There’s an Aussie saying – ‘they’re doing it tough’, which can mean any variation on the theme of hardship, be it financial, emotional, physical or all three at once.
When the word ‘hardship’ is employed, it typically means financial struggle: in other words, privation, destitution, poverty, austerity, penury, impecuniousness and so on.
If you search the word ‘hardship’ online you will find a range of links purporting to explain (if you are doing it tough), how to apply for an early release of superannuation.
approved, your super fund will pay a lump sum which, in 2015-2016, averaged $13,519 (or about $520 a fortnight for a year).
The Department of Human Services has been administering these payments since 2011, which makes sense because to apply for a hardship payment you need to have been on a Commonwealth benefit for 26 weeks or more. Also you need to prove the degree to which you are doing it tough (‘cannot meet reasonable and immediate family expenses’). Centrelink with its data cross-matching abilities is probably in the best position to do this job, though frankly you’d think they have enough to do, what with answering 50 million phone calls and all.
Members make the application direct to their super fund. The Department of Human Services assesses applications and makes a recommendation to the superannuation fund when release conditions are satisfied. The final decision to release benefits is made by the fund/s.
Little Brother’s part-time job
Our head of research, Little Brother, stumbled across these statistics in the department’s annual report while looking for something else. In 2015-2016 there were 29,379 hardship applications, a 65% increase on the 19,367 applications made in 2014-2015. The Department (let’s call it Centrelink), fully or partially approved 51.6% of these claims, a big drop from the level of approvals in previous years.
Nevertheless, the total of hardship payments was $204.95 million, an 11.5% increase on the previous year.
Australian superannuation funds have paid out $539.71 million in early release hardship payments over the past three years. Funds usually make only one payment per person per year. The Courier-Mail reported in January 2016 that some super funds, including Sunsuper, REST and Super SA, had closed the door on early release applications. Given the big increase in applications in 2015-2016, it would seem that other super funds, which still consider applications, have gained new members.
The good news is that hardship payment recipients have been spending on average $3.45 million a week over the last three years. This money was almost certainly spent in Australian supermarkets and other retail stores. Crikey, it may have even stimulated (part-time) employment.
A report by the Australian Council of Social Services (ACOSS) found that Australia has failed to reduce the level of overall poverty in the community over the 10 years to 2014.
The 2016 Poverty in Australia report found that 13.3% of the population (2.99 million people) were living below the poverty line in 2013-14. Alarmingly, there was a 2% percentage point rise in the number of children living in poverty to 17.4% (731,300 children aged 0-17).
The internationally accepted poverty line is defined as 50% of median household income (adjusted for housing costs). In 2014, the 50% of median income poverty line for a single Australian adult was $426.30 a week (or $343.00 for income after housing costs). For a couple with children it was $895.22 a week (or $720.22 after housing).
ACOSS chief executive office Dr Cassandra Goldie commented that the majority of people living in poverty receive social security payments as their main source of income.
“At the same time, a third of people living in poverty rely on wages as their main source of income. The evidence is clear that a job does not guarantee an adequate income.”
Australia ranked 14th in OECD poverty survey
Despite its strong economic performance, Australia’s 2014 poverty rate (12.8%), ranked 14th highest of 36 OECD countries.
We’re well below the United States (second-highest at 17.5%, just ahead of Israel), but much worse than Denmark (second-lowest at 5.4%).
If I may editorialise now, the number one culprit in the growth of Australia’s poverty level is the high cost of housing, closely followed by unemployment or under-employment. One could also argue that Commonwealth income support payments are not keeping up with the real cost of living.
The real state of unemployment in Australia depends on whose data you believe. The Australian Bureau of Statistics reported the unemployment rate in January at 5.7%. Roy Morgan Research, which has been keeping its own tabs on unemployment since 2005, says the figure was 9.7% in January and was above 10% in seven of the 12 months in calendar 2016.
Analysis provided to the ABC in October last year showed how brutal the poverty spiral can be in some capital cities.
The ABC said an acute shortage of affordable housing in Melbourne was adding to the numbers of homeless people. It was also forcing welfare recipients to seek accommodation on the suburban fringes, where there are fewer jobs and services.
The ABC cited an average rent of $340 per week for a one-bedroom flat in Melbourne – $11 more than the $329 per week paid to a single person on Newstart (including rent assistance).
Newstart is Australia’s unemployment benefit. Fortnightly payments range from $528.70 for a single person with no children to $894.80 for a couple with children.
In the example given, a single person on Newstart is paying $680 a fortnight to rent a one bedroom flat in Melbourne. Even with rent assistance, said single is unable to live in Melbourne without sharing accommodation.
In 2013, the Commonwealth Government had a $3.6 billion budget for rent assistance and made payments to 1.29 million people. These rent assistance payments ranged from $87.07 to $130 per fortnight.
The fundamental problem with so-called hardship payments is that they do not solve the underlying problems – unemployment and a lack of affordable housing. Early release superannuation payments amount to breathing space for recipients, a cash buffer to cover expenses that are either being ignored or deferred. And as we all know, expenses like traffic fines, a broken tooth, broken or lost spectacles, non-PBS prescriptions and indexed insurance premiums come along when least expected.
One potato, two potato
One of my correspondents once defined poverty as the “Potato Index”. By this, he meant that two days before the next cheque was due, the household was out of potatoes. Should he buy one organic potato or two? So he’d walk around the village, checking potato prices at the local outlets.
“Hmm, looks like one potato,” he’d say, “or half a pumpkin.”
This conversation came back to me this week when shopping for ingredients for leek and cauliflower soup.
Cauli is out of season, though, so when I found one, $14.99 seemed a less than sensible purchase. The national emblem of Wales, on the other hand, cost only $1.79.
“What did you buy that for? It wasn’t on the list,” asked She Who Makes Lists.
“Research,” I muttered. “Besides, we can make leek and potato soup.”