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What's Next for Welfare to work? IA117
Mixed results leave room for more welfare reform
“There are more than 100,000 fewer recipients of Parenting Payment Single and Parenting Payment Partnered now than there were in 2006,” says a new report being released Thursday.
“But the number of people on Disability Support Pension has risen by about 35,000 during this time.”
In What’s Next for Welfare-to-Work, Jessica Brown finds that the results of the 2006 ‘Welfare to Work’ changes, which introduced a part-time work test for some Disability Support Pensioners and Parenting Payment recipients, are mixed.
“Nearly 750,000 people now rely on Disability Support Pension,” says Brown. “As the unemployment rate has dropped over the past decade, the number of people on Disability Support Pension has continued to increase. It is clearly a candidate for further reform.”
Almost one in six working-age Australians now rely on welfare for all or part of their income.
“Many Disability Support Pensioners are older, relatively unskilled people with work experience in industries where jobs are disappearing.”
“There is a real danger that a rise in unemployment will lead to an increase in long-term welfare dependence. This has been the experience of previous recessions.”
But reforming DSP won’t work if there aren’t enough suitable jobs available.
“If the government is serious about reducing long-term welfare dependence, it must consider a new strategic direction for unemployment and welfare policy that paves the way for greater low-skilled job creation.”
One solution is a system of ‘in work’ benefits that uses the tax-transfer system to top-up the disposable income of low-paid workers while letting the minimum wage fall, says Jessica Brown.
Policymakers should draw lessons from both the successes and failures of past welfare reform to ensure that any short term rise in unemployment is not the catalyst for an explosion in long-term welfare dependence.
Jessica Brown is a Policy Analyst at the Centre for Independent Studies. She is available for comment.
The embargoed report is available at http://www.cis.org.au/issue_analysis/IA117/IA117.pdf.
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