Media Release

Treasury finds greatest opportunity for reform with DPB.
Tuesday, October 5, 2010

A Treasury report prepared for the Welfare Working Group has correctly identified that the greatest opportunity for welfare reform lies with the Domestic Purposes Benefit, says welfare commentator Lindsay Mitchell.

"Treasury identified six ways in which welfare reform could improve outcomes for both beneficiaries and the economy. They are improved labour force participation; reduced poverty risk; fiscal savings; improved intergenerational outcomes; greater individual and social well-being and increased economic growth. "

"The DPB ticked 4 of these boxes as presenting a large opportunity. The Invalid's benefit ticked 2, the sickness benefit one, and the unemployment benefit, none."

"Treasury has also identified the DPB as being the most expensive benefit at $1.7 billion in the last financial year, with the highest future liability costs. Liability associated with current domestic purposes beneficiaries is around $17 billion compared to only $3 billion for the unemployment benefit yet 'administration expenditure is primarily focused on Unemployment Beneficiaries' ".

"It has long been my contention that the DPB is most in need of reform because it is adversely affecting the lives of hundreds of thousands of children many of whom will grow up to be beneficiaries themselves. The report states that, 'child poverty rates are almost 75 percent for ‘work-less households’ compared to 11 percent where at least one adult is working-full time, ' and, ' living in a benefit dependent home has serious impacts on child wellbeing. ' "

"In light of this, Treasury's recommendations are disappointing. Guaranteed entitlement based on having dependent children is preserved. There is no recommendation to cap the number of children a beneficiary can add to a benefit (with increased payments each time). While they identify that mothers entering the benefit system aged 16 and 17 have a high probability of remaining there for a very long time, changes to eligibility or conditionality for teenagers is not explored. Perhaps most surprising is a lack of discussion about time limits, which have the greatest potential to change expectations and behaviour."

Lindsay Mitchell
Welfare Commentator
ph/fx 04 562 7944
mob 021 132 5968