Frydenberg admits Newstart is effective economic stimulus

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Treasurer Josh Frydenberg has admitted that an increase to Newstart would be an effective form of economic stimulus.

The Treasurer conceded that Newstart recipients would be more likely to spend the money.

Josh Frydenberg on ABC Melbourne with Jon Faine – Friday, 27 September 2019

FAINE: But there are still people, particularly in the retail and other sectors saying, you know it would be the very good economic thing to do; it would boost the economy; if you gave people more money in their pocket, including low income people. Other people with a rate cut – a tax return – have used it to pay off their credit cards or mortgages. People who are living on almost nothing will actually spend that extra money.

FRYDENBERG: Well, there’s no doubt that people who are on Newstart or on other welfare payments are not saving it. They’re actually spending it to get by day to day. That’s absolutely right.

The question about the effectiveness of an increase to Newstart as economic stimulus was put to the Treasurer following criticism by former Treasurer Peter Costello that the government was not doing enough to resuscitate the economy.

The Treasurer’s remarks follow comments from the Reserve Bank Governor Philip Lowe last month suggesting that an increase to Newstart would be an effective form of economic stimulus.

This week, the Reserve Bank Governor also signalled more rate cuts as early as next week in further proof that the government is leaving the Reserve Bank to do all the heavy lifting.

Analysis shows that an increase to Newstart would be an important boost to the economy, and regions that need it the most.

It is clear to everyone except Scott Morrison that Newstart is inadequate.

Linda Burney

Media release - Friday, 27 September 2019