Thursday, 16 August 2007
Social Security Amendment (2007 Measures No. 1) Bill 2007
I welcome the opportunity to speak on the Social Security Amendment (2007 Measures No. 1) Bill 2007 and note that the amendment proposed by the Deputy Leader of the Opposition represents the peak of hypocrisy. The Labor side of politics, and particularly this group, has done everything possible to oppose the measures that this government has introduced to improve opportunities for job seekers, to improve the economy and to provide the ability for people to go to work. When we look at the future that Australians face in the lead-up to the forthcoming federal election, we have an economy that is running at full speed and enjoying high levels of employment and high levels of income growth, still against the backdrop of a low-inflation, low-interest rate environment.
Yet, in the knowledge of that, the opposition propose to introduce a policy that they know will push up interest rates, push up inflation, cost some 300,000 jobs, according to Econtech, and result in lower real incomes for the people of Australia. Somehow that is to the benefit of the people of Australia, they would claim. This Forward with Fairness policy really is no fairness at all. It really does come from the architect of one of the most famous policy blunders in the history of the Australian parliament—Medicare Gold—a policy that has been buried. I see the Deputy Leader of the Opposition running out the door because she does not want to hear the facts. She does not want to hear that she has replaced one failed policy, Medicare Gold, with another failed policy—‘Forward with Alleged Fairness’, I would say.
I will for a moment dwell on the achievements of this government in the economic area and the way in which that has contributed to opportunities for Australian job seekers and improved the lot of Australian families. Let us again reflect on the fact that this government has created some 2.1 million jobs since 1996. Is that a happy coincidence? I suppose the members opposite would argue that it is. They have voted against every measure that we have sought to impose to produce those 2.1 million jobs, but somehow it is just a happy coincidence. Of those jobs, 1.2 million have been full time and almost 900,000 have been part time. We heard the world was going to come to an end with the introduction of the Work Choices legislation, but what have we seen? Not mass sackings but 387,500 additional jobs, of which 84 per cent have been full time—hardly a disaster, as the members opposite would claim. There are now over 10.4 million Australians in work—a record high. There are 7½ million in full-time employment and 2.9 million in part-time employment. The unemployment rate in Australia in July 2007 was 4.3 per cent.
The focus of this bill is to support job seekers. I think there is no better way of supporting job seekers than keeping unemployment at 33-year lows. Unemployment has been below five per cent for 15 consecutive months. Male unemployment is 3.9 per cent; female unemployment is 4.8 per cent. These are great figures for job seekers. In December 1992 under Labor what was the unemployment rate? Was it seven per cent? No, it was not. Was it eight per cent? No, it was not. Was it nine? Was it 10? No, it was not. It was 10.9 per cent—hardly an achievement to help Australian families and hardly an achievement to help job seekers. Yet we have the Deputy Leader of the Opposition coming into this place feigning some concern for working families and feigning some concern for job seekers. It is all a massive facade. Her only concern is appeasing her union masters. That is her only reason for being in this place—her and the Leader of the Opposition. The union bosses pull the strings and the Deputy Leader of the Opposition and the Leader of the Opposition do the dance. They are nothing more than manipulated puppets.
Let us look at long-term unemployment, one of the most intransigent problems for some job seekers. We see that long-term unemployment is now down to 65,900 people, the lowest level in more than 20 years. It has more than halved under the Howard government. The very long term unemployment level was some 36,200 in June 2007. That has fallen sharply by some 135,200, or 78.9 per cent, from its peak in November 1993 of 171,700. So we did have almost 200,000 very long term unemployed under Labor, under those members opposite, who somehow claim to be looking after the interests of job seekers. It is now 36,200. That is a staggering improvement, an improvement which has not been just a matter of happy coincidence but which has been achieved through the hardworking members of the Australian economy and good policy settings put in place by this government.
On the issue of wages, we heard when Work Choices was going to be introduced that wages were going to be slashed, that conditions would be slashed and so on and so forth. But we can see what has happened. As opposed to under 13 years of Labor, when real wages fell, since Work Choices was introduced real wages have increased some 2.4 per cent. There has been under the Howard government a 20.8 per cent increase in real wages, as opposed to a 1.8 per cent decrease under those 13 years of Labor. It is a stark contrast. It bears evidence to the rank hypocrisy of those opposite, who say they have concern for Australian working families.
The purpose of this bill is to provide further assistance to job seekers and those who are seeking to make the transition from welfare to work. Before moving on to the substance of the bill, I want to reflect for a moment on the recent study by Econtech, which reflected on some of the provisions of the policy Forward with Fairness, or ‘Forward with Alleged Fairness’, as I might say. It seems amazing that when you look at the economic research—which shows quite clearly that a more flexible labour market produces positive benefits for the whole economy, positive benefits for job seekers and positive benefits for working families—the members opposite in this place are yet proposing a policy which is going to instil greater rigidity in our labour market, at a time when we need maximum flexibility, at a time when the economy is running at full speed.
If you put an impediment into the operation of our labour markets at a time when it is at full stretch, what is going to happen? There are a number of things that can happen. Unemployment could go up because of that impediment. Costs could go up. Wage inflation could go up. Wage inflation could push up interest rates. All of the proposals that are embodied in Forward with Fairness provide that rigidity in the labour market, a rigidity which the current Australian economy cannot sustain. The members opposite know that, but they ignore that because they are under the thumb of the union masters. At a time when this economy needs greater flexibility, they are imposing greater rigidity, taking our industrial relations regime back to a pre-Keating era—back to an era of higher inflation, higher interest rates and, potentially, lower wages. No Australian family looks forward to the members opposite introducing a policy that is going to reduce the potential income they can make or that is going to reduce their potential to get a job.
If you look through the report you will see that it makes some interesting observations. It notes that in a more flexible economy adverse shocks are less likely to be displayed by increased unemployment, where if you have a less flexible economy the adverse shocks to that less flexible economy can be embodied in increased unemployment outcomes, which no-one wants to see. The report also notes that the roll-back of the unfair dismissal laws will provide an incentive to hire more casual labour. They will also result in less positive employment outcomes. In fact, a study by Blanchard and Wolfers in 2000 found that a higher level of employment protection—that is, a stricter unfair dismissals regime, if you like—has a statistically significant and economically important adverse effect on unemployment. So we see that tougher unfair dismissal laws have a statistically significant adverse effect on unemployment, yet the members opposite are keen to bring that in. They say: ‘Let’s just do what our union masters tell us. We know it will ramp up the unemployment rate, but we don’t care. We’re on this side of the chamber. We’re working at the behest of the union movement. They are calling the shots and we obey.’ Also, the report looked at NAIRU, the non-accelerating inflationary rate of unemployment. That has fallen some three per cent. The report concludes that the reform efforts in this country have succeeded in achieving a lasting reduction in unemployment, a lasting reduction in NAIRU.
I would also like to consider the impact of trade unions. Trade unions are a very important element, as they run the Australian Labor Party. They call the shots, and the Australian Labor Party dances when the members of the trade unions call those shots. I again turn to the study of Blanchard and Wolfers, which found that a higher level of union density—that is, the proportion of trade union members relative to wage and salary earners—was associated with higher unemployment and that this effect was statistically significant. So higher union membership means higher levels of unemployment.
Furthermore, the OECD study by Nicoletti and Scarpetta also found that higher union density has an adverse effect on employment outcomes. It is also interesting to note that the work by Lye and McDonald in 2005 suggested that the decline in union density since the mid-seventies has effectively reduced the minimum equilibrium rate of unemployment by about three per cent and the growth of enterprise agreements during the nineties also reduced the minimum equilibrium unemployment rate by almost one per cent.
I note that in my electorate we have seen some eight consecutive quarters of falling unemployment. We have seen unemployment in my local government areas fall from around the 20 per cent mark to the point where all areas except one are in single-digit unemployment. It is a staggering improvement. We have more work to do there, but I would have to say that it does not reflect the claims made by the Australian Labor Party that unemployment and mass sackings were going to occur under Work Choices. Precisely the opposite is true.
Now that I have set the scene, I will turn to the legislation. This legislation aims to address three key areas in providing additional support for those who are seeking employment. Certainly, opportunity is one of the best things we can provide for those people looking for employment. Firstly, the bill extends eligibility for the mobility allowance. Secondly, the bill improves the equity of the youth allowance and provides more immediate support and employment assistance for young people once they cease studying. Thirdly, the bill removes the disincentives in the income support system for people with shared care of a child.
Mobility allowance is an income supplement payment to provide financial support to persons who have difficulty in using transport for reason of a disability, to help them engage in employment or work training. There is a standard rate of mobility allowance and there is a higher rate payable to those who qualify. The current qualification requirements for mobility allowance are that the person: is over 16; has a disability that prevents them from using public transport without substantial help for the next 12 months or longer; is undertaking vocational training, voluntary work, paid work, independent living or life skills training, or a combination of these, for at least 32 hours every four weeks on a continuing basis; has an agreement to look for work through the Job Network; is getting Newstart allowance, youth allowance or Austudy and is required to satisfy the activity test; or needs to travel to and from home as part of work, training or job seeking.
To qualify for the higher rate of mobility allowance, a person needs to be receiving the DSP, Newstart allowance or youth allowance, and one of the following must apply: the person must be working for 15 hours a week or more in the open labour market or must be looking for work for 15 hours a week or more under an agreement with a DEWR funded service provider.
The higher rate of mobility allowance was introduced with the Welfare to Work reforms that commenced on 1 July 2006. The proposed aim of the amendments is to expand access to the standard rate of mobility allowance to a person with a disability who is undertaking a vocational rehabilitation program. The amendments also will expand access to the higher rate of mobility allowance to a parenting payment recipient who meets the requirement to qualify for the standard rate of mobility allowance, and a recipient of Newstart allowance, DSP, youth allowance or parenting payment who is also working for at least 15 hours a week on wage levels set under the supported wage system.
I now turn to youth allowance. The second key area that the amendments in this legislation address is equity in the treatment of youth allowance recipients who cease full-time study. Currently, youth allowance is payable to a full-time student aged 16 to 24 or to an unemployed job seeker aged 16 to 20. Unemployed job seekers aged 21 or more may qualify for Newstart allowance, and full-time students aged 25 or more may qualify for Austudy payment.
For a full-time student, once they cease full-time study they can only qualify for youth allowance, or Newstart allowance if aged 21 or more, if they are then an unemployed job seeker who satisfies the work search activity test. Under the amendments in this legislation, where a youth allowance recipient does not immediately advise Centrelink that they have ceased full-time study and there is a gap between when the study stopped and when they register as an unemployed job seeker, they cannot be paid youth allowance or Newstart allowance in the gap.
It is important to note that this measure will ensure that people finishing full-time studies will maximise their chances of obtaining employment by rapidly obtaining employment focused assistance from Centrelink and employment service providers. This amendment will ensure the equity of treatment of job seekers receiving youth allowance in that all recipients will undertake job-seeking efforts at an acceptable and appropriate level in order to remain eligible for the allowance.
I now turn to parenting payment partnered. The third key amendment in this bill is also part of the initiatives announced by the government in the 2007-08 budget. Essentially, the provisions are to expand access to a range of supplementary payments and concessions for parenting payment partnered recipients with a partial capacity to work, due to a disability. Currently, assistance and concessions are provided to parenting payment single recipients with a partial capacity to work. The extra assistance is to be provided to PPP recipients with access to the pensioner education supplement, the telephone allowance, the pensioner concession card or the pharmaceutical allowance. The increased access to payments for PPP recipients will ensure there is fairness and consistency.
This legislation is important because it continues to assist those who are seeking to join the workforce and those who are seeking to better themselves through further training and job-seeking activities. But one can add that there is no greater way to assist those people than to create the economic climate that is going to improve the jobs market. There could be no worse way to assist those people than to roll back our industrial relations regime to the pre-Keating era and introduce rigidity into the system that will push up interest rates, deter employers from taking on new staff and reduce the long-term income of families. I commend this bill to the House. I also decry the efforts by the Australian Labor Party to wind back the industrial relations clock, to wind back opportunity for Australian workers and job seekers.