Review of $100b welfare system calls for simplified payments

Welfare review by Patrick McClure lays out plan for simplified payments, tightening eligibility for disability support

By political reporter Anna Henderson

25 Feb 2015,

A wide-ranging review of the nation's $150 billion welfare system has laid out a plan for five basic payments and recommends tightening the eligibility for disability support.

The Coalition commissioned the review in December 2013 and asked lead author Patrick McClure to find ways to save money and encourage more people to return to work.

It has called for simplification of the 20 income support payments and 55 supplementary payments.

The report suggests there should be five primary payments: a tiered working age payment, a supported living pension, a child and youth payment, a carer payment and an age pension.

"The key to a simpler architecture is to have fewer primary payment types with varying rates within the primary payments that better reflect different circumstances," the review said.

"Many people currently on Newstart allowance would be better off in the new system," it added.

The report recommended creating a supported living pension for those assessed as having a work capacity of less than eight hours a week, who are expected to have the same limited capacity for another five years.

It recommended that a person's eligibility for the supported living pension be based not on the permanence of their impairment, but instead on how long they would be limited in their capacity to work.

Those with a less severe disability would be on a working age payment, which would have three levels reflecting people's capacity to work.

The upper tier would be for people with a disability and a capacity to work between eight and 14 hours per week.

The middle tier would be for those with a disability and a moderate capacity to work between 15 and 29 hours per week or those with dependent children or young people under 22.

The foundation tier would then be for people with full capacity to work or study full-time.

The review also suggested a number of changes to the Child and Youth Payment.

It suggested the payment should be paid per child, should increase with the age of the child to better reflect the increasing costs of children as they grow up, and should be conditional.

"It should be conditional on the child or young person having up-to-date immunisations and being in school, education or training, where they have capacity," the review said.

In addition, the review said it supported the Productivity Commission's suggestion to simplify the range of childcare payments and ensure they encourage and support employment.

It also suggested that in the new welfare system, there should be a consistent minimum age at which a young person should be able to access income support.

"In providing financial support for people unable to support themselves, the payment system should provide assistance to parents for dependent children and dependent young people and to the individual when they are independent of their parents," the review said.

"Children and young people are expected to be engaged in education and so are not expected to support themselves through work below a certain age."

The report said the system should be designed so no-one moved to a new payment that was below than what they were previously receiving.

It said the new carer payment system would continue to be a means-tested payment available to those providing constant care for someone with a physical, intellectual or psychiatric disability or older people in need of care.

While the reference group had earlier suggested carers should recieve a working age payment, the review suggested that a separate payment for carers would be more appropriate.

The review said the age pension was out of the scope of the review.