Morrison should resist the temptation to make McClure's report his little red book
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Version 0 of 1. Scott Morrison is an ambitious minister in a big portfolio brimming with policy possibilities. He has hit the ground running. First childcare, and now the much-awaited second McClure review into social security payments. With McClure’s recommendations he should hasten slowly. The UK has tried to implement pretty much the same policy over the last four years – reforms recently described by the Guardian as a failure. In 2010 the UK elected a Conservative-led government. The new secretary of state for work and pensions was Iain Duncan-Smith, a former party leader intent on ushering in a “welfare revolution”. The revolution’s centrepiece was a universal credit that would simplify and streamline benefits, better reward work, cut benefit fraud and save taxpayers. Social security is the largest part of the UK’s national budget, delivering billions of pounds to millions of people. The universal credit was designed to replace six different payments with a single benefit, with additional allowances for children, disability, housing, and caring. The new payment would have just one application process, one contact point, and a single taper rate so that the benefit reduces by 65p per £1 above an income free area, to reduce high effective marginal tax rates as people on benefits moved into work. There would also be a new computer system providing real time updates of people’s earnings from their employer to the tax office and then to the benefits office, reducing overpayments and fraud. Like many revolutions, the reality of the universal credit has been far less rosy than its idealised vision. Delivering the grand policy vision required a serious overhaul of the information and computer systems used by key government agencies – the Department of Work and Pensions, HM Revenue and Customs, local authorities and Jobcentres. The government’s efforts were heavily criticised by the National Audit Office and parliamentary committees. IT contracting was fragmented and inefficient, with multiple IT firms – commercial competitors – engaged to do different tasks, and often failing to communicate with each other. The department’s oversight board could not effectively track the actual progress of the project. There was high turnover in senior management, including senior staff going on sick leave, with six project leaders in three years. The UK’s Major Project Authority called for a “reset” of the universal credit project in 2013. Today, there are just over 31,030 Britons receiving the universal credit, out of 5.1 million claimants. The original target was 1 million recipients by April 2014. At this rate, it is estimated that full roll out will take more than 1,500 years. The latest Audit Office update stated the net cost to government would be £138m (AUD$280m) over 10 years. The UK’s universal credit is a blueprint for McClure’s report – or perhaps the UK was inspired by Australia and McClure’s original report for the Howard government more than a decade ago. Policy parentage is often contested, and not easily resolvable. Regardless, the similarities are striking and the dangers are clear. Morrison must be tempted to use McClure’s report as the little red book for his own welfare revolution. There is a broad consensus that our system of unemployment benefits needs fixing, and the government is desperate for a new agenda. If there are losers in the process they’re likely to be the unemployed and people claiming the disability pension – perennial targets for a “welfare crackdown” narrative. Big computer companies are no doubt beating a path to his door, and that of the minister responsible for Centrelink, Senator Marise Payne, with flashy presentations on how easily they could make bold new welfare changes with a fancy new computer system. She has already described the current system, unfortunately known as Isis (Income Security Integrated System), as a “turbo-charged Commodore 64”. Joe Hockey has described Isis as “broken” and his Commission of Audit said it would cost between “$1.2bn and $1.5bn” to replace. Hockey should know the perils of Centrelink IT only too well. As John Howard’s human services minister he was responsible for the failed $1.1bn Access Card. Given its IT challenges, Centrelink does a remarkable job. Morrison himself pointed to the need for efficient IT systems in implementing welfare policy reform in his address to the National Press Club on Wednesday: Implementation of policy is as important as the development of policy. I think that is one of the key lessons out of the last government. Lots of ideas, you could say it was a festival of dangerous ideas running for six years, but nevertheless, even when they had a good idea the implementation of that policy always let them down. We won’t be repeating that mistake. We want to ensure the sort of change we can implement are changes backed up by the systems that need to drive it. The danger here is clear. Big changes to social security policy are difficult and often controversial. Add to that the need to introduce a fundamental overhaul of the computer system that pays everything from the age pension to the childcare rebate, and red flags should be flying – just not the revolutionary kind. Morrison doesn’t actually have direct responsibility for Centrelink, either. That should worry him. It means he wouldn’t actually have ministerial control over the implementation of the IT system changes required for his possible reforms. This is McClure’s second report on welfare. His first was given to Howard in 2000. Howard shelved it because implementing its core recommendations were seen as too difficult. Morrison should take note of this too. The social security system is complex because it deals with people’s lives, and they are complex. That won’t be changed by a new computer system. The promise of simple IT solutions is illusory, as Britain’s recent experience shows. |