The Welfare to Work package

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• The Welfare to Work package
• Peter DavidsonAustralian Social Policy
  Conference, July 2005

2
Assessing the Welfare to Work package

• Background to welfare changes Is there a
  crisis?
• Who are the target groups of the Welfare to Work
  package?
• Outline and assessment of the package
• rates of payment
• investment
• suspension regime

3
Reliance on social securityis low by
international standards
4
Reliance on social security has fallen as more
fulltime jobs were created
5
Productivity Commission predicts cost of payments
will fall in future
6
Existing workforce age payment recipients
7
Main target groups
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People with disability, sole parents and very
long term unemployed

• Around 60 of people with disability and jobless
  Parenting Payment recipients have year 10
  qualifications or less
• Their unemployment rates are about twice that of
  the general labour force
• 25 of PPS recipients suffer from depression
• Approx. 200,000 unemployed people have been on
  NSA/YA for over 2 years

9
Long term unemployed
10
Mutual Obligation? - Employers

• Employer resistance is probably main barrier to
  work for people with disability, mature age
  people and indigenous people
• But employers of people with disability often do
  face higher costs
• including workplace modifications, higher workers
  compo costs, need for greater supervision,
  support, or time off.

11
Outcomes from Job Network Customised assistance
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What questions did the Government ask when
formulating the package?

• - Which type of payment should people of
  workforce age receive? - What package of
  employment assistance is best for each type?
• OR
• What does each person need to assist them into a
  job and to avoid poverty in the meantime?

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An antiquated social security system

• Three categories of payment
• Pensions for those unable to work
• (lower) Newstart Allowance for those able to
  work
• (still lower) Austudy Payment for full time
  students

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Outline of Welfare Package

• Payments
• Cuts post July 2006 for
• New applicants for DSP able to work 15-30hrs
• Sole Parents whose youngest child is 6yrs
• Investment
• Modest investment in employment and other
  services
• Requirement and Penalties
• Extend activity requirements to target groups
• Shift to a suspension model of penalty

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Payments - Effect on future incomes
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Investment devil in the detail

• 1.5B investment over 3 years, but 0.5B saved
  from Job Network changes
• More places in Job Network, but harder to get
  Customised Assistance (net cost 0.1B)
• Modest expansion of other programs to overcome
  work barriers, e.g. Wage Assist, Open Employment
  (0.6B)
• Employer package (0.1B)
• Child Care (0.3B)

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Is there enough investment?

• Target groups
• Activity tested
• 180,000 jobless parents with older children
• 50,000 mature age
• 20,000 p.a. PWD moving onto Allowances
• 200,000 VLTU
• Not activity tested
• 650,000 jobless DSP recipients
• 200,000 jobless parents with younger children

• Extra assistance
• VET - 4,100 places p.a.
• Open Employment - 12,000 places p.a.
• Rehab - 17,000 places p.a.
• Wage Assist - 5,000 places p.a.
• PSP - 9,000 places p.a.

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Obligations and Penalties

• Obligations Newstart New world
• For sole parents with older children, people with
  disability able to work 15- 30 hours pw, and
  mature age
• Part time work and participate in programs
• Suspensions
• If client breaches activity requirement, payment
  suspended until they contact Centrelink
• If recipient had good reason payment is
  restored with full back pay
• If not, full back pay is not given.

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Conclusions

• The Welfare to work package will
• Assist a minority of new recipients in target
  groups into sustained employment
• Reduce the future incomes of most new recipients
  in target groups
• Increase work incentives for Newstart recipients
  but reduce them for those diverted to Newstart
  from pensions, and for existing DSP and PPS
  recipients
• Keep the social security system complex