Posts by "Peter McCallum"

Budget 17/18: Drug Testing Welfare, does it add up?

The federal government has announced, in their 2017 budget, plans to drug test welfare recipients and link payments to their test results. They plan to test 5,000 recipients as part of a trial. This includes the possibility of selecting areas for testing based on testing the sewerage of certain suburbs for traces of drugs.

A similar program in New Zealand over three years saw just 0.47% of tested welfare recipients failed the drug test. In 2015, New Zealand spent $1m testing 8001 people and 22 tested positive, a mere 0.27%. Similar programs have been run in various parts of the United States. In Missouri they spent $336,297USD in 2014 testing 446 of the 38,970 welfare applicants for drug use and 48 tested positive, a mere 1.1%. In 2015, 10 U.S. states spent a total of $850,909USD testing welfare recipients and found 321 positive cases out of 2,996, a total of 10.7% and one percentage point higher than the national drug use rate of 9.7% – although Kansas and North Carolina only apply tests to those under ‘reasonable suspicion’ of drug use and Maine tests those previously convicted of drug offences only. Utah, a state which does not base tests on suspicion or convictions, had only 18 of 460 test positively, less than half the national rate at 3.9%.

With positive results from drug testing payment recipients often turning out lower the national rate, it may be the case that those who are worse-off simply cannot afford to spend their incomes on much else besides necessities.The Prime Minister has stated that this policy is “doing them a favour”, and that “substance abuse and drug dependency have a high correlation with unemployment”. In his own words, “The lesson is: don’t do drugs”. While it is true that substance abuse and drug dependency have a high correlation with unemployment, it is not necessarily the case that drug use causes the user to be unemployed. It is perfectly believable that someone without work may be more likely to turn to substances due to their unhappy situation. As these programs have consistently cost more money than they have saved, as seen in both the United States and New Zealand, the question which arises is: why drug test welfare recipients at all?

If the government does not wish for people to engage in illegal activity such as using illicit drugs then perhaps they should randomly drug test all citizens and avoid targeting a particular, more vulnerable, group. If the government does not wish for people to use government support to engage in illegal activity then perhaps they ought to drug test and monitor pensioners, people who negatively gear, people in industries which receive subsidies or beneficial regulations, students and indeed politicians. Indeed, the government could test the sewerage of suburbs with high levels of pensioners or investment property owners. Of course these programs would also be likely to cost more to implement than they would save, so while they would be a net negative to the budget, perhaps they would enable the government to sleep more soundly at night knowing that less people are using government transfers to buy drugs.

When discussing his proposal and design for a negative income tax, economist Milton Friedman argued that the government should simply not waste administrative resources policing the activities of recipients of welfare. Ultimately targeting people on welfare may prove to be a popular move politically for the government, and although I believe it will be a net negative for the budget, they may push ahead with the program even as costs add up if what they are really paying for is votes.