FactCheck: do 99% of Newstart recipients also receive other benefits?

99% of people on Newstart are actually on another type of benefit.

–Treasurer Josh Frydenberg during the treasurers’ debate at the National Press Club, May 6, 2019.

During a debate with shadow treasurer Chris Bowen, Frydenberg was asked why the Coalition has not offered to consider raising the Newstart Allowance for jobseekers.

He replied that 99% of those receiving Newstart also receive other benefit payments, such as “parental allowance or another form of support”.

Verdict

It is true that Newstart Allowance recipients almost always receive additional payments. But given the small nature of many of the additional payments to a large number of recipients, it is disingenuous to infer that the Newstart Allowance is considerably more generous than the headline figure suggests.

Checking the source

In response to a request for a source on which the claim was based, a Treasury spokesperson provided a link to the Department of Social Services (DSS) payment demographic data, and told The Conversation:

Ninety-nine per cent of Newstart Allowance recipients receive supplementary payments and allowances, including Commonwealth Energy Supplement, Pharmaceutical Allowance, Commonwealth Rent Assistance, Family Tax Benefit and Telephone Allowance. This has been calculated from DSS admin data.

How many people are on Newstart, and how much do they receive?

The Newstart Allowance is the main income support payment for unemployed people in Australia.

The current payment maximum rate for Newstart is A$555.70 per fortnight for a single person. Couples receive less, whereas older people and those with dependents receive a modestly higher payment.

According to PolicyMod, ANU’s model of Australian tax and social security payments, the average Newstart recipient receives A$490.60 per fortnight (A$12,755 per year) for their Newstart payment alone, bearing in mind that not all receipients receive the maximum Newstart payment.

According to the DSS data (which can be downloaded here), 722,923 people in Australia were receiving the Newstart payment in December 2018.

What are the other eligible benefits?

Some recipients who rent are eligible for Rent Assistance of up to A$137.20 per fortnight. All recipients are eligible for the Energy Supplement of A$8.80 per fortnight.

Newstart recipients with children are likely to receive family payments. These are complicated payments that vary by the age of the child, and are paid either on a per-child basis (Family Tax Benefit Part A) or as a per family payment (Family Tax Benefit Part B) to help single-parent or single-income families.

Not all Newstart recipients receive the full payment, as they may have other income either from small amounts of paid work or from other sources such as bank interest. The payment tapers away sharply as private income increases, with recipients losing 50 cents in the dollar for every dollar of private income above A$104 per fortnight, and 60 cents in the dollar above A$254 per fortnight. Recipients therefore tend to have only minimal other income from private sources.

Modelling the benefits

ANU’s microsimulation model, PolicyMod, can do a distributional analysis of most social security payments and personal income taxation in Australia. This means we can model the impact of the payment for detailed social and economic groupings.

The model is based on very detailed data for actual persons and families in the Australian Bureau of Statistics’ Survey of Income and Housing, but uses a range of additional government data to improve our estimates of tax and social security payments. It is also capable of modelling detailed policy change.

While the government does provide some useful administration data on Newstart recipients and other payments, for this analysis we require the more detailed data available in PolicyMod.

We analysed the share of Newstart Allowance recipients who also receive other payments such as Family Tax Benefits, Rent Assistance and the Energy Supplement.

Our analysis shows that 19% of Newstart recipients receive family payments, with those families receiving an average of A$527.80 per fortnight (A$13,722 per year) in addition to their Newstart payments.

We also found that 32% of Newstart recipients recieve Rent Assistance, at an average of A$115.30 per fortnight (A$2,997 per year) on top of Newstart.

All Newstart recipients are eligible for the Energy Supplement. In particular circumstances, Newstart recipients are also eligible for the Telephone Allowance of up to A$43.80 per year, and the Pharmaceutical Allowance, which pays A$6.20 a fortnight (and is halved for couples).

This means everyone on Newstart Allowance is eligible for some additional benefit. However, with the exception of Family Tax Benefits and Rent Assistance, these payments are generally very modest. A Newstart recipient who is single, of working age, and has no children receives an energy supplement of A$8.80 per fortnight.

On average, across all Newstart recipients, their average income from all sources of social security is A$637 per fortnight. This consists of A$101 from family payments, A$9 from the Energy Supplement, A$36 from Rent Assistance, and A$491 from their base Newstart payment. About 57% of all Newstart recipients rely on the base Newstart payment and the Energy Supplement alone.

So while it is true that almost all Newstart recipients receive at least one additional payment, in many cases these payments are comparatively small. It should also be noted that family payments are designed to cover the basic costs of children and therefore, at least in theory, are not directly intended for the Newstart recipient. - Ben Phillips and Cukkoo Joseph

Blind review

This, to my mind, is an accurate review of Josh Frydenberg’s statement. It is entirely believable that the majority of Newstart Allowance recipients receive at least some additional income support payment such as the Pharmaceutical Allowance or the Energy Supplement. However, the key point, as the article suggests, is that most of these additional payments are small.

More substantial payments in dollar terms, such as Rent Assistance or Family Tax Benefit, arguably do not cover the expense of renting a home or raising children. The adequacy of Rent Assistance in particular is called into question by Anglicare’s Rental Affordability Snapshot 2018 - Greater Sydney and the Illawarra, which states (p32):

Of the 18,446 properties advertised in Greater Sydney and the Illawarra on the weekend of 24-25 March 2018, only 57 were affordable and appropriate for households on income support payments without placing them into rental stress.

As the authors of this FactCheck point out, family payments are designed to meet the costs of children, not the living expenses of Newstart Allowance recipients. - Gerry Redmond

The Conversation’s FactCheck unit was the first fact-checking team in Australia and one of the first worldwide to be accredited by the International Fact-Checking Network, an alliance of fact-checkers hosted at the Poynter Institute in the US. Read more here.

Have you seen a “fact” worth checking? The Conversation’s FactCheck asks academic experts to test claims and see how true they are. We then ask a second academic to review an anonymous copy of the article. You can request a check at checkit@theconversation.edu.au. Please include the statement you would like us to check, the date it was made, and a link if possible.

Ben Phillips receives funding from Australian Research Council grants and undertakes consultancy research for various organisations through the Australian National University.

Gerry Redmond receives funding from Australian Research Council UNICEF

Cukkoo Joseph does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.