A budget standard indicates how much a particular family living in a particular place at a particular time needs in order to achieve a particular standard of living. A living wage must be sufficient to ensure that all working people are able to afford rent in a suitable dwelling, a healthy diet, a good quality education, healthcare, transport, electricity and other energy costs, adequate clothing, entertainment and a contingency for unexpected expenses.
Over recent decades the living wage has received increasing international attention from researchers and policy-makers as a tool for informing adequacy assessments. The aim of the study was to produce new estimates for use in assessing the adequacy of two of the cornerstones of the Australian social safety net: the minimum wage and the Newstart Allowance (NSA. The principal goal of the research reported here was to review, refine and update the budget standards for Australia produced over two decades ago to make them relevant to current circumstances.
A key finding of the study is that the minimum wage performs far better than NSA in terms of adequacy, although there is room for improvement to provide adequacy for couple families with and without children. The current adequacy of NSA is little short of abysmal, and the contrast with the minimum wage raises important questions about whether it is time to introduce an independent mechanism for reviewing and setting the level of NSA that is similar to that used by the Minimum Wage Panel to review and assess the adequacy of the minimum wage.
A budget standard indicates how much a particular family living in a particular place at a particular time needs in order to achieve a particular standard of living. This article presents new estimates that build on the earlier budget standards produced by the Social Policy Research Centre in the 1990s. The new budgets incorporate increases in consumer prices and community standards and reflect changes in item availability, retail practices and shopping behaviour, as well as improved research methods, 20 years of use and experience, and new data. They are designed to achieve a minimum income for healthy living standard and apply to families with a breadwinner who is either in full-time work and receiving the minimum wage, or unemployed and receiving Newstart Allowance. The estimates suggest that although the minimum wage is adequate for single people, it is not adequate to meet the needs of many couple families with and without children, while Newstart Allowance does not provide an adequate safety net for the unemployed, whatever their family status.
New minimum healthy living budget standards for low-paid and unemployed Australians
Peter Saunders, Megan Bedford
First Published 4 Jun 2018
The Economic and Labour Relations Review