Australian Social Security & Welfare-to-Work: Avoiding Freudian Slips?

Abstract:     
The British Freud Report and new Australian Government both endorse contracting-out of job brokerage services for the unemployed. The theory behind contracting-out is that it provides superior outcomes for clients, at lower costs and burden of responsibility for government, offering greater flexibility and adaptability to the needs of the unemployed. This paper demonstrates that 'quasi-markets' such as job networks retain many features and complexities of line-administration of government-run services, require extensive micro-management (generating friction with network providers), struggle to provide accountability or protect client rights, and risk penalising or neglecting the most vulnerable clients. It is suggested that welfare-to-work reforms heighten these risks for vulnerable clients, the very group singled out in the Freud Report for privatised job brokerage. The paper argues that both countries should re-think the abandonment of program-based funding of job brokerage for vulnerable groups like the disabled, along with the wisdom of purist 'job-first' welfare-to-work social security reforms. 'Paternalist' welfare policies quarantining ('controlling') or stopping welfare payments for so-called dysfunctional citizens (such as members of indigenous communities, people breaching community service orders, drug users or neglectful parents) are shown to simply compound adverse disciplinary impacts on vulnerable clients.

Keywords: welfare-to-work, welfare reform, job-networks, PEP, work barriers

JEL Classifications: I38, J64,K10, K30, K31

Accepted Paper Series