Welfare reforms are worthwhile, but not an easy budget fix

The old model of DSP providing a stop-gap for workers too old to return to manual labour but too young for the age pension is now outrageously outdated.

We need instead to focus finding places in the workforce for young people with disabilities- and getting tough on those who shouldn't be on the pension at all- rather than confining them to the dustbin of life-long welfare.

But we need to be circumspect about what these changes can achieve. The Howard, Rudd and Gillard governments have all had a go at reforming disability pensions, and none have had much luck. With 26 million Europeans and 12 million Americans on disability benefits, there are no clear international 'best-practice' examples that we can emulate either.

Like with previous DSP reform, the road ahead will be long and rocky.

In contrast, changes to unemployment benefits have yielded the most positive results of the welfare reform era. But in many ways they have now become victims of their own success.

With a booming economy and tough rules for jobseekers, the job-ready and the young and lazy have largely been pushed into the workforce. Very long-term unemployed account for an increasing proportion of jobseekers, making the job of policymakers much more difficult.

The Gillard government's instinctive reaction to this has been to increase training for the long-term unemployed.

More than a quarter of all Newstart recipients who have been on the payment for longer than twelve months are exempt from job search due to training, up from less than ten percent in 2004. Moves to provide more skills training for unemployed people in the budget suggest the government will continue down this path.

But while training programs are a tempting fix for governments who want to look like they are doing something to help long-term unemployed, we now have good evidence that they very rarely work.

Basic literacy, numeracy and job-search classes can help, but ultimately the best way to get an unskilled worker into work is to find them an unskilled job - not try to train them for a skilled position they may never get.

The 'work-first' approach has proven to be the most successful way to reduce unemployment. Low-level jobs often lead to much better jobs.

The budget's focus on requiring long-term unemployed to participate in more work experience - despite Labor's obvious predilection for expensive training programs- perhaps shows that deep down the government knows this is true.