A decade down the track we might consider whether it’s an anniversary worth celebrating.
The independent committee charged by the government to make recommendations for change – a series of proposals known as the McClure Report – came back with three objectives for welfare reform: significant reductions in the number of jobless families and households; significant reductions in the proportion of the working age population on income support; and stronger communities with improved social and economic participation.
Perhaps uniquely for a major report on such a contentious issue it was greeted positively, not only by both sides of politics, but also by the business and community sectors.
It offered government a comprehensive road map for reform – a systematic approach to what is a highly complex problem. At the time there was real optimism for change.
But the Howard Government’s failure to embrace the McClure Report as a whole – including some of its toughest reforms – has left many of its targets either unmet or compromised.
In terms of jobless families, there’s no doubt the number has fallen since the late 90s. Increasing employment and welfare to work measures have had an impact but numbers are still too high.
Australia has the second-highest percentage of children living in jobless families in the developed world.
There are an estimated 543,000 Australian children currently in this position.
Around one in seven Australian children lives in a jobless family – one in two for single parent households – with all the associated implications that carries for future social and economic development.
These are hardly significant reductions.
And remember these numbers have remained stubbornly high through some of the best economic times Australia has experienced.
It’s further evidence that the problems of jobless families and job poor communities won’t be overcome by economic growth alone.
In terms of working age people heavily reliant on income support – again, while numbers have declined overall – there remain major challenges in supporting key groups into work.
Between 1996 and 2007 the number of people receiving the Disability Support Pension actually increased from 500,000 to more than 700,000 – greater growth than in any other pension category.
It’s estimated that 20 per cent of this total – 140,000 people – are thought to be capable of work, but we’ve failed to reach them.
And as for those vulnerable communities that stood to benefit most from the roll-out of the McClure Report’s recommendations, it’s Mission Australia’s experience that we’re a still a long way off from achieving its lofty goals of social and economic transformation.
Despite a strong start, the previous government’s approach to welfare reform was unbalanced and lacked coordination and integration. Ten years on we’ve failed to reap its full benefits and in some cases have gone backwards.
The current administration has the opportunity – particularly through its social inclusion agenda and the Henry Tax Review – to finish the job.
Among other things, that means simplifying the overly complex benefits system and introducing a single income support payment with a needs-based ‘add on’ bonus according to individual or family circumstances.
It also means removing remaining barriers to participation – such as the disincentives that exist in the current tax system for welfare recipients seeking to return to work.
We must tackle effective marginal tax rates so when an individual moves from welfare to employment they don’t suffer the double hit of income tax and a dramatic reduction in benefits.
As the majority of disadvantaged Australians are moving from income support to low paying jobs, the combination of income tax and a reduction in benefits is crippling.
And we need the Rudd Government to deliver its disability employment strategy.
While completing these reforms will be challenging and costly they will ultimately benefit us all via greater economic and social participation.
But if we don’t find the political will to see them through the gap between the job rich and job poor will become ever wider, condemning our most vulnerable communities to sclerotic levels of disadvantage.
Toby Hall, CEO, Mission Australia
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