Treasury’s brief to the incoming government calls for broad-scale welfare reform, among other cost-cutting measures. But welfare groups say the reforms outlined in the so-called Red Book are ineffective and risk discriminating against some of the most marginal people in the community.

National Director of Uniting Care Australia, Susan Helyar, says it’s time to break away from welfare reform orthodoxy and deliver adequate payments and effective services if government is serious about reducing individual reliance on welfare and increasing overall labour force participation.

“There has been no substantial change in the level of long-term unemployment in the last 15 years and this is because we’re using the wrong approach to welfare changes,” she said.

The Red Book — prepared by Treasury for the incoming government — does call for an increase in payment rates to people receiving Newstart Allowance and student benefits, but says these increases should be offset by tightened eligibility criteria for the disability support pension.

Australian Council of Social Service CEO Dr Cassandra Goldie points to several other government-funded schemes that are plagued by inadequacies and perverse incentives, highlighting the distinction between tax incentives and welfare payments.

“On the expenditure side, there are a number of schemes which are poorly targeted, including the health insurance rebate, the Medicare safety net scheme, and the childcare tax rebate. These schemes disproportionately benefit higher income earners. They also generate inflation in service costs, which in turn disadvantages low and middle income earners,” she told Crikey.

ACOSS is also alarmed by the Department’s call to encourage a “user pays” approach to health and aged care delivery in order to reduce costs. “This seems to us to be the wrong approach,” Dr Goldie said.

“Australians should expect governments to provide or fund essential services such as these. But they will only be able to do so if more public revenue is available or less is wastefully spent in other areas.”

Finance has also called for a reduction in the tax rate paid by individuals on welfare payments transitioning to work, a point both ACOSS and UCA are in agreement on. The report notes: “Low income families face particularly high effective marginal tax rates (EMRT), yet they are the ones who would benefit most from an increased participation through higher incomes, lifetime earning and, most importantly, breaking the cycle of inter-generational disadvantage.”

Pointing to the Jeff Halmer Pension Review published in 2009, Susan Helyar has called on a similarly broad and in-depth inquiry into the welfare system.

“We haven’t seen that level of comprehension in this debate. The debate going on at the moment is narrow, shallow and not representative of the real problems,” she said.

“We want to reduce the disparity in payments and increase incentives for people to work, but this problem won’t be fixed by bashing people over the head with a financial stick.”

Peter Fray

Fetch your first 12 weeks for $12

Here at Crikey, we saw a mighty surge in subscribers throughout 2020. Your support has been nothing short of amazing — we couldn’t have got through this year like no other without you, our readers.

If you haven’t joined us yet, fetch your first 12 weeks for $12 and start 2021 with the journalism you need to navigate whatever lies ahead.

Peter Fray
Editor-in-chief of Crikey

JOIN NOW