Budget to bash unemployed

By Leith van Onselen

I read with some trepidation this morning that the Coalition Government might still be considering cracking down on so-called welfare ‘cheats’ that are accessing unemployment benefits without applying for jobs. From The Australian:

More than 20,000 jobseekers are deliberately “gaming the system” by turning up to Centrelink appointme­nts just to get paid, new figures show, as the government prepares to target in next week’s budget “capable” people who refuse to work…

Employment Minister Mich­aelia Cash and Human Services Minister Alan Tudge will unveil the new welfare crackdown…

A new system that provides “immediate and proportionate” financial punishment is expected to be a central part of the new regim­e as the government seeks to draw a battleline with Labor over welfare compliance.

New data obtained by The Australian shows that last year 7006 jobseekers missed their Centrelink appointments and re-engaged at the very end of each fortnight, allowing their welfare payments to continue without any financial consequence.

Of those, almost half repeated the behaviour six times or more during the year in order to maintain a Newstart payment of about $579 a fortnight.

An additional 16,492 jobseek­ers were identified for “unusual” behaviour in attending Centrelink appointments at regular intervals only to prevent payments being cut off…

The group the department has identified as deliberately gaming the welfare system amounts to about 3 per cent of the 759,000 people receiving the Newstart ­allowance.

I have nothing in-principle against cracking down on legitimate welfare cheats. However, I want to note that Australia’s welfare system as it pertains to the unemployed is already one of the most tightly means tested among developed countries. It is also so horribly low – at just $268 a week for a single – that the Business Council of Australia claims Newstart “presents a barrier to employment and risks entrenching poverty”. Heck, even the Coalition-dominated inquiry into Newstart found there was a “compelling case” for boosting it, although it refrained from recommending so for budgetary reasons.

We also shouldn’t lose sight of the fact that last year’s HILDA survey revealed that welfare reliance for those below retirement age has actually fallen over the past decade:

ScreenHunter_14165 Jul. 26 07.03ScreenHunter_14166 Jul. 26 07.03

Whereas the Government’s own Budget figures shows that unemployment benefits make up a tiny fraction of the welfare Budget:

And unemployment benefits are actually forecast to decline as a percentage of GDP over the forward estimates:

Clearly, concerns about rorting and waste regarding unemployment benefits seems overdone. While there may be some abuse at the margins (as is the case in all quarters of the tax and welfare system), the fact remains that unemployment benefits in Australia are already tightly means tested, payments are already ridiculously low, and the cost to the Budget is expected to decline relative to GDP.

Moreover, given the Aged Pension is the biggest (and a growing) source of welfare spending, one wonders why the Coalition doesn’t target rorting there? No doubt there are a bunch of wealthy pensioners that are hiding assets so that they can continue to receive benefits. Why is it that the Coalition always targets the unemployed and vulnerable first and foremost?

Policy solutions need to be far more innovative and comprehensive than simply cutting access to Newstart, and must include training initiatives, addressing the overuse of foreign labor (which is depriving locals of job opportunities), as well as addressing the high effective marginal tax rates applying to those shifting from welfare to work.

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Unconventional Economist
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  1. Ronin8317MEMBER

    Complying with the Centerlink requirement for interviews is now called ‘gaming the system’?

    • reusachtigeMEMBER

      Doing the bare minimum is so typical of the dole bludger! Only those who go above and beyond should keep their payments.

    • Thats right Robin. But State Governments financing Toll roads with private sector money at double digit interest rates for a generation when they could borrow the money easily at about 2.5%. That is not gaming the system .

      It is the blending of state and corporate interests which has another name ending in ‘ism.

  2. There seems to be an idea in Australia that there is a general ‘Welfare’ and if you cant be fcked getting out of bed then simply apply and you can live of the fat of the land.
    As per above graph No such system exists. Pensioners have paid in and are now receiving. family payments are simply churn of what was ours to begin with. In fact we have all paid in Social Security is an insurance system.
    From what I can see the bill for Newstart is about the same as the Diesel fuel rebate. about $5B pa.

    The people that run this country are Narcissistic assholes. I cant wait to see what they do with the unemployed come the great bust. Be hard to claim that 20% of the population are bludgers,

    But by then Rupert may have cut the national loss making rag lose and people may find it hard to buy the Herald Sun with no job so they may lose the main cheerleader for this national cruelty

    • OK I have a problem with all this. My rural mates end up employing ‘backpackers’ to do any serious work. Austrlalians will just not go where there is any levle of facility than is less than the big cities. Then we are supposed to pay unemployment to those who don’t want the work???
      Secondly – this welfare thing IS out of control. You have the boomers rorting the system while going on overseas trips every year. Then you have an exploding unfunded liability in the NDIS and other areas.
      Sure a lot of other stuff needs attention such as the boomer superannuation asset test situation. But please let’s not pretend we don’t have a huge problem in the area of welfare.

      • “Then you have an exploding unfunded liability in the NDIS and other areas”.. How is the NDIS unfunded ? As opposed to say vehicle Salary Sacrificing or diesel fuel rebate.
        Oh oh and the big unfunded “The FCKING WAR” is that funded. no best fuck the disabled and unemployed a little harder.

      • It’s not that cut and dry flawse.
        I’ve spent time being a picker and there are some real pricks out there that treat their pickers in a manner that would make 7/11 and dominoes blush. I was lucky in that I could pull up stumps and go to uni. But a few of the locals who have being working on the farms for years and were seeing their employment dry up did not think too nicely of the business model being adopted by some. These bastards are then undercutting the guys who do do the right thing which leads to a race to the bottom.
        The Idiot did a nice piece on one aspect of it in Tasmania.

      • Yeah, but if all 20k people apparently rorting Newstart applied for jobs currently done by ‘backpackers’, you’d only have displaced 1 in 10 backpackers, and in practical terms, your rural mates would still be looking at ‘hiring backpackers to do the serious work’.

  3. Hooray, let’s bash the poor even harder! They deserve it. Go out and buy an IP you losers!

  4. Strewth UE You agree that GDP is the dodgiest stat around and useless for determining anything. You have a dynamic of debt running riot in the GDP measurement. Now our sole determinant of whether our welfare levels are OK is a % of GDP????????? As long as we finance the welfare with debt we’ll get a GDP response from higher welfare!!!!!!!!

    • ceteris paribus

      With the greatest of respect flawse, you are totally on the wrong track. Welfare transfers are modest by OECD standards and overawhelmingly highly targeted to alleviate poverty. Read A Podger and P Whiteford research publications. The real welfare problem we have is tax concessional welfare, billions upon billions of tax expenditure dollars predominantly targeted at the already comfortable and the rich. Trusts, super-still, NG, CGT discounts, novated leasing, business shareholder giveaways etc. etc. etc. Please don’t perpetuate this pernicious propaganda of “transfer” welfare waste. It is very harmful. And have a read of the budgetary Tax Expediture papers.

  5. Is only 0.61% of GDP spent on unemployment?

    If so, it shows that the job search requirements of Newstart should be removed immediately. After all, Shorten loves low-wage immigration – which deprives me and other Aussies of a job anyway.

  6. ” Budget to bash unemployed ” …and so it should … bludgers shirking responsibility and living off the efforts of others.

    Furthermore, I really think that JobNetWork Providers and Centrelink should be able to – without recourse whatsoever – check the metadata of these tossers. Consequent on these actions, the Dole payments should be adjusted downwards for inefficient use of the bludgers’ time on, among others, financial blogging websites, PS and particular others.

    • Yeah, stop wasting money on JobNetWork Providers and Centrelink and allocate a Universal Basic Income to all.

      • Or just get rid of the job search requirements of Newstart – doing so would make life much easier for the unemployed would it not?

  7. ‘Employment Minister Mich­aelia Cash…’
    That cheat should be in some new employment far away from government.

  8. 20k is 0.17% of the workforce and 2.5% of the unemployed. Imagine the difference it would make if they all went back to work!