Income Support Needs $3.4 Billion Overhaul

Child Poverty Action Group (CPAG) is recommending that a major $1.5 billion housing-related income supplement be scrapped while also calling for an income boost of around 40 percent for families receiving benefits, in a new report being released on Sunday May 19.

In The Accommodation Supplement: The wrong tool to fix the house, CPAG recommends removing the Accommodation Supplement for around 250,000 families because the payment is overly complex and poorly designed.

“The Accommodation Supplement (AS) is an expensive failure that has helped fuel the housing crisis,” says CPAG Co-Convenor Alan Johnson, who co-authored the report with Associate Professor Susan St John and Janet McAllister.

“Accommodation Supplement payments are directly linked to a recipient’s actual housing costs, so any increase appears to encourage landlords to increase rents. And recipients can’t save much by moving to cheaper housing: as their housing costs decrease, their AS income also partially decreases.”

The report outlines a plan to scrap the Accommodation Supplement while increasing all low incomes through a mix of increasing benefits, Working For Families entitlements, and raising the minimum wage at a faster rate than scheduled.

“Basic income should be high enough to meet ordinary costs of living, including housing, without having to rely on piecemeal supplements” says McAllister.

“The Government also needs to create and maintain an adequate supply of appropriate housing. If there is not enough warm secure appropriate housing to go around, some people will still obviously miss out, even if their incomes increase.”

The report found that families receiving benefits who have children currently need an income boost of around 30% to 50% to get out of income poverty; and that some working families are also currently living in income poverty (that is, their after-housing-costs incomes are under 60% of the median).

Around 300,000 households – some receiving benefits, some relying on wages – currently receive the Accommodation Supplement (AS) at an annual cost to the Government of $1.5 billion, and yet many more people are entitled to receive it but are missing out.

The report estimates that it would cost an additional $3.4 billion a year to scrap the Accommodation Supplement while ensuring all families with children are at or above the poverty line of 60% of median after-housing-costs income and others (without children) are at or above the 50% line. It estimates it would cost $2.2 billion to scrap the Accommodation Supplement and ensure everybody is at or above the 50% line.

“The current poverty crisis is so bad that if the Government truly wants to reduce poverty, then it needs to commit both bold new long-term thinking and substantial new funding to the issue,” says St John.  

“Although our specific proposals are different from those of the recent Welfare Expert Advisory Group report, we have independently come to the same broad conclusion, and the Government could implement most of the WEAG recommendations while also implementing ours.

“The need for new funding is obvious to anyone who looks closely at the issue; and the longer we wait, the more expensive the problem will become.”