The Welfare System Ain't Broke, So Why Fix It?


Nothing demonstrates the mean-spirited mentality of this government more than its obdurate desire, despite all the evidence, to “reform” Australia’s welfare state.

Does Australia’s welfare system need reforming? The available evidence says no. The federal government’s deficit has been driven by lower-than-expected revenues, rather than any blow out in spending. Australia runs quite a small government as a share of our overall economy. In comparison with other wealthy nations, we don’t tax very much, and we don’t spend very much either.

What about welfare payments themselves? Are they rising unsustainably? Is there a culture of entitlement in which more and more Australians are living on government benefits?

No, no, and no. The government’s own Review of Australia’s Welfare System, chaired by Patrick McClure, shows that Australia’s welfare state is shrinking. The proportion of ordinary Australians accessing government benefits has been falling for decades. According to the Interim Report, released over the weekend, “the percentage of the working age population receiving income support peaked in 1997 at 24.9 per cent, before falling … to 16.7 per cent in 2013.”

That’s a very significant fall. The proportion of Australians on welfare dropped by approximately a third in less than two decades. As a nation, we’re bludging less, and working more.

The federal government’s own Interim Report into Welfare Reform shows that the proportion of Australians accessing welfare benefits has been falling since 1997. Source: Department of Social Security.

None of this has deterred the Abbott Government, of course. Hell-bent on fixing what isn’t broken, Social Security Minister Kevin Andrews has been busy telling anyone who’ll listen that Australia needs to reform welfare.

On Sunday, for instance, he was on the Bolt Report telling viewers that the government was considering introducing income management for young unemployed people.

“We would say, you can have a debit card that precludes certain expenditure. It could, for example, preclude expenditure on alcohol. You get a card, go to the bottle shop and they say ‘sorry, transaction declined’,” he told Bolt. “The government believes that income management is important.”

Income management is another solution to a problem that doesn’t exist. There is little evidence that people on welfare are abusing their welfare payments, or squandering their income on drugs, alcohol or gambling. The vast proportion of welfare recipients use their payments for exactly what you’d expect: paying for life’s necessities, like food, clothing and shelter.

Especially shelter. As Bernard Keane pointed out yesterday in Crikey, the Interim Report is silent on the issue of affordable housing, surely one of the most pressing issues facing anyone in Australia with a low income. No amount of welfare “streamlining” will do anything to address the critical shortage of affordable rental housing, which in many Australian capital cities has reached crisis point.

Nor is there any good evidence that income management helps those being “managed.” When first trialled in the Northern Territory and Cape York, there was plenty of spin about the benefits it would bring in assisting Indigenous Australians to better budget and provide for themselves and their families. But the only decent study into the effects of income management in the Northern Territory found no evidence of this.

“There is little evidence to date that income management is resulting in widespread behaviour change, either with respect to building an ability to effectively manage money or in building ‘socially responsible behaviour’,” the report from the Australian National University found. “As such, the early indications are that income management operates more as a control or protective mechanism than as an intervention which increases capabilities.”

A separate study from the Menzies School of Health Research looking into spending patterns at remote groceries found “no beneficial effect on tobacco and cigarette sales, soft drink or fruit and vegetable sales” from income management. As this Parliamentary Library analysis on income management observes, “evidence for the success of income management of welfare payments is mixed; while some people report that it has improved their lives, there is little evidence that it is leading to widespread changes in behaviour.”

What does the government’s Interim Report on welfare reform say about such evidence? It completely misrepresents it. The Interim Report blithely asserts that “income management can be an effective tool in building community capacity, by contributing to, and encouraging adherence to, broad social norms as well as reducing community dysfunction.” It does this by fudging the evidence. While citing the ANU research in a section on income management, the Interim Report comprehensively ignores any of that study’s negative findings, and cherry-picks only the positive findings. The Menzies School report is not mentioned.

There are distortions and manipulations like this all over the Interim Report. Where the facts don’t fit the story the government wants to tell, those facts are manipulated, or left out altogether. It’s the sort of thing we’re getting used to from this government, which is consistently hostile to things like scientific evidence (see: climate change) or transparent communication (see: Operation Sovereign Borders).

You can’t get a better example of that than the fact that the government didn’t bother to wait for the findings of its welfare review before implementing the most sweeping changes to Australia’s welfare system in a generation, in the May budget.

If the government was really serious about welfare reform, it would have postponed radical changes such as forcing under 30’s off Newstart for six months until after Patrick McClure had completed his deliberations. Of course, nothing of the kind took place. No wonder the government is giving welfare groups only six weeks to respond to the recommendations of this report.

Some of those recommendations are pretty alarming. The Interim Report recommends moving people without a permanent disability off disability support and onto unemployment benefits. Almost certainly, that implies that they will then receive a lower rate of payment. Alarmingly, Minister Andrews has already signaled this could apply to the many hundreds of thousands of Australians currently receiving disability benefits who have a mental illness. Such a change is a recipe for misery, homelessness, and even violence.

Are there jobs for people with disabilities to move into? The Disability Discrimination Commissioner, Graham Innes, says there aren’t. “There aren't the jobs available for us to move into or we're not – those opportunities are not being created,” he told the ABC’s Lateline last night.

But the government won’t be listening to people like Graham Innes. His role as Disability Discrimination Commissioner was abolished in the May budget.

The tragedy of this review is that there are real opportunities to improve Australia’s welfare system, without throwing vulnerable citizens into poverty. Welfare in Australia is too complex. There are too many payments and supplements. It is undoubtedly true that ordinary citizens find it opaque and difficult to understand. Anyone who’s sat in a Centrelink for a few minutes can grasp this immediately.

A government that was determined to improve Australia’s welfare system would be prepared to guarantee that no Australian would be worse off, and that any changes would be introduced would be gradual, careful and conservative.

But after the May budget, no one can have any confidence that this government wishes to make welfare better for those receiving it. Every action from the government since taking office shows that it wants to make welfare harder to get, and mutual obligation less mutual.

Ben Eltham is New Matilda's National Affairs Correspondent.