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Social Security Policy of Australia: An Overview

Discuss about the  Social Security search for the existing problems and develop a policy proposal which needs change.

In Australia, social security is a system of social welfare payments that is provided by the Commonwealth Government of Australia. The Department of Human Services usually administers such payments. The social security system receives its fund from general taxation revenue and it endows with flat rate income support payments to those individuals who are incapable to work (people who are sick or disable) or are not expected to work (retired people) or the unemployed. Individuals who have dependent children and pay rent in the private rental market are provided with additional payments.

The social security protection provides to the war veterans and their dependant with pension facilities, which includes both the income support payments and the compensation scheme (Kitao, 2014). The Commonwealth Government makes such payments from the general revenue. Further, the social policy also funds voluntary and compulsory occupational superannuation, health care compensation, road accidents compensation, paid sick leaves and other welfare services and benefits to the citizens of the country.

The Australian Social Security Policy suffers from certain deficiencies, which entail inadequacy in the lower ‘allowance payments’ like the Newstart allowance and the students’ payment scheme and there is an increase gap between these payments and the pension payment schemes as well (Hamilton, 2014). The incline in the complexity of the system, the existing hindrance in the employment schemes, the arbitrary fall in the payments of the single parents as and when their children grow older and, lastly, the inflated housing expenses for individuals with low incomes, requires an effective and appropriate reform in the social security policy of the country.

The dissection of social security payments between the higher pension and lower allowance is regarded as outdated and unjust. Although there are several issues related to the existing social security policy of the country, but one of the most talked about issues is regarding the income support payment scheme, especially for the people of ‘working age’ (18-64 years). The other essential issue that this proposal highlights is the increased gap between the allowance payments and the pension schemes that is provided by the existing social security policy. The proposal talks about the other related issues that add up to the highlighted issues and affects the efficacy of the existing policy such as the arbitrariness in the payment rates, complexity in the payments levels, etc. It discourages the individuals to take part in the labor market of the country, thus affecting the socio-economic condition of the country. This system separates people into two individual groups, where one group is considered as ‘capable of working’ and the other group is deemed as ‘incapable of work’. The individuals who are able to work are entitled to lower allowances as it is believed that it is adequate t provide them with only short term income support (Taylor, Gray & Stanton, 2016).

Deficiency in the Policy

On the other hand, people who are entitled to higher pension payments like the Disability Support pension are the ones who are considered as people who lack the capacity to work. Since these people do not have to search for jobs and are in no need of any training requirements unlike those who are provided with allowances, these people are not endowed with much help with respect to transition to employment.

The division of payments between the allowances and pensions is responsible for the steep fall in the income-support payment scheme for several individuals with disability and the single parents. The essential issues with respect to the social security policy may be summarized into the following points:

  • the payments are arbitrary in nature and is subject to irregularities;
  • the system is intricate and obsolete;
  • the division between the allowances and pensions encourage employment;
  • the requirements of activity are intricate and rigid with inconsiderate penalties;

If the Commonwealth government did not divide the payments into so many levels, between those who are required to search for jobs and those who do not require seeking employment, the policies would not have led to payment cuts. This policy could have concentrated on aiding people to seek for paid employment and not depend on the income support scheme (Saunders,  Bradbury & Wong, 2016).

The income support scheme under the governmental policy implies that the system is based on two important values. One of the values is the recognition of the Commonwealth government and the responsibility of the society to provide assistance to those who are in need of financial assistance (Smith, 2014). The other value is the requirement of providing private assistance outside the social security system to encourage individuals and the income support payments scheme is considered as a safe way to provide such external assistance.


The different level of payments is not the problem, the fact that these payments fail to cater to the financial needs of the individuals, is the main problem of the social security policy. These payments are based on the ambiguous and intricate evaluation of the future employment potential of the individuals that is, whether they would fall into the group of ‘able to work’ or the group of ‘unable to work’. The income-support payment scheme is not fair as it does not meet the needs of the people and it discourages participation in the employment sector. This is because if the people take part in paid employment, they shall be subject to the risk of receiving lower allowances; hence, this holds back the people from seeking employment.

As outlined above, the first issue related to the social security policy is that it is arbitrary in nature and there are irregularities in the payments. The Newstart allowance is merely $231 per week, which is less than the pension rate for any single adult. The payment rate for any single fulltime student who lives on his own, irrespective of age of the student is appropriately $162 per week that is less than the pension (McVicar & Wilkins, 2013). These differences in the payment rates are unjust and arbitrary in nature. The lack of connection between the cost of living and payment levels results in financial suffering of individuals, in particular the individuals who are disability support pensioners and are unable to raise even a minimum amount of money at the time of emergency.

Identifying the Issues in the Policy

The second issue states that the policy suffers from complications and is obsolete. The policy is complex as every income support payments have separate eligibility and activities requirements, income of tests and payment rates. The Social Security Act is of 630 pages and is difficult even for the experts to comprehend the statute. Further, the policy provides lower payments under the Newstart allowance compared to the pensions on the ground that individuals who are unemployed are not considered ‘deserving’ of pensions as they are the ones who have the capability to work. Therefore, they only require short-term assistance until they are employed. The payments under pension have always been reserved for people who are incapable of working (Atalay & Barrett, 2015).

The concept of dividing people between the ‘able to work’ and ‘unable to work’ is obsolete. Most of the people suffering from any form of disability would rather get assistance to overcome their disability and work instead of depending on the Disability Support Pension. However, these people utilize their energies in establishing their incapability to work to avert being transferred to a lower payment level. The sole reason being, the allowances paid to individuals who are employed is very low, thus, the policy discourages people to participant in employment activities.


The third issue related to the policy is that it discourages people to seek employment and take part in employment activities. In case of individuals under the Disability Support pension retain a job for 2 years, the pension eligibility requirement of such individuals becomes subject to evaluation (Schofield et al., 2014). In case they lose the job, they shall be entitled to claim lower Newstart allowance. Similarly, if any single parent with school going children receives pension under the parenting payment, and is employed fulltime for more than 3 months, his/her pension shall become subject to risk as she would have to claim payment under the Newstart Allowance, if he/she loses the job.

The fourth issue related to the policy is that it entails intricate activity requirement and the penalties are very inconsiderate. In case of the individuals who are suffering from disability is transferred from the pension payment level to the allowance payment level, they become entitled to stringent activities requirements. Moreover, the policy does not provide any flexibility in the requirements and consequently the individuals have to report to the Centrelink and establish that they are seeking several jobs in one week. The policy fails to consider the circumstances of every individual and the factors that act as hindrances to work such as the individuals may have disabled children who needs to be looked after or have young children who requires constant care (Morris & Wilson, 2014).

Background of the issues

The social security policy merely imposes its services upon its recipients without leaving any scope for negotiations; consequently, it condenses the probability of success. Further, if any individual is unable to fulfill the stipulated requirements shall be subjected to severe penalties, which would disentitle the recipients from income support for a period of 8 weeks.

This proposal aims at redressing the above-discussed issues related to the social security policy of the Commonwealth Government. The key objective is to eliminate the difference between the pension payments for those who are unable to work and the allowance payments for those who are capable of working. The recipients of the policy must be entitled to a right to payments, the rate of payment must be set at the ‘Australian Minimum Standard of Living’, and the policy must be responsible for taking reasonable steps to provide financial independence to the recipients. The policy must be reformed in a manner that it provides financial assistance to individuals keeping in mind their respective needs and position, such as people with disability or a caring parent etc. This proposal lays down the following development principles that may be applied to address the discussed issues:

the government must set a benchmark to assess the adequacy of income support payments;

In order to eliminate the distinction between the allowance and pension payments based on the notion of ‘ability of a person to work’, the social security policy may be divided into a set of income-support payments for individuals who lack sufficient private income. The policy shall provide a set of additional assistance to those who require special assistance;

Income-support payments for people who are of working age shall be based on the ‘Australian Minimum Standard of living’, which would act as a minimum and acceptable standard of living for a single adult working individual. Further, the policy may provide additional assistance with respect to non-discretionary expenses such as disability expenses and housing rents.

The government may increase the rate of the Newstart allowance and other related allowances by $ 45 every week. This could be an initiative for the income support individuals and for eliminating the gap between the rate of allowances and the pensions.

The payments to be made under this social security policy must be regulated by legislation, which would determine the minimum living standards within the community and the increase n the rate of payments.

For the individuals who are suffering from any form of disability that has incapacitated the person from working, the policy must provide additional assistance relating to any significant non-discretionary expenses. In other words, the disable person would become entitled to a combination of the income support payment and additional payments for his/her disability (Williams & Smith, 2014). However, other people who are capable of working shall only be entitled to the income support payment and no additional supplements.

There must be some level of flexibility in the activity requirements with respect to the income support payment. The services shall no more be imposed upon the recipients, they shall be entitled to negotiate regarding the services with the Centrelink.

For the carer, single parent and the disables, these must not be the criteria to determine their eligibility to become recipient of income support payment; instead, the Australian minimum standard of living should be the criteria for the same.

Implementation

In order to implement the above-discussed reforms, it is imperative for all the stakeholders who are directly affected by the social security policy of the country. It is the responsibility of the employers, government and the service providers to ensure that the participation requirements of the policy are fulfilled effectively. It is their mutual obligations to assure that there is an availability of paid work and that the procedure of recruiting is just. These stakeholders must further ensure that any person seeking for employment is entitled to individualized assistance for the same (Kiely & Butterworth, 2013).

In case of determining the minimum standard of living, the government must appoint an Independent Commission of experts who would consider the standard of living of the social security policy recipients. The Independent Commission may provide a report on the adequacy of the payment rates to the Parliament regularly every five years.

The social workers who act as a voice for the people affected by the inequality and poverty recommend the government to frame a social security policy that introduces adequate payments that based on the requirement of the recipients. Such policy must encourage people to take part in the employment activities as far as it is feasible for the recipients to do so. The policy must aim at supporting and assisting people who are unable to work to enable to overcome their barriers to work (Zammit, 2017). The social workers recommend a policy that guarantees fair and reasonable returns from work and meet the individual requirements of the recipients, thus, enabling them to be a part of the workforce and render services that help them become capable to support themselves as well as their families.

The Government is under obligation to provide social security to individuals who do not have any private income or have a little income. The Social security policy should be such that it provides support services to people who are in actual need of financial assistance and are seeking for paid employment (Mendes, 2015). The social security policy that aims at providing support to people of working age should work with people and organization, which receives income support services. The social workers recommend that the Government extend its review panel to ensure that people who need support are endowed with assistance.

The payment structure under the social security system with respect to people of working age must be based on two essential elements. One is that the structure should include a common income support payment and another element is that there must be additional supplements for people who require special needs such as the disabled persons (Marston, 2014). In other words, unlike the existing payment structure under the policy, the reformed policy must consider the financial requirement of the recipients instead of their capacity or based on the employment prospects in future.

The proposal talks about the steep fall in the social security payment in respect of the single parents when their children start growing older. The social workers recommend a reformed policy, which ensures that there is an increase in the security payment with an objective to prevent a reduction in the income-support payment package of these families. The main objective of the proposed social security policy is to frame the policy in a manner that no individual is denied financial assistance and those with the greatest need must receive additional assistance from the government of the country.

Reference list

Atalay, K., & Barrett, G. F. (2015). The impact of age pension eligibility age on retirement and program dependence: evidence from an Australian experiment. Review of Economics and Statistics, 97(1), 71-87.

Bellon, M., Crocker, R., Farnden, J., Gardner, J., Sando, S., & Peterson, C. (2015). Family support needs following acquired brain injury across metropolitan and regional/remote South Australia. Brain Impairment, 16(02), 131-144.

Bowman, D., & McGann, M. (2015). ‘Tick-and-flick’? Mature age jobseekers’ experiences of employment services.

Hamilton, M. (2014). The ‘new social contract’and the individualisation of risk in policy. Journal of Risk Research, 17(4), 453-467.

Kiely, K. M., & Butterworth, P. (2013). Social disadvantage and individual vulnerability: A longitudinal investigation of welfare receipt and mental health in Australia. Australian & New Zealand Journal of Psychiatry, 47(7), 654-666.

Kitao, S. (2014). Sustainable social security: Four options. Review of Economic Dynamics, 17(4), 756-779.

Lenette, C., McDonald, D., & Fowler, J. L. (2014). ‘Newstart’or ‘Stop–Start’? The implications of recent welfare reforms on undergraduate students who are sole parents. Higher Education Research & Development, 33(3), 627-630.

Marston, G. (2014). Welfare for some, illfare for others: The social policy agenda of the Abbott Government. Australian Review of Public Affairs.

McKenzie, H. J., McHugh, C., & McKay, F. H. (2016). Life on newstart allowance: a new reality for low-income single mothers. Journal of Family Studies, 1-16.

McVicar, D., & Wilkins, R. (2013). Explaining the growth in the number of recipients of the Disability Support Pension in Australia. Australian Economic Review, 46(3), 345-356.

Mendes, P. (2015). The changing nature of the Australian welfare state: A critical analysis of the ACOSS campaign to increase the Newstart Allowance. Australian Journal of Political Science, 50(3), 427-441.

Morris, A., & Wilson, S. (2014). Struggling on the Newstart unemployment benefit in Australia: The experience of a neoliberal form of employment assistance. The Economic and Labour Relations Review, 25(2), 202-221.

Reference Group on Welfare Reform (Australia), McClure, P., Sinclair, S., & Aird, W. (2015). A New System for Better Employment and Social Outcomes: Report of the Reference Group on Welfare Reform to the Minister for Social Services: Final Report.

Saunders, P., Bradbury, B., & Wong, M. (2016). The growing gap between rich and poor in Australia. Australian Journal of Labour Economics, 19(1), 15.

Saunders, P., Wong, M., & Bradbury, B. (2016). Poverty in Australia since the financial crisis: the role of housing costs, income growth and unemployment. Journal of Poverty and Social Justice, 24(2), 97-112.

Schofield, D., Cunich, M., Shrestha, R., Passey, M., Kelly, S., Tanton, R., & Veerman, L. (2014). The impact of chronic conditions of care recipients on the labour force participation of informal carers in Australia: which conditions are associated with higher rates of non-participation in the labour force?. BMC public health, 14(1), 561.

Smith, A. (2014). Cost Sharing of Pensions Paid Under the 2001 New Zealand-Australia Social Security Agreement: Should It Be Time for Change?.

Taylor, D. R., Gray, M., & Stanton, D. (2016). New conditionality in Australian social security policy. Australian Journal of Social Issues, 51(1), 3.

Williams, T. M., & Smith, G. P. (2014). Can the National Disability Insurance Scheme work for mental health?. Australian and New Zealand Journal of Psychiatry, 48(5), 391-394.

Zammit, A. (2017). Long-term unemployment in Australia.

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