Final report into welfare reform

Caitilin Punshon
The welfare system in Australia has been under review. The final report of this review has been released. It makes many suggestions for changing the system. This includes reducing the number of payments. Eligibility rules will also change. Five payment types are recommended. They include a Carer Payment and a Supported Living Pension. There are some good ideas in the report. But not everyone receiving welfare needs more encouragement to find work. Often the problem is that there are not enough available and accessible jobs. It is now up to the Australian Government to decide what changes it will make to the welfare system.
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Caitilin Punshon on 12/03/2015
A form with a list of criteria including family income and housing expenses.
The eligibility criteria may change.

The eligibility rules may change.

The final report A New System for Better Employment and Social Outcomes by Patrick McClure has been released. Also known as the McClure Report, the review into welfare reform recommends making significant changes to Australia’s welfare system. This includes reducing the number of payments and adjusting their eligibility requirements. There is a total of 62 recommendations in the report. The Australian government has yet to make any policy decisions in response to these recommendations. However, people who receive welfare payments can expect that major change is on its way.

New types of payment

One of the key recommendations of this final report is the creation of a simpler system of welfare payments. The proposal is to have just five payment types instead of the 20 that exist today. Importantly, one of five recommended types is a Carer Payment. This was excluded from the list in the interim report (opens in a new window) that was delivered in July 2014. Following consultation, it has been added to this version of the report.

In addition to a Carer Payment, the report recommends that there be a Child and Youth Payment for parents or guardians of people under the age of 22. There will also be an Age Pension and a Supported Living Pension. The Supported Living Pension would be for people whose capacity to work is permanently or severely restricted. According to the recommendations, ‘permanently’ means for at least five years. ‘Restricted’ means unable to work for more than eight hours a week. People receiving this pension will need to have their condition “fully diagnosed, treated and stabilised”. It is unclear how these terms will be defined or by whom.

The remaining payment type is a Working Age Payment. The report recommends this be offered in tiers that reflect an individual’s capacity to work. The upper tier would be available to people who could work for eight to fifteen hours a week. The middle tier is for those who can work between 15 and 29 hours a week. People with full capacity to work or study would be eligible for the foundation tier.

The report repeatedly states that “Nobody moving from the old system to the new system should have a reduction in their rate of payment”. However, it remains to be seen if this will be the case.

Some positive ideas

It is understandable that people may be worried about proposed changes to the welfare system. Yet there are some positive ideas in this report. Among these is the Passport to Work. This is an individualised guide that will explain what happens to income support payments if a person’s employment situation changes. There are also a number of measures aimed at easing the transition from welfare to work. This includes allowing people to keep their concession cards for a significant period of time after they find a job.

Some problems too

Parts of this report will of course raise concern. One of the biggest problems is its assumption that people receiving welfare payments are not given enough encouragement to work.  This perhaps misses the point. Many, if not most, people who receive income support would much prefer to be earning money from having a job. Yet the reality is that such jobs are not always available. Nor are they always accessible. The idea of designing a welfare system that encourages workforce participation is fine in itself. But unless jobs exist and can accommodate people’s diverse circumstances, the system will not work.

A Jobs Plan is recommended to help deal with this issue. This will involve initiatives aimed at increasing workforce participation for “disadvantaged people”. These initiatives include things like government employment targets and wage subsidies. It sounds like a good idea. But programs like this have been tried before. It will be interesting to see what is different this time.

The report also emphasises principles like self-reliance, participation and working to one’s capacity. All of these are admirable. But people still sometimes need support in order to reach these ideals. A level of individual effort is undeniably required. But the whole community needs to be willing to contribute to achieving this too.

Where to from here?

For all its recommendations, the final report into welfare reform does not contain a great amount of detail. It offers lots of ideas but is not clear how – and even if – any of these will actually work. It is now up to the government to consider the report’s recommendations. Some decisions will most likely be announced in the 2015-2016 Federal Budget in May. People receiving welfare payments will have to wait until then to see what happens next.

 A New System for Better Employment and Social Outcomes (opens in a new window)

Easy English version of the executive summary (opens in a new window)


Readers comments (3)

Considering the government tried/is still trying to make the unemployed under 30 wait six months before they can get newstart, and then they only receive it for six months before they are knocked off for another six months, I dread what they might cherry pick out of the McClure report. I think this whole exercise is not to help those on welfare, it is just to save money so the wealthy can continue to use dodge paying taxes by using negative gearing and superannuation tax breaks. There will be many people on the DSP who will have trouble proving that their disability won't improve over five years. And they will probably have to rely on less money to pay for all the costs related to their disability.

Thanks for your comment, Graham. As you observed, there are many concerns about how the recommendations of this report will be both interpreted and implemented. There's a long way to go before this all becomes clear. My hope is that people will not worry unnecessarily about what may be coming, but I do think anyone currently receiving a welfare payment needs to be aware that things are going to change. Whether those changes are positive or negative for any individual remains to be seen.

After reading the report and trying to make the government aware of my concerns I was sent a letter that clearly stated that all that mattered was getting people off welfare, off DSP and into paid work. This is what the current government is working towards.
No where have they stated how this will be achieved. The only answers I get from them are about how I have a responsibility to work. Doesn't matter how those 8 hours are made up. Doesn't take into account the difficulties in finding suitable work around my disability or how an employer would be able to help me to work.
The reality is many people are unsuitable for work, regardless of how much we would love too. We would be a drain on any employer but this doesn't matter to the government, only the numbers on the page.
My view point was proven this week when a woman in her 60's needing a hip replacement, has chronic lung disease and cares for her disabled adult child received a letter from the government telling her they would find her work.
While the system needs to be changed for the better, this report does not give any insight on how it would be achieved and leaves those that read it bewildered and frightened.

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