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NFPs React to McClure Welfare Review

25 February 2015 at 2:17 pm
Xavier Smerdon
The Federal Government has released the long-awaited final report of the review of Australia’s welfare system including controversial recommendations around Disability Support Pensions which has had a mixed reaction from the Not for Profit sector.

Xavier Smerdon | 25 February 2015 at 2:17 pm


NFPs React to McClure Welfare Review
25 February 2015 at 2:17 pm

The Federal Government has released the long-awaited final report of the review of Australia’s welfare system including controversial recommendations around Disability Support Pensions which has had a mixed reaction from the Not for Profit sector.

The report recommends a new disability payment which would be restricted to people unable to work more than eight hours a week.

The welfare review, conducted by former Mission Australia chief Patrick McClure, proposes a number of recommendations on ways to streamline Australia’s $150 billion welfare system including a move to reduce the current complicated system of Government payments from 20 to just five areas of assistance.

It recommends major changes to the Disability Support Pension, including moving those who have conditions that may improve over time or respond to treatment on to means-tested payments if they have some capacity to work.

McClure proposes that the Disability Support Pension would also be renamed the Supported Living Pension and recipients would need to prove their disability is expected to last for more than five years.

The review found that more than 50 per cent of people currently receiving the payment have conditions that could improve over time, including psychological and psychiatric conditions and musculoskeletal and connective tissue problems, which may not prevent them working in the future.

McClure said overall a  much greater focus on employment is needed.

“People who can work should work to their capacity and rates of payment should reflect different capacities to work and support a transition to work,” McClure said.

“People with very limited capacity to work should receive a payment that reflects that they are likely to be receiving income support indefinitely with little capacity to supplement payments through work.”

Another recommendation is that young people would not be eligible for support until the age of 22.

However the report said that no one would be worse off under the new system.

Federal Social Services Minister Scott Morrison told the National Press the Government would consider the report but the aim of the recommendations was to make the welfare system simple and targeted.

He said there were three areas he would prioritise as a result of the report – getting families back into work and the issues of child care, the need to get young people back to work using novel approaches to achieve that, and the issue of aging – encouraging Australians to stay in the workforce longer.

“These changes cannot happen overnight and many will require a different pace for change but we must commit to them now,” Morrison said.

“It’s about not leaving the next generation worse off.”

People with Disability Australia (PWDA) cautiously welcomed some key recommendations of the report while expressing concerns about eligibility rules that could see claimants needing to show they cannot work more than eight hours a week with incapacity expected to last at least five years.

PWDA urged the Government not to “cherry-pick” the report by adopting recommendations which relate to income support savings and ignoring those which relate to building a disability and mental health jobs plan.

“This time the obligations must be mutual and the focus on incentives not penalties,” the Not for Profit said.

PWDA President Craig Wallace said, “We are pleased by the call for a Jobs Plan for people with disability and mental health conditions. This is something we have recommended for some time. The outlines of this Jobs Plan – subsidies, targets, incentives and attitudinal change – seem practical and sensible.”

“We need to know the detail of the payment structure redesign, particularly the proposed Tiered Working Age Payment and the Supported Living Pension. Any redesign needs to ensure that people with disability are able to meet daily living costs, the extra costs of disability and support people to get jobs. Requiring claimants to show they cannot work more than eight hours a week is a very high bar especially in the current labour market.

“We do welcome the idea of a passport to work which could remove the fear involved in people taking up jobs by enabling them to return to their former income support arrangements and concessions if the job ends or the work hours reduce. This needs to be practical, not just a repackaging of existing arrangements

“While the report urges employment service providers, such as Jobs Services Australia and Disability Employment Services to achieve better skills and job matching, we think this sector needs root and branch reform such as unbundling of employment supports so we don’t have a Neolithic employment system alongside a modern NDIS.

“We also hold concerns about moving from income based housing rents to Rent Assistance in public housing, which may act as a disincentive to work, and the lack of independent income support for people under 22 years of age.”

Not for Profit Welfare peak body, ACOSS said the Review is an opportunity for the Government to reset its social security policies from the harsh payment cuts announced in the Federal Budget, and invest in policies that reduce poverty, improve fairness, and promote employment.

“Any reform must be complemented by increased support to assist people to find paid work, particularly people who are long-term unemployed, older people, single parents, carers and people with a disability,” CEO Cassandra Goldie said.

“In addition to the Minister’s commitment to an open dialogue on the Government’s reform process from here, we also need a conversation between community organisations, employment services, and employers, so that we can progress policy changes that will work to improve the job prospects of people disadvantaged in the labour market, and to provide adequate income support for those who need it.

“Ultimately the changes we make must simplify the system, improve payment adequacy, and support people into work, as well as to improve the fairness and equity of the system.”

Shadow Minister for Families and Disability, Jenny Macklin said Australians were rightly concerned the McClure Review would be used by the Abbott Government as justification for another round of “savage” cuts to vulnerable Australians.

“It looks almost certain that people with disability will be the big losers, as the Government moves to push them onto different levels of payments,” Macklin said.

“Scott Morrison must immediately rule out leaving any Australians worse off as a result of the McClure Review.

“He must also guarantee that there will be no cuts to payment rates or benefits that go to the most vulnerable Australians. And he must explain how the Abbott Government’s response to this review will tackle poverty, spread opportunity and provide support to people who need it.”

UnitingCare Australia said Australia needs a simpler, fairer and more adequate welfare system.

“The McClure recommendations may offer a way forward to achieve that,” Lin Hatfield Dodds, National Director of UnitingCare Australia said.

“We particularly welcome attention being given to the adequacy of payments people receive.”

“For many years, income support payments have been inadequate. This has made it extremely difficult for vulnerable Australians to maintain a decent standard of life.

“Providing adequate payments is at the centre of an effective welfare system. People who rely on income support, need payments that are reflective of community living standards, allowing them to cover their basic needs and participate in the community. It is crucial that payments are adjusted over time to maintain adequacy. Adjusting payments through the use of an expert panel every four years and a six-monthly adjustment according to an index like the Consumer Price Index would be very welcome.

“We need to ensure our welfare system provides people with a genuinely secure safety net and the supports required to address the challenges they face. A strong and reliable welfare system that supports those who need it is a key part of a healthy society.”

Patrick McClure also included a discussion on the role of Civil Society in his review.

“Philanthropy is a key driver of civil society and some $11 billion is received by civil society per annum in Australia. However, there is little benefit in increasing philanthropy if funds are not directed effectively,” he said.

“There should be the development of an efficient capital market for social purpose to facilitate strategic investments and ensure clear outcomes.

“A social purpose capital market should facilitate investments with a social impact through Social Impact Bonds, an investment model whereby government pays for agreed social outcomes that result in better outcomes for individuals and families and a longer term saving to Government.

“Social enterprises are another means to build community capacity. These organisations are led by an economic, social, cultural or environmental mission consistent with a public or community benefit. Australia would benefit from a long term strategy to support social enterprise development.

“Civil society also offers opportunities for unemployed volunteers to work alongside their employed counterparts to allow for mutual learning and the forging of networks that can lead to future employment.

“Social participation involved in volunteering is beneficial for the individuals involved and the community as a whole.”

Some of the major recommendations include:

  • Implement a new architecture for the income support system that is employment focused.

  • A Supported Living Pension—a means tested payment for individuals over 22 who are permanently and severely restricted in their capacity to work.

  • A Child and Youth Payment—a means tested payment paid to parents for dependent children and dependent young people, until the age of 22.

  • A Carer Payment—a means tested payment for individuals over 22 with caring responsibilities.

  • An Age Pension—a means tested payment for people over the Age Pension age.

  • Retain concession cards as a component of the social support system. Income support recipients and low income earners should receive concessions to assist with health costs and certain goods and services

  • The expert panel established to review community living standards should consider a wide range of relevant factors in providing its advice to Government on changes in community living standards.

  • The review should be undertaken at least every four years to determine whether payment levels are appropriate relative to community living standards. The review should be open, transparent and published.

  • Introduce a ‘Passport to Work’ for income support recipients—a set of personalised guidelines which describe how much better off people will be in work and reduce the fear of taking a job.

  • Review means testing in relation to the new payment architecture to ensure:

• income support payments are targeted to those most in need

• rewards for work are clear

• negative effects of means testing such as income test ‘stacking’ and ‘sudden death’ assets thresholds are minimised

• people with similar means and circumstances receive similar levels of income support.

  • Housing Assistance -Reduce disincentives to workforce participation by moving from income based rents in public housing and extending Commonwealth Rent Assistance to public housing tenants.

  • Develop Jobs Plans for groups at risk of poor employment outcomes as identified by the Australian investment approach.

The report can be downloaded from the DSS website HERE

Xavier Smerdon  |  Journalist  |  @XavierSmerdon

Xavier Smerdon is a journalist specialising in the Not for Profit sector. He writes breaking and investigative news articles.

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