Not as much focus on welfare reform as previous budgets

4 May 2016

There is a range of positive initiatives in addition to the ongoing support for the NDIS. These include around $96 million for a "Try, Test and Learn" fund to finance innovative policy interventions.

Peter Whiteford, Professor, ANU Crawford School of Public Policy.

In the Coalition government's previous budgets - particularly its first in 2014 - savings were predominantly proposed in the area of social security and welfare spending. At one level this is not surprising. Social security and welfare accounts for around one-third of all Commonwealth government spending.

But as the OECD has pointed out, because Australia has the most-targeted social security system in the rich world, cuts to social security are likely to significantly increase inequality. Perceptions of the unfairness of these proposals were important in derailing the 2014 budget.

In the 2016-17 budget, social security and welfare continues to account for the largest single share of government spending. While this function will continue to see the strongest growth in spending, this is virtually entirely due to the continuing roll-out of the National Disability Insurance scheme (NDIS) over the forward estimates.

Also built into the forward estimates is a range of savings measures that have not yet been passed by the Senate. These include cuts to family payments for low-income families, reductions in Pharmaceutical Benefit Scheme concessions, the higher age pension eligibility age, the one-month waiting period for young people to access income support, and lower payments for many young unemployed people.

Phasing out the compensation for carbon pricing will also reduce benefits for new recipients of the Newstart Allowance.

While this may appear appropriate, as the Australian Council of Social Service has pointed out, the income tax cuts that were also intended to compensate for the carbon price remain in place. It is anticipated savings will also be made through an additional 90,000 medical reviews of people receiving the Disability Support Pension.

There is a range of positive initiatives in addition to the ongoing support for the NDIS. These include around $96 million for a "Try, Test and Learn" fund to finance innovative policy interventions to help people who have the capacity to work but appear to be at risk of long-term reliance on welfare payments.

More substantially, around $750 million over four years will go into a suite of new assistance for young job-seekers.