The age of inequality on its way

Wollongong woman Taylor Clarke-Pepper says she is shocked by the changes announced in the federal budget. Picture: KIRK GILMOUR
Wollongong woman Taylor Clarke-Pepper says she is shocked by the changes announced in the federal budget. Picture: KIRK GILMOUR

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 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 vividly describes her small one-bedroom apartment in Wollongong as "dirty, stained carpets, barely any furniture, and a half dingo next door who scares me".

News had filtered through to her via social media that those under 30 on unemployment benefits could be denied any payment at all 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:

"So with this budget, I'm screwed!" said one post.

"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. No-one will feel the blowtorch of the budget more than the young unemployed or sole parents. But almost all Australians 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 introduced for a visit to the GP, higher education fees increased and taxes raised.

New markers for society have been laid down. A child is no longer deserving of government support after they turn six; families are expected to support their unemployed children until they are 30.

You will be expected to work until 70. Household income of $100,000 is the new well off, the level at which a family loses government benefits.

The belt tightening, says Hockey, is in the national interest. Spending has been unsustainable.

"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 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 20 per cent of income earners see an average 5 per cent reduction in disposable incomes, those in the top 20 per cent 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 a 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 a circumstance, Hockey told ABC Radio: "I would expect to be in a job - that would be the starting point."

Clarke-Pepper, who lives in a region with one of the highest youth unemployment rates in the country, was "kicked out of home at 17" and already has had an insight into what life is like with no income.

"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 extremely difficult. There's 17 per cent unemployment for youth here."

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."

Minister for Social Services Kevin Andrews points out that the six-month embargo on payments will be reduced by one month for every year a person has been employed before they became unemployed.

According to research by Australian Council of Social Service, about 100,000 young unemployed will be affected.

On top of the measure is another hit on the young jobless - moving unemployed people under the age of 25 on to the lower youth allowance, a fall in income of $46 a week to $207.20 for a single person over 18.

Prime Minister Tony Abbott wants to "change the culture and mindset of young people".

For Hockey, it is "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.

"When you take the two together, removing income support and closing great employment and skills programs, it's pretty shocking what they are doing," Wren says.

For sole parents, the picture is no 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.

NATSEM analysis shows that as people move from low incomes towards middle incomes, they lose out under the welfare changes, seeing a larger part of their family benefits reduced.

"As you earn more, you lose more in many cases," Phillips says.

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.

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.

He notes that older people, facing lower indexation of pensions and the rise of the retirement age due to the budget, are now increasingly fending for themselves as divorce rates have their impact and a smaller number of children leave them fewer 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."

Hugo supports the rise in the retirement age, noting life expectancy for a man over 50, for example, had increased by nine years since 1970. And the government will pay employers up to $10,000 for hiring someone over 50. The program is notable as an oasis of spending amid the slash and burn of other employment programs.

At the core of the revamp is that Australia's budget position is unsustainable and if action is not taken now, it will be worse. Welfare spending, notes Hockey, is 35 per cent of the budget and could not be exempt. All Australians needed to contribute to fiscal repair.

"We are asking them to contribute, because if we contribute now, we will build great things for our nation."

The government also argues the total tax take is down and the abolition of mining and carbon taxes - still to pass Parliament - will help everyone struggling with living costs.

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 NATSEM's Phillips.

It is a very different story for those less well off, who will see the financial impost on them grow rapidly from 2016.

Louise Williams, who runs the single mothers' forum where the suicidal message was posted, said such posts are not uncommon.

"We got so many people this week who are at breaking point, on the brink of crisis.

"We tell them they are not alone."


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