The Federal Government’s response to the McClure report on social welfare grasps the problem, but its solution is not smart enough. Since it was elected in 1996, the Government has grasped both popular sentiment and good sense in turning around welfare culture. Welfare, whether it be based upon unemployment, parenthood, age or disability is not an automatic right. The taxpaying community has a right to insist that those who get government benefits have to show not only instant need but a willingness to take steps to get themselves out of a situation of need and into self-support. Sure, if that is not possible, then the welfare benefits continue, but if there is no willingness to try to come out of welfare dependency, then benefits should, after appropriate warning, dry up. Few have an argument with that approach.
Secondly, the Government has rightly approached the question of welfare on the basis that throwing money at it is not the best approach and will not help either taxpayers or recipients in the long run.
Thirdly, the Government, or at least Treasurer Peter Costello, has recognised that the present welfare system often acts as a disincentive to move from welfare to work. This is because the different in family take home income can be as little as a dollar an hour after moving from welfare to work – and that is without taking into account the costs of going to work such as clothes. Transport and the lost opportunity of using the time for cost-saving by working at home to produce clothing, food, child-care and maintenance of shelter. In short, some families are worse off when they go to work. The tax system, the deductions from welfare payments and the costs of working militate against people moving from work to welfare.
The Government recognises this. But its response to the McClure report does not suggest it has worthwhile solutions. There is a certain amount of more of the same. Extending work-for-the-dole to people aged 35-39; a requirement for community activity for people aged 40 to 64 and new requirements for recipients of parenting and disability pensions, if administered fairly and with compassion, are worthwhile extensions of existing policy. But they are small steps.
The suggestion of a transition bank to help part-time and seasonal workers offset their earnings and ease the impact of tax tapers and welfare benefit cuts and a new and simpler payment structure merging benefits and pensions, with add-ons to recognise special needs such as childcare and transport are worthwhile, but they ignore the opportunity for more effective measures to ease and encourage the transition from welfare to work. And perhaps the most effective measure has been ignored purely for ideological reasons.
Before the last election, the Labor Party proposed a negative tax. It meant that as people went from welfare to work, their tax would be negative — that is, the Government would pay them in addition to their wages until a certain amount was earned then tax would be zero and eventually positive. It would mean moving into the workforce would be substantially better off, unlike now, when they must wonder at whether the hours at work are worth it. The Government should forget the fact it was proposed by Labor and look at it on merit.