Welfare reform is back on the agenda in a big way – or so it seems.Prime Minister Julia Gillard recently stared down colleagues who wanted her to water down tougher penalties for unemployed people who failed to meet their job-seeking obligations.
And yesterday Opposition Leader Tony Abbott raised a number of proposals including getting rid of unemployment benefits in areas where work is plentiful.
All interesting stuff – but is it real welfare reform? Not by a long shot.
What we’re seeing here is the pretence of welfare reform. Action at the margins aimed at addressing some of the challenges facing the country in terms of workforce participation but nothing that will make a serious and long-lasting difference.
Australia needs root-and-branch welfare reform – reform that tackles the complexity of the income support system including how it interacts with the tax system, that reconsiders and possibly reinvents the nation’s approach to supporting disabled people, that takes a balanced approach to assisting long-term unemployed people into the workforce and doesn’t fall into the trap of ‘‘all stick and no carrot’’.
The last attempt at wholesale reform – on the back of the McClure Report 11 years ago – was ultimately shelved by the Howard government.
The reforms recommended by Patrick McClure, which aimed to leave no income support recipient worse off, were rejected in favour of a piecemeal approach that favoured penalties over incentives.
Eleven years on, we’re still wrestling with the same old issues.
Too many jobless families, too many people on disability support, too many long-term unemployed people wasting away without fulfilling their potential.
If there’s one set of statistics that exposes the ongoing failure of Australia’s welfare system it’s the extraordinary growth in the numbers of people receiving the Disability Support Pension (DSP) in the past 20 years.
In 1991 there were a little more than 300,000 DSP recipients. Twenty years later that number is rapidly approaching 800,000.
During that time Australia’s population grew by more than 30 per cent while disability pension numbers rose by more than 130 per cent.
As a recent report by the Whitlam Institute makes clear: ‘‘Over 56 per cent of people moving on the DSP have moved to this benefit from another income support payment – over 35 per cent from an unemployment benefit. They have moved from a benefit where the search for work is expected to one where it is not.’’
The numbers of people on the DSP are growing without check. More of the same isn’t going to address this problem and nor are simplistic suggestions to withdraw income support in regions where jobs like fruit picking are available.
What nobody wants to admit is that real welfare reform is expensive – hideously so – but then even more financially debilitating is letting the current situation continue.
But if we’re not in a position to fund these changes now – when Australia’s economy leads the world and we stand on the cusp of an extraordinary commodities boom – then when?
Many DSP recipients want to work. The keys to reaching these hundreds of thousands of people are to make sure they receive the training they need to fill vacancies in industries starved of employees; that they’re not financially worse off as they make the move to employment; and that they get the support they need for non-vocational issues.
In other words, we need to provide DSP recipients who are capable of work with a pathway to employment.
Part of the solution could be found in the area of social procurement – governments and businesses providing a social outcome when they buy a good or service.
There is plenty of scope for government to show leadership and provide thousands of employment and work experience opportunities for people locked out of the labour market by procuring goods or staff that deliver a social dividend.
Then there is the vexing issue of effective marginal tax rates – the perversity of people on low incomes facing higher tax rates than wealthy individuals as they move into the workforce simply because of the way the tax and income support systems interact.
How can we expect people on benefits to pursue work when they are slugged financially for their efforts? Where’s the incentive?
It’s not my desire to be uncharitable. I’m glad that welfare reform is being discussed. It recognises at least that our leaders are aware that there is a problem.
Much of what the Prime Minister and the Opposition Leader are talking about can be achieved through changes to the nation’s employment service system – that’s absolutely appropriate and sensible.
But let’s not pretend it’s real welfare reform.
Toby Hall is the Chief Executive Officer of Mission Australia
This piece was published in the National Times on 1 April 2011
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