Welfare Reform in a Tight Budget
11 May 2011 at 12:32 pm
The 2011 Federal Budget has a strong focus on moving people off welfare and into the workforce, through measures such as providing wage subsidies for the long-term unemployed and tightening the Disability Support Pension – however welfare groups have labeled the 'get tough' measures as counter-productive.
In his budget speech, Treasurer Wayne Swan says in a growing economy like Australia’s, having the fourth highest proportion of jobless families in the developed world cannot be justified.
To get more people into the workforce, Swan says the Government will cut effective tax rates for 50,000 single parents by up to 20 cents in the dollar, invest $80 million in their skills, and transition more parents with high school kids onto job search payments.
Tax breaks that encourage people without kids to stay at home will be removed, and the Dependant Spouse Tax Offset will be phased out.
Swan says the government will invest $233 million in new support programs and 35,000 wage subsidies to encourage employers to take on staff that have been out of the workforce for more than two years.
To slow the growth of the Disability Support Pensions, which is now provided to an estimated 800,000 Australians, Swan says the government will bring forward strict new work tests, update the definition of incapacity, introduce new requirements for younger recipients, provide more wage subsidies, and allow more hours to be worked before payments are suspended.
Swan says the Budget addresses entrenched disadvantage through the introduction of participation plans for teen parents, new requirements for jobless families, extending controversial income management programs, and development of new place?based programs to support local and regional employment.
The Budget includes a significant boost for mental health services, with $1.5 billion provided for new mental health initiatives that Swan says focus on support for the seriously ill.
$419 million will be invested in headspace – the youth focussed early-intervention mental health foundation – and Early Psychosis Prevention and Intervention Centres.
The Budget also includes funding to establish a new National Mental Health Commission that will drive future reforms.
National peak welfare body the Australian Council of Social Service welcomes what it says is a modest investment in wage subsidies for unemployed people and the easing of income tests to improve work incentives, but is critical of benefit cuts for sole parents and young people on New Start Allowance.
ACOSS CEO Dr Cassandra Goldie says while the budget holds promise – removing the barriers to paid employment for some Australians – the ‘get tough measures’ are unnecessary and will be counter-productive.
Dr Goldie says the Budget had to be tough on waste, not welfare, and therefore ACOSS is pleased to see measures on the healthcare rebate, the tightening of fringe benefit tax on company cars, the dependant spouse offset and the removal of the low income tax offset for investment income of children. She also says ACOSS is delighted with the National Mental Health Reform Package, an overdue step that should find broad support.
However she says the government has made a mistake by imposing ‘activity requirements’ on people on social security, which she says in many cases won’t help them into employment.
She says ACOSS is particularly concerned about the $56 per week reduction in payments for some groups of single parents with teenage children and the $43 per week reduction in payments for unemployed 21 year-olds.
In an article in the Sydney Morning Herald, journalist Adele Horin says the Budget’s ‘tough-love’ approach to welfare is a brave move, but warns that the right people need to get the toughness.
Horin says the changes to the Disability Support Pension means that for the first time disability pensioners aged under 35 with some capacity for even a day's work a week will be compelled to attend Centrelink interviews to prepare for their future. She says the new applicants will need to prove they have tried to find a job over the past 18 months.
She says never before has an Australian government required existing recipients of the disability pension to do anything to receive their benefit, and such a move has been considered political suicide.
She says the toughening of the disability support pension is a way of diverting thousands of people onto the cheaper, poverty-level Newstart Allowance.
At the moment, the maximum payout for a single person on the disability support pension is $670 per fortnight, compared to the $474.90 per fortnight for a single person with no children on Newstart.