What’s in store for Australia’s social security system?

adminSocial security rights review

As the community welfare sector continues to resist harsh budget measures and braces for even potentially harsher cuts to vital income support payments in the Mid-Year Economic Fiscal Outlook (MYEFO) statement, Patrick McClure has handed his report to the Government.

The final report was expected to be released in November.  The Minister, Kevin Andrews has stated that it will take at least two electoral terms to complete what would appear to be a radical overhaul of the welfare system.

The draft McClure report proposed a “simplification” of the social security system, reducing it to four main payments: a tiered working-age payment, a Disability Support Pension (DSP) (only for manifest disabilities), an Age Pension and a family payment.

The Minister appears to have scotched the idea of limiting any new structure to just four main payments, telling the media that his aim is to get the number of payments and supplements to around 25 or 30.

This latest response from the Minister is more in line with the suggestions made by the National Welfare Rights Network (NWRN) in its submission on the Interim Review. NWRN considered that there were too many risks with the model being proposed, that it would leave far too many people worse-off.

While the simplification of social security payments is important, it is nowhere near as critical as addressing the adequacy of income support payments and providing more effective employment assistance.

McClure has provided an insight to the shape of his report in a series of leaks and commentary pieces that have been published in various new outlets.

It is expected that the report will suggest extensive and far-reaching changes that will affect people on the DSP, and that the changes will focus on those with a mental illness. It is rumoured that the McClure Report will recommend that a “no disadvantage” clause will apply for a period, and that the majority of DSP recipients will be reclassified and required to undertake new job search obligations.

In the immediate period after the review, people’s higher payments would remain the same. The probability is, however, that over the longer-term some people currently on the DSP may be financially worse off.  It could also mean that we will have people with identical medical conditions and the same barriers to employment receiving different rates of payment.

With some people being paid under different rules, it is difficult to imagine that successive governments will resist the temptation (and potentially millions in savings) to push more and more people off the higher (and more costly payments) to a lower payment.

We have already seen this happen in 2013 for single parents who were “grandfathered” from detrimental changes made in 2006. It also happens currently for people with disability by tighter and tighter medical eligibility rules being put in place for access to the DSP.  People with disability who cannot find sustainable paid employment and cannot meet the eligibility criteria for DSP are left to languish on the manifestly inadequate Newstart Allowance.

Currently, the single Newstart Allowance is nearly $170 per week less than the pension. The DSP is $776.70 per fortnight plus the Pension Supplement is worth $34.10 a fortnight.

The McClure Report will be released against the backdrop of a relentless campaign from various quarters to paint Australia’s welfare system as “unsustainable”.  Some media outlets are routinely labelling people who claim or receive the DSP as “bludgers” and “rorters”.

Over the coming months, there will be intense speculation about welfare changes.  One thing, however, is sure: the social security “safety net” is under threat.  Any proposals must be carefully considered.  ACOSS research released on Sunday 12 October 2014 during Anti-Poverty Week highlighted that in the past 12 months, the number of people living in poverty has risen by over 250,000.