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Big data to drive overhaul of welfare system
September 22, 2016 News

Minister for Social Services Christian Porter has proposed a revamp of the welfare system.Alex Ellinghausen


Big data that predicts the likelihood of people getting stuck on welfare will be used not just to design policies to stop individuals entering the system in the first place but inform a looming redesign of the entire welfare system, Social Services Minister Christian Porter says.

The government announced a $96 million “Try, Test and Learn Fund” in the budget to allow states and territories, the non-government sector, academia and stakeholders to road-test ideas for reform, and will follow similar experiments in New Zealand and recommendations of last year’s McClure review into Australia’s welfare system.

Releasing a longitudinal report on welfare spending by PricewaterhouseCoopers on Tuesday, Mr Porter said governments of all stripes had let ideology drive the debate about welfare when “the real task is to continuously engage in an honest, evidence-based assessment as to when an existing welfare spending approach improves an individual’s prospect for a better life, a life made more meaningful by employment, by community contribution and through self-reliance and measure when it does not”.

He is proposing a new “priority investment approach” that aims to understand people’s experience with the welfare system during the course of their lives and how targeted interventions can stop them getting stuck in a life of welfare dependence.

 Mr Porter quoted huge figures for the cost of the welfare bill on Tuesday, but the investment approach actually targets a relatively small number of groups receiving various forms of welfare who are regarded as being likely to end up in the system in the long term.

Breaking the cycle

The primary aim of the change is to break the welfare cycle, with the budget benefits coming as a secondary benefit.

For example, there are 4370 teenage parents in the welfare system at present, of whom 12 per cent are forecast to access income support in each year for the rest of their lives.

But Mr Porter said as well as the policy targeting approach, “the data we now have provides very strong reasons to question the effectiveness of some of the fundamental, overarching architecture of our welfare system”.

 “The data that we have amassed have helped us devise better, simpler overarching structures that could help us achieve better outcomes and improve lives across groups,” he said.

The McClure review recommended a major overhaul of working-age welfare payments and Mr Porter said the government was now looking at the issue.

He suggested extending the principle of mutual obligation to areas such as children’s school attendance.

Critics of Mr Porter’s proposals said targeted interventions were fine if there were proper supports in place on the other side of the ledger, such as spending on employment training services.

 Labor’s Jenny Macklin said “you don’t help young people by cutting their support and driving them into poverty and hardship”.

“Let’s not forget the Liberals also cut $270 million from community organisations in the 2014 budget – grassroots community groups that were set up to help vulnerable Australians.”

Business Council of Australia chief executive Jennifer Westacott said the PwC analysis “clearly shows that current arrangements are not working”.

“Many young people – students, parents and careers – are at risk of long-term income support dependence,” she said.

 “The Business Council applauds the new policy’s data-focused approach. This will better target spending to those who need it most and help track the impact of welfare payments on individuals.”
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