Finance Finance News The government’s cutting corners in its welfare ‘revolution’

The government’s cutting corners in its welfare ‘revolution’

underemployment youth welfare reform
The government wants to break the cycle of intergenerational welfare. Photo: Getty
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The “revolutionary” welfare reform announced by social services minister Christian Porter on Tuesday is cost-effective in one respect – generating maximum media coverage from a small budget item.

The plan is to offer $96 million to “not-for-profit organisations, governments, social policy experts and industry to pitch their ideas” on how to reduce long-term welfare dependence in Australia.

That’s not a lot of money, considering the Turnbull government cut $152 million from the Higher Education Participation and Partnerships Program in May – a scheme which “aims to ensure that Australians from low SES backgrounds who have the ability to study at university have the opportunity to do so”.

That scheme is still funded to the tune of $553 million, but Mr Porter’s $96 million plan makes front page news because welfare is a key battleground between the left and right of politics.

welfare revolution Christian Porter
Social services minister Christian Porter is calling for ideas to reduce welfare dependence.

Revolutionary data

During his address to the National Press Club, Mr Porter made much of new modelling from professional services firm PwC using “algorithmic and actuarial analysis used in insurance industries to predict the likely movements on, off and between welfare payments for specific groups of people over their future lifetime”.

That kind of modelling is nothing new, but the fact the government has given PwC access to decades of data certainly is. Melbourne University economist John Freebairn tells me academic researchers could only dream of such access.

The biggest, scariest number thrown up by the PwC report is the total costs to taxpayers of all future welfare payments for all current citizens – a whopping $4.8 trillion.

PwC’s report says that “substantial and somewhat uncertain figure … can be considered a baseline figure against which the potential impact on the total lifetime cost of policy changes can be assessed”.

That’s not as useful as it might sound.

If future governments retain the new ‘Australian Priority Investment Approach to Welfare’, each will delight in telling taxpayers they have shaved tens of billions of dollars from the “total lifetime cost” of the current population.

What they will really be doing is comparing one long-distant, highly speculative figure with another.

Look over there!

This has been a growing trend in Australian politics – discussing fiscal policy over decades rather than the near term. It’s pie-in-the-sky rhetoric that distracts voters from what’s happening right now.

A good example is the $3.8 billion cut from the final two years of the six-year Gonski needs-based education reforms.

Gonski committed extra resources to help students with special needs, particularly those from low SES areas where welfare dependence is widespread and intergenerational.

So the government has pulled $3800 million out of a program supported by schools, social researchers, charities and NGOs across the social service spectrum, then stumped up $96 million to ask the same groups for ideas to break the welfare dependence cycle.

As John Falzon, CEO of the St Vincent de Paul Society, put it on the ABC on Monday: “We’re all in favour of an investment model – Australia has had some excellent investment models. We had one recently – it was called Gonski.”

school attendance welfare payments
The government will consider linking adult welfare payments to their children’s school attendance.

When questioned by journalists at the end of his speech on Tuesday, Mr Porter said he would consider linking parents’ welfare payments to their children’s attendance at school, following the success of the ‘no jab no pay’ program linking welfare payments to kids’ immunisations.

There’s little doubt that armed with his never-before-released data set, he could indeed target and improve school attendance in that way.

But the heavy-lifting to break cycles of poverty and intergenerational disadvantage involves much more than that.

Mr Falzon argues the New Zealand model, upon which the Porter reforms are based, needs closer examination.

He told the ABC: “If your starting point is wishing to reduce social expenditure, that’s very different to wishing to reduce poverty and inequality. [In New Zealand] there were real concerns about getting people off welfare, but into what? Out of the frying pan and into the fire I would suggest.”

While the government continues to cut funding from schemes targeting social disadvantage, it’s hard to take seriously its claim that the new reforms are about improving people’s lives, and not just about saving money.

To read more columns by Rob Burgess click here.

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