the future of the australian welfare system

After Joe Hockey announced the Liberal Party’s budget plans for 2014, many people began to panic due to the proposed changes to Australia’s welfare system, in particular Newstart Allowance and the Disability Support Pension.

Just to confuse people even further, a report entitled A New System for Better Employment and Social Outcomes was released last week that details a significant overhaul of the entire welfare system as we know it.

This interim report on Australia’s welfare system was commissioned in December 2013 by Kevin Andrews, the Minister for Social Services. He appointed an independent reference group to conduct the review, with Patrick McClure (former head of St Vincent de Paul and Mission Australia charities) as Chairperson. It was written after taking stock of information from a number of reviews and public debates on welfare reform over the last decade, and has been released to the public so that they may receive feedback from the community over the course of six weeks, after which a final report will be written.

The report suggests ways in which, from the information that it has gathered, Australia’s welfare system may be better adapted to suit the current labour market and community expectations.

What has got people so worried?

Well, there’s the recommended changes to the DSP (Disability Support Pension). With the changes, only those with a permanent impairment would continue to receive the payment, while most people receiving the payment due to a partial impairment would be moved off the DSP and onto the new working age payment. The changes from the budget will still apply for the DSP, including certain recipients under 35 having to do compulsory work experience or education and training, and a review of those under 35 who accessed the payments under different rules in 2008 and 2011, who will then have their capacity reassessed against current tables (which is going to cost a fortune). The working age payment will be tiered depending on individual capacity for work. A higher rate of payment will be considered for partial disability. The way in which a person’s level of disability will be determined is not specified.

Then, there’s income management. For those unaware of what this means, essentially some welfare recipients, specifically young people, parents and ‘disadvantaged’ groups, would receive a percentage of their payments in the form of debit cards that could only be used for certain things, ie food and other essentials.

Welfare quarantining was actually introduced as part of the Northern Territory intervention by the Howard Government in 2007, who seemed to believe that all aboriginal people were dysfunctional and corrupt and wasted their welfare payments on drugs and alcohol. The BasicsCard was then given to 73 communities in the Northern Territory. Everyone on welfare HAD to have one, including war veterans. No joke. What actually happened was that people starved because the system was so flawed and communities too isolated, poverty rose, and overcrowding of urban towns became a problem.

Unfortunately, the Labor government continued such actions, and the BasicsCard was used repeatedly in welfare quarantining (almost exclusively on aboriginal people), even though there is no clear evidence that it actually works. The concept of income management and the use of a BasicsCard is invasive and only makes life harder for those people who are already the most vulnerable.

Do we actually need welfare reform? No. Certainly the current system needs some tweaking to be simpler to understand and meet individuals needs better, but a reform of the whole system is unnecessary. The number of Australians receiving welfare payments has dropped by almost a third in two decades. Australia is in fact working more. There is deficit because revenues are less than anticipated, rather than spending being too high.

The report itself states that it is an unwieldy system that with the years of incremental changes has become too complex, and is no longer in step with the labour market or the economy. This is true enough. However, the case for reform as stated in the report does not adequately justify the necessity of such a restructuring, and there is clear evidence to the contrary.

In regards to what this report actually means for the future of the welfare system and Australia, we will need to wait for the 6 weeks of community feedback to be over and the final report to be written. Until then nothing in this report is set in stone, although it is certainly no surprise that it is making people nervous if it is any indication of what may be in store.