The Australian Council of Social Service is calling for a major overhaul of the social security system for people of working age, proposing a single or ‘common’ income support payment with added supplements depending on a person’s need, similar to the ‘Universal Credit’ in the United Kingdom.

In its submission to the Federal Welfare Review released today, the peak national community body, proposes the establishment of an Independent Commission of experts to review and develop a benchmark for rates of the new payment.

It also wants the Federal Government to abandon a number of harsh Budget measures that pre-empt and undermine the Review.

“The social security system for people of working age is complex, unfair and it undermines employment participation. The system is broken, and tinkering at the margins won’t fix it,” said ACOSS CEO Dr Cassandra Goldie.

“People with the same financial needs receive vastly different payments and those on the lowest payments such as Newstart Allowance receive as little as $35 a day. A carer, person with disability or sole parent who moves to the lower Newstart Allowance loses up to $170 a week in income for no valid reason.

“To qualify for higher payments people have to prove they cannot engage in paid work. This is counterproductive and it means too many people are being ‘written off’ in the jobs market. Payment levels should be based on people’s financial needs now, not their future employment prospects.

“We believe the best solution is to remove the distinction between pensions, allowances for unemployed people and student payments and replace them with a common income support payment for people of working age, based on essential living costs.

“Under this model, people with extra costs – including the costs of a disability, caring for a person with disability, and raising a child alone – would receive supplements on top of the common income support payment. These supplements would extend to many people on low to modest wages.

“The levels of payment needed by people to meet basic essential living costs in Australia today should be based on recommendations by an independent Commission of experts. This would help ensure that payment rates are based on objective assessment of financial need, not the opinions of decision-makers that some groups ‘deserve’ more or less than others.

“Comprehensive payment reform will take time. In the short term, the Government should adopt the sensible calls in the Interim Report to improve Newstart and other allowances for single people – as was done for people on pension payments.

“It should also boost Rent Assistance for those paying the highest rents, to stop payments for sole parents from falling as their children grow older, and to bring student payments for adults up to the same level as Newstart Allowance. These are sensible and urgent reforms to reduce the worst poverty.

“A key condition for our support of payment reform is that no group should be worse off and those on the lowest payments such as Newstart Allowance should be better off. There is a danger that many people will be worse off if proposals to shift people whose disability is not ‘permanent’ to a lower payment than the Disability Support Pension is implemented. The ‘shell game’ of endlessly shifting people from higher to lower payments to save money has to stop.

“We urge the government to drop the harshest of the Budget’s social security changes and wait until the Welfare Review runs its full course. These include the proposal to deprive young people under 30 of income support for six months of each year, reducing the indexation of all payments, and changes to Family Tax Benefit B which cut payments for families on the lowest incomes.

“We need to reform the safety net, not to shrink it,” Dr Goldie said.

Media Contact: Fernando de Freitas 0419 626 155

Summary and Recommendations – Download

ACOSS Submission to Welfare Review – Download

Key ACOSS Recommendations
• A common income support payment to replace pension and allowance payments for people of working age, based on essential living costs;

• Supplements should be paid in addition to the common income support payment to people on low to modest incomes to meet specific costs incuding the costs of disability, caring, and raising a child alone.

• Independent Commission of experts appointed by Government to review and develop a benchmark to determine base rates of payment and report to Parliament on adequacy of the common income support payment and supplements on a regular basis;

• In setting future payment rates no group should be financially worse off and those facing the greatest hardship should be better off;

• Withdraw or suspend Budget proposals that pre-empt the Review’s findings
1. six month waiting periods for unemployment payments for young people
2. indexation of pensions to the CPI only
3. changes to Family Tax Benefit Part B;

• Social security should be paid as cash benefits without restriction on their use: ‘Income Management’ should only apply where the recipient or local community elects to use it.

• Activity requirements should be reasonable and directly relevant to people’s employment prospects. The social security system should not be used as a social engineering device by imposing requirements around the care of children or how money is spent, that don’t apply equally to the rest of the community.