Ideas@TheCentre – The Centre for Independent Studies

Ideas@TheCentre

Ideas@TheCentre brings you ammunition for conversations around the table.  3 short articles from CIS researchers emailed every Friday on the issues of the week.

NDIS cost blowout has begun

15 February 2013

andrew-bakerThe Senate Inquiry into the government’s National Disability Insurance Scheme (NDIS) legislation is due to report in March, but the government is starting to buckle under the pressure and is looking at expanding eligibility for the scheme to include some people aged over 65 years.

A scare campaign being led by special interest group National Seniors is claiming: ’At 64 you're covered for the rest of your life (by the NDIS); at 65 you're out on the street.’

While someone who acquires a disability aged 64 years or younger will be able to stay on the NDIS for their entire lives, the second part of the National Seniors’ claim is manifestly false. If someone acquires a disability aged over 65 years they will not be ‘out on the street,’ but will receive disability supports through the aged care system.

With the government ready to spend around $22 billion a year on the NDIS when it is fully operational in 2018-19, some people are afraid they are going to miss out on the NDIS spending spree as it passes by.

The government is responding to the pressure, and is considering scrapping the 65 years cut off age and looking at other options. In The New Leviathan: A National Disability Insurance Scheme, I highlighted that changing the eligibility age was a serious risk to the long-term financial viability of the NDIS.

The $22 billion a year figure covers 441,000 people under the age of 65, and not one soul older than 65, of whom around 600,000 have a severe or profound disability.

Given that the NDIS costs on average around $50,000 per person, with some people receiving NDIS funded services valued at $250,000+ per year, expanding the scheme beyond the current boundaries will cost hundreds of millions, if not billions, more than current estimates.

The NDIS cost blowout has begun.

Andrew Baker is a Policy Analyst at The Centre for Independent Studies and author of The New Leviathan: A National Disability Insurance Scheme.

Well intentioned but fiscally ludicrous

15 February 2013

alex-philipatosWell, the fiscal chickens have come home to roost. The government’s Wage Connect policy has proven so successful in finding businesses with their hands out that the ALP has been forced to place the program on hold until 1 July.

Wage Connect is a program designed to assist job seekers, who have little to no recent work experience, get back into a job. The program is restricted to those who have been unemployed for over two years.

Employers who offer full-time positions to inexperienced staff, providing them with on-the-job training, can receive subsidies to the tune of $5,900 per employee for six months to assist with training costs. This averages out to roughly $230 per week, equivalent to that of the Newstart Allowance.

The government had originally committed $85 million out of the 2011-12 budget to fund the program over the next four years. But since the budget, long-term unemployment has grown by 23,000 people to a total 253,000. Predictably, Wage Connect has proven popular with businesses eager to get their hands on some easy money.

The program has laudable objectives. The long-term unemployed often lack the skills and experience necessary to find even entry-level jobs, so any program that increases their chances of gaining employment ought to be considered. However it was entirely foreseeable that this program would burn a hole through its budget.

Many businesses in low-skilled industries regularly employ inexperienced staff. Offering these businesses subsidies simply pays them to hire employees they might already have hired.

Of course, many of these subsidies would have gone to the intended recipients; businesses weary of hiring inexperienced staff would have seen the subsidy as a just reward for taking a risk on inexperienced staff.

But there is a better way to get the long-term unemployed back into jobs, with no impact whatsoever on the government’s budget.

To give businesses a greater incentive to take on the long-term unemployed, the government could provide a six-month exemption from the minimum award wage.

This would give businesses six months to provide training, without the cost pressures imposed by minimum award wages. After six months – the same duration as the Wage Connect subsidy – the employee’s wage would go back up to its regular level.

This way, the long-term unemployed would have higher job prospects, employers would have an incentive to hire them, and the government would reduce the number of long-term unemployed job seekers drawing income support.

Scrapping Wage Connect subsidies in favour of a minimum wage exemption should be a no-brainer for any government wanting to stem the growth in long-term unemployment, particularly one struggling to produce a budget surplus.

Alexander Philipatos is a Policy Analyst at The Centre for Independent Studies.

Victorian revival highlights lost ground on child welfare

15 February 2013

jeremy-sammutCompulsory school attendance was introduced in Australia during the Victorian era in the later-nineteenth century. The Victorians were the first to recognise that the state had a role to play in promoting child welfare by requiring parents to ensure that their children received a minimum level of schooling. This was part of a broader movement to encourage respectable standards of behaviour by people of all classes.

The effort to bring about social improvement had largely succeeded by the early-twentieth century. Working class communities had embraced ‘middle class’ notions of respectability (work, marriage, sobriety, and thrift) that had proven conducive to the formation of functional families. A marker of respectability was the ability of parents to send clean, well-fed, and properly dressed children to school each day. A marker of un-respectability was enduring the shame and stigma of having one’s children rounded up by the truancy officer.

For a hundred years, society traded on the legacy of the Victorians, but things began to change in the aftermath of the social revolution of the 1960s.

The Sixties ethos of personal liberation undercut the Victorian behavioural code, which was fashionably dismissed as so much ‘bourgeois’ uptightness. Complacency also set in. Official enforcement of respectable behaviour seemed unnecessary. Rarely-needed truancy laws appeared ‘harsh’ and anachronistic.

In the modern era of free-flowing welfare, however, these attitudes have become socially disastrous.

Social norms have collapsed in a significant underclass of welfare-dependent and dysfunctional families, and the failure to regularly send children to school symbolises the breakdown of behavioural standards.

The response to rising levels of chronic truancy has been feeble. Woolly-minded sociologists have offered lame excuses about ‘poverty’, and the self-serving welfare industry has demanded higher government funding for ‘more support services’ to help ‘struggling’ parents. Meanwhile, educational faddists have prattled on about making school ‘fun’ so kids are ‘engaged.’ Too little attention has been paid to the best interests of children denied an education due to parental neglect.

Our thinking about child welfare now appears to be slowly coming full circle.

The Victorian Government has just announced plans to make it easier to fine parents whose children miss more than five school days a year without a valid excuse. This follows embarrassing revelations earlier this year that not one fine had been issued for truancy under new laws introduced in 2006.

The renewed, if much belated, attempt to revive the specter of the truancy officer and crack down on absenteeism is welcome. However, the need to punish parents who don't send children to school highlights the truly appalling amount of ground we have lost over the last 40 years.

Jeremy Sammut is a Research Fellow at The Centre for Independent Studies.