THE objectives of welfare reform are to provide opportunities for people to participate in the economy through education, training and jobs, and to cut unemployment and a reliance on income support.

Real reform is always a balancing act between carrots (investment in training and incentives for individuals and employers) and sticks (obligations on individuals). The present income support system is complex, with many anomalies and disincentives to work. One of the hurdles to participation is the difference in payment levels between pensions and allowances.

For example, an individual on disability support pension receives $364 a week (including a pension supplement) compared with an unemployed person on Newstart allowance who receives $237.  

This is a difference of about $130 and a real disincentive for an individual to move from a pension into work. If the job fails, the individual goes back on to an allowance and is $130 a week worse off.


At present there are 800,000 people on the disability support pension. Of this group about 30 per cent have a muscular-skeletal impairment and possibly could still do part-time work.

The welfare-to-work initiative under the Howard government in 2005 tightened up eligibility criteria for the disability pension.

Individuals are now assessed as having severe physical, intellectual or physical impairments, based on an impairment table where they need to score 20 points or more; as well as being unable to work for 15 hours a week for the next two years.

Since then 90,000 applicants for the pension have been rejected and moved to Newstart allowance.  

To get more people with disability into work requires customised assistance. This means wage subsidies and sometimes workplace modifications.

Disability employment service providers also need to convince employers they are good employees and not a workers compensation risk.

A key recommendation of my reference group on welfare reform in 2000 was for a single, integrated payment to be introduced through time; in other words, to bring together the payment levels of pensions and allowances.

This addresses the problems of disincentive to work and the complexity of payments. The Howard government did not implement it. The cost was estimated to be $500 million.

It is interesting that 10 years later the Cameron government in Britain and the Key government in New Zealand have introduced legislation to develop a single integrated payment level. This is at a time of fiscal constraint in both countries.

The Henry report in Australia last year also recommended that the payment levels of pensions and allowances be brought together through time.

In Australia this would mean that we would have a standard base-rate payment, with add-on modules for the costs of disability, children and housing as well as a participation supplement to cover the cost of job search.

The question then arises: at what level do you set the base payment. I recommend setting it at a mid-point between the present pension and allowance levels. This would apply for all new applicants who are entering the income support system.

Another group that requires special attention are mature-aged workers over 50. This group is often discouraged in their job search because of their age and lack of skills. Yet many want to continue to work part time.

They often have insufficient superannuation savings. The average 50-year-old man at present has $135,000 in superannuation; a woman, $85,000.  

There is a need to provide training subsidies for these individuals to re-skill and remain in the workforce rather than to go on to a pension or allowance. There also needs to be incentives for employers to give them a job.

Some want to start their own business. They need to be able to access programs such as the new enterprise incentive scheme. NEIS participants are taught a Certificate 4 in business administration and learn practical business skills in finances, marketing, administration and business planning. They are mentored by local businesspeople after they set up their business. NEIS has an 80 per cent success rate.

The above initiatives are examples of real welfare reform, a balance between investment in training and incentives, as well as obligations on individuals.

They are in contrast to the present welfare debate by government and opposition that is tinkering around the edges of welfare reform.

Extending work for the dole, which is a very basic work experience program, is already available to jobseekers.

The income management initiatives in the Northern Territory make sense if they protect women and children. They involve quarantining 50 per cent of income support for spending on food, housing and life necessities.

It is a good outcome if it makes children's lives healthier and enables them to attend school.

I cannot see how extending income management to single unemployed individuals will enable them to access training and find jobs.  

The current base No-Start rate should, no, MUST be raised to
the SAME level as the CURRENT base pension rate.

With the extra modules mentioned to be available to BOTH
pensioners AND the unemployed AS REQUIRED.

To set the rate mid-way between the current levels
would NOT help the unemployed in real terms, and
would penalise pensioners unfairly.