WHY THE SCARY NUMBERS ABOUT WELFARE DEPENDENCY?
September 23, 2016
There was something notably absent from the discussion on the future of Australia's social security system this week.
All the talk about huge numbers lost sight of the core purpose of Australia's social security system -- keeping people out of poverty.
People like the woman I recently met in Geelong, a mother and carer to her six-year-old son with a disability. Her life has been transformed since the introduction of the National Disability Insurance Scheme. Her severely disabled child now receives support and services unimaginable before the NDIS. She now has choice and control over what support her son receives. Through flexible in-home respite for her child, she has been able to achieve her own goal of studying part time.
The NDIS is pioneering the use of actuarial data to transform the lives of people with disability and their families. Big data can be a useful tool to target at risk people and help them improve their lives. We can use data to reduce poverty -- if that is our clear objective.
Australia has the most targeted social security system in the world. More than 40 percent of all benefits go to households in the lowest 20 percent of incomes -– the greatest proportion across OECD countries. Social Services Minister Christian Porter stated that the 'welfare' spend is around $160 billion but fails to mention that this includes child care assistance, the NDIS and residential aged care -– not things that most people would consider to be 'welfare'.
Unlike the New Zealand model, the Government's analysis includes the Age Pension and family payments in its calculation of lifetime costs -- both payments with objectives unrelated to work. More than half the lifetime spend projected in the PwC report will be on the Age Pension. For the groups identified as at risk of long term welfare dependency, time receiving the Age Pension in retirement is included in their lifetime costs and years on welfare. That's hardly an accurate depiction of 'welfare dependency'.
Which begs the question: what's the real motivation for the Turnbull Government producing these scary numbers about welfare dependency? Is it to lay the groundwork to cut support to vulnerable Australians?
Take a look at the Liberals record over the last three years: one month wait for Newstart, cuts to paid parental leave, cuts to the pension and of course they are making a visit to the doctor more expensive by freezing the Medicare rebate. My fear is that the Liberals are seeking to justify another round of cuts that will hurt the poorest Australians. The Turnbull Government certainly can't claim to have an 'investment approach' to welfare if they're cutting support to vulnerable Australians.
Governments of any political persuasion should always allocate spending as efficiently as possible. They should do everything possible to invest in people and make sure they can get a good education and get into work. That means paying more than just lip service to social investment. If you cut Gonski education funding, you don't believe in social investment. If you cut support for Medicare you don't believe in social investment. If you secretly plan to deregulate Australia's university system, you don't believe in social investment.
The truth is growth in social security expenditure is driven largely by our ageing population, with increases in the numbers of Australians claiming the age pension. Income support for job seekers is a relatively small proportion of the social security budget and it's not growing. In fact, the proportion of the working-age population claiming income support has been decreasing over the last two decades from a peak of over 25 percent in 1994.
Paul Keating foresaw the challenge of an ageing population -- that's why he introduced compulsory superannuation. The maturing of our super system is expected to see a decline in the proportion of people of age pension age claiming the full rate age pension. By 2047, the proportion of Australians receiving a full pension is projected to fall from about 50 percent to 30 percent. But we need to do better. The current superannuation guarantee of 9.5 percent isn't good enough and it needs to be increased. Unfortunately the Abbott Government's decision to freeze the scheduled increase to 12 percent by 2019 is expected to cost average Australian workers about $100,000 in lost retirement savings.
If the Turnbull Government was serious about improving the lives of vulnerable Australians they would invest in Gonski, they would invest in Medicare, they would invest in our higher education system. Instead the Government would rather manipulate big data to justify further cuts to the most vulnerable Australians.
This Opinion Piece was first published in the Huffington Post on Friday, 23 September 2016.