The Turnbull government's powerful expenditure review committee has discussed axing one of Tony Abbott's first major policy achievements, the work-for-the-dole program.
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But a group of backbench MPs have lobbied Treasurer Scott Morrison as part of a rearguard action to save it, with one describing work for the dole as "red meat for the base" and warning that axing it would infuriate the party's conservative supporters.
Fairfax Media has been told axing work for the dole was discussed when the budget razor gang met last week but a final decision has not been made.
The proposal to axe the policy, introduced by Mr Abbott in 1998 as a junior minister in the Howard government, was floated as the Turnbull government continues to hunt for savings.
Another signature Abbott policy, the Green Army program, was killed off last December in the mid-year budget update.
With the May 9 budget fast approaching, decisions have not yet been taken on a number of other big ticket budget items - including a cut to the capital gains tax discount rate - which some senior ministers are arguing forcefully for, and others vehemently oppose.
Last year's budget diverted $500 million from work for the dole over four years to the PaTH youth employment program but maintained $648.5 million in funding.
Andrew Laming, one of the MPs who lobbied Mr Morrison on the issue, said it was a "signature Liberal Party policy" that should not be dumped.
The Queensland MP told Fairfax Media he was a "big supporter of work for the dole" as it "provides an absolutely vital foundation...for work-ready job seekers in this country".
"Without it, it is very hard for other arrangements like the newly conceived PaTH program to fill that gap. The loss of work for the dole would lead to 150,000 young Australians having to front up to futile job interviews to meet their activity requirements, which does little to get them a job," he said.
"The skills learned on work for the dole are an important bridging process to being ready for a real workplace. It's actually in the nation's interest to have a pool of people with experience, a strong resume and supervisor references to give them a shot at a slice of the pie."
However another Liberal MP, who asked not to be named, said while the policy was popular with the party's base it was "shit" and "it should be dead; it's a hopeless program".
Work for the dole requires people who are unemployed to work in what are often low-supervision, menial tasks such as cleaning and labouring in exchange for access to welfare payments. It was wound back under the former Labor government but revived by Mr Abbott when he became prime minister.
A spokesman for Employment Minister Michaelia Cash said "Work for the dole is a key component of the government's mutual obligation regime. The government has no plans to abolish the programme."
On Tuesday morning, the minister issued a further statement: "Work for the dole is fundamental to our efforts to get people off welfare and into work. The government will not be abolishing work for the dole. Any suggestion to the contrary is simply incorrect."
Ms Cash did not address, nor deny, that the expenditure review committee had discussed axing the program.
A government-commissioned $340,000 review of the program last year found the probability that an unemployed person will find a job improved by just 2 percentage points because of work for the dole.
But the researchers found a positive response from a majority of participants, with two-thirds saying their "soft skills" - or people skills - had increased.
From January to September 2016, 86,309 people began participating in work-for-the-dole activities. Of those people, 36,544 participants were under the age of 30 and the balance, 49,765 were over the age of 30.
Of those who participated in the program, 59,898 had been unemployed for more than 12 months, 25,368 for six to 12 months and just 1043 for less than six months.
The St Vincent de Paul Society labelled work for the dole a "demonstrable failure" in its pre-budget submission to the government and recommended it be scrapped.
The Australian Council of Social Services said the $250 million spent on the scheme last year would be better spent in the Employment Fund, helping the long-term unemployed find work experience and training that would improve their job prospects.
Anglicare Australia also recommended work for the dole "and similar punitive approaches to Newstart" be dropped in favour of investment in partnership programs that "deliver wrap-around support, education and on-the job training".
- with Amy Remeikis, Heath Aston
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