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Damned if you work, damned if you don't.

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Media Release

Penny Wong Labor Senator for South Australia Shadow Minister for Employment and Workforce Participation, Corporate Governance and Responsibility

Thursday 3 November, 2005


The Howard Government's extreme welfare changes are fundamentally flawed, according to new modelling by the National Centre for Social and Economic Modelling (NATSEM), Shadow Employment Minister Penny Wong said today.

NATSEM was asked by the National Foundation of Australian Women to find ways of improving the changes to welfare, so they would reduce the extreme negative impact on vulnerable Australians. The research shows that the core of the Government's changes, a cut to payments, leaves people worse off and reduces the incentive to work.

"This research confirms Labor's view: that extreme cuts to the income support of vulnerable Australians do not help them gain work," Senator Wong said.

"In fact, the cuts proposed by the Howard Government actually result in less incentive to work, because the Howard Government will take back more of what people earn.

"John Howard will take back up to 75 cents of every dollar people earn.

"As well as crushing incentive, vulnerable Australians will have less money to pay their bills and feed their families.

"It doesn't matter whether you move into work or stay on welfare, the Howard Government will punish you either way.

"Last night at Senate Estimates, the Department confirmed that it had been aware that the welfare changes increase effective marginal tax rates, and that NATSEM's previous modelling of this increase was accurate.

"When Treasurer Costello announced these extreme changes on Budget night, he knew they would crush the incentive for welfare recipients to move from welfare to work.

"The time has come for the Howard Government to abandon these changes and instead implement real welfare reform that actually helps people to overcome welfare dependency."

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