Welfare set for $3.6bn overhaul

The Age
May 11, 2005

Sole parents and disabled people face tougher pension eligibility tests, Misha Schubert reports.

About 190,000 people will be pushed off welfare and into jobs over the next four years under a $3.6 billion overhaul of Australia's welfare system.

But taxpayers will still be paying for the changes - designed to cut the social security bill in future decades - for the next eight years.

Under the radical redesign, a $2 billion boost to rehabilitation, retraining and job-search support will sweeten tough new eligibility rules designed to slash the welfare rolls in coming years.

But many of those already on welfare will be shielded. More than 700,000 people who already claim the disability pension will be quarantined from harsher measures.

Another 115,000 people on parenting payments will be forced to look for a job once their youngest child turns six, but will keep their pensions if they cannot find work.

An estimated 32,000 sole parents and disabled people every year will be rejected for pensions under tougher work tests, leaving them $40 worse off every fortnight.

Justifying the new rules designed to slash the number of people qualifying for disability and parenting payments in future, the Howard Government insists it is no longer viable to exempt 2.6 million welfare recipients from work. "Notwithstanding very low levels of unemployment, too many Australians are dependent on welfare payments," the budget says. "A welfare system that focuses only on participation for those who can work full-time is no longer sustainable."

The new system will use a mix of carrots and sticks to lure people off welfare, but complicate many payments by creating two or three different sets of rules, depending on when someone applied for a pension. In the short term, it is not expected to increase the unemployment rate because many do not take full effect for at least 15 months.

The Government estimates that 18,000 fewer people will qualify for the disability support pension every year under the new rules, and 14,000 fewer will receive the parenting pension. Parents will be paid $432 a fortnight on the dole - instead of $476 on the pension - leaving them $44 worse off. Disabled people without children will get only $400 a fortnight - $77 less than the disability pension.

But tens of thousands of poor households will profit from the ambitious training and rehabilitation package, including pain management courses and personal support programs to get people "job-ready quickly".

An extra 20,000 disabled people are expected to seek job-search help over the next four years from specialist disability employment agencies, whose services will be uncapped for those facing harsher eligibility tests. Another 31,000 jobless people are predicted to enrol with Job Network agencies.

Disabled people also will be paid $100 a fortnight for taxis to job interviews or work.

Wage subsidies will be paid to companies for up to six months to hire older and long-term jobless people under a push to find them work. But those who fail to turn up for job interviews or look for enough jobs each fortnight face a faster suspension of their dole payments under a new penalty regime.

Mission Australia chief Patrick McClure, who oversaw a major review of welfare in 2000, said the plan would "advance the cause of welfare reform" but there was a lot more to be done.



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