Investing in people – improving lives   -   20 September 2016  -  National Press Club

Today the Coalition Government announced the first stage in a new approach aiming to revolutionise the welfare system by focusing on improving the individual lives of people trapped in it.

The new approach analyses data assembled from a variety of sources, and the first wave of this data is presented in a Baseline Valuation Report.

Minister for Social Services, Christian Porter, said for the first time government had evidence of exactly what was happening to people in the welfare system, down to very small groups.

“For the first time in history through the Australian Priority Investment Approach to Welfare, we have a clear, transparent and detailed profile of the welfare system,” Mr Porter said.

“This information allows us to identify and target those groups most at risk of long-term welfare dependency.

“Revolutionary change is required, but required in stages, which shifts the focus on to real people for whom the mere passive receipt of welfare is failing, sometimes spectacularly, to actually make their lives better.”

The baseline valuation is constructed collating welfare information collected over the last 15 years, along with data from the ABS and other sources.

It then applies the type of algorithmic and actuarial analysis used in insurance industries to predict the likely movements on, off and between welfare payments for specific groups of people over their future lifetime, and the likely welfare cost of target groups.

The analysis shows that there are a number of groups who have particularly poor outcomes, such as:

• For 11,000 young carers, it is expected, on average, they will access income support in 43 years over their future lifetime;

• For 4,370 young parents it is expected, on average, they will access income support in 45 years over their future lifetime; and

• For 6,600 young students it is expected, on average, they will access income support in 37 years over their future lifetime.

The analysis also shows the total estimated future cost of the welfare system for Australia’s current 24 million people is $4.8 trillion  =   $4,800,000,000,000.

“While this is a large figure, the more important purpose of our data system is to allow us to identify what happens to people in receipt of welfare with the highest risks of long-term dependency and to analyse the impacts of policy designed to help those people break cycles of welfare dependency,” Mr Porter said.

“The outcomes highlighted from the report are particularly concerning for the young people identified. 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.

“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.”

The key to creating better policy will be the $96 million Try, Test and Learn Fund, which will enable organisations to compete for a chance to try a policy that proposes to create a path out of the welfare system.

Mr Porter said the fund will be open by the end of the year for not-for-profit organisations, governments, social policy experts and industry to pitch their ideas.

“Government will consult on how the Fund should operate to best encourage innovative proposals from a wide range of stakeholders,” he said.

“Young carers, young parents and young students will be the initial priority groups to receive additional support through the Fund.

“In the longer term, Government will be looking at innovative early intervention strategies, targeted supports and services for other groups across the Australian population, including for older age groups.”

The underlying data from the Australian Priority Investment Approach will help foster innovation throughout society. Social policy experts and service providers outside Government will also be provided access to de-identified information developed for the approach, available through a secure website.

Subsequent annual valuation reports are due each year, with the final valuation report to be completed by the current provider, PwC, in 2018. From 2019, the Department of Social Services will take on the responsibility of producing annual valuations.  

The full report can be found on the Department of Social Services website – dss.gov.au/priority-investment-approach