Welfare review


Current Issues

Welfare review

E-Brief: Online Only issued September 2000

Peter Yeend, Analysis and Policy
Social Policy Group

What is in this e-brief

This e-brief aims to provide background information on the Welfare Review announced in September 1999 and to provide links to relevant documents and sites on the Internet. As part of this background it includes an outline of changes to welfare since 1996 and also a brief history of welfare reviews conducted in Australia.

Welfare Review

Governments welfare review announced

On 29 September 1999, the Minister for Family and Community Services Senator the Hon. Jocelyn Newman announced, at an address to the National Press Club, the government's intention to conduct a welfare review.

Welfare principles

In announcing the review, the government outlined a set of welfare principles which should be the aim of reform. They were:

  • Maintain equity, simplicity, transparency and sustainability;
  • Establish better incentives for people receiving social security payments, so that work, education and training are rewarded;
  • Create greater opportunities for people to increase self-reliance and capacity-building, rather than merely providing a passive safety net;
  • Expect people on income support to help themselves and contribute to society through increased social and economic participation in a framework of Mutual Obligation;
  • Provide choices and support for individuals and families with more tailored assistance that focuses on prevention and early intervention; and finally;
  • Maintain the Government's disciplined approach to fiscal policy.

Issues and problems for the Welfare Review

The Minister's comments on specific issues and problems included:

  • Some parts of the welfare system still create work and saving disincentives.
  • More can be done to emphasise individual responsibility.
  • The system does too little to prevent the problems resulting in people needing to go on payments.
  • More needs to be done to help people improve their capacity to move off payments.
  • The number of children in workless families is disturbingly high.
  • We are starting to see the transfer of welfare dependency across generations.
  • There are examples around Australia where, notwithstanding that there are job vacancies, certain members of the community are not only prepared, but feel entitled to exploit the social safety net.
  • The labour market marginalisation of older unemployed and people with disabilities are issues needing to be addressed.
  • The increasing dependence of both sole-parent and low-income dual parent families on parenting allowance, rather than self-provision through employment is a matter of concern.

Welfare Review timetable

The high-level Reference Group was established on 29 September 1999 and it presented an interim findings report in early 2000. The Reference Group provided a final Green Paper to the Minister on 17 August 2000. The Green Paper is to form the basis of a comprehensive welfare reform submission to be presented to Cabinet before the end of 2000.

Welfare Reform Internet site

The government has established a Welfare Review information site within the general Department of Family and Community Services home page.

Information available on the Welfare Reform Internet site includes:

Composition of the high-level Reference Group

The high-level Reference Group formed to put together the Green Paper on Welfare Reform is comprised of:

  • Mr Patrick McClure (Chair), Chief Executive Officer - Mission Australi
  • Mr Wayne Jackson (Deputy Chair), Deputy Secretary - Department of Family and Community Services
  • Professor Peter Dawkins, Melbourne Institute of Applied Economic and Social Research - Melbourne University
  • Professor Mark Lyons, Social Economic Management School - Sydney University of Technology
  • Ms Jane Schwager, Chief Executive Officer - Benevolent Society of New South Wales
  • Mr Jim Longley, Chief Executive Officer - Anglican Retirement Villages
  • Ms Elizabeth Morgan, Social Policy Specialist - Morgan, Disney and Associates

Key submissions to the Welfare Review

Advertisements calling for public submissions were placed in the press in October 1999. Three hundred and sixty six were received. A list of public submissions, many available electronically, is available here. Submissions included:

Interim findings report - early in 2000

The interim report of the Reference Group for Welfare Reform was released in March 2000.

The interim report flagged several key aims and elements, which should be addressed in any welfare reform. These areas are:

  • Individualised service delivery
  • A simpler income support structure more responsive to individual needs
  • Incentives and targeted assistance to encourage and enable work participation
  • Social partnerships between government, businesses and communities
  • Mutual obligations consistent with community values and individual capacity

Responses to the Interim Report

Community organisations

  • Australian Council of Social Service (ACOSS)

Comments and statements by Political Parties

The Australian Labor Party

The Australian Democrats

Feature media articles and comments

Green Paper (McClure Report) released 16 August 2000

The Expert Reference Group Green Paper, the McClure Report was released on 16 August 2000.

Welfare changes by the current government since March 1996

Since coming to office in 1996, the Government has undertaken a considerable number of changes to existing income support and supplement programs. However, the majority of these changes have been relatively small. There have, however, been a couple of substantial rationalisations of program arrangements for specific sectors and these are outlined below.

Reforms to assistance for the unemployed

Youth allowance

The Youth Allowance (YA) was introduced from July 1998 and featured the rationalisation of income support arrangements for the young unemployed and students. The pre-existing AUSTUDY, Youth Training Allowance and Newstart Allowance programs for young people were rolled into the one YA program.

General eligibility and payability information about YA is available here.

The Job Network

The Job Network was introduced from May 1998. It featured a complete change to the employment placement assistance arrangements for the unemployed and replaced the arrangements that had been in existence under the previous government's Working Nation arrangements.

General information about the Job Network is available here.

Mutual Obligation and Work for the Dole

One of the major new welfare initiatives for jobseekers introduced by the current government has been the development of Mutual Obligation (MO), featuring the Work for the Dole Program (WFTD).

Mutual Obligation is based on the proposition that unemployed job seekers supported financially by the community should:

  • actively seek work
  • constantly strive to improve their competitiveness in the labour market
  • give something back to the community that supports them

The objective of Mutual Obligation is to encourage greater self-reliance and motivation in job seekers by encouraging them to take responsibility for and to be more focussed on, their job search and preparing for work activities.

Job seekers are required to take part in a Mutual Obligation activity if they are:

  • 18 - 24 years old and have been getting Newstart or Youth Allowance for six months; or
  • 25 - 34 years old and have been getting Newstart Allowance for 12 months.

WFTD is a Commonwealth Government funded programme that provides work experience opportunities and activities for eligible job seekers. WFTD Dole enables some unemployed people to satisfy their mutual obligation requirement to give something to the community in return for their unemployment payments.

Reforms to assistance for families

As a part of the compensation to low-income families for the introduction of the 10% Goods and Services Tax (GST), reforms to family assistance were introduced from 1 July 2000.

The new family assistance arrangements rationalised the low-income family assistance and tax transfers previously provided under both the social security and tax systems. Features of the new package are:

  • Family Tax Benefit - Part A provides age and income related payments for each dependent child in families with incomes up to about $77,000 per annum (for one child)
  • Family Tax Benefit - Part B provides a supplement, paid in addition to FTB-A, for single income families
  • Child-Care Benefit amalgamates the previous Child-Care Cash Rebate and the Child-Care Fee Relief and will provide income tested fee subsidies for those using a range of child-care services.
  • Maternity Allowance and Maternity Immunisation Allowance provides lump sum payments to parents after the birth and immunisation of each child for those who pass the Family Tax Benefit income test.

For general information about the new family assistance arrangements, see the Payments for Families section on the Family Assistance Office Internet site.

Welfare reviews and reforms - history

There have only been a few occasions in the history of welfare provision in Australia when full-scale reviews have been followed by comprehensive reforms. Most of the changes to welfare programs and systems have occurred on an ad-hoc and incremental basis.

Generally, welfare programs have evolved over time and have been replaced as successive governments have perceived different needs. The rarity of major reviews is somewhat surprising, given the longevity of the major programs: the old age and invalid pensions originating in 1908 and the unemployment and sickness benefit payments in 1944.

Much examination of welfare programs in the 1920s and the 1930s but very little development

While no substantive changes were made to the old age and invalid pensions of 1908 during the 1920s to the 1930s, there was considerable examination of the need for new payments during the period. It was not until later, when the Commonwealth gained access to revenue sources, especially income taxation, that it acquired the financial capacity to implement new welfare programs. Some of the highlights of the considerations undertaken in the 1920s and 1930s were:

  • In 1913 the Cook government considered contribution-based benefits.
  • In 1927 the Bruce-Page government established a Royal Commission to consider a child endowment.
  • In 1928 and also in 1938 legislation was introduced for some form of national insurance scheme, but in both cases nothing came to fruition.
  • In 1937-38 considerations and inquiries into a national insurance scheme for the unemployed.

1941 to 1946 - establishment of a national government provided social security system

The Menzies government introduced child endowment in 1941. The Chifley and Curtin governments added payments for unemployment, sickness benefits and also widows pensions from 1944.

Broadly, these new payments had their origins in the mass unemployment of the 1920s and 1930s. In the 1940s, there was a broad, nationally expressed desire for 'social security': a 'new order' to address the concerns arising from the lack of proper provision for those adversely affected by the mass unemployment of the 1920s/30s. The establishment of the Joint Parliamentary Committee on Social Security in 1941, which, remained in existence until the end of the seventeenth Parliament in 1946, reflected this concern. While not all of the new national social security programs of this period had their origins in the Committee, it provided a focus and forum for the expression of concerns, views, new ideas and also an impetus for new initiatives.

The 1950s to the 1970s – consolidation and incremental change

During the 1950s to the 1960s, there was very little substantive change to the welfare system or to programs. This period of stability was largely the result of a period of full-employment. Social change and increased unemployment stimulated a renewed look at income support from the mid 1970's.

1980s – the Social Security Review commences from 1986

The Social Security Review was established in February 1986 by the then Minister for Social Security, the Hon. Brian Howe, MP. The Review was funded for two years and was commissioned to develop a long-term perspective on priorities and, where needed, new directions for income security, focussing on three main areas:

  • income support for families with children
  • social security and workforce issues
  • income support for the aged

Review processes broadly followed the following steps

  • examination of the features and elements of current programs and outcomes
  • publication of discussion papers
  • community consultations
  • formulation of new policies, goals and programs
  • development of change proposals to and approval by government
  • where required, approval of any necessary legislation and/or regulation by the Parliament
  • development and introduction of new or revised programs

The Social Security Review covered all major aspects of social security policy and examined issues of equity, adequacy, simplicity, access, redistribution and transition to work. Six major issues papers were put forward and formed the basis for community consultations. A further 31 Research and Discussion papers were produced.

By late 1988 completed most of the Review's work had been completed and by the end of 1991 significant policy changes had been made across all the major programs examined.

1986 Social Security Review – what was the impact?

The Social Security Review led to substantive restructuring of the social security system, including the introduction of several new income support programs. Given the lead-time involved with any examination and development of welfare programs, many of the changes arising from the Review took several years.

Apart from the instigation of new programs, the Social Security Review had some broader and long-term direct and indirect impacts on social security and welfare delivery. Some of these were:

  • An increased awareness and emphasis on active elements within income support programs, mainly in terms of linking receipt of assistance to access to work assistance measures like training and job placement assistance, eg. Jobs, Education and Training (JET) for sole parents.
  • The need for guaranteed indexation of payments to cost of living increases. Virtually all payments are now indexed to the CPI.
  • On-going monitoring and evaluation of all payments to ensure proper targeting and delivery according to design and policy requirements. Evaluation of program outcomes has become the norm, especially in the context of program and policy evaluation and development. In 1988 the then government introduced a requirement that each program be subject to a major evaluation every three or five years.

1986 Social Security Review – new programs and changes to programs

The Social Security Review established a culture of and an acceptance of change. Modifications to programs were aimed at targeting and providing positive incentives to encourage work and reduce welfare dependence, especially long-term dependence. This was a significant shift from the proceeding years, when most of the main income support programs were not reviewed and remained unchanged. The starkest examples of this was the invalid pension program, which had been in existence since 1908, yet had remained largely unchanged until replaced by Disability Support Pension in November 1991.

Many of the changes to existing programs and new programs initiated from the mid-1980s to the mid-1990s can claim to have their origins wholly or partially in the Social Security Review. Some of the more significant changes that arose from the Social Security Review are set out below.

Retired age assistance 1994

The raising of the qualification age for women to access the age pension from 60 to 65, to take over 20 years, commencing from 1994. This acknowledged one of the consistent findings of the Social Security Review, that there was no longer any justification for gender based eligibility conditions for payments.

This raising of the qualification age for women had parallels with the cessation of access to the Widow B pension that commenced from July 1987.

Unemployment assistance

1986-87

A series of measures were introduced signifying a shift from passive to active assistance. Active assistance placed a far greater emphasis on work search efforts and requirements including:

  • compulsory registration with the Commonwealth Employment Service
  • compulsory personal lodgement of fortnightly income and work search effort forms
  • work intention questionnaires
  • compulsory interviews after 12 months receipt of payment
  • job departure certificates detailing reason/s for loss of employment

1988

Job search allowance replaced the unemployment benefit for 16-17 year olds, signifying a greater emphasis on education retention and work search efforts and requirements.

1989

The introduction of widowed person's allowance, for newly widowed people of either sex, partially removing the sex differentiation that had previously applied for widow's B pension.

The introduction of the Newstart allowance (replacing the unemployment benefit) for those unemployed for 12 months or more, a program which featured:

  • intensive interviews
  • referral to training and labour market programs
  • tougher work search effort requirements

1991

Income support for the unemployed was re-structured to feature:

  • Jobsearch allowance for 16-17 year olds was extended to all those unemployed for up to 12 months; and
  • Newstart allowance was paid to unemployed aged 18 or more and unemployed for 12 months or more.

1993

The income test free area for Jobsearch and Newstart allowance was raised from $30 to $50 per fortnight to encourage increased employment participation.

1994

A $200 education entry payment was introduced for the unemployed aged 16-17 and those unemployed for 12 months or more.

The Earnings Credit Scheme of up to $500 was introduced, to encourage increased employment participation.

Partner allowance was introduced for the unemployed partner of a Newstart allowance recipient, replacing the dependent partner allowance, as a move towards full independent payments for female partners.

Introduction of mature age allowance for older long-term unemployed with no recent attachment to the workforce and little prospect of re-attachment. It was payable to males between 60 and 64 (ie. below the aged pension age) and those unemployed for 12 months or more. Recipients were not required to look for work.

Disabled and the sick

1991

The Disability Reform Package was introduced which featured:

  • The replacement of the invalid pension with the disability support pension, entailing new qualification criteria placing more emphasis on work capacity rather than impairment or disability.
  • Sickness benefit replaced by the sickness allowance with a 2-year cap on payment duration, confining the payment to those temporarily incapacitated for work.
  • Specific funding for training and rehabilitation programs for those on the disability support pension and the sickness allowance, to encourage employment participation and the maximising of self-support from employment.

Commencing from 1991, a series of incremental enhancements and expansion of access to the carer pension and carer assistance generally.

Sole parents

1987

Dual eligibility to the pension and education assistance ceased and sole parent pensioners were eligible for the pensioner education supplement.

The maximum qualifying age for a dependent child was lowered from age 24 to 15.

Earnings Credit Scheme of up to $1,000 was introduced to encourage increased employment participation.

Fringe benefits were maintained for 3 months after income earned had exceeded the fringe benefit income test cut-off point, encouraging increased and continued employment participation.

1989

The introduction of the Jobs, Education and Training (JET) program providing:

  • funding for work assistance and educational programs
  • assistance with and referral to child care
  • education supplement for those undertaking study

JET was later expanded to widow pensioners, partner allowees and carers.

Assistance for families with children

1987

The introduction of the Family Allowance Supplement (FAS) from December 1987 replaced the Family Income Supplement (FIS). FAS, a non-taxable payment, featured far higher rates of payment and more generous means testing arrangements than FIS, so as to significantly expand access to low-income families. At the time it was the biggest single dollar increase ever made to child payments.

FAS was paid in addition to Family Allowance (FA), commonly referred to as the child endowment. FAS later absorbed the additional pension and benefit components, paid in respect of children had its evolution saw several name changes. These names included additional family payment and additional family allowance.

With the introduction of the current government's new family assistance arrangements, introduced from 1 July 2000, this payment is now paid in the form of the Family Tax Benefit Part-A.

The introduction of FAS in 1987 also featured the expansion of access to rent assistance (RA) for low-income working families paying private rent. Previously, only low-income families on a government income support payment (ie. pension or benefit), were able to access RA.

From November 1987, the Child Disability Allowance (CDA) replaced the Handicapped Child Allowance, featuring no income testing and the discontinued distinction between 'substantially' and 'severely handicapped'.

1988

From December 1988, all child-related payments were paid fortnightly as a single payment (not monthly as applied to some payments previously). The main child related payments then included were the basic family allowance, FAS, CDA, double orphan pension and multiple birth payments.

An assets test for FAS and income testing based on annual taxable income was also introduced.

1994

Home Child Care Allowance (HCCA) was introduced and largely replaced the dependent spouse tax rebate for those with children.

HCCA was paid fortnightly to the partner at home caring for the child, rather than as a lump sum tax return to the income earner at the end of the year or a fortnightly deduction in wages. HCCA was subsequently re-named the basic parenting payment.

Descriptions of the evolution and development of welfare programs in Australia

Several Parliamentary Library papers provide a more detailed history and chronology of the development of welfare assistance programs to specific groups. The papers are:

 

For copyright reasons some linked items are only available to Members of Parliament.

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