Thursday, February 05, 2009

Raise the unemployment benefit?

An Australian left-wing think tank is calling for the dole to be raised to the same level of payment as Super. That is faulty thinking.

Unemployment is a temporary state of affairs. The payment is designed to encourage people to move on asap. Retirement is usually a permanent state of affairs. Superannuitants do not have future earning capacity to borrow against. (Similarly being on an invalid's benefit is considered a permanent state of affairs hence that pays a higher rate as well.)

Research shows the higher the level of dole, the longer people stay on it. The more comfortable it is, the more jobs they will turn down during the job search period. The numbers on the dole in Australia are already very high compared to NZ. This think tank says that as the number is forecast to go far higher - from 500,000 to 800,000 - the time is ripe to put more money into dole recipient hands. I would have said exactly the opposite.

Some interesting numbers re payment rates.

Australia single dole $225 single super $281
NZ single dole $184 single super $298
NZ (1998) single dole $147 single super $213

The difference between the unemployment benefit and super here is significantly higher and it has widened over the last ten years.

1 comment:

Anonymous said...

NZ has debts of 90% of GDP.

We cannot afford any dole. I doubt we can afford any super either.

At the very least, ACT should insist on Dole levels being returned to 1991 nominal levels. That way at least one of Ruth Richardson's reforms would have been restored!