of what counts as poverty. This is the logic of fighting obesity by raising the definition of what counts as obese. Nothing changes but it looks great on paper. One thing that never looks good, even on doctored paper, is children in poverty.

“Seven hundred and thirty nine thousand children living in poverty. This is the nation that’s allegedly young and free.”

Seven hundred and thirty nine thousand children living in poverty. This is the nation that’s allegedly young and free. It’s incredibly hard to live free with uncertainty about your survival and dignity. That is the underlying promise of our society isn’t it? Freedom and dignity. When did we allow the bar to be set lower instead of higher? It lacks ambition and any kind of accountability. Australians shouldn’t be grateful to just be scraping by. The numbers can be a bit difficult to follow at times. For a more vivid image, picture the one in eight adults living in poverty or the one in six children the report concluded are living in poverty.

To quote ACOSS Chief Executive Dr. Cassandra Goldie “Clearly at the moment we are not getting where we need to be. There needs to be a clear target and a very specific plan to reduce poverty in Australia.” This is a sentiment we all feel. Whether you’re poor yourself or lucky enough to have been born in the right place at the right time it’s hard to justify poverty. It is impossible to justify the price of one person’s wealth at the cost of starving children. That’s what it’s all about. There is no shortage of wealth or means. The technology is not insufficient. The population is not bloated. There is a lack of political will and an agenda. This is never more apparent than when you look at the top and then look at the bottom. It’s a simple exercise but it imparts a profound and clear message. The suffering at the bottom is the price for the comfort at the top. We sell ourselves out on the promise of a fantasy life on top. Our cruel reality is that the nightmare at the bottom is only going to be extended to more of us and dream of the top will become restricted to fewer and fewer.

The Welfare System is demonstrably not about bringing freedom and prosperity to those who need it most. 2,030 people died after receiving Robo-debt notices. Of those two thousand, four hundred and twenty nine were under 35. These were young people who hadn’t even reached the midway point on their journey through life. Centrelink cut them down early. Aggressive debt collection and financial stress, contributed to kicking people who were already down. 663 of the 2,030 were classed as vulnerable. People who had struggled with drug abuse, mental illness and domestic violence were harassed over debts they had not actually incurred. It might be tempting to dismiss this as not being connected but given the fact Centrelink has now wiped 70,000 Robodebts it is abundantly clear there has been a colossal screw up and it has killed people. Innocent, vulnerable people.

If you’re on these payments to begin with, you’re vulnerable. If you’re on them with mental illness and other issues you’re something else entirely. These people have been failed at best. Forgetting to pay one of your legitimate bills can be highly stressful, if unlike the fiercest opponents of anything remotely socially responsible, you don’t collect money from property and investments and actually work for a living. Hospitality worker Laura was stung for $24,000 which is roughly equivalent to her yearly income. It’s beyond stressful to be spontaneously dumped with a debt equivalent to your total yearly income. Without any mental illnesses or other stresses that is a massive and sudden dose of unneeded anxiety. Centrelink has sent out 410,000 of these notices. 70,000 have already been redacted.

“As unemployment decreases, the demand for greater wages increases, so employees are fired. Capitalism is its own mechanism for creating unemployment”

Centrelink claims that these are not debt notices despite the fact it operates on a guilty until proven innocent system. Guilty until proven innocent isn’t a particularly enlightened approach to trying to balance the budget. It definitely doesn’t exude an aura of fairness. If you’re slammed with a sudden debt of up to tens of thousands of dollars, it is entirely on you to prove your innocence. People already under financial pressure are pinned between a rock and a hard place. Pay a ridiculous debt or challenge it with money you don’t have. It’s negligence and extortion, plain and simple.

While a raise to Newstart or the introduction of a Universal Basic Income (UBI) as promised by the social democrats may be tempting. It ignores the structural cause of poverty, which is capitalism itself. As unemployment decreases, the demand for greater wages increases, so employees are fired. Capitalism is its own mechanism for creating unemployment. Both UBI and Centrelink are products of capitalism, and perpetuate free market capitalist ideals. Thus, neither can ever truly bring the working class out of poverty [1].

Newstart was first introduced by the neo-liberal Keating government in 1991 to further cement its “activation approach” to welfare. It achieved this through placing further restrictions on the unemployed. Heightened surveillance of unemployed workers facilitated the application of increasingly harsh penalties for non-compliance with these new stricter requirements. By enforcing the participation in low quality work, deterring reliance on benefits, and alienating recipients, Newstart has enabled completely unregulated labour markets where workers are subject to complete exploitation from corporations [2]. When unemployed workers enter the workforce from Newstart, they move away from being unemployed workers living in poverty, to employed workers living in poverty. Raising the Newstart payments will never alleviate workers from poverty, as the Newstart’s sole purpose is to get workers off welfare and into low quality, low paying jobs.

“Capitalism cannot bring the working class out of poverty, when capitalism is the system responsible”

Universal basic income was postulated as a method for preserving the status quo after World War 2, as a response to labour union expansion [3]. Milton Friedman endorsed the system and proposed a negative income tax based off of the premise of UBI [4]. This is the same Milton Friedman who, alongside the Chicago Boys, was the financial advisor of the tyrannical, fascist dictator of Chile, Pinochet, who has the blood of 40,000 people on his hands [5]. Friedman’s proposal was to provide a form of UBI that would replace all social security services and let the private sector handle services such as healthcare, etc. The problem with a market based solution such as UBI, is that when you entrust a system that prefers profits over people with human lives, the result will always end in tragedy and exploitation. In addition, the introduction of a UBI will remove much of the working class’ bargaining power and ability to negotiate higher wages and better conditions.

From here, it is very clear to understand why we must not fall for the trap of considering UBI or higher Newstart payments as the solution to poverty. Capitalism cannot bring the working class out of poverty, when capitalism is the system responsible. So, what is to be done? One simple proposal put forth by world renowned economist, Richard D. Wolff is to guarantee high quality work and pay to everyone [6]. This would address the root cause, as poverty develops due to the inverse proportionality between wages and employment. If high quality work was treated as a fundamental human right, the cost of redistribution in the form of welfare would be much lower and the working class would actually be alleviated from poverty. Higher employment would lead to a shorter work week and better conditions. A socialist government would guarantee jobs, public housing, healthcare and more. Actual freedom, rather than the freedom politicians pay lip service to, is impossible until poverty and wage slavery have been eliminated.

References:

[1] “Labor’s Accord: How Hawke and Keating Began a Neo-Liberal Revolution – Solidarity Online.” Solidarity Online,October, 12, 2012, https://www.solidarity.net.au/mag/back/2012/50/labors-accord-how-hawke-and-keating-began-a-neo-liberal-revolution/.

[2] Daisy Farnham, “Workfare, neoliberalism and the welfare state: Towards a historical materialist analysis of Australian workfare”, October 2013): 13-14.

[3] Anon., “Universal Basic Income: A Critique”, BadMouseProductions, July, 30, 2017, https://www.youtube.com/watch?v=J10jKdPRN9A.

[4] Jim Manzi, “Against the Negative Income Tax”, National Review, February, 15, 2011, https://www.chicagomanualofstyle.org/tools_citationguide/citation-guide-1.html.

[5] Orlando Letelier, “The ‘Chicago Boys’ in Chile: Economic Freedom’s Awful Toll”, The Nation, September, 21, 2016, https://www.thenation.com/article/the-chicago-boys-in-chile-economic-freedoms-awful-toll/.

[6] Richard D Wolff, “Economic Update: Beyond Universal Basic Income”, Democracy at Work, April, 1, 2019,     https://www.youtube.com/watch?v=cAkzzoQGifE.