Peak welfare group urges reform

The Australian Council of Social Services has outlined its priorities for welfare reform - including a proposed minimum income guarantee and disability supplement. In its response to the government's welfare reform consultation process ACOSS said Australia's social security system, designed over 50 years ago, was riddled with anomalies and disincentives and not meeting the needs of today's individuals and families

ACOSS President, Andrew McCallum said the social security system should act as a safety net but also include a more balanced system of mutual obligation, where activity requirements are matched by employment and other supports as well as income support.

"Currently the system is a hodge-podge where people in similar circumstances receive different amounts via a complex series of separate payments, each with its own conditions, rates and eligibility requirements," Mr McCallum said.

"It's not surprising that many people fall between the cracks. We advocate the creation of a base rate of payment which provides a minimum income guarantee to people at risk of poverty.

"Under the ACOSS model, payment would be made according to people's needs rather than their payment type, and tests and requirements streamlined so that they are relevant to particular circumstances and capabilities.

"This will to ensure fairness and security for recipients in the application of any activity requirements, and that income tests are appropriate to different needs.

"The minimum income guarantee should be balanced by an employment assistance guarantee to provide positive assistance for disadvantaged job-seekers to help overcome substantial barriers to employment.

"This guarantee would be of particular benefit to long-term
unemployed people, people assessed as facing a high risk of long-term unemployment and people with a disability.

"It would be a combination of assistance such as wage subsidies, employment experience and training. The help offered to each job-seeker under the guarantee would be negotiated between them and an employment service provider.

"As part of the pathways from welfare to work we also propose the development of transitional plans that set out the Government's obligations as well as those applying to the recipient."

ACOSS's submission also includes recommendations for:

 Removing work disincentives (see table attached) by amalgamating Newstart Allowance for unemployed people with Austudy Payment for adult students into a new employment and skills payment;

 Assistance with the extra essential costs associated with disabilities (such as mobility and communications) through the development of a fortnightly non-taxable Costs of Disability Supplement.

 Reforms to ease the worst poverty traps such as easing taper rates and income test 'stacking' for families, which can result in withdrawal of up to 100% of extra income earned.

 Improving equity in educational opportunities for people eligible for workforce age payments by providing a lifetime entitlement to support them during a number of full-time equivalent years of study over the life course.

Mr McCallum warned that social security reform cannot realistically be expected to resolve the breadth of social and economic challenges facing contemporary Australia.

"However, the reform process should seek to ensure the system is designed to link with services and supports needed for individuals to participate in employment and in the community, to have a secure living environment, and to sustain important relationships throughout
life."

Two current Social Security anomalies:

Scenario 1

A single person, over 21 years of age with no children, on Disability Support Pension (DSP) starts looking for work, transferring from the pension to Newstart Allowance (per week amounts)

DSP $269.65

 Includes Rent Assistance $46.60

 Plus Pharmaceutical Allowance $2.90

 Plus withdrawal rate of 40 cents in every dollar over $120
per fortnight earned

Newstart $236.65 (loss $33)

 Includes Rent Assistance $46.60

 Plus mutual obligation requirements

 Plus fewer concessions

 Plus withdrawal rate of 50 cents in every dollar for
$62-$142 earned per fortnight; 70c in every dollar over $142 earned
per fortnight.

Scenario 2

An unemployed adult (25+, no children) undertakes full time study to improve their job prospects

Newstart $236.65 (per week)

 Includes Rent Assistance $46.60

Austudy $155.05 (loss $81.60)

 No Rent Assistance

(Rates at 1 July 2003)

August 2003 contents