Weighing the cost of Welfare to Work implementation

Yesterday the news was alight with stories from the Department of Human Services that 35,000 people refused to take jobs and remain instead on welfare; this despite Australia’s expenditures on welfare plummeting well below the OECD average.  An insider’s view of how the welfare-to-work system works is therefore very timely. In today’s blog, Juanita McLaren details the sheer volume of interactions she has via the private sub-contractor who provides her with job-seeking support – despite being offered only one position in the past year.  She asks a more pertinent question: how much of the welfare budget is allocated to monitoring compliance? Juanita is on student placement with Good Shepherd Australia New Zealand and has written previously about the time requirements in the welfare to work scheme.

The cost of policing Welfare to Work

How much does it cost to implement a highly conditional welfare to work program?  As a single mother/ masters student on the Welfare to Work program for the last twelve months, I have received calls from so many different people in that time with regards to my compliance; checking in on how my job search is going, asking for evidence of my studies, wanting copies of my invoices or asking for feedback on their service.   How many people are being paid to police the $738 I receive once a fortnight to cover a family of four?  By the way, this puts us below the poverty line (of $834.14 for a parent plus three children), and the future isn’t looking positive for this to change any time soon.

For the benefit of this blog piece, I decided to look into how much the government is spending on external agencies to implement their welfare to work program.  According to the 2015 federal budget, around 75% of Social Security and Welfare expenditure is spent on direct welfare payments, while the remaining 25% is spent on welfare services. On the surface this looks like quite a reasonable ratio. But I wanted to look further into the figures being spent on welfare to work implementation more specifically.

The definition of welfare expenditure (see page 389) in The Australian Institute of Health and Welfare (AIHW) review of 2013 states that the categories of welfare expenditure “specifically exclude employment services, which are in the ‘Other labour and employment affairs,’ except for those that support specific welfare groups such as people with disability.”  Translation: the government’s AIHW review has no figures on the cost of external job agencies implementing the welfare to work program.

So I went to the most recent budget for 2016/2017, where I was able to find this expense neatly tucked away in the category of Expenses and Net Capital Investments, as the subcategory of Other Economic Affairs. The expected cost of employment services works out to be around $1,837m, which is about 10% of the overall cost of “assistance to the unemployed and the sick”.  Here is what the breakdown of the forecast says:

“Expenses under the labour market assistance to job seeker and industry sub‑function are expected to increase by 24.5 per cent in real terms from 2015‑16 to 2016‑17 reflecting larger increases in the uptake of wage subsidies and Work for the Dole placements in 2016‑17 as a result of the introduction of jobactive from 1 July 2015. Expenses between 2016‑17 and 2019‑20 are expected to decrease by 2.8 per cent in real terms, mainly driven by the lower number of unemployment benefit recipients."

 A budgeted 24.5% increase in expenses for implementation to reflect placements? It might be worth noting that the jobactive provider that is contracted by the government to guide me personally out of welfare and into financial independence has alerted me to one job in one year. 

Effective support…?  A personal history

The only job that has been proposed to me in the last twelve months was full-time fundraising in a shopping centre on the outskirts of Melbourne. According to policy I have to accept any ‘reasonable offer’, so I reluctantly said yes, indicating that I wasn’t in a position to do full time, but maybe part-time. The job network person said she would call and ask if 30 hours a week would be possible.

In the end, she didn’t make the call, and she didn’t put me up for the job. When I asked about it in the following compliance meeting there was no record.  So what is the government paying them to do? It can’t possibly all be going towards my free access to the job network agency’s fax machine that they suggested would probably be the only way they could help at my first meeting.  According to the Four Corners investigation last year, job service agencies are able to get a lot for very little, such as $1000 bonuses for every job placement, increased bonuses for jobseekers upgraded to ‘disadvantaged’, or by running compulsory but unbeneficial training courses.  Nor am I alone in making complaints about the appropriateness of service that’s provided to people, most of whom would love to find a position that matches their qualifications and constraints (but without working for criminals, as some have been guided to do through jobactive).

The left hand vs the right

By far the most perplexing (and somewhat amusing) allocation of welfare administration money that I have encountered was through a call I received one afternoon in mid-January this year. This goes into the category I like to call “you can’t make this stuff up.”

The call came through from a local phone number, and when I answered the gentleman on the other end of the phone introduced himself as being from my job active provider’s Post Employment Support office.

“But I don’t have a job,” I said.

The man on the other end of the phone insisted that I had indicated on my last job search report in December that I had had two interviews.  “But I didn’t get the jobs. I made some good contacts but not a job,” I replied. He then asked if I got any jobs through the ‘good contacts’ I’d made at the interviews. I had to remind him again that I did not have a job. He then asked me about what else I was doing as a part of my job plan, so I asked him to check my files, to which he responded “I don’t have access to your files because I am in a different department at a different location.”

To this day I do not know why he called when he had no evidence of me getting a job, but even more frustrating is when I checked my phone after the call, this man had unsuccessfully attempted to call me over six times that morning, to offer support for a job that I didn’t have.

That may not sound like much, but one has to wonder how the costs of implementation build up and quietly disappear into the abyss like autumn leaves, especially when they are not even accounted for in the same categories of the budget.  At the same time research shows that the Welfare to Work program is keeping families in poverty, reducing well-being and encouraging single parents into jobs with poor career potential, thereby reducing long-term financial security. A lot of energy is being expended on monitoring single parents on welfare to work, and yet I wonder how much more effective we would be in getting ourselves out of poverty if less was spent on the conditionality of our benefits and we were able implement our own self-agency.

This analysis is a contribution to the Scorecard on Women and Policy project, initiated by the Women's Policy Action Tank.  We invite policy specialists in all areas to provide analysis of public policy using a gender lens:  womenspolicy@goodshep.org.au  Follow us on Twitter: @PolicyforWomen