The Centre for Independent Studies (CIS) — a right-wing economic think tank — released its What's Next for Welfare-to-Work? report on October 15. As part of a strategy to push more people off welfare, the report called for a fall in the minimum wage and a tightening of eligibility rules for the Disability Support Pension (DSP).
The CIS paper made headlines with its reporting of the 21% drop in those on the single parents' pension since the introduction of the Welfare to Work "reforms" by the previous Howard government in 2006.
However, despite the tightening of eligibility for new applicants for the DSP, the number of people on this benefit has increased. "This suggests that DSP should be the focus of future welfare reform", said the report's author, Jessica Brown.
The Howard government's Welfare to Work changes meant all single parents who claimed the parenting pension were stripped of the benefit when their youngest child turned six.
They were placed on the lower Newstart Allowance and required to look for at least 15 hours of paid work a week.
Welfare to Work also attacked the disabled. Applicants for the DSP had to prove they were unable to work at least 15 hours a week. Existing DSP recipients continued to be eligible as long as they could not work 30 hours a week.
The fall in the number of single parents claiming the parenting pension was heralded as a success by the CIS. It said the key challenge for government was to make similar cuts in those who receive the DSP. The CIS report made three recommendations to achieve this.
The first is to extend a harsher work test to existing pensioners. "If work tests are applied to new applicants, then it is fair and equitable that existing recipients face the same test", the report said.
The report also called for a "more objective and better defined" (i.e. rigid) set of criteria for doctors to follow in assessing patients for the DSP. The report does not explain how such a "more objective" assessment would be applied.
What does the CIS propose be done with the thousands of workers pushed off the DSP because of its proposals? "The only way to successfully reduce welfare dependence is to also consider far-reaching reforms of labour market policy", the report said. Its one recommendation — cut the minimum wage.
"There is a general acknowledgement that a high minimum wage acts as a disincentive for employers to increase low-skilled employment", the report said. "If the productivity of workers is less than the cost of their wage, it is simply uneconomical for a business to hire them.
"Reducing the real minimum wage should therefore result in a low-skilled jobs growth."
But there is no proof that cutting the minimum wage increases employment.
However, "reducing the real minimum wage" does have real and tangible benefits for employers. The lowest-paid workers become cheaper for capital, which increases profits.
Rises in the minimum wage also flow on to 1.6 million workers who rely on awards, which was 20% of the workforce in 2005, according to the Australian Council of Trade Unions.
The (un)Fair Pay Commission's July ruling to freeze the minimum wage reduced the real wage of all those dependent on awards. Profits have been shielded, but unemployment levels have not fallen.
With its slavish loyalty to free-market economics, the CIS report ignores the social consequences of its recommendations.
Rather than freeing up labour markets and offering new opportunities for those on welfare, the Welfare to Work changes brought in by Howard (and kept by Labor) have made life for welfare recipients only more difficult.
December's Who is Missing Out? Hardship Among Low Income Australians report published by the Australian Council of Social Service (ACOSS) painted a grim picture for those forced to negotiate the welfare benefits maze.
The report assessed poverty in the community, based on the lack of access to essential items such as a secure home. It found 49% of single-parent households and 27% of people with disabilities suffered multiple deprivations.
Rather than discouraging people from finding appropriate work, the current levels of benefits left many in poverty, the ACOSS report said.
"The present payment structure is poorly designed to prevent poverty. Levels of payment are often well below the minimum required to secure the essentials of life. In many cases, those facing the highest risk of deprivation receive the lowest payments."
In July 2007, the Premier's Council for Women in NSW published the Welfare to Work: a Challenge to Family Values report. The reporters interviewed women from a range of backgrounds and detailed their struggle with Welfare to Work requirements.
Some women said they felt punished by the system, which forced them to trade commitments to their children with the need to find paid work.
"The scheme … simply adds pressure to an already pressured life trying to bring up my three kids on my own with no support or family nearby", one woman said.
Others reported they were forced into accepting low-paying and unskilled jobs, even when they held professional qualifications. They were appalled by the lack of resources available at Centrelink and the inflexibility of the rules.
The high cost and low availability of suitable childcare prevented many women from finding decent work. Many women reported that their stress levels rose, but not their incomes.
It's a sure bet that forcing disabled people off the DSP would have a similar, if not more drastic, result. They will face more exploitation, lower wages, more stress and ongoing bureaucratic bottlenecks.
The number of people officially classed as "welfare dependent" may fall, but at what social cost?
While all people should have the right to work, slashing benefits and cutting wages is not a recipe for increasing social equity.
A real solution is the government-funded provision of free training, free childcare and suitable, socially useful jobs. Only then will the great majority of disabled people be able to pass from welfare — not to grinding poverty and stress, but to a rewarding job at a fair wage.