Costello's welfare nightmare
April 27, 2005/the AGE
Illustration: Spooner
Budget plans to tighten benefits could spell political trouble, writes Michelle Grattan.
John Howard's attention while overseas might have been publicly on free trade agreements and Gallipoli, but privately he has had plenty of domestic homework about the welfare-to-work package - the policy centrepiece of Peter Costello's 10th budget on May 10.
It is not unusual for budget decisions to be worked on late, but this one is especially important for both PM and Treasurer.
Changing the rules for the disability support pension and the parenting payment is proving very complicated. And it's clearly politically fraught - not least because it could push up unemployment. No wonder there's last-minute agonising.
The Government has a big opportunity to advance welfare reform. Botch the job, and it would be difficult to return to it. Do it well, and it could be a building block for further change. Get this wrong and the controversy could work against Peter Costello just when he wants to look his best as future prime minister.
There will be no restraint imposed by the new Senate. But the nature of politics is that when one constraint disappears, others (albeit not as direct) can appear.
The coalition back bench is more bolshie than last term, inclined to speak out when it thinks mistakes have been made. And, despite the Government's strong position, there's always the next election to think about.
Some 700,000 people are on the disability support pension and more than 600,000 (mostly single mothers) on the parenting payment. This is too many - good neither for the country nor for many individuals.
As Costello keeps saying, with an ageing population, we need to maximise the workforce. And the path a better life is through work, where that's possible. It's potentially the best way out of poverty and isolation.
The path to a better life is through work, where that's possible. It's potentially the best way out of poverty and isolation.Having said that, attempting to get the balance and detail right can end in a mire.
Obviously, it's a very good time to try to get people off welfare and into work, part-time or full-time. Unemployment is low; the economy, though slowing, is strong. Even in these circumstances, however, and with a package that is full of training, child care and other support to help people make the transition, many won't be able to get jobs soon or perhaps ever.
Labour might be in short supply and the unemployment rate down to 5.1 per cent, but it's still a market out there and employers will go first for the most attractive candidates. The disabled, single mothers whose child-caring responsibilities might intrude, and older (often retrenched) people will still start behind the eight ball.
The big political fear is that if many seek and fail to get jobs, the Government could have bad news on unemployment. Federal departments are divided about the effect.
The Department of Employment and Workplace Relations is optimistic about people getting work. But Finance is believed to have produced disappointingly low estimates of how many on welfare would obtain jobs by the end of the forward estimates period (2008-09).
The issue for Howard has become how tough or soft the Government makes the "mutual obligation" requirements it puts on these welfare recipients.
After wondering whether to confine the disability pension changes to new applicants, the Government decided existing pensioners should be tested. Now it is talking about making the test for them voluntary.
It knows how sensitive the disabled issue is, even if Costello goes on about bad backs. Last week on SBS's Insight, Costello emphasised that disability pensioners who tried but failed to get work "won't be prejudiced . . . they have to have the right to come back on (to the disability support pension) and to keep their concessions". This is more generous than the cabinet's recent disposition. It would both reassure the disabled and prevent unsuccessful job seekers swelling the unemployment numbers.
Costello has sounded tougher on sole parents. "A system that has no work requirement - not even a part-time work requirement - for a parent of school-age children is a very generous one and an inappropriate one in a country with possible labour shortages and the long-term ageing of the population," he said last month.
But insisting on a part-time "work requirement" for sole parents of primary school age children has some knotty difficulties. Not least, it doesn't seem to jell with the PM's philosophy. Howard has always been big on choice for mothers who want to stay at home. While he emphasises those with very young children, his wife remained a full-time parent after their youngest hit school age.
One cynic puts it this way. "If you're married you can stay at home. If you've left your husband, you have to work."
Single mothers will often have more pressures on them than women in two-parent families. The juggling act that any working mother must perform will be harder without someone to help. Women on the parenting payment will, by definition, be at the bottom of the heap financially, most likely to get low-paid jobs and unable to buy in services to assist them.
This doesn't negate the case for trying to get sole parents into work or training, but means the work capacity test the Government introduces for sole parents with children in primary school needs to be extremely flexible, taking account of parenting and other responsibilities (such as any care the women might give to aged parents).
Howard said a while ago that "we're not in the business of forcing people to do things that are unreasonable".
The word in Canberra is that the work test for single parents won't end up too onerous. To make it over-stiff would be excessively onerous for the Government, which needs to find ways of encouraging participation without pain.
Michelle Grattan is political editor.
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