Thursday, 16 August 2007
Social Security Amendment (2007 Measures No. 1) Bill 2007
I rise to speak in the second reading debate on the Social Security Amendment (2007 Measures No. 1) Bill 2007. When it comes to welfare reform and workforce participation, we know that the Howard government really do not get it. They talk a lot but they have missed many of the fundamentals of this debate. Stuck in Australia’s past and growing more and more stale in office, they do not understand Australia’s future social and economic challenges and they certainly do not have any policies to deal with these challenges. As we know, the only thing that comes from government ministers these days is an attempt to provoke a fear campaign. They have ceased governing and they have no positive policies for Australia’s future.
This bill is just another reminder that the Howard government does not really understand how to help people who are living at the margins of Australian life to move into the social and economic mainstream. There are some very small measures to give extra assistance to some of those in our community who we would like to move from welfare to work. They are indeed steps in the right direction but they are very small steps; they provide very limited help in dealing with some of the barriers to participation. This may make you think that the government has been paying attention and that it has heard the calls about how to increase participation, but the measures are so small that it almost seems that the government is just playing political games, trying to look like it is doing something when there is an election just around the corner. However, because these measures are a step in the right direction—albeit a very small step—Labor will support them. Nevertheless, a Rudd Labor government would do more.
Our growing economy and our ageing population require permanent action to increase participation in our workforce. This is to say nothing of the social value of increasing participation. Work is a critical foundation of social inclusion; the evidence is there for all to see. No-one can read the findings of Tony Vincent’s research into geographical disadvantage in Australia and conclude that we are doing enough to bring people into the social and economic mainstream. I remind the House that that research has tracked persistent disadvantage by postcode, showing us those parts of the country, geographically, that are being left behind despite 16 years of economic growth. What is most troubling about Tony Vincent’s research is that, having done it more than once, he can show that disadvantage persists over time despite that economic growth.
If you compare his most recent work with his earlier work in 2004, you see that it shows that 70 per cent of the postcodes he had identified in 2004 continue to be persistently disadvantaged in 2007. There are, of course, many other commentators who are addressing these issues of participation and inclusion, but Tony Vincent’s work, as I have said, is powerful indeed, directing our attention to those parts of the country that are being left behind.
In its budget earlier this year, Treasury also highlighted Australia’s lagging international participation rate. Compared to its OECD competitors, Australia ranks 25th among 30 OECD countries with regard to workforce participation of prime working age males. Similarly, for child-bearing aged females—defined as being between 25 and 44—Australia is ranked 13th among OECD countries, including New Zealand, the United States, the United Kingdom and Canada. That is, we are behind those countries in our female labour force participation rate. In relative terms, we also have a low participation rate for older workers. That participation rate is 71 per cent in New Zealand and 67 per cent in Japan, while in Australia it is just 55 per cent.
ABS data also tells us that for all but two years in the past two decades, part-time employment increased at a greater rate than full-time employment. As a result, the proportion of people employed part time in Australia is now 30 per cent. Of course, part-time employment is an important feature of any labour market that wants to maximise participation and meet the needs of workers who must balance additional responsibilities such as child care or caring for a sick or elderly member of the family, or both.
In its latest Australian Social Trends work, released last week, the ABS revealed that the part-time employment level among Australian men is well above the OECD average, and it is also high in respect of the figure in comparable countries. Similarly, the part-time employment level among Australian women is also high with respect to comparable countries and very close to the OECD average. The ABS notes that while part-time work can supplement labour supply and increase participation, 67 per cent of men and 49 per cent of women who work part time reported that they would prefer to work full time. The budget also cited work that estimated that if Australia closed the participation gap with the highest ranking comparable OECD country in 2005 for each of these labour market segments there would be an additional 600,000 people participating in the labour force. However, the last two decades have seen a decline in male and an increase in female labour force participation and an increase in non-standard forms of employment.
A recent Productivity Commission staff working paper confirmed that in 2005-06 more than 2.2 million men were outside the labour force—that is, neither working nor looking for work. The commission found that, in contrast to women, the rates at which men are disengaged from the labour force have increased fourfold over the past century, rising particularly rapidly over the past 50 years. The pattern of falling male participation and part-time employment outgrowing full-time employment has serious implications for the pattern of social disadvantage in this country, because poverty and incomes research tells us that full-time employment is the most effective weapon to guard against poverty and disadvantage.
In addition to spending more time doing non-standard and irregular work hours, Australian workers have had to combat the use of Mr Howard’s unfair Australian workplace agreements to standardise their working conditions. As of course is a matter of record, these extreme industrial relations laws have enabled AWAs to exist and to strip back basic payments such as penalty rates and overtime that often make up a significant portion of the weekly wage of the low paid. For those families across the nation, whether they be in metropolitan Sydney or Melbourne or our great regional centres—in fact, across the country—who are dealing with rising interest rates and cost of living pressures, the ability of Mr Howard’s AWAs to strip penalty rates and overtime has been exercised, and that significantly jeopardises the chance of families surviving in homeownership and paying a mortgage. Of course, we should never forget that the Howard government invited employers to make such award-stripping arrangements with its original Work Choices propaganda that gave the example of Billy, who got a minimum wage job and lost all of his penalty rates and overtime. Through that propaganda the Howard government issued an invitation to Australian employers to strip away these basic conditions.
Against this backdrop, how do we lift the participation rate? The solution begins with understanding the problem and then tackling it. A range of factors inhibit full participation by those who could be working. First, and according to the evidence foremost, is a lack of skills among the jobless. It is a simple fact that people get a job only if they have the skills an employer needs. The second factor is a lack of incentive. People are naturally inclined to work; it is deeply ingrained in our psyche to take action to better our circumstances. However, governments can pervert that instinct when they create arrangements that prevent people from benefiting through the circumstances in which they work.
Few people need to be told that there are non-financial benefits to working. However, many people seriously weigh up the costs of work against the financial benefits when making a decision about entering the labour force. This is particularly the case for women who have been raising children, for those close to retirement and for those with a disability who fear the loss of the insurance of social security if they gain work. A range of highly practical barriers also exist, such as access to affordable child care for parents in the context of irregular and long hours of work and transport issues for people with a disability—that is, the practical issues of what they need to do to get to work. Employer attitudes are also an issue, particularly for people with a disability and mature workers, as is designing employment services to meet the needs of these groups. These are the challenges.
Let us review what the Howard government has done after 11 long years in office to meet these challenges. I will deal with one example. Faced with the challenge of a skills shortage in the labour market and lack of skills among jobless Australians, the Howard government has made it harder, not easier, for many jobless Australians to study or train. The Welfare to Work rules prevent parents or people with a disability with a part-time participation requirement fulfilling that requirement through real training or study. It has restricted access to the pensioner education supplement so that a parent or a person with a disability on Newstart cannot get that extra little bit of help to undertake training.
Of course, the loss of the pensioner education supplement was remarked upon in this House, but we have not seen any positive response from the Howard government. We should note that people were able to access this pensioner education supplement before the Howard government’s Welfare to Work changes; it was an entitlement removed for this class of person in those changes and, despite us consistently raising the issue, the Howard government has done nothing to address it.
In case this failure to train job seekers looks like an oversight, let us look at other examples. It is well documented that people on income support have little financial incentive to return to work because of punishing effective marginal tax rates. So what has the Howard government done? It has increased those effective marginal tax rates. After the welfare changes, the government is now taking back more of what single parents and people with a disability earn than before. They have reduced the financial rewards from working.
So that I cannot be accused of being selective, let us look at another example. What about practical barriers, such as child care? The childcare crisis continues in Australia, with no solutions from the Howard government. Not only are there no solutions but it is actually now harder for single parents to access the childcare assistance specifically designed to help them move from welfare to work—the Jobs, Education and Training Child Care Fee Assistance. Previously, this was available for single parents for long enough for them to complete a degree or real training course. Now it is restricted to 12 months—not enough time, for example, for a single parent to undertake a valuable course in an area of skills shortage, such as nursing.
When it comes to looking at the reasons why people are not participating in the labour market and providing practical solutions, the Howard government have actually gone backwards. They have made it harder than it needs to be for people to move from welfare to work. When it comes to the employment outcomes of this economy, of course we know that the resources boom has driven employment growth, but some of the policy settings that the Howard government could have adopted to deal with the issues that I have just outlined remain undone after 11 long years, and now we confront a circumstance where the government have effectively ceased governing.
I return to where I started. Labor will be supporting this bill. The measures within it are small—they are small indeed—but they are beneficial and on that basis we will support the bill, but we note that there is so much more that needs to be done and will never be done by this government. With those words I move:
That all words after “That” be omitted with a view to substituting the following words:“whilst not declining to give the bill a second reading, the House:
- condemns the Government for making it harder for Australians to move from welfare to work;
- condemns the Government for reducing the financial rewards for people who move from welfare to work;
- condemns the Government for restricting access to training and education for job seekers; and
- calls on the Government to allow people with part-time participation requirements to fulfil those requirements through real training or study”.