THE federal government's Newstart program is actively discouraging welfare recipients from seeking work and creating a class of haves and have nots among those on benefits, according to one of Australia's top former bureaucrats.
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The comments come as a parliamentary committee urged the Gillard government to delay plans to shift 100,000 single parents on to the lower Newstart allowance from July 1 next year.
In a submission to the committee, the former head of the federal Department of Health and Aged Care, Andrew Podger, said current pensions and benefits were ''lacking any clear coherence'' and had created a class of have and have nots within welfare recipients. He said the gap between pensioners and other Australians receiving government payments skewed applications towards programs that paid more.
''A substantial incentive has been created, not to gain employment but to gain eligibility for the disabled pension,'' Professor Podger said.
The fellow of the Australian National University of Academy of Social Sciences Australia said keeping Newstart payments low while inflating the pension did not help transition people receiving the payment into jobs. He blamed baseless fears about an ''entitlement culture'' fed by political parties wanting to appear tough on unemployment for the gap.
But according to research from the academy, Australia, New Zealand and the UK have the lowest ''middle class'' welfare in the Organisation for Economic Co-operation and Development.
Professor Podger said there should be stricter work tests as part of a carrot and stick approach to getting people into jobs and supported work tests for single mothers whose children were over eight.
But he urged that failing a work test should not result in punishment for single parents.
''They should stay on parenting allowance, not move to the lower Newstart, if they genuinely cannot find work,'' he said.
The government plans to save $685 million over four years by forcing single parents receiving parenting payments on to the Newstart allowance once their youngest child turns six.
The Newstart allowance is about $60 a week less than the single parenting payment and Professor Podger said it was unfair.