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Thursday, 25 November 1999
Page: 12748


Mr St CLAIR —I rise to ask a question today. Why is it that in some cases people are financially better off when receiving welfare payments rather than working for an income? Australia has for many years financially punished those who work hard. Last week I was speaking with a constituent in my electorate who showed me an article he had written for the Australian Hereford Quarterly 10 years ago. The article was entitled `Social security suiting spongers splendidly'.

The article was looking at why there were so many unemployed people in Australia. The article took two hypothetical cases of a man, his wife and six kids. The only difference was that one was receiving unemployment benefits while the other was working as a mechanic. He then went about collecting figures from the department of social security, and he was able to find out that with various benefits and top-ups the unemployed man was able to receive $1,122.60 per fortnight, while the hardworking mechanic was lucky to bring home $800 a fortnight after tax.

After reading the article it got me and some others wondering whether it is still the same today 10 years later. Can a person on unemployment benefits still earn more than someone who is working? After doing some research in the last few days, I believe the answer is still yes. It staggered me to see that, when I took the same hypothetical situation of two men, their wives and six children, with one of the men being on unemployment benefits while the other worked, you could still earn more income being on unemployment benefits than working.

The average weekly ordinary times earnings, which is the average wage in Australia before you include overtime, equates to $753.70 per week before tax. I then asked the Department of Family and Community Services to work out the figures on the same hypothetical situation. The figures showed that being on unemployment benefits with a wife and six children you could receive an income of $831.62 per week after tax. That is $1,663.24 a fortnight. Compare that with a man who works hard to earn only $1,507.40 a fortnight before tax. After tax it would work out that the family on unemployment benefits is some $400 a fortnight better off.

To conclude, is this sending the right message? There are people who need the support of these sorts of welfare funds, and I understand that. But, on the other hand, if I could earn another $400 a fortnight for doing nothing, it would be tempting. Why is it that in some cases you are financially better off to receive welfare benefits than to work for an income? We might not be able to fix this problem, but we can introduce legislation that will reward those who work hard, as we are doing with the reduction of personal income tax. However, once again, it is the opposition who are trying to prevent the types of reform that I and others believe are necessary to return to a society that rewards effort, rather than continuing to support one that penalises effort.