A new system for better employment and social outcomes: interim report

Abstract

This report argues that fundamental reform of the architecture of Australia\u27s welfare system is needed to better capture evolving labour market and social changes, and proposes four pillars of reform. In December 2013, the Minister for Social Services, the Hon. Kevin Andrews MP, appointed an independent Reference Group to review Australia\u27s welfare system. This is the Reference Group’s Interim Report. Mr Patrick McClure AO chairs the Reference Group. The other members are Mr Wesley Aird and Ms Sally Sinclair. The Reference Group was supported by a Taskforce in the Department of Social Services in preparing this report. Executive summary Government cash transfer payments to individuals and families represent the most significant component of Australia’s social support system in expenditure terms. The Department of Social Services has policy responsibility for income support payments and supplements worth around $100 billion in 2012–13. This is a significant investment with a wide reach across the community. Changes to Australia’s income support system over time have resulted in unintended complexities, inconsistencies and disincentives for some people to work. The system is also out of step with today’s labour market realities and community expectations. The income support system is in need of major reform to deliver better outcomes for all Australians now and into the future. Long-term reliance on income support increases the risks of poor health, low self-esteem and social isolation. It can also have intergenerational effects. Children who grow up in households with long periods on income support are more likely to have poor education, employment and social outcomes. In contrast, employment generates clear financial, health and social benefits for individuals, families and communities. To maximise employment and social outcomes, and to remain sustainable over the longer term, Australia’s income support system needs to have a stronger employment focus. It should provide adequate support while encouraging more people to work to their capacity. It should also be simpler and more coherent. While reforms in recent decades have increased participation expectations for income support recipients, a more fundamental reform of the architecture of the system is needed to better capture evolving labour market and social changes such as the growth in part-time work and the increased labour force participation of women. The broader social support system should work in tandem with the income support system to assist those most in need. This includes well-functioning employment services, housing assistance, child care, and early intervention and integrated services for people and families with complex needs, such as homelessness, mental health conditions and drug or alcohol addiction. Reform needs to take account of recent developments such as the system of lifelong care and support for people with disability being introduced through the National Disability Insurance Scheme, the expansion of paid parental leave and the opportunities offered by new technology. It should also take account of effective interventions to support people who are vulnerable in the labour market, such as people with mental health conditions and people with disability. This report proposes four pillars of reform: Simpler and sustainable income support system Strengthening individual and family capability Engaging with employers Building community capacit