Australian Opposition Leader Bill Shorten addresses workers during a visit to a Brisbane freight company. Picture: Lukas Coch/AAP
Australian Opposition Leader Bill Shorten addresses workers during a visit to a Brisbane freight company. Picture: Lukas Coch/AAP

Labor to dole out $39b

WORKERS will be forced to pay a whopping $39 billion to give those on the dole a weekly pay rise of $75 - slugging the average earner an extra $3200 in tax.

As Labor ramps up its rhetoric on needing to boost Newstart because it's "so low it's stopping people from getting work", exclusive Government modelling reveals how the much the baked-in costs would hammer the Budget.

Unions and the Australian Council of Social Service want a weekly $75 increase to the fortnightly rate of $538.80 for singles and $582.80 for singles with children.

Newstart is indexed twice a year but welfare groups argue it hasn't risen in line with the cost of living for the past 25 years.

The modelling shows increasing Newstart, plus related payments like Austudy and parenting payments, by $75 a week from September would cost the Budget more than $39 billion over the medium term.

From next financial year it would punch an annual $2.4 billion hole in government coffers, ballooning to more than $4 billion year by 2029-30.

Over the medium term, a median full-time wage earner will have to pay an extra $3233 in tax to cover the dole increase, or $237 a year from next financial year.

It means those who have an annual salary of about $86,000 will lose about one-fifth of planned tax cuts that start in 2022-23.

Mr Shorten has not nominated how much Newstart should increase by.

"Commonsense says that a review is going to conclude that amount is too low,'' he said this week.

A Labor spokeswoman yesterday told The Courier-Mail it would review "the adequacy of Newstart and related payments and supports".

"Last time Labor did a major review of a payment, we delivered the single largest pension increase in history. We don't do reviews to cut payments."

Finance Minister Mathias Cormann said Mr Shorten needed to explain how he would pay for his "unfunded" promise.

"Newstart allowance is indexed twice a year but clearly Bill Shorten wants people on the dole to believe that he will increase it by more,'' he said.

"Ninety-nine per cent of people on Newstart receive other welfare payments as well, including the commonwealth energy supplement, pharmaceutical allowance, commonwealth rent assistance, family tax benefit payments and a telephone allowance.

"Two thirds of people on Newstart come off it within less than 12 months.

"Our focus is on getting more people off welfare into work, so they can build a better life for themselves and their families."