Inequality report confirms need for policy rethink

The Australian Council of Social Service is calling on the Federal Government to ensure the upcoming Mid-Year Economic and Fiscal Outook and future welfare reforms reduce growing inequality, following the release of a damning Senate report.

“In the forthcoming MYEFO and in responding to the Welfare Review, the Government has an opportunity to chart a course which treats people fairly according to their capacity and means,” said ACOSS CEO Dr Cassandra Goldie.

The report by the Senate’s Community Affairs References Committee, Bridging our growing divide: inequality in Australia notes that inequality in Australia has increased since the 1980s.

It finds that the harsh approach of the Federal Budget will push more people into poverty and disadvantage and calls for many of its more harmful measures to be abandoned.

“We are looking to MYEFO for a change in direction and call on the Government to shelve those measures which will disproportionately hit people on low incomes and to provide funding certainty for frontline services, including homelessness services, which assist people living in poverty.”

“The current review of working age payments also presents an opportunity for reform which reduces inequality and increases employment participation.

“Welfare reform must reflect the principles of adequacy, fairness and simplicity and improve housing affordability, employment incentives and administrative efficiency.”

ACOSS has developed a set of principles for welfare reform (included in full below) in partnership with our members. With the release of the McClure Welfare Review final report expected soon, the Committee indicated its support for these principles describing them as “fundamental to the integrity of Australia’s social security system”.

The Committee backed the fundamental principle that payments should be based on financial need, not future employment potential, and that no recipient should be financially worse off as a result of the reforms.

Importantly, the Committee also added its voice to the many community and business voices calling for the inadequacy of the Newstart Allowance to be addressed, noting it was $100 below major poverty lines (the 50% of median income and Henderson Poverty Line).

“In responding to the welfare review, increasing the adequacy of allowances and closing the gap between pensions and allowances must be a high priority,” Dr Goldie said.

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The base rates of social security payments for singles and couples should be adequate to meet socially accepted essential living costs; that is, to prevent poverty.

The safety net should be there when it is needed, including for young people who are unemployed.

Income support should be benchmarked to broader community living standards; and indexed to movements in wages as well as prices affecting social security recipients.

Supplements should meet additional major non-discretionary costs; including housing rents, costs of disability, costs of sole parenthood, costs of caring, and retention of a separate system of family payments for the costs of children.


People with the same financial needs should receive the same level of income support. Maximum payment levels should be based on current financial need rather than ‘deservedness’. No group should be financially worse off as a result of reform, and those facing the greatest hardship should be better off.

People should not be moved from higher to lower payments when their financial needs are the same, and the system should be redesigned to prevent this happening.

Housing affordability:

Comprehensive action should be taken to make housing affordable for people on low incomes, including in places where jobs are available.

Rent Assistance should be adequate and indexed to movements in rents.

Improvements in Rent Assistance should complement, not replace, adequate public investment in social housing and reform of incentives for private investment in affordable housing.

Employment incentives:

To improve employment incentives for people with barriers to employment, maximum payment levels should be based on an individual’s current financial need rather than their future employment prospects.

Payments should not reduce the closer a person with a disability or caring responsibility comes to securing paid employment.

Base rates of social security payments should be targeted to people in financial need through income and assets tests which ignore modest levels of private income and assets, ensure a fair return to paid work, and can be readily understood and complied with. Supplements should be less strictly income tested, in accordance with their purpose (for example to assist with the extra costs associated with a disability, which do not reduce once a person gains employment).


The payment system to be as simple and understandable as possible. The main goal of simplification reforms should not be to reduce the number of payments, but to:
• streamline the system so that people in similar circumstances receive the same level of payments with the same or similar eligibility requirements;
• remove the hurdles the present system throws up for people undergoing common life transitions such as employment, unemployment, different stages in the care of children or other family members.

Social security should be paid as a legislative entitlement without restriction on its use, unless the recipient or local community elects to receive payments in a different form (for example, to pool payments to provide employment in a remote community).

Entitlements and compliance with any participation requirements should be assessed by a single statutory agency that is accessible to all.

‘Income Management’ should not be compulsory and should not apply automatically to categories of people based on benefit type, location, or race.