Michael Keenan (Stirling, Liberal Party, Shadow Minister for Employment and Workplace Relations) Share this | Hansard source

The Howard government introduced the Welfare to Work reforms in 2006. They were carefully considered reforms, and they were widely welcomed by the Australian electorate. The Welfare to Work reforms helped people to break their cycle of dependency on welfare through constructive measures which assisted them back into the workforce. The compliance system we have now was designed and introduced to help break a cycle of welfare dependency that destroys lives. The Howard government recognised that there were still too many long-term unemployed job seekers—and they are always the hardest job seekers to place—who appeared destined to remain on welfare payments indefinitely. This is a great human tragedy, and it is the long-term unemployed who are the hardest people to move from welfare into the workforce. This has been a very well-regarded initiative, and it has also been widely welcomed by taxpayers. You really need to ask, given the success of this system, why Labor feel the need to fiddle with it as they do in this bill. They are effectively destroying parts of that system.

Labor’s Social Security Legislation Amendment (Employment Services Reform) Bill 2008 seeks to drastically change the compliance regime and compliance requirements for job seekers. They do all this while pretending that they support the Welfare to Work arrangements. Meanwhile they come through with this bill and essentially destroy those arrangements. The changes proposed by the government will result in the most lenient compliance regime since the introduction of unemployment benefits. More than just fiddling with the current rules, Labor’s employment services reform bill is going to ruin a system that has worked incredibly effectively. The current system is achieving positive results in helping people to get from welfare into the workforce, but Labor seem to want change, for what purpose I am not sure. Why they would want to upset this respected and well-working system is unclear.

The Howard government introduced appropriate compliance measures, enabling and encouraging job seekers to re-engage with the employment system. Welfare to Work reforms established a clear link between the receipt of income support payments and a mutual obligation to the people who were providing that payment. As a central tenet of Welfare to Work, job seekers who on three occasions within a period of 12 months failed to attend appointments, Work for the Dole activities or job interviews without a valid reason could have their welfare payments suspended for eight weeks.

This measure was designed to discourage wilful noncompliance, and it has been very successful. There was a significant decrease in the number of long-term unemployed—that is defined as those who have been in receipt of welfare payments for a year or more—from June 2006, when there was 205,000 long-term unemployed Australians, to August 2008, when there was 146,000 Australians classified as long-term unemployed. That is an extraordinary result: a 30 per cent decrease in the number of long-term unemployed in a period of just two years. That is a remarkable figure, and it shows that these reforms were clearly working.

A credible compliance regime is crucial to help discourage those people who are intent on long-term work avoidance. Labor’s social security legislation amendment bill seeks to drastically change these requirements. For every day that a job seeker does not attend their Work for the Dole or work experience activity without a valid reason, they will lose a day’s welfare payments, which is approximately $42.90 for a person who is on the single rate of Newstart. If they have six recorded absences without a valid reason in a six-month period, they will be referred for a comprehensive compliance assessment. Job seekers who fail to attend an appointment with the provider will be given the opportunity to reconnect without suffering a financial penalty. If they fail to reconnect, they will not be paid until they do so. If they incur three such failures within a six-month period, they will be referred for a comprehensive compliance assessment.

This is an extraordinarily significant amendment. It waters down the compliance regime that has worked successfully. It imposes a model that encourages noncompliance. The current model contains sufficient safety nets to ensure that people are not unfairly disadvantaged should they have legitimate reasons for being unable to attend appointments or mutual obligation activities and does not penalise those who are endeavouring to do the right thing, which is most. Unlike the current system, which is based on eight-week non-payment periods being triggered after three breaches within a 12-month period, Labor’s model is based on a six-month time frame and allows six absences from work experience or Work for the Dole activities or three missed appointments before a comprehensive compliance review is triggered. What we are concerned about is that this system is far too lenient. It does not provide any incentives for those job seekers who are wilfully non-compliant. Six absences in six months is essentially not turning up to work one day a month.

Labor’s proposed changes to the compliance regime comprehensively roll back the Welfare to Work reforms that were introduced by the previous government. Under the current system, job seekers who miss an appointment with their provider without a valid reason will have a failure to attend recorded. As I said, if that job seeker records three failures without a valid reason within a 12-month period, they are subject to an eight-week non-payment period. As a safeguard—and this is important, because Welfare to Work was never about a punitive approach; it was about encouraging and helping people into the workforce—under the current system financial case management is available to any job seekers who are deemed to be in severe financial hardship.

Sadly, under the changes that have been proposed in this bill, financial case management will no longer be available to those job seekers who may be experiencing severe financial hardship. Quite why this measure is being taken is unclear, particularly in these days of economic uncertainty, when many Australians find themselves struggling under ever-mounting debt. All too often we have seen people who have previously been employed losing their jobs and finding themselves unemployed. There is also the fact that credit is so easily obtained from financial institutions that have little regard for the ability of their customer to service that debt. I acknowledge what the member for Robertson was saying earlier on about GE. People can very quickly find themselves in financial hardship. Quite why the government would axe the financial case management program is unclear, particularly when the need for it is getting ever greater.

The new system being proposed within this legislation is based on a no-show, no-pay principle. For each day of the mutual obligation activity a job seeker misses, they lose one-tenth of their fortnightly welfare payment. As I said before, for a single on Newstart allowance, this is $42.90 a day. The new system allows for six recorded failures to attend Work for the Dole in the mutual obligation period within a six-month period, and after that Centrelink will impose a no-show, no-pay failure. This is, of course, not turning up for work one day a month. The comprehensive compliance assessment will be conducted by Centrelink and will result in one of five outcomes: a new job seeker clarification instrument, a job capacity assessment, a review of the employment pathway period or an eight-week non-payment period, or no action could be taken. With so many options available, it is unlikely that many people will have their payments suspended for eight weeks. Once a comprehensive compliance assessment has been undertaken, irrespective of the outcome, the clock resets back to zero.

Labor’s no-show, no-pay concept is based on their belief that this somehow replicates the real world. I am not sure what real world that might be, because which employer would put up with somebody not turning up for work one day every month? This is a fairly out-of-touch view of how the real world works. In the real world, if people do not show up for work without permission or a plausible excuse then, quite frankly, they probably will not be employed for much longer. This measure is not a good incentive for instilling good work practices into somebody who may have been out of the workforce for a long time. A financial penalty of one day’s welfare payments missed is not likely to deter people from wilfully not attending. It also has the potential to encourage an increase in the black-market economy, with job seekers earning more from working a few hours at the pub or babysitting than they might lose if they fail to attend their mutual obligation activities.

Under the proposed changes, failure to attend an appointment with an employment provider will not result in an automatic loss of payment. Instead, job seekers are asked to reconnect with their provider within 48 hours. This is, quite frankly, too lenient, and it does little to instil good work practices that highlight the importance of meeting your obligations with a particular provider.

I am concerned that these changes will cause an ability for a complete rollback of the compliance regime through the utilisation of legislative instruments. The schedule 4 items may result in the ability of the departmental secretary to use legislative instruments to classify job seekers. This may potentially exempt job seekers from the mutual obligation requirements. Items to be repealed are provisions that automatically deemed job seekers who met their activity agreements to be complying. Under the new arrangements, the secretary will be granted the ability to specify by legislative instrument classes of person. Depending on which class the person falls within, this will determine whether there is residual discretion applied should they fail to meet the terms of their employment pathway plan. Under the proposed classifications, it will be deemed inappropriate for some job seekers to be expected to actively seek or undertake employment in addition to complying with the terms of their employment pathway plan.

I started out by saying that our compliance regime is not broken and I do not see why the government would seek to change it, particularly when they have committed to that compliance regime in other forums. The changes that were made by the Howard government have seen real results in moving long-term unemployed people into the workforce, and the outcome of the 30 per cent reduction speaks for itself. The compliance measures that were introduced by the Howard government introduced a clear link between the receipt of income support payments and those persons’ obligations to seek work, something I think that the community expects.

Labor’s proposed changes to the legislation will result in a return to increased welfare dependency and intergenerational unemployment, that worst and most stubborn form of unemployment, where long-term unemployment is transmitted down through family generations, which has the potential to destroy particular communities. The opposition does not support these changes. They are the wrong priorities for the government, and I would urge them to reconsider.

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