Ideas@TheCentre
Welfare reforms show glimmer of hope
Over the past few decades, a bipartisan consensus has emerged about the need to reduce the number of working age Australians reliant on welfare. While the aging population means that large-scale welfare programs will become increasingly unsustainable, there is also a growing appreciation of the pernicious effects of long-term welfare dependence on individuals and communities.
In 2006, the Howard government introduced ‘Welfare to Work’: a reform package that tightened eligibility for Disability Support Pension and Parenting Payment (mostly single mothers or women whose partners are not working). The reforms, which had been advocated by the CIS, required Parenting Payment recipients to look for part-time work once their children reached school age. Disability Support Pensioners who were able to work at least 15 hours a week were compelled to look for a part-time job.
These were significant reforms. They were also controversial, with some commentators suggesting that they contributed to the Howard government’s 2007 election defeat. Yet, there has been no evaluation or analysis of their impact published by either the Howard or Rudd governments.
The CIS this week released its own evaluation by piecing together data from various government sources. The results are quite astonishing.
Since the reforms were introduced, the number of people claiming Parenting Payment has dropped by around 20%: a fall of more than 100,000 people. This happened at the same time that unemployment was dropping, suggesting that rather than simply leaving Parenting Payment for unemployment benefits, many recipients left welfare altogether.
The remarkable success of the Parenting Payment reforms is however tempered by the relative lack of progress in reducing Disability Support Pension numbers.
Since the reforms were introduced, the number of people claiming Disability Support Pension has increased by more than 4%: an extra 35,000 people. There are now 750,000 people claiming DSP. While we don’t know the counterfactual—perhaps the number would have increased even more in the absence of any reform—it is clear that if DSP numbers are to be significantly reduced, more needs to be done.
Jessica Brown is a Policy Analyst at The Centre for Independent Studies, which published her report What's Next for Welfare-to-Work this week.
