Opinion & Commentary
Cut wages and create jobs
The best way to move people off welfare and into jobs is to require them to work. Not everybody can or should be expected to work but many of the 1.7 million working-age adults claiming income support could, in principle, be working full or part-time.
Over the last 10 years or so, the number of claimants required to look for work has been increasing, although the majority are still exempt. When welfare claimants are told to look for work, policies need to be in place for those who, for one reason or another, fail to find it. This is the core reason why we need mutual obligation.
Mutual obligation activities, hopefully, contribute to the common good and should, if possible, enhance the skills and self-esteem of those who undertake them. But their key function is to ensure welfare claimants who fail to find work nevertheless do something in return for the income they receive.
Although mutual obligation is popular with the public, many welfare groups and social policy academics oppose the principle that people should do something in return for their benefits. They still hold to the idea that welfare should be unconditionally granted to anyone who needs it. Rather than openly resisting the policy, however, they have sought to undermine it.
They have tried to do this partly by weakening the penalties on claimants who fail to carry out the activities required of them and partly by replacing work-like activities with softer alternatives such as training, even though this rarely helps get people into work.
Through the Howard years, the Federal Government compromised with critics of mutual obligation without ever giving in to them. With the election of Kevin Rudd, however, the Government appears willing to cede most of what the critics want. The result will almost certainly be that welfare dependency will continue rising. For breaches of activity conditions will go unsanctioned and the incentive to get off welfare and find work will be weakened.
The Government should distance itself from those who seek to undermine conditional welfare and should rethink its current suite of proposals designed to weaken breaching penalties, roll back work for the dole and increase provision of training courses. Keeping people on welfare for long periods while they go through pointless courses will do nothing to reduce welfare dependency levels and will certainly not solve the nation's skills shortage.
It is not even compassionate. If we really want to improve the job prospects for hundreds of thousands of people now on welfare who could and should be working, the answer lies not in training but in lowering the price employers have to pay to hire low-skilled workers.
Professor Peter Saunders is social research director and distinguished fellow with the public policy think tank The Centre for Independent Studies.
