A new disability payment would be restricted to people unable to work more than eight hours a week because of an incapacity that is expected to last for at least five years, under the final recommendations of the sweeping review of Australia’s welfare system conducted by Patrick McClure.



The report, set to be released on Wednesday, recommends the current complicated system of government payments be collapsed into five types of assistance.

These would be the disability payment, now to be called a “supported living pension”; a means-tested payment for parents of children under 22; the aged pension; a special means-tested payment for carers; and a “working-age payment” that is “tiered” depending on a person’s work capacity.

The “upper tier” working-age payment would be for people with limited capacity due to disability, the middle tier for people with disabilities with a capacity to work between 15 and 29 hours a week and for parents with dependent children, and the “foundation tier” for those with a full capacity to work.

It recommends young people should not be eligible for income support in their own right until they turn 22.

“Children and young people are expected to be engaged in education and so are not expected to support themselves through work below a certain age,” it says.

In an interim report, released last June, McClure recommended that carers should receive the regular working age payment. But in the final report the panel has been convinced that the challenges facing carers mean they should continue to receive a separate means-tested payment. It would be available to those providing constant care.

McClure recommends that no one would be worse off as the new streamlined system is introduced, and says the new system could mean that many people now receiving Newstart – unemployment benefits – were better off.

The report says all payments should be adjusted in the same way to keep pace with the increasing cost of living and that “supplements” to the five main types of payment should also be reduced.

“People need a payment that enables them to have a basic, acceptable standard of living, and that allows them to meet their obligations to look for work, or to study, and/or to support children,” the report says.

The social services minister, Scott Morrison, will address the National Press Club on Wednesday to outline the government’s response to the report.

On disability payments, the report says the “supported living pension” should be a means-tested payment for people over 22 who are permanently and severely restricted in their capacity to work. This is defined as the capability to work “less than eight hours a week” with “a level of incapacity that must be expected to last for at least another five years”.

The report says income management should be used “judiciously” and its outcomes should be evaluated.

Morrison has said he wants to use a system of “carrots and sticks” to get three specific groups in particular back into the workforce – women with children, young men and older workers.