Wednesday, April 20, 2011

Welfare Reform

Good article from my old Centrelink manager Patrick McClure. Unless we have radical welfare reform we are not going to get radical tax reform. Welfare is the main source of government expenditure. I support privatising much of the welfare state through personal savings and investments but we still need a safety net. Equalising payments would be a good step.

Equalise pension benefits

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........

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