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More questions than answers in ‘Welfare Review’

The interim report of the Review of Australia’s Welfare System headed by Patrick McClure was released for public comment on Sunday 29, June. The public consultation and submission process is open until Friday 8 August.

Submissions from the public and stakeholders that are made during the six week consultation period will inform the development of the Reference Group’s Final Report to the Minister for Social Services.

This extraordinarily brief consultation period will make it difficult to ensure that all voices with a stake in the welfare system are able to be heard. Many people and organisations have already warned that the process is being rushed given the wide ranging scope of the review and its potential outcomes.

It is also difficult to measure the impact the changes outlined in the recent federal budget will have on the some of the aspects of the McClure report. For instance, the report makes the case for building partnerships across the community sector and with employers to assist people move from welfare into work.

However the federal budget has begun dismantling some of the very structures that already exist to do this important work. Programs like Youth Connections have provided vulnerable young people with targeted assistance to remain engaged with school, training and work. Yet this successful program has been defunded from December and is just one of many similar assistance programs that were hit in the federal budget.

Given this, it is important that as many people and organisations take the opportunity to make a submission as is possible in the short time-frame

VCOSS encourages our members and the public to use the information we have compiled here to help guide their submission writing. We’ve also put together some quick tips below on writing a submission and getting the most out of the process, to assist people who may not be familiar with preparing a submission to government.

Overview of the McClure report

While the interim report contains no recommendations it does propose a range of significant possible changes to the way Australia’s welfare system currently operates.

The interim report suggests the 20 welfare payments and ~50 supplements available under the current system be reduced to four: the age pension, disability support pension, a tiered working age payment and a child payment. There would be fewer supplements and these would be targeted to address individual circumstances and needs, through rent assistance, a participation supplement and a mobility allowance.

The report recognises the inadequacy of current allowances such as Newstart and student payments like Austudy and Abstudy. It also acknowledges the significant gap between these payments and the age pension that has grown over recent decades. However the four-tiered structure proposed by McClure in this report differs markedly from the single payment benchmarked to living costs he proposed when tasked by the Howard Government with a similar review of welfare in 2001.

ACOSS, National Welfare Rights Network and others warn that this four-tier system would likely result in the retention of the current inequities in the system between students, the unemployed, those on the age pension and some families. Coupled with some of the punitive sanctions mooted in the report this could see large numbers of people at risk of being forced onto lower allowances with more rigid compliance measures in future.

Participation in employment should be a priority across the whole social support system… Arbitrary exemptions from participation requirements should be avoided… In a new system, requirements need to be backed up with appropriate and timely sanctions if expectations are not met.
A new system for better employment and social outcomes , pg 83 

McClure proposes reframing the social security system to place the transition into employment at the heart of most individuals’ interactions with the welfare system.

Moving people off the Disability Support Pension

One of the more contentious measures outlined is the proposal to limit access to the Disability Support Pension (DSP) to people who have a permanent impairment and no capacity to work. Currently there are over 800,000 people in Australia who receive the DSP. Around 31 per cent of DSP recipients have a psychological disability which limits their capacity to work.

Under the proposed changes, people currently on the DSP who have an episodic impairment, such as mental illness, would be moved onto the “tiered working age payment”, which would function much like Newstart. People with partial capacity to work or the prospect of being able to work at some time in the future would be obligated to actively seek work or be involved in some form of training, commensurate to their individual capacity.

Payments targeted at working age adults, including Newstart Allowance, Parenting Payment, and Austudy Payment could be combined into a single working age payment. This would be the payment for all adults who are expected to work now or in the future.
A new system for better employment and social outcomes, pg 50

The report acknowledges that there are currently significant barriers to employment for many people with a disability. It also says that employers need to do more to create job opportunities for people with disabilities and mentions a smattering of programs and employers that do so already. However it does not meaningfully address the pertinent question of where the hundreds of thousands of jobs for people currently on the DSP are going to come from.

As People With Disability Australia has noted, this country lags behind the rest of the developed world when it comes to creating genuine job opportunities for people with disability. The most recent OECD ranking placed Australia 21st out of 29 OECD countries for employment participation by people with disability, at around 40 per cent, compared with 80 per cent workforce participation for people living without a disability.

And, with 45 per cent of people with a disability living below the poverty line, Australia holds the dubious honour of having one of the worst rates of poverty for people with disability in the OECD. This central question of where the jobs are going to come from, what support programs are going to be put in place to help people with complex needs get ready for work and how people are going to find the jobs that are available are not dealt with in any substantive way in the report.

Expanding income management

The report proposes expanding income management “as a budgeting tool to build the capability of individuals and families by helping people stabilise their circumstances and better manage their income support payments to ensure essential needs are met”A new system for better employment and social outcomes, pg 83.

The report proclaims income management can be effective in helping people “stabilise their circumstances” and “build capabilities”. However there is little evidence to this effect. Indeed, the bulk of research and scholarly studies produced on income management find little or no evidence that it leads to widespread improvements in people’s lives or long-term changes in behaviour.

So far the trial of income management at sites around the country, including Shepparton in Victoria, has cost in the order of $1 billion over the past seven years.

Response of the community sector

ACOSS and the National Welfare Rights Network have welcomed aspects of the report – particularly the recognition of the inadequacy of the low rate of Newstart. Yet there is significant concern at other measures within the report, particularly forcing people off the DSP onto lower payments as well as the forecast expansion of punitive measures people receiving government payments will face.

Responding to the release of the report, ACOSS said that any “…reforms should ensure that no disadvantaged group is worse off, that payments are targeted to need and that the system supports employment participation.”

“The strengths of the report are its focus on reforming the whole payments system rather than changes at the margin, its recognition that payments for unemployed people and students and many sole parents are inadequate, and its emphasis on building bridges between income support and employment through employment services and social supports.”

“The Report’s main weaknesses are that it does not take payment simplification far enough and it takes activity requirements too far. It proposes to retain different levels of payment for pensions, unemployment and student payments regardless of financial need. It advocates new requirements for people receiving income support that go well beyond training and finding employment, including requirements for the care of children and management of their budgets. The use of income support as a form of social engineering is unnecessary, intrusive and wasteful.”

National Welfare Rights Network says the report contains some ideas worth pursuing, especially around the simplification of the welfare system for people who rely upon it. They have also warned the six week timeline for consultation is too short, particularly given many groups and organisations are dealing with the impact of the federal budget and tendering for ongoing funding.

“We welcome the need to provide improved and more effective employment assistance, and expand on wage subsidies and training assistance.  While big business clearly has a role to play, the report should make explicit that Government has the critical role as a major employer in the country.

“A system of top ups could bring benefits for some groups who miss out, such as the 130,000 people with disabilities on Newstart, but this idea needs careful consideration.  It could cause much more complexity in the system and be expensive to administer.

“Care must be taken in denying access to the Disability Support Pension for all but the most severely disabled because it is bound to cause extreme hardship and poverty, unless action is taken to ensure that what replaces DSP for such people is at least equivalent to the rate of DSP. We need to guarantee that the horrendous UK experience of disability support reform is not repeated here.

“The NDIS & DSP perform different functions, and McClure’s proposals will need careful consideration. The Productivity Commission noted that the DSP plays a different and critical role to the NDIS and we should continue to provide income support separate from disability care and support.

“It’s disappointing that expanding income management is being promoted as a solution to complex problems. $1 billion has been spent so far on income management, will little measurable benefit.”

Improving lives, or merely bottom lines?

Even the interim report’s author, Patrick McClure, acknowledges “people may not necessarily be better off” if the reforms are implemented as proposed. In this context it is concerning to see the financial imperatives of welfare reform overtake the potential individual and community capacity building and sustainability of a genuine social safety net that an open, consultative and people-centred approach could offer.

One of the central contentions of the report is that Australia’s welfare spending is expensive and unsustainable and that this is driving the need for the proposed reforms. The report states that in “2012–13, the Australian Government provided more than $110 billion in cash transfer payments”. Social Services Minister Kevin Andrews has repeatedly stated that the system is unsustainable, and some in the media have echoed these lines.

However the report itself notes: “the percentage of the working age population receiving income support peaked in 1997 at 24.9 per cent, before falling … to 16.7 per cent in 2013” – A new system for better employment and social outcomes, Appendix G, pg 162.

Percentage of working age australians recieving income support

Link to New Zealand reforms

The current round of welfare reform proposals echo much of what has been undertaken in New Zealand in recent years. New Zealand experts have criticised these reforms for creating an increasingly punitive welfare system that cares little for the needs of the people it is intended to serve. They point to the effective dismantling of key components of the social safety net as a warning to other countries, including Australia, not to copy their model of reform. Since the beginning of the reform process New Zealand has seen a 43 per cent growth in the number of people without adequate income support who are reliant on emergency relief payments to get by.

Quick tips on writing a submission

Submissions on the report can be made up until Friday 8 August.

Don’t be intimidated. People often feel that they are not qualified to comment via a public submission process unless they have a comprehensive knowledge of every aspect of the matter at hand.

However you views and experience matter. And you have the right to have your views heard by the Parliament. Public submissions on key pieces of policy and legislative change are an important mechanism to ensure our elected representatives are aware of the views of citizens and the will of the people in between elections.

A submission can be as formal and as detailed as a research report or as informal as a letter or an email. The important thing to capture is the essence of the impact on people and organisations that will be affected by the reforms as they are proposed.

Submissions will be made public on the Welfare Review website, unless the author indicates they want it to remain private.

The following resources and factsheets contain useful information that may help you in preparing a submission to the review.

Resources and fact sheets

Payment reform must reduce poverty complexity and exclusion from employment – ACOSS

National Welfare Rights Network responds to McClure report – National Welfare Rights Network

Facts about mental illness and the Disability Support Pension – Mental Health Council of Australia

Get real on jobs – PWD Australia

National Welfare Rights Network Factsheets

Back to basics: Simplifying Australia’s family payments system to tackle child poverty – ACOSS

Reduce poverty: Improve employment – ACOSS

Social security trends snapshot, April 2014 – ACOSS

Media reports

The Welfare System Ain’t Broke, So Why Fix It? – New Matilda

NFPs Call for Fair and Supported Welfare System – Pro Bono News

Mentally ill people could lose disability support in welfare overhaul – The Guardian

Welfare review flags simplifying payment, extending income management – ABC

Support agencies say coalition is rushing its overhaul of welfare system – The Guardian

Can you work? That’s all the Australian government wants to know – The Guardian

Psychiatrists warn of impact of welfare reforms on mentally ill – The Australian

Abbott government  unveils plan to restrict how young people spend dole – The Guardian