The Australian, Getting off the welfare train

Release Date: 
8 April 2014

In the indigenous employment figures released last month, one statistic stands out: only 30 per cent of working-age people in remote communities have a job. Among 17 to 24-year-olds, only 18 per cent are fully engaged in work or study. The government wants the people in remote communities to retain their attachment to country. But more need jobs for such communities to have greater independence and viability.

Local jobs should be filled, where possible, by local people. Jobs can also come from good local economic development. But part of the answer also lies in people working elsewhere, orbiting in and out from their homelands, as many remote indigenous people did in the past.

Orbiting for work is not straightforward. Social and cultural factors may prevent mobility. Additionally, policy settings can create perverse incentives.

Consider a man with a spouse and three young kids who wants to take a job in a town. In the remote community, that family would have, after paying all housing costs, about $41,600 disposal income a year from two dole payments ($24,300), family tax benefits (about $19,000) plus some smaller welfare allowances. Housing costs are likely to be $70 to $100 a week (say $4000 a year). In exchange, the father might have to do some part-time make-work activity. More likely, effectively there would be no obligations.

If this family moved for work, the breadwinner would likely receive the minimum wage or just above because of low skills. Family benefits would be about the same. However, rental costs would likely be higher (say, $350-plus a week including bills), assuming a property was even available. All up, their disposable income after housing would be about $44,800.

Economically the family would be just above break-even, but the downside would be loss of leisure time, disconnection from homelands and culture, and the risk of losing the job, in which case disposable household income would fall considerably until a new job was found.

Further, the family’s low-rent social housing in their home community — which they might have had for more than a generation — would be given to another family.

Ailsa Woibo, an indigenous grandmother from Hopevale, called these disincentives “the welfare pedestal that our young people are sitting on”. To climb the staircase of opportunity they must step down before stepping up.

The government is encouraging, through financial incentives, unemployed people to consider moving for work. In remote communities, policy settings should ensure, at least, that taking a job, where work is available, is a socially feasible and financially rational choice.

Indigenous Affairs Minister Nigel Scullion has outlined how housing rules could change, including portability of entitlements, mobility packages. Last month, the government introduced legislation that is not indigenous-specific but would provide relocation support for a remote family and a jobs bonus after 12 months of work.

The Forrest review on indigenous employment also heard how other incentives could be made more favourable to taking a job. For example, by ensuring work activities for those on welfare maintain skills and the money-leisure trade-off is weighted in favour of taking a job. Better schooling is also essential.

A great historical policy failure is that so many remote indigenous families are welfare dependent, without prospects of work and welfare creation. We are determined to remove debilitating structures so that everyone in remote communities can climb off the welfare pedestal and go to work.