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Social Policy

Which areas of welfare are in most need of reform?

25 Aug 2014, by Informa Insights

WelfareAustralia’s welfare system is a complex framework of income support payments and supplements, which is aimed at helping the population in times of need.

The Reference Group on Welfare Reform (RGWR) said the the Department of Social Service’s cash transfer payments to individuals and families are the largest component of the nation’s social support system, totalling approximately $100 billion in 2012-13.

However, the RGWR has called the current state of the welfare system into question, claiming that changes over the years have caused “unintended complexities, inconsistencies and disincentives for some people to work”.

In a June 29 report, titled ‘A New System for Better Employment and Social Outcomes’, the group outlined several areas where the welfare system is failing to meet expectations.

According to the findings, a stronger employment focus is the key to improving the current situation. While adequate financial support should be provided, the report urged the government to simplify the system and encourage more people back into the workplace.

“Long-term reliance on income support increases the risks of poor health, low self-esteem and social isolation,” the document stated.

“It can also have intergenerational effects. Children who grow up in households with long periods on income support are more likely to have poor education, employment and social outcomes.”

The RGWR highlighted various demographics that are being poorly served by the current welfare system, particularly in terms of employment. These individuals, who are deemed “at risk” of becoming dependant on income support, included:

Young people

The report noted that the proportion of young adults without a job is significantly higher than the general unemployment rate.

This is despite the importance of full-time training, education and employment upon leaving school. The RGWR said a lack of skills and experience often means young people are more vulnerable while out of a job than those who have been in the workforce previously.

Figures showed 27 per cent of individuals aged between 17 and 24 were neither in work or education in 2011.

“These are people at heightened risk of unemployment and coming to rely on income support payments,” the RGWR said.

Indigenous Australians

Indigenous Australians continue to have disadvantages across a number of variables, including rates of employment.

Slightly over 40 per cent of people in this demographic aged between 20 and 64 were studying for or held a qualification gained outside of school. This compared with 64.6 per cent of non-Indigenous Australians.

“Around 10 per cent of working age income support recipients (excluding Disability Support Pension and Carer Payment) are Indigenous Australians, although they only comprise around 2.3 per cent of the working age population,” the report stated.

Parents receiving income support

According to the RGWR, many parents are eager to study and work despite receiving income support, as they are motivated to support themselves.

However, this transition can be particularly challenging for some mothers and fathers, with principal carer parents not required to find a job until their youngest child reaches six years of age.

“This can result in many years of being disconnected from the labour market, particularly if a parent has more than one child while receiving the payment,” the group explained.

Unemployment and low income can then have a knock-on effect for the child’s education, relationships and health.

What reforms are needed?

The RGWR report highlighted several reforms that the group believed would streamline the income support system and provide a more robust welfare framework overall.

These included:

• Strengthening individual and family capabilities
• Making the income support system simpler and more sustainable
• Building community capacity
• Encouraging employers to engage

The RGWR confirmed these reforms must take into account several recent developments in the welfare system, including the expansion of paid parental leave and the National Disability Insurance Scheme.


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