Jennie George (Throsby, Australian Labor Party, Shadow Parliamentary Secretary for Environment and Heritage) Share this | Hansard source

I am not going to answer everything that has been asserted by my good friend the member for Corangamite. I understand his passionate support for the Minister for Employment and Workplace Relations’ so-called Work Choices bill, as he is a known member of the HR Nicholls Society, but I have always found the member for Corangamite to be a rather fair and compassionate person. Yet his analysis today of the Welfare to Work legislation reveals a cold-hearted bean counter approach that I had never detected before. One might be forgiven for thinking that the member might have had a finger in the pie in developing the government’s Welfare to Work legislation. I would be interested to get an answer from him on that matter, because he seemed to be suggesting in his comments that people with disabilities and sole parents actually choose that state of being and that existence.

I can assure you that I for one support the notion of moving people in a supportive framework from welfare into work, as does the Labor Party. It is good for those people and it is good for the economy. It meets a major economic challenge that we face with an ageing population, but neither he nor the minister or the government have ever answered the fundamental question: how do you help people move from welfare to work when the government’s first response is to cut their existing entitlements—in the case of disability pensioners, with the new work test, by $77 a fortnight, and in the case of sole parents, $44 a fortnight—as some kind of precondition for them finding work? That is what I find most objectionable in this legislation: not the principle, but the actual means of implementing that principle.

I awoke the morning after the budget to the screaming headlines. One of the headlines particularly grabbed my attention: ‘Manna from heaven’. I thought: would the people whom I represent in my electorate—the 6,000 people on the disability support pension and the 4,000 mums on the sole parenting payment—think that the budget delivered justice and manna from heaven for them, knowing at the same time that the very wealthy were getting the benefits of the largesse, and that come July they in their very low levels of entitlement will be facing quite severe cuts? You have only to look at the largesse. If you happen to be on $20,000 a year, a $7 tax cut per week; on $100,000, a $52 tax cut per week; on $150,000, a $119 tax cut per week. That is $37 billion in tax cuts over four years. I would have thought that a government with that amount of expenditure—with the amount of money it can put out there to try to assist families deal with the pressures of rising inflation, petrol prices and mortgages; with the $37 billion it can afford on tax cuts—might have rethought the very mean-spirited approach it will be taking to sole parents and people on disability support pensions from July this year.

It was not just the tax cut. On top of that there was the reduction in the top marginal tax rates and of course the very generous superannuation concessions. One thing you can be assured of is that sole parents and disability pensioners will never see the generous superannuation concessions that flow, because they are finding it hard to eke out an existence to look after their children. It is no wonder that a growing number of them are among the working poor. It is a mean-spirited approach that really upsets me in a country as wealthy as ours. It upsets me that, with the largesse that flowed to the top end of town, the government in all conscience thinks it is fair to proceed to place an estimated 171,000 Australians at the lowest end of the income scale on lower payments than those under current arrangements. I wonder, again, how those 10,000 people in my electorate feel about this government’s budget.

The other thing that concerns me most about the Welfare to Work changes is the obvious hypocrisy of the government’s position about which families it supports and which it does not, and which families get support to look after their children at home and which families will miss out on that support. As the member for Corangamite well knows, the Labor Party has been pursuing the issue of the very generous concessions for wives of very wealthy people who make the choice to stay at home and look after children in a system that has no means test attached to it. If you happen to be the wife of one of the 76 millionaire families that receive from our welfare system $3,300 in benefits each year, or one of the wives of the 350 men who earn over half a million dollars a year, you are okay: you can stay at home with your child and Australia’s generous welfare support will provide over $3,000 for you to exercise that choice. But if you happen to be a sole parent, when your child turns eight, you will go onto a lesser benefit and your entitlement will in fact be cut by $1,144 from 1 July this year. Is that fair? Is that an incentive to help move people from welfare to work?

I ask why it is that this government, with the means that it has, continues to pursue the stick approach to sole parents, most of whom are there not through any choice of theirs but because of marriage failure. Why is the government going to punish them by reducing their benefits, all in the supposed theory that somehow this will provide them with work, while at the same time extending largesse to people who can well afford alternatives?

The third reason I find inconsistencies in the government’s approach is that it has not, despite all the money that was available, despite the huge surpluses in the last year and in the next couple of financial years—we are talking about $10 billion, $11 billion; huge of amounts of money that have been raised from the community, from working families—addressed the obvious inequity that exists in the very high effective marginal tax rates that women face. Women in two-income families tell me, ‘Look, Jennie, there’s no point looking for work.’ These are people who would voluntarily go back to work but for the huge disincentive with marginal tax rates of 50 per cent or more. Women in households where there is another income earner tell me that that presents a huge disincentive. By the time they go back to work, pay their transport and petrol costs and find child care—if they are lucky enough to find it—they bring home 50c or 40c in the dollar.

That is exactly the same problem that the sole parent will face. I looked this morning at the headline: ‘Slaving for $2.66 an hour’. I thought: ‘This is a great government. If you happen to be very wealthy and earn $100,000 a year you will have a $52 tax cut but, if you happen to be a sole mum with children, you will be forced to work and you will be getting $2.66 an hour.’ If you do not believe me, let me just quote from where that analysis came:

A budget analysis by the Brotherhood of St Lawrence found a sole parent of two school-age children who takes a 30-hour-a-week job at the minimum wage of $13 an hour would lose about 64 per cent of their extra earnings.

“This parent will also have to pay around $60 a week for child care,” the Brotherhood’s executive director Tony Nicholson said.

“This leaves him or her—

usually her, as we know—

approximately only $80 a week better off by working. They are effectively working for an hourly rate of $2.66. The government has squibbed. People want to move from welfare to work but the budget doesn’t encourage it.

Our shadow Treasurer, in his earlier portfolio and in his current one, has consistently said to the government that effective marginal tax rates on second-income earners, in terms of the interaction of the tax and welfare system, are really very punishing to people who want to re-engage in paid employment. If you do not believe me, member for Corangamite, I suggest that you look at a very authoritative study recently released by Professor Apps from Sydney University, an expert in this area, who concludes that second earners in Australia face an average tax rate of around 50 per cent, the second-highest in the developed world. She says that the tax and family benefits system is a very unfair system and that it also has very negative impacts on the labour supply or the hours worked by mums.

These effective marginal tax rates are the main reason why we have had a fall in the labour force participation rates for mothers in the 25- to 49-year age group. The participation rate has actually fallen between 1990 and 2003, because women make the judgment that there is no economic incentive as a second-income earner wanting to do some part-time work to actually go to work. They exercise some choice but, for sole parents with children aged eight, from July onwards there will be no choice. The only choice will be that you go, you take the job on offer—and I will come to that in a minute—and, if you do not like the job or if you give it away, even though you might effectively be earning $2.66 an hour, you will lose your benefit for eight weeks at a time. Is this something the government could be proud of?

I shake my head in despair sometimes, thinking about the growing inequity in income distribution, growing inequality, growing levels of poverty among the working poor. When I read and listen to all the fanfare about the wonders and virtues of the budget, when I see the Treasurer smirking and taking great delight in how the top end of town has been so well catered for, and then I think about all those people who, come July, will be hit so hard, I think surely we can do better as a nation than to take the stick to the most disadvantaged and the poorest people in our community.

Nothing that the member for Corangamite said today in his speech answered the fundamental question: how does the slashing of entitlements of people eligible for the DSP or the sole parent payment help them find work? Until he answers that question in a rational way, he cannot expect that this side of the House will just accept the kind of economic parroting arguments that we constantly hear. Yes, of course it is important that people move from welfare to work, of course we need to increase the participation of women—particularly married women, because in Australia the participation rate of married women with children is much lower than the rate in comparable OECD countries. But you cannot do it by taking a stick. You have to do it by looking at the disincentives in returning to work and you also have to put in a supportive framework.

The member for Corangamite mentioned disability providers in his electorate. I have wonderful providers in my electorate too. The Greenacres Association do a wonderful job. I visit them regularly. They do provide assistance to enable disabled people to return to work where they can. But it is not as easy as the member for Corangamite suggests. If it is that easy, can he explain to me why the rate of employment for people with disabilities in the government’s own purview—in its employment—has dropped from 5.6 per cent to 3.8 per cent? If it were that easy, surely governments would lead the way.

I think it is rather simplistic to say that we have to move all these people—implying that they are making the choice to stay—into jobs that often do not exist. For example, if you look at the people on the disability pension in my electorate, the majority of them are mature-age people. Try finding a job in the Illawarra if you are 50 or over. It is not that people are not looking for work. In January this year, in my electorate the full-time teenage unemployment rate was 35 per cent. Those young people are desperate to find employment, and we have some good pilot projects that are working at placing them into apprenticeships. So you also have to have the jobs that will take up the people who are on disability pensions, who are unemployed or who are sole parents. I think you have a very simplistic view of how this operates, with due respect.

I cannot fail to respond to the comments the member made about how the government sees the Welfare to Work program working in harmony with its Work Choices legislation. Of course, the two do intersect and that is another great cause for concern. We know the changes in the Work Choices legislation will drive down wages and conditions. We know there will only be a handful of minimum conditions. We know that things like penalty rates, overtime and shift allowances will no longer be guaranteed. We know that people who do not have much industrial bargaining power will find it very hard to retain their current entitlements. But when the government forces sole parents and people on the disability pension into work, with all the power in the hands of the employers, I know where they will end up: they will end up on the bottom of the negotiating scale. I know there are a few extra places in the JET program for retraining, but what ability will a sole parent who has been out of work for a long time have to negotiate a reasonable job offer? It will be the job on offer. As the member for Corangamite knows, if a sole parent does not take that job she will be in a situation of having her entitlements cut for eight weeks. Just imagine it: if you are offered a job on the most miserable of conditions, and you decline that job, you will be without any income support for eight weeks. So the eight-week non-payment period will apply to sole parents for refusing a reasonable job offer—‘reasonable’, I guess, means a job that provides the legislated minimum conditions—or, if you decide to leave the job because you think you are being ripped off, you will find that your entitlements will be cut for eight weeks. So it is an issue of how women in that situation are going to put food on the family table.

No-one has explained to me the rationale behind the punitive suspension regime. I cannot believe that, with the largesse that extends to the top end of town, this government could in all conscience support legislation which would leave children and their mothers with no income support for eight weeks—that we would go back to the days of charity where they go to Centrelink and Centrelink says, ‘Well, go to St Vinnies and see whether you can get money to pay your bills.’ I think that is absolutely unconscionable.

Let me quote the words of St Vincent de Paul who raised this matter in their submissions to the Senate inquiry that investigated this legislation. They said:

Our concern lies primarily with the way in which the combination of these two reform agendas—

that is Work Choices, the industrial relations legislation, and Welfare to Work—

will result in some of the most vulnerable members of the community being pushed off social security and into low paid jobs that will be offered on the proviso that an Australian Workplace Agreement be accepted, even if that agreement results in the lowering of real income and a loss of conditions such as penalty rates. The potential for those AWAs to wreak havoc on the lives of Australian families, especially the precarious positions of single parent families, is very real and profoundly disturbing.

I conclude by saying this to the member for Corangamite. I understand your rationale and your longstanding view about the supposed benefits of industrial relations reform—interestingly, the HR Nicholls Society does not embrace the changes with great gusto; I think it was someone from the HR Nicholls Society that said all the overly prescriptive regulation reminds them almost of a Soviet style command and control economy in terms of what can and cannot be in agreements—but I do not understand how, in the context of a budget that some describe as manna from heaven, the member for Corangamite, whom I always considered to be a fair and reasonable person, can look so well after the interests of the top end of town—the people who do not need a hand-up, the people who are relatively privileged and fortunate and who will benefit not only benefit from tax cuts but from a reduction in the top marginal tax rates and extremely generous superannuation contributions. How in all conscience can you live with yourselves while at the same time punishing and taking a stick to the most vulnerable in our community—people with disabilities and sole parents who are not there by choice—and saying to them, ‘The way you find work is by this government cutting your entitlements,’ in the case of disability pensioners by $77 a fortnight and for single mums by $44 a fortnight, and then telling them to go to the local charity if they refuse to accept a job that should not be on offer and that is exploitative. I do not think in all conscience the government should proceed. (Time expired)

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