The chief architect of a major review of Australia’s welfare system has urged the government to intervene in regional communities to create jobs, warning that the lack of opportunities is fuelling support for fringe political groups.

It has almost been two years since Patrick McClure released his sweeping review of the social security system, which called for a complete overhaul of the payment system and a new approach to reducing long-term dole dependence.

McClure told Guardian Australia that the government had since moved on some of his recommendations, including improving family and youth payments, and investing in the Department of Human Services’ IT system.

But McClure said the government still needed to “do quite a bit of work” to stimulate job opportunities in failing regional economies, where welfare was often people’s only option.

He warned failing to do so would cause disaffection with government, which he said was now “expressing itself in more extreme [political] groups” in Australia, the US, and Britain.

“It does really need intervention, it’s not enough to say let the market play out,” McClure said. “In a lot of those regional areas, corporates may have foreclosed, manufacturing plants may have closed down.

“So how do we intervene to provide alternative jobs and alternative training? Because otherwise people vote for increasingly extremist groups.”

He said such disaffection had driven support for figures such as Pauline Hanson and Donald Trump.

McClure’s review identified a series of ways to build community capacity in regional Australia, including government interventions to encourage micro-business, social enterprise and cooperatives. “I think those are the interventions that are required in times like this,” he said. “I don’t think we can rely on the market.”

McClure said it was unfair to brand mature-aged welfare recipients as “dole bludgers” if there were no jobs available for them. He said the “cheap slogan” was appropriate in some circumstances, including for “young people who have made a lifestyle choice”.

“But when it’s mature-aged people that actually want a job, and have families to support, it’s a bit unfair to say that if there’s no job opportunities for them to go to,” McClure said.

A key recommendation of McClure’s review was for the government to adopt an “Australian investment approach” to welfare, modelled on the New Zealand system.

That approach identifies groups who are most likely to depend on income support for long periods but have the potential to work. Efforts are then focused on supporting those groups to employment.

As part of that approach, McClure’s review called for jobs plans to give opportunities to Australia’s most disadvantaged groups, initially people with a disability or mental health issue. That was acted upon in May, when the government announced $96m to help at-risk groups move away from welfare.

McClure’s report also called for a simplification of the welfare system, which provided 20 different income support payment types and 55 supplementary payments.



He urged the government to reduce the number of payments to five; a supported living pension, the aged pension, a means-tested payment for carers, a tiered working-age payment, and a child and youth payment.

McClure said he believed that the social services minister, Christian Porter, was committed to simplifying the welfare system. But he said the government would need to show courage to push the reforms through an intransigent Senate.