Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697637768431.pdf (Australia)
` SUBMISSION Senate Inquiry re Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support payments in Australia September 2019 By email: community.affairs.sen@aph.gov.au __________________________________________________________________________________ |info@financialcounsellingaustralia.org.au | www.financialcounsellingaustralia.org.au |@FCAupdate Level 6, 179 Queen Street Melbourne VIC 3000 Contact person for this submission Fiona Guthrie phone: 03 8554 6979 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 About Financial Counselling Australia and Financial Counselling Financial counsellors provide advice to people with money and debt issues.
Working in community organisations, their services are free, confidential and independent.

Financial Counselling Australia (FCA) is the peak body for financial counsellors in Australia.
FCA’s members are the State and Territory financial counselling associations: • • • • • • • Financial Counsellors Association of WA (FCAWA) South Australian Financial Counsellors Association (SAFCA)1 Financial Counsellors Association of Queensland (FCAQ) Financial Counsellors Association of NSW (FCAN) Financial Counsellors ACT (FC-ACT) Financial and Consumer Rights Council (FCRC) Financial Counsellors Association Tasmania (FCT) This is a joint submission from all of these associations.
About the case studies in this report The case studies in this report were provided by financial counsellors from around Australia.

They were collected in September 2019.

We thank the financial counsellors involved for taking the time to complete the short survey case study template.

1 SAFCA includes financial counsellors and capability workers in the NT.
Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 CONTENTS 1 2 3 4 INTRODUCTION ...................................................................................................................................... 1 SUMMARY ............................................................................................................................................. 1 RECOMMENDATIONS ............................................................................................................................. 1 PRINCIPLES OF FAIRNESS ........................................................................................................................ 2 5 NEWSTART AND BUDGETING ................................................................................................................. 3 6 NEWSTART AND SAVINGS ...................................................................................................................... 4 7 NEWSTART AND LOANS .......................................................................................................................... 4 8 DIRECT CLIENT EXPERIENCES FROM VICTORIA ........................................................................................ 7 APPENDIX 1 – VICTORIAN REPORT “THE EXPERIENCE OF (NOT) LIVING ON NEWSTART ................................. 9 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 1 Introduction Financial Counselling Australia (FCA) welcomes the Senate Inquiry into the adequacy of Newstart and related payments.
Financial counsellors are experts in assisting people in financial difficulty.

Financial counsellors regularly assist clients who are living on Centrelink income support payments.

Most of their clients are in financial difficulty, either of a short- or long-term nature.

Financial counsellors know from practical experience that Newstart is not an adequate income support payment.
People on Newstart struggle to afford even the most basic living expenses, and this can exacerbate or encourage debt accumulation.

Financial counsellors have also repeatedly observed a clear relationship between a person being on Newstart and becoming vulnerable (if they were not already).

Being unemployed is stressful, and financial difficulty only causes further stress.
Being vulnerable makes it hard, bordering on impossible, to look for work, negotiate with creditors they cannot pay, deal with debt collectors, and meet the mutual obligation requirements of Newstart.

We do not propose to review the evidence on the inadequacy of Newstart.

Many organisations, including ACOSS, will provide incontrovertible evidence of this fact.

This submission will instead focus on the impacts of the inadequacy of Newstart on people who financial counsellors see regularly in their work.
2 Summary We support an urgent increase in Newstart by at least $75 per week to ensure people are more likely to be able to keep a roof over their heads and pay the household bills.

We support an independent review of the adequacy of income support payments and the introduction of an independent body to set such payments to ensure they remain adequate into the future.

3 Recommendations We ask that the Senate Inquiry make the following recommendations.

1.
1.

Adopt fairness as an underpinning principle in decisions about the level of income 2. support payments.

Increase Newstart payments by at least $75 per week and increase related income support payments consistent with a living wage.

3.

Establish a review of all income support payments to ensure they are adequate and fair.

4.

Establish an independent body to set and review income support payments to ensure they remain adequate into the future.
1 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 5. Review Commonwealth Rent Assistance payments to ensure they adequately cover realistic rental costs.

6.

Remove all requirements that link income payments to compliance with job search 7.

8. or parenting activities.

Implement in full the recommendations made by Good Shepherd in its submission2 into the Inquiry into ParentsNext.
Implement the recommendations made by Good Shepherd Australia New Zealand in its “Outside systems control my life” report.

9.

Redesign the Cashless Debit Card so that it is opt-in only.

4 Principles of fairness The welfare safety net should be assessed through the prism of fairness.

The principles of fairness should be: 1.

People are entitled to income support when they do not have an income.

As a fair society we do not want people to live in poverty.

2.
2.

That income support cannot be linked to good behaviour or the requirement to fill out endless forms, attend meetings, or attend story time with their children.

Regardless of whether people engage in such activities, they should not be placed into poverty.

Instead, systems should encourage and support people.

Income support payments must meet basic needs.

The payment rate must be independently set and reviewed.

Leaving people living below the poverty line is not fair.

3.

4.
3.

4.

That we should be non-judgmental and appreciate that people do not choose poverty.

5.

Acknowledge that when people need Newstart or other income support they are often vulnerable.

Vulnerability means that their decision-making and daily functioning can be very challenging.

Extra care is needed when people are vulnerable.

Recommendations Adopt fairness as the underpinning principle when assessing the structure, adequacy and obligations for Newstart and related income support payments.
The current approach to welfare is anything but fair.

It is more akin to a neo-Dickensian philosophy of punishment and shame that entrenches poverty.

2Good Shepherd Australia New Zealand Submission to the Senate Standing Committees on Community Affairs – Community Affairs References Committee; Response to the Inquiry into ParentsNext, including its trial and subsequent broader rollout.
2 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 5 Newstart and budgeting Financial counsellors often assist people who are on Newstart.

They are invariably experiencing financial difficulty.

Financial counsellors will usually complete a money plan with their clients to get a snapshot of their financial position.

When the client is in receipt of Newstart the budget is almost always in deficit.
The client is then faced with the difficult decision of what, and how much, to pay in the knowledge that there will be expenses and debts that cannot be paid in full.

Case study – Joe Joe is 63 and lives in small rural NSW town.

Joe worked for himself as an auto electrician for more than 30 years.

He raised a family and they got by.

With a weary body, and in his late 50s, Joe and his wife had a career change.

They bought a small shop in their town.


Soon after, Joe was diagnosed with cancer and his wife had a stroke.

They both required treatment hundreds of kilometres away from their home.

They used all their savings trying to keep the business afloat during their period of ill health.

The business is now being sold, with nothing left once the bank is paid out.

While their health has improved over the past 12 months, they can’t get any work in their small drought-affected community.
The nearby mines don’t hire new workers aged in their 60s.

Joe and his wife do not have any superannuation so they are living on partnered Newstart – below the poverty line.

They are devastated.

Joe is more than fit for work but cannot obtain it.

They don’t have enough money to travel for work as the closest large town is 100 kilometres away.

They pay more than they can afford on the repayments for power and rates to avoid legal action.

Deciding priorities for payments is stressful.


It means paying for essentials and then telling other creditors they cannot afford any payments.

The creditor can then threaten legal action, causing further stress.

When financial counsellors prepare a client’s statement of financial position to work out what is available to pay debts, they start with the assumption that a client cannot cut back on basic necessities.
This is an important assumption because it acknowledges a basic right to food, shelter, electricity, phone and water.

Sadly, financial counsellors see people who, faced with a deficit in their budgets, stop eating regularly in an attempt to meet all required payments.

Poor nutrition often leads to poor health and higher medical expenses and more costs to the public sector.

Case study – Jerome Jerome is in his mid-30s and has just spent three months in jail.
He has been released but has lost his housing so has nowhere to live.

His sister offered him a room at her house two hours’ drive away.

Jerome is on Newstart so cannot pay for removalists to move his furniture to the new location or pay for storage.

He is at risk of losing all his treasured belongings if he moves to his sister’s place.

He is also at risk of homelessness because he cannot afford even subsidised housing.
3 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 6 Newstart and savings Having savings builds people’s financial resilience3 and helps them in a multitude of ways, including being able to cover emergency costs, the psychological comfort of having a buffer, and building confidence about financial management.
In July 2016, FCA issued a consultation paper titled Everyone needs a savings buffer.4 The consultation paper covers the benefits of a savings buffer.

Case study – Mary-Lynette Mary-Lynette is 51.

She had to move from her remote Indigenous community to Adelaide for medical treatment for conditions including diabetes and chronic liver disease.

Mary-Lynette is on Newstart and supplementary payments including the pharmaceutical allowance.
She lives in public housing, pays $136 a fortnight for rent, $140 for utilities, and $50 for rental furniture, which leaves her with just $244 a fortnight for food and other expenses.

Her mother is elderly, with end-stage renal disease, and still lives in the remote community.

To visit her mother costs Mary-Lynette $240 return from Alice Springs.

Then there is the fare from Adelaide to Alice Springs and accommodation costs in Alice if the timetables don’t align.
This means Mary-Lynette has to go into significant debt every time she wants to visit family.

Her fridge has also blown up but she can’t afford a new one Mary-Lynette is constantly in debt and has little money for food.

An increase in Newstart might allow her to develop a small savings buffer and to afford to travel the long distances required to see her family.

It is impossible to build any savings buffer when on Newstart.

This means recipients are not able to build any financial resilience.
Instead, it arguably builds learned helplessness because people find life is impossible to manage when they simply do not have enough money.

When an emergency expense arises, this can be catastrophic.

It can lead to desperate measures like borrowing from a payday lender, leading a person into a deepening debt trap.

7 Newstart and loans Newstart rarely covers basic living expenses, which means that if a person has a loan they cannot afford to make any repayments.
The person is forced to have difficult discussions with their lenders, a situation that is ongoing for as long as the person is on 3 Financial Wellbeing- A Survey of Adults in Australia, ANZ, April 2018 p. 6 had a key finding that acting saving and not narrowing for everyday expenses were key to financial wellbeing.
Available at: https://www.anz.com/resources/2/f/2f348500-38a2-4cfe-8411-060cb753573d/financial-wellbeing-aus18.pdf 4 Financial Counselling Australia, Everyone needs a savings buffer: Why income and expenditure statements need a savings buffer July 2016.

Available at https://bit.ly/2m4wJZJ.

4 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 Newstart.
The longer the period they cannot make any repayments, the more likely that the person will face enforcement proceedings or the repossession of assets.

Case study – John John lived in a semi-rural area.

He had worked for many years but when his health declined he had to stop working.

He was put on Newstart, which wasn't enough to cover even his rent.

Due to his poor health, he couldn’t walk without an aid and literally couldn't feel ants biting him on his legs.
However, he still was found ineligible for a disability support pension.

He became severely depressed He was thousands of dollars behind in his rent, but luckily his landlords were understanding.

They reduced his rent and kept a tally of what was owing in the hope of being repaid when John’s situation improved.

However, most people aren't this lucky and become homeless with large debts hanging over their head.
Debt collectors were harassing John but he had nothing to pay towards any debts because he was barely eating as it was.

Because he couldn't pay his bills he would be disconnected from utility companies and then sign up with another provider because he needed electricity for his medical issues.

So he kept building up debt even though he didn't want to but he had no idea of what else to do.
It was also difficult for him to attend appointments because of his health and because he couldn’t afford to register his car, pay for petrol or even pay the bus fare.

A higher rate of Newstart would have made him feel as though the fight was worth fighting; that he had a chance to get through to the other end.

When a financial counsellor has a client on Newstart, the options are all undesirable and difficult.

This is illustrated below.

1.


Negotiate a moratorium (a period of no payments) with the lender.

• Lenders will only usually agree to a period of three months.

This option will only be successful if the person can find employment within this time.

In reality, most people will not.

The most recent ABS statistics show that on average a person will be searching for a job for 46.5 weeks, with the median duration 20 weeks (five months).5 2.

Sell an asset.
Sell an asset.

• This can be difficult if, for example, a car is damaged or a home needs repairs done.
5 “The average duration of job search by unemployed persons increased to 46.5 weeks in 2017 from 34.4 weeks in 2007, and the median duration of job search reached 20 weeks in 2017 from an average of 10 weeks in 2007.” Source: ABS, Labour Statistics, Fact Sheet 1, https://bit.ly/2kKSfCF 5 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 3.

Borrow money from family and friends.


• This is often not possible or desirable for obvious reasons.

It also relies again on the person finding work in a timely way.

If not, the person will end up with more debt.

4.

Get a loan from a lender that does not lend responsibly, such as a high-cost payday lender or predatory lender that is not concerned about affordability where there is an asset.

• Such loans leave the person worse off very quickly and some people then lose their asset.

5.
5.

Try to negotiate a debt waiver on compassionate grounds, such as illness or disability.

• Even when there are strong compassionate grounds, getting a waiver is difficult as the lender usually argues that the person is expected to go back to work.

However, this argument flies in the face of evidence that an increasing number of people who are on Newstart should instead be receiving a Disability Support Pension.
Case study – Jean Jean, 59, worked in aged care until September last year, when the stress of the job became too much.

She had a breakdown, is now unable to work and has supporting documentation from her doctor.

She tried to claim a disability support pension but was knocked back by Centrelink.

She is behind with her car payments and just manages to pay her rent.

She had to access her superannuation to make ends meet.

Jean’s confidence and self-esteem have been destroyed.
She can’t afford to do anything socially and has become very isolated, which has exacerbated her poor health.

An increase in Newstart would enable her to make her car payments and help her regain some contact with friends.
6 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 8 Direct client experiences from Victoria The Financial and Consumer Rights Council, the Victorian peak body for financial counsellors, recently asked financial counsellors in that state to collect data from clients on Newstart about their experiences.
The resulting report, “The Experience of (Not) Living on Newstart: Data and Stories from Financial Counselling Clients”, is attached as Appendix 1.

The report includes the data and stories from 111 people in receipt of Newstart.

The findings reinforce the points made in this submission.

Arrears and budget deficits are the norm • People commonly reported arrears in paying household bills and debts in the previous 12 months.
The most common bill to go unpaid was for utilities (87 people – 78%), followed by housing (58 people – 52%).

• The Newstart allowance is paid on a fortnightly basis.

Of the 111 people in the survey, 100 people completed an income and expenditure statement setting out how they allocated their money.

Of this group, 81 statements were in deficit.

• Housing costs were easily the largest expenditure item for most people.

Some 89 income and expenditure statements provided information on this cost.
A usual measure of housing stress is when more than 30% of one’s income is spent on housing.

A total of 81 people were in this category.

Some 73 people spent more than 40% of their income on housing, 56 people spent more than 50% and 20 people spent more than 70%.

A highly vulnerable group • The survey asked participants about whether they had skipped meals or accessed food relief or emergency relief services (such as access to vouchers to pay bills) in the past 12 months.
It was very common to have done this: 93 people (84%) had accessed emergency relief services; 92 had accessed food relief services; and 77 people had skipped meals.

• Many people reported personal circumstances that would make them vulnerable.

The two most common experiences were social isolation, which was experienced by 75 people (68%), and mental health issues, also reported by 75 people (68%).

• The community bears the costs when people need to access emergency relief services as well as hospitals.
7 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 In their own words: what I miss out on, what I can’t afford • Survey respondents were asked to write down what they missed out on or couldn’t afford.

The overriding theme is that the inadequate rate of Newstart has serious impacts on the lives of recipients.
This ranges from missing out on food, not being able to afford adequate housing, driving unroadworthy cars, poorer health and limited social interactions.

The comments about the detrimental effect on children are particularly sad and it is clear that parents feel this acutely.

• The quotes below are a sample from the survey and illustrate the points above.

They are an appropriate place to conclude this submission.
“I visit a different community service each week to get food.” “I don’t have a bed; I’m sleeping on a broken, 40-year-old couch.” “(The) power (company is) threatening disconnection due to arrears.” “My kids have to carry all their belongings in their school bags because we can’t afford to pay for lockers.” “I can’t afford to send my kids on school excursions.” “We can’t do simple things like taking my daughter to her friend’s birthday party because we can’t afford gifts.” “I am driving an unroadworthy car with bald tyres because where am I going to get $600 from to replace the tyres?” “My neck and back were injured in the domestic violence I experienced but I can’t afford to go to the physiotherapist for treatment.
And I can’t afford regular psychology appointments to deal with all the trauma.” “Sometimes I go without my medications so I can feed my child.
She has already missed out on so much, it’s upsetting.” “I can’t catch up with friends for coffee because I simply cannot afford to socialise.” “(I miss) talking to people.” “(I) couldn’t afford (a) new fridge (and) had to get rent to buy … 400% more expensive.” “(I) borrow money from family which I can’t pay back.” “I have worked since I was 17 and now when I need help 30 years later, there is none from the government.” 8 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 APPENDIX 1 – VICTORIAN REPORT “The Experience of (Not) Living on Newstart” 9 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 i THE EXPERIENCE OF (NOT) LIVING ON NEWSTART: DATA AND STORIES FROM FINANCIAL COUNSELLING CLIENTS September 2019 Between February and May 2019, 111 people who were clients of financial counsellors shared their stories about trying to live on the Newstart allowance.
They also provided information about their weekly income and expenditure showing that it is simply impossible for many people to make ends meet on the current rate.

Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 ABOUT FCRC The Financial and Consumer Rights Council is the peak body for the financial counselling profession in Victoria.
ABOUT THIS REPORT This report was put together by the FCRC Centrelink Working Group (CWG).

FCRC Working Groups engage in system advocacy on issues encountered by financial counsellors in their practice, aiming to change systems that disadvantage vulnerable people.

CWG involves 20 practising financial counsellors concerned with improving Australia’s social security system.

Liz Stary is convenor of the Working Group, and along with Carmel Stafford undertook the data analysis on which this report is based.
ACKNOWLEDGEMENTS FCRC thanks the clients who told their stories, and the financial counsellors who participated in this process and provided completed surveys.
ii Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 TABLE OF CONTENTS EXECUTIVE SUMMARY .................................................................................................................................. IV 1 INTRODUCTION .................................................................................................................................... 1 1.1 1.2 1.3 WHAT IS THIS REPORT ABOUT?
.................................................................................................................... 1 WHY DID WE WRITE IT?
............................................................................................................................. 1 METHODOLOGY ....................................................................................................................................... 1 2 ARREARS AND DEFICIT BUDGETS ARE THE NORM ................................................................................. 2 2.1 2.2 2.3 ARREARS ................................................................................................................................................ 2 INCOME AND EXPENDITURE STATEMENTS IN DEFICIT ...................................................................................... 2 SAVINGS ................................................................................................................................................ 3 3 A HIGHLY VULNERABLE GROUP ............................................................................................................. 4 3.1 3.2 3.3 ACCESSING FOOD RELIEF IS A COMMON COPING STRATEGY ............................................................................... 4 PERSONAL CIRCUMSTANCES ARE CHALLENGING .............................................................................................. 4 COMMUNITY BEARS THE COSTS ALSO ........................................................................................................... 5 4 IN THEIR OWN WORDS: WHAT I MISS OUT ON, WHAT I CAN’T AFFORD ................................................ 6
6 4.1 4.2 4.3 4.4 4.5 4.6 4.7 FOOD AND CLOTHING ............................................................................................................................... 6 HOUSING AND UTILITIES ............................................................................................................................ 7 IMPACT ON CHILDREN ............................................................................................................................... 7 TRANSPORT ............................................................................................................................................ 8 HEALTH ................................................................................................................................................. 9 SOCIAL INTERACTIONS ............................................................................................................................... 9 FINANCIAL MANAGEMENT ....................................................................................................................... 10 APPENDIX 1 – STATEMENTS OF FINANCIAL POSITION: IMPOSSIBLE CHOICES ............................................... 11 iii Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 EXECUTIVE SUMMARY This report describes a survey of people whose main source of income was the Newstart allowance and who were clients of a financial counsellor.
There were 111 responses to the survey.

Arrears and budget deficits are the norm • People commonly reported arrears in paying household bills and debts in the previous 12 months.

The most common bill to go unpaid was for utilities (87 people – 78%), followed by housing (58 people – 52%).

• Of the 111 people in the survey, 100 people completed an income and expenditure statement setting out how they allocated their money.

Of this group, 81 statements were in deficit.


• Housing costs were easily the largest expenditure item for most people.

Some 89 income and expenditure statements provided information on this cost.

A usual measure of housing stress is when more than 30% of one’s income is spent on housing.

A total of 81 people were in this category.

73 people spent more than 40% of their income on housing, 56 people spent more than 50% and 20 people spent more than 70%.
A highly vulnerable group • People commonly had problems paying for food and bills: 93 (84%) had accessed emergency relief services (which can help pay bills); 92 had accessed food relief services; and 77 people had skipped meals.

• Many people reported personal circumstances that would make them vulnerable.

The two most common were social isolation, which was experienced by 75 people (68%), and mental health issues, also reported by 75 people (68%).
• The community bears the costs when people need to access emergency relief services and hospitals.

In their own words: what I miss out on, what I can’t afford • Survey respondents were asked to write down what they missed out on or couldn’t afford.
The overriding theme was that the inadequate rate of Newstart had serious impacts on their lives, ranging from missing out on food, not being able to afford adequate housing, driving unroadworthy cars, experiencing poorer health and limited social interactions.

The comments about the detrimental effect on children are particularly sad and it is clear that parents feel this acutely.
iv Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 1 INTRODUCTION 1.1 What is this report about?

This report describes the practical experiences of people who sought help from a financial counsellor because of financial hardship and whose main source of income was the Newstart allowance.
The report documents the actual income and expenditure position of this group of people and captures the reality of their lives.

1.2 Why did we write it?

Financial counsellors assist many clients who are in receipt of income support payments.

There is no doubt that the low rates of these payments can both cause and exacerbate financial hardship.

This is particularly the case in relation to the Newstart allowance, which has not increased in real terms for 24 years.
Not surprisingly, financial counsellors are strong supporters of the Raise the Rate campaign, which is advocating for an increase of $75 per week in the Newstart allowance.

In writing this report, we are adding yet another piece of evidence to the Raise the Rate campaign.

1.3 Methodology The survey was conducted between February and May 2019 and there were 111 responses.

Financial counsellors with clients in receipt of Newstart, asked them to complete the survey or filled in the data with them.
The survey asked participants: • Demographic information (age, gender and postcode) • Whether they had been in arrears in the past 12 months (housing, utilities, credit cards, personal loans, schooling costs or other) • • If they had accessed specific services in the past 12 months (emergency relief, food relief) or if they or a family member had skipped meals If they had experienced any specific circumstances (homelessness, family violence, mental health difficulties, social isolation, chronic illness, terminal illness, other) • In their own words, what they missed out on or couldn’t afford.
1 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 Participants were also asked to complete a short income and expenditure statement (a template was provided or a financial counsellor could use their own).

2 ARREARS AND DEFICIT BUDGETS ARE THE NORM 2.1 Arrears As Newstart is such a low level of payment, people commonly reported arrears in paying household bills and debts in the previous 12 months.
This data is graphed below.

The most common bill to go unpaid was for utilities (78% or 87 people), followed by housing (52% or 58 people).

Number of people reporting arrears in past 12 months i g n a t r o p e r e p o e p f o o N l 87 58 100 80 60 40 20 0 40 45 33 Arrears in housing Arrears in utilities Arrears in credit cards Arrears in personal loans Arrears in schooling costs 2.2 Income and Expenditure Statements in Deficit The Newstart allowance is paid on a fortnightly basis.
Of the 111 people in the survey, 100 people completed an income and expenditure statement setting out how they allocated their money.

Of this group, 81 statements were in deficit.

The other 19 statements were incomplete so could not be assessed (these statements did not include items such as debt payments).

Housing costs were easily the largest expenditure item for most people.

Some 89 income and expenditure statements provided information on this cost.
A usual measure of housing stress is when more than 30% of one’s income is spent on housing.

A total of 81 people were in this category.

73 people spent more than 40% of their income on housing, 56 people spent more than 50% and 20 people spent more than 70%.

2 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 An example of an income and expenditure statement is below.
This statement does not include any allowance for food.

Appendix 1 has more examples of income and expenditure statements, which show the impossible choices people have to make.

2.3 Savings As confirmed by ANZ research,1 one of the most important indicators of financial wellbeing is the ability to save money and accumulate a small savings buffer.

This allows people to cope with unforeseen events such as the need for car repairs or to travel for a funeral.
None of the income and expenditure statements had room for even a modest level of savings, such as $5 per fortnight.

There is no room for discretionary expenditure of any kind.

1 Financial Wellbeing: A Survey of Adults in Australia, ANZ, April 2018 p.6.
Available at https://www.anz.com/resources/2/f/2f348500-38a2-4cfe-8411-060cb753573d/financial- wellbeing-aus18.pdf 3 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 3 A HIGHLY VULNERABLE GROUP 3.1 Accessing food relief is a common coping strategy The survey asked participants about whether they had skipped meals or accessed food relief or emergency relief services (such as access to vouchers to pay bills) in the past 12 months.
This data is shown in the graph below.

It was very common to have done this: 93 people (84%) had accessed emergency relief services; 92 had accessed food relief services; and 77 people had skipped meals.
Number of people reporting these situations in past 12 months 93 92 77 100 80 60 40 20 0 Accessed emergency relief Accessed food relief Skipped meals i g n a t r o p e r e p o e p f o o N l 3.2 Personal circumstances are challenging The graph below shows the number of people reporting personal circumstances that would make them vulnerable.

The two most common experiences were social isolation, which was experienced by 75 people (68%).

Mental health issues were also reported by 75 people (68%).
Not having enough money to live on is obviously highly stressful.

Mental health issues in particular are both cause and effect in relation to financial hardship.
i g n a t r o p e r e p o e p f o o N l Number of people reporting these personal circumstances 75 75 47 48 55 Homelessness Family Violence Mental health issues Social isolation Chronic illness 80 70 60 50 40 30 20 10 0 4 Terminal illness 4 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 3.3 Community bears the costs also Individuals obviously suffer when they do not have enough to eat and cannot pay their bills.
But the community also bears the costs.

These include the costs of funding food relief services, and the costs arising from people experiencing health issues or homelessness.

These costs, however, do not seem to be factored into government decision-making processes that leave the Newstart allowance at levels that mean people don’t have enough to eat and experience poor physical and mental health.
5 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 4 IN THEIR OWN WORDS: WHAT I MISS OUT ON, WHAT I CAN’T AFFORD Of the 111 people surveyed, 110 answered the question “What I cannot afford” or “What are you or your family missing out on” or both.2 The quotes in this section are from survey responses and chosen to illustrate the specific topic.
The overriding theme is that the inadequate rate of Newstart has serious impacts on the lives of recipients.

This ranges from missing out on food, not being able to afford adequate housing, driving unroadworthy cars, poorer health and limited social interactions.

The comments about the detrimental effect on children are particularly sad and it is clear that parents feel this acutely.
4.1 Food and clothing “(I miss out on) … food.” “I visit a different community service each week to get food.” Summary of the themes A common theme was that people did not always have enough money for food and regular meals.

Some people said they missed out on buying fresh or healthy food.

Some people said they could not afford warm clothing or shoes for themselves or their children.

What this means People who cannot afford food either skip meals or visit community-run food relief services.
These services, however, generally limit the number of times an individual can obtain a food relief package.

There are health implications when people on Newstart do not eat enough healthy food.

There are also broader costs to the community because of the need to fund food relief services.

2 Slightly different versions of the survey were administered with some versions asking “what I cannot afford”, others asking “what are you or your famiy missing out on” and some asking both questions.
6 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 4.2 Housing and utilities “I don’t have a bed; I’m sleeping on a broken, 40-year-old couch.” “(The) power (company is) threatening disconnection due to arrears.” Summary of the themes The data on housing costs described in Section 2 showed that this represents a large proportion of most people’s weekly expenditure.
Not surprisingly, access to stable and secure housing was also a clear theme in the qualitative comments.

For example, some people commented that they could not afford private rental or a mortgage or rates.

People also had trouble in being able to afford basic necessities such as gas, electricity, water and heating.

Telephone and internet costs were also out of the reach of some people.
What this means Some people remain in unsatisfactory housing situations, such as staying with friends, because of the cost.

One person appeared to be remaining in a family violence situation because they could not afford the cost of housing.

Another said they were missing out on feeling safe because they lived in a rooming house.

In the experience of financial counsellors, many people prioritise housing costs over food.
The high costs of housing therefore makes it extremely hard, and often impossible, to make ends meet.

People who struggle with utility payments can and are disconnected.
4.3 Impact on children “My kids have to carry all their belongings in their school bags because we can’t afford to pay for lockers.” “I can’t afford to send my kids on school excursions.” “We can’t do simple things like taking my daughter to her friend’s birthday party because we can’t afford gifts.” “Kids have to stay home as never have money to do anything with them.” “Embarrassed to have his friends over.” 7 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 Summary of the themes People reported that their children missed out on many things at school for example, school camps, excursions, music lessons, sports day (because of an entry fee), after-school activities.
Some people said they couldn’t afford school uniforms, school books or subject fees.

Children also missed out on other things that would be considered a normal part of growing up, such as gifts, treats such as Easter Eggs or going out as a family.

What this means Children and young people missing out on activities such as school excursions are not receiving the same educational opportunities as others.
It is also likely that there will be psychological impacts for children and young people because they are unable to participate in the same activities as their peers.

How these psychological issues play out is for other experts to assess, but surely must be a concern for us as a community.

Parents unable to adequately provide for their children are likely to experience feelings of shame and despair.
4.4 Transport “I am driving an unroadworthy car with bald tyres because where am I going to get $600 from to replace the tyres?” Summary of the themes People said they couldn’t afford the running costs of a car such as petrol, tyres, insurance, registration, repairs and ongoing servicing.

Some people also said that for them public transport was unaffordable.

What this means An inability to access transport may make it difficult for some people to attend job interviews.
There are obvious risks to the community if unroadworthy cars remain on the road.

Individuals also risk fines, and debts to third parties may arise if the car is an accident and is not insured.

Access to transport is also important in facilitating participation in the community, so that people can interact with friends and family.
8 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 4.5 Health “My neck and back were injured in the domestic violence I experienced but I can’t afford to go to the physiotherapist for treatment.

And I can’t afford regular psychology appointments to deal with all the trauma.” “Sometimes I go without my medications so I can feed my child.
She has already missed out on so much, it’s upsetting.” Summary of the themes People were not able to pay for many health-related costs.

Examples mentioned included: medications, dental care, optometry, rehabilitation, vitamins and physiotherapy.

One person needed to see a specialist but could not afford it.

Some people mentioned psychological impacts such as feeling sad and depressed.
What this means There are obviously serious impacts for individuals who are unable to afford the medicines they need to stay well.

For some people, this will be a significant barrier to being “job ready”, for example, if they are unable to recover from injury.
There may also be implications for the broader health system if people end up using emergency services or more expensive health-care options because preventative medicines are unaffordable or they have not been able to access mental health services in a timely way.

4.6 Social interactions “I can’t catch up with friends for coffee because I simply cannot afford to socialise.” “I’m newly arrived to the country and have escaped domestic violence.
I have no local friends and I can’t make any friends because I can’t afford to attend these sorts of functions.” “(I miss) talking to people.” Summary of the themes An inability to participate in the community and feel part of society was a common theme in the comments.

People said they missed out on things like socialising, fun, coffee, recreation, entertainment, treats, holidays, Christmas and Easter.
9 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 What this means When people lose connections with others, it can exacerbate feelings of inadequacy and mental health issues.

It also diminishes opportunities to find employment.
4.7 Financial management “(I) couldn’t afford (a) new fridge (and) had to get rent to buy … 400% more expensive.” “(I) borrow money from family which I can’t pay back.” “I have worked since I was 17 and now when I need help 30 years later, there is none from the government.” Summary of the themes Some people commented on their overall financial position of having debts that they couldn’t afford to pay back.

What this means People unable to pay their debts will receive calls from debt collectors.
Some will resort to high cost credit in an attempt to find a short-term solution, such as a payday loan.
10 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 APPENDIX 1 – STATEMENTS OF FINANCIAL POSITION: IMPOSSIBLE CHOICES 11 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 12 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122 13 Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support paymentsin AustraliaSubmission 122