" PATRICK McClure has delivered the most ambitious, courageous and transformative blueprint for welfare reform the nation has seen.
If adopted, these reforms have the potential to revolutionise the safety net and provide better incentives for work.
The welfare system has become unwieldy, ad hoc, inconsistent and fundamentally unfair. Countless reviews have warned successive governments that change is necessary but policy timidity and incrementalism have ruled.
The chief recommendation, a tiered working-age payment, would reflect the capacity of people to work now or in the future.
The Disability Support Pension would be provided only for people with a permanent impairment and no capacity to work.
This proposal is the most crucial. It would end the perverse incentive for people to get on to the DSP because it pays significantly more than Newstart. It would provide a payment that pays more than the dole but has as its ambition getting people real jobs.
The report’s conclusion that there is a significant and growing gap between pensions and allowances, resulting in people in similar circumstances being treated differently and creating a disincentive to work, has been the sleeper issue that must finally be tackled by a brave government.
In 2012-13, the federal government provided more than $110 billion in cash transfer payments and about $2.2bn for employment services. Despite this enormous cost, the system is complex and inefficient and is hard to understand and access.
The report finds that many different payments and supplements create confusion and result in people in similar situations receiving different levels of support, with different requirements for workforce participation.
It exposes the inconsistencies in means-testing across payment types, with parents often subject to several income tests at once.
It also finds that there are inconsistencies in payments to cover the costs of children at different stages and in different family circumstances, undermining the goal of supporting young people to gain an education and to prepare for the workforce.
A child-payment structure that could bring together family tax benefit, Youth Allowance, ABSTUDY and other payments for dependent children and young people has merit. But the devil will be in the detail. When the final review is delivered, the question will be whether the Abbott government will make the upfront investment necessary, including increasing some payment rates, in order to save taxpayers and deliver the country’s most disadvantaged the dignity of work.
Originally published as A cure for what ails welfare"
