Social services minister Christian Porter to outline focus on identifying and eliminating ‘welfare traps’ rather than just cutting spending

This article is more than 4 years old

This article is more than 4 years old

The social services minister, Christian Porter, will on Tuesday produce new figures estimating the total future cost of the welfare and pensions system for Australia’s current 24 million population at $4.8tn.

Porter will use a speech to the National Press Club to flesh out his preferred approach to reducing intergenerational welfare dependency which involves using actuarial analysis to unpack the lifetime patterns of people receiving welfare payments and benefits.

Porter on Tuesday will produce new valuations of the social security and income support system across various groups, and use predictive modelling to forecast various outcomes.

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According to analysis supplied by his office ahead of Tuesday’s speech, in 2014-15, there were 4,370 young parents aged 18 or under receiving the parenting payment, and the government’s new data system predicts that this group of 4,370 are likely to have further children and remain on the parenting payment for very long periods of time.

The material says 80% of young mothers entering the welfare system for the first time through parenting payment had a parent or guardian who also received income support at some stage during their upbringing.

For the 4,370 young parents it is expected, on average, they will access income support in 45 years over their future lifetime. The baseline valuation for this cohort estimates a total future lifetime welfare cost at $2.4bn.

Porter will also focus on young carers, producing material indicating for 11,000 young carers, it is expected on average they will access income support in 43 years over their future lifetime.

In the recent May budget, the government unveiled a new $96m fund to allow state governments, nongovernment bodies and academics to bring forward experimental approaches to reducing welfare dependency. Porter will tell the press club the fund will be open by the end of 2016.

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The social services minister will argue the new approach to analysing the transfer payments data reveals concerning trends among young Australians. “The outcomes highlighted from the report are particularly concerning for the young people identified,” he will say on Tuesday.

“Nobody wants to see a life spent in the welfare system from a very young age. The moral imperative here is to move away from being content with policy approaches that just spend more money because that is the way it has always been done,” he said.

“Our data is quite clearly showing us this does not improve lives, and that must be our goal. The future foundation measure of success must be whether we can improve individual prospects for a better life, made meaningful by employment, community contribution and self-reliance.”

Porter has been pursuing what he terms the “Australian priority investment approach” since taking the social services portfolio from Scott Morrison last year.

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Porter – a former treasurer in the Western Australian state government before making the move to the federal arena – argues the approach is less preoccupied with cutting spending on social services and more focused on identifying and eliminating “welfare traps” through evidence-based approaches and innovative policy solutions.

But welfare groups counter the debate in Australia becomes skewed when it veers into the territory of welfare cost blowouts.

The Australian Council of Social Service said the largest single area of income support expenditure is on the aged pension – which is four times the amount spent on unemployment benefits. Porter’s estimated $4.8tn figure includes government spending on pensions and well as on welfare payments.

Acoss said spending on unemployment benefits and parenting payments in Australia declined from 1.2% to 0.6% of GDP.

The peak welfare body said young people who receive income support typically do so for short periods of time – between less than one and three years – and the vast majority, more than 70%, derive less than 25% of household income as income support.