The Guardian 25 May, 2005

Budget 2005-06 Welfare:
Callous welfare cuts

Andrew Jackson

As further details of the federal budget are released the full horror of its “reforms” come to light. In one worst-case scenario a person with a disability may be up to $156 per week worse off under the new welfare regime.

The government trumpeted new spending in welfare — totalling approximately $1.5 billion — on childcare, wage subsidies and employment assistance for people with disabilities.

What is now revealed that this “new” spending will be paid for by the estimated value of cuts to payments and employment assistance of $1.4 billion.

Hundred of thousands disadvantaged

As expected the federal budget laid out guidelines that will place people with disabilities whom the government deems are able to work at least 15 hours per week onto the Newstart (unemployment) benefit rather than the Disability Support Pension (DSP).

An analysis by the Australian Council of Social Service (ACOSS) revealed that 120,000 people with disabilities stood to lose income as a result of the proposed changes.

A proposal to reduce the number of hours a person can be assessed as working and still get the Disability Support Pension (DSP) from 30 to 15 hours a week is also likely to make it much harder for new applicants to get the pension.

ACOSS estimates 60,000 people with disabilities who apply for DSP over the next three years would instead be put on Newstart (unemployment) payments — $38 a week less than the DSP.

Another 64,000 people already on the DSP who are assessed as able to work 15 hours a week would keep the DSP but their future payments would be lower than other pensioners because they are indexed differently (linked to inflation rather than average earnings). These people would also have to look for part-time work or participate in programs like Job Network.

In addition to this, people with a disability who are moved onto Newstart, and who wish to study in order to re-enter the workforce will also lose a $31.80 per week Pensioner Education Supplement. This is also true for Single Parent Pensioners.

Pensioners who commenced study in a course that was six months or longer would then be moved into the most poverty-stricken welfare group of all — students receiving Austudy. Students on Austudy receive $75 per week less than the DSP.

On top of that they would lose up to $49 per week rent assistance, which is payable to all welfare recipients except students.

In summary: a person incapacitated with a disability who is deemed able to work for 15 hours per week but instead wishes to study would lose: $75 p.w. in benefit, $32 p.w. study allowance and $49 p.w. rent assistance = $156.

Privatisation — past and future

The federal government has also laid out plans to further privatise the welfare system. Next in line to be sold off is the process of assessing people with disabilities.

The assessment procedure is currently carried out by government-employed doctors; in the near future it will be carried out by profit-­making companies.

A major lesson can be learned from a previous welfare privatisation experiment.

When the government introduced regime of punishing the unemployed for breaching “mutual obligation” rules, it gave the private Job Network agencies the power to recommend fines or the suspension of Newstart allowances if their registered jobseekers failed to meet activity requirements.

This power now seems to have gone to their profit-hungry heads: in the last financial year, Job Network operators recommended 281,000 instances where payments should be stopped.

However, when Centrelink reviewed these they found that only one in seven of these unemployed people — 15 percent had breached the rules. This means the Job Network operators acted to unfairly throw almost 240 000 Newstart recipients off their benefits.

This is a frightening indicator of the zeal with which private corporations are willing to carry out the government’s slash and burn welfare agenda, and this zeal is no doubt taken into account when Job Network contracts come up for renewal.

Obviously a Job Networks operator’s “performance” will also be taken into account should that company apply for a contract to assess disability pensions.

Imagine: A person with a disability walks into a privatised “one-stop” welfare shop. If the provider assesses the person and recommends them for a pension, it will receive a once-only fee for the medical assessment.

If the person is assessed as fit to work and recommended for unemployment benefits, then the company could then take them on as a Job Network client. That way the company would not only get the once-off disability medical assessment fee, but would then reap a windfall in government subsidies to help that person find employment.

On top of that they would then have the power to recommend that the disabled person be thrown off benefit altogether if they commit a breach of the rules.

We are only left to question: Did that private provider win its contracts because of its ability to expertly and impartially assess people’s illnesses or because of its commitment to the Howard government’s “fend for yourselves” philosophy?

A last nasty jab

The federal government has axed one of the very few positive changes it has made to welfare over the last nine years — a special travel subsidy allowing aged pensioners cheap interstate travel will be discontinued when the other welfare “reforms” are passed.

This will save the federal government around $10 million per year.

Given the size of the projected budget surplus, and the size of the tax cuts handed out to the wealthy, “mean-spirited” would be an understatement.

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