Government asks Treasury officials to investigate cause of ‘welfare traps’

Treasurer Scott Morrison during question time on Thursday. Photo: Alex EllinghausenCashless welfare trial to go aheadWelfare spending must be reined in: minister
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The Turnbull government has asked officials from Treasury and the Department of Social Services to form a working group to investigate why ‘s tax and welfare system creates “welfare traps” for some recipients.

Treasurer Scott Morrison and Minister for Social Services Christian Porter say the group will analyse “impediments” in the system that create disincentives for welfare recipients to rejoin the workforce.

They say the tax and welfare systems ought to ensure that ns are “better off working than being on welfare”.

A spokesman for Mr Morrison said senior officers from both departments will be involved.

In a joint statement, Mr Morrison and Mr Porter said the government was determined to ensure that the efforts of working ns are rewarded as they work more and receive fewer welfare benefits, and that they are not penalised with “excessively high tax rates”.

“We need a tax and transfer system that supports those most in need while rewarding working ns trying to secure their financial security by building personal wealth,” they said.

“The way our personal income tax system and complicated welfare system interact should not result in the creation of welfare traps, eroding or even removing the financial incentive to join the workforce.”

They say the working group’s investigation will inform the government’s tax white paper process, which will look at this issue in more detail.

The news comes a day after the St Vincent de Paul Society National Council released a new report on ns living in poverty.

St Vincent’s national chief executive, John Falzon, said political attitudes towards people who needed welfare had changed for the worse in over the past 20 years.

“It has become completely stigmatised and something that is treated with disdain by our political elders,” Mr Falzon said.

Community and welfare groups have long been calling for Newstart payments, which are currently $523.40 for a single person per fortnight, to be boosted by $50 a week.

With Judith Ireland

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