Welfare investment approach 'revolutionary' — or is it?

By David Donaldson

September 21, 2016

The government’s new investment approach to welfare is a revolutionary change, harnessing prevention to make future savings and improve lives. At least that’s what the Minister says.

There are mixed messages so far as to how much the Priority Investment Approach will be significantly different to what’s come before.

The basic idea is that predicted long-term costs are calculated based on indicators of disadvantage and money is apportioned to avoid entrenched, costly disadvantage. If the government can find ways to improve a life and save on long-term welfare payments by spending some money upfront, they’ll fund it.

As welfare expert and ANU Crawford School of Public Policy professor Peter Whiteford told The Mandarin a few weeks ago when the policy was first announced, “the idea of early intervention — how can you argue against that?” Indeed, it’s a concept many in the social services sector have been advocating for a long time.

In his speech to the National Press Club to launch the PwC Baseline Valuation Report yesterday — which, as the actuarial basis for the investment approach, tells the government which groups are most at risk of getting stuck on welfare, and how much that will cost — Social Services Minister Christian Porter denounced ideological fixations of economists and students, which are “not of much use or merit whatsoever in real-world government”.

After some of the controversy around social policy over the past few years, you’d be forgiven for getting a little excited at this point.

“What should be spent on welfare is surely a question answered fundamentally by recourse to real-world conditions, rather than answered by opening a text book,” the Minister exclaimed — before immediately criticising Labor for allowing the welfare bill during the period of stimulus payments in the global financial crisis to exceed an arbitrary measure of his choosing. But I digress.

There are parts of Porter’s announcement that use evidence to help us better understand what’s happening to people on welfare and work out which interventions are working. The actuarial work underpinning the approach will give government a clearer picture of who it’s helping and how those people fare over time.

The Minister has promised $96 million for a ‘Try, Test and Learn Fund’ to give money to interventions that can demonstrate measurable improvements to the welfare of groups identified as being at high risk.

He highlighted three such groups, according to PwC’s accounting: young carers, young parents and students. If targeted support can give these groups, which the data show are more likely than most to be out of work for a significant portion of their lives, then that’s promising. The government has already started the Young Carer Bursary Programme, a $3.5 million investment designed to improve the educational outcomes of young carers by helping them complete their schooling.

“The real task is to continuously engage in an honest, evidence-based assessment as to when an existing welfare spending approach improves an individual’s prospects for a better life,” the Minister said.

“Rigorous evaluation will be the hallmark of the system. We’ll ensure that we do not continue down the often-trod path of spending money in an area merely because it instinctively or emotively appears to be useful.”

Like Education Minister Simon Birmingham, Porter is keen on the rather sensible idea that money isn’t everything, and that system design can, in fact, be just as important. Though it may be going a little far to claim, as Porter did, that decreasing inequality — one of the key functions of welfare payments — “tells us precisely nothing about whether any change has improved a single individual life”.

This is the point at which the claim to being a “close to revolutionary” direction in welfare reform loses its shine a little. The system Australia’s new investment approach is based on, New Zealand’s, has been criticised for focusing too much on getting people off welfare payments, and not enough on whether their lives have been improved by doing so. Have they found a job, or simply given up trying to comply with difficult requirements? Will that job help make their life “more meaningful” and will they stay in it?

For while Porter’s speech contained denunciations of ideology alongside invocations of the value of evidence and the need to invest in the future, he also suggested increasing the “mutual obligations” on recipients. This may include making payments contingent on requirements to refrain from excessive alcohol or from illicit drug use, to turn up in a timely manner to key work appointments, to pay debts owed to the taxpayer, or to ensure children attend school.

He also stood by one of the government’s existing savings measures, making New­start applicants wait four weeks before they can claim payments.

Whether or not some of these requirements are based in evidence, they represent quite a different approach to the investment concept, which “maximises their future opportunities for self-reliance”. Withholding funds is at odds with the idea of investing money now to help build capability for the future. It’s the kind of hardline language around welfare we’re more used to hearing, something that’s not particularly revolutionary.

And as ACOSS CEO Cassandra Goldie pointed out, the government has de-funded several programs that did align with the approach of giving at-risk young people tailored support — though that was under a different minister.

It remains to be seen which tendency guides decisions about reform and spending — the notion of spending money on early intervention to help people avoid being locked out of the job market, or the desire to push people off welfare and hope it works out alright.

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Stephen Grey
5 years ago

The sentence “The system Australia’s new investment approach is based on, New Zealand’s, has been criticised for focusing too much on getting people off welfare payments, and not enough on whether their lives have been improved by doing so. ” goes to the heart of this.

As has been done for Meals on Wheels in NSW, something subtle enough to tap into the non actuarial aspects of the system will be required to understand the social implications of changes in full. It’s more a matter of seeing patterns and trends in the social changes wrought by the program than strict measurement of money and numbers of people, number of of hours and similar things, important as they are.

5 years ago

I like the ‘Try,Test and Learn’ concept and portion of the strategy – it embeds innovation (with funding) into the system, allowing for more diversity in approaches than governments have previously supported to combating welfare dependence.

However experimenting on the poorest and most disadvantaged groups in society is problematic, so any such innovative approach needs very, very, very effective governance and monitoring to ensure that any particular innovation doesn’t harm those it is intended to help.

The area is ripe for user-based design, aka organisations working with directly with disadvantaged groups in the community to design solutions, or for disadvantaged people to propose their own solutions for testing with appropriate funding.

However without conveying this clearly to groups, providing them the resources and support to consider this type of innovative approaches, the likelihood is that we’ll see standard grant requests from the usual suspects – those who understand how to use the process to access funds, rather than those with innovative ideas that may just work.

I’m sure there will be some gems of ideas suggested, potentially ideas that could transform the larger picture of how we manage and fund welfare, but they’ll have to get past the traditional gatekeepers – career bureaucrats and politicians – who may not have the skills to recognise the great ideas.

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