Craig Thomson (Dobell, Australian Labor Party) Share this | Hansard source

I rise to support the Social Security Legislation Amendment (Employment Services Reform) Bill 2008. This bill will amend the Social Security Act 1991 and the Social Security (Administration) Act 1999 to give effect to measures announced in the 2008-09 budget to support the new employment services, in particular, the introduction of a new job seeker compliance system. The bill needs to be passed this year to provide Centrelink with the lead time to implement the new compliance framework to take effect from 1 July 2009, to coincide with the commencement of the new $3.9 billion employment services contract.

The measure will affect all job seekers in receipt of Newstart, youth allowance, parenting payments and special benefits including parents. The administration of the new compliance system will take into account the individual circumstances of job seekers in rural and regional areas—for example, where transport difficulties may impact on job seekers’ abilities to meet the participation requirements.

My electorate is a great example of the problems that transport can bring about. It is a major issue in my electorate and I do not ever miss the opportunity to talk about the problems of public transport that are there. For example, for someone living in The Entrance, a popular tourist area in my electorate, and wanting to travel to the major centre on the Central Coast of Gosford, using public transport it would take at least an hour and a half. This, clearly, makes difficulties for people in terms of meeting their job obligations and it needs to be taken into account. Often, public transport is the only option for those looking for work, in terms of attending interviews or taking up training opportunities, because many of them do not own cars. The difficulty with transport for a great many people on the Central Coast is a matter of daily life that they have to put up with, and it makes it difficult when they are seeking work or training opportunities.

One of the key points in the submission from my electorate of Dobell to the national 2020 Summit earlier this year was the shortfalls in public transport generally on the Central Coast and the need to look at better solutions and to provide better links between the various suburbs there to make transport, and the effect that transport has on people’s lives, a little easier.

This new welfare compliance system will restore the balance between participation and penalty. The current welfare penalty system simply is not working. It does not encourage job seekers to look for work. The current system of three strikes and then an eight-week non-payment penalty, introduced by the previous Liberal government, is ineffective. In fact, it has been counterproductive and heavily focused on a penalty culture. Nationally, the number of penalties issued more than doubled over the past two financial years. In my electorate of Dobell, where unemployment is almost twice the national average at 7.4 per cent, penalties have increased by 114 per cent in the last year—a 114 per cent increase. The most counterproductive element of all of this is that during the eight-week non-payment period job seekers are not required to report to Centrelink or their employment service provider to undertake training or look for work.

Believe it or not, Madam Deputy Speaker, those on the other side are opposing these measures—even though it is quite clear that the system as it operates at the moment has failed. Despite our proposals for changes to welfare compliance that will see a more effective system begin next year, as part of the Rudd government’s new $3.9 billion employment services, the Liberal Party—and the two speakers who made their contribution today—continue to not recognise that the changes that have been proposed are about correcting the balance between participation and penalty. The opposition is refusing to see the writing on the wall—that their system of three strikes and then an eight-week non-payment penalty is simply not working. Data from the Department of Education, Employment and Workplace Relations shows that 75 per cent of job seekers who received an eight-week non-payment penalty last financial year came back onto income support, most within a fortnight of finishing their non-payment period. So it is not about changing the culture at all; it is just about applying a penalty—hurting those people who are most vulnerable in relation to their current work situation. It is a system of compliance that simply does not meet the needs of the modern economy and certainly is about penalising those who fall foul of the three-strikes system.

During the eight-week penalty period job seekers are not even required to report to Centrelink or their employment service provider to undertake training or to look for work. This is just one facet of a system put in place by the previous government that, for obvious reasons, simply does not make sense. Figures also show that 15 per cent of job seekers who receive an eight-week non-payment penalty have a mental illness, while five per cent have unstable housing. The opposition has chosen to ignore the fact that the number of eight-week non-payment penalties issued more than doubled over the last two financial years. However, there has been no improvement in the attendance at job network interviews, job search training or customised assistance. Almost half the people on income support in 2001 were still unemployed in 2007. This shows that the system introduced by the coalition is punishing often homeless or mentally ill job seekers for punishment’s sake. It is a good example of the sort of punishment-and-penalty culture that the opposition supports.

From 1 July next year the Rudd government is proposing to introduce a more effective welfare compliance system that includes a no-show no-pay penalty. The new system is more effective because a job seeker is penalised at the time they breach. Just like a job, if a job seeker fails to turn up to a required activity without a reasonable excuse, they will lose a day’s pay. However, any job seeker who wilfully and persistently refuses to look for work or comply will still receive an eight-week non-payment penalty. A major point of difference is that under the Rudd government’s system a job seeker can have their payment reinstated if they agree to undertake a compliance activity such as full-time Work for the Dole for 25 hours a week for those eight weeks. This was something that was never part of the previous government’s system. The government strongly supports mutual obligation but also believes that its obligation is to help job seekers gain the skills needed to break the cycle of welfare dependency.

The bill will amend the social security law to introduce a new compliance framework for the approximately 620,000 people who receive Newstart, youth allowance, parenting payments or special benefits and have participation requirements. The key features of the new compliance framework are new, more work-like no-show, no-pay failures; the retention of connection and reconnection failures; the retention of the eight-week non-compliance penalty for persistent and wilful noncompliance; a new comprehensive compliance assessment before any eight-week non-payment period is imposed; opportunities for payment to be reinstated if job seekers participate in an intensive compliance activity; new hardship provisions to replace financial case management; a waiting period for job seekers who are voluntarily unemployed or unemployed because of misconduct other than minor transgressions; and greater discretion for employment service providers to report on compliance to Centrelink.

Let us have a look at the no-show no-pay failure feature in more detail. If a job seeker without a reasonable excuse does not attend an activity they are required to attend—for example, training or Work for the Dole—Centrelink will impose a no-show no-pay failure. Centrelink will also impose a no-show no-pay failure if the job seeker does not attend a job interview or if they attend the interview but deliberately behave in a way that would clearly see them not being offered the job—for example, telling the interviewer that they do not want the job that they are there to apply for. A no-show no-pay failure will result in a job seeker losing one-tenth of their fortnightly payment for each day they do not attend. This does not affect any rent assistance, pharmaceutical allowance or youth disability supplement the job seeker may receive, but it does apply to any supplement the job seeker is receiving for participation in Greencorps or Work for the Dole. Quite clearly, by imposing this no-show no-pay failure at the time of the indiscretion, a culture is being built. What this compliance regime does is demonstrate that if you do not comply, if you do not turn up at the set time, the punishment is there. It is not something that may happen in the future; it has a direct correlation to the behaviour and the activity of the job seeker.

Under the connection and reconnection failure feature, if a job seeker without reasonable excuse does not attend an appointment they are required to attend—for example, with their employment service provider—Centrelink will impose a connection failure. Centrelink will also impose a connection failure if the job seeker refuses to enter into an employment pathway plan or does not meet their job search requirements. There is no penalty for a connection failure. Instead, the job seeker will have to attend a reconnection requirement—for example, a further appointment or further job search requirements. If the job seeker, without reasonable excuse, does not attend a reconnection requirement, Centrelink will impose a reconnection failure period. The job seeker will lose one-fourteenth of their fortnightly payments each day that, without a reasonable excuse, they do not comply with the reconnection requirement. Again, this does not affect any rent assistance, pharmaceutical allowance or youth disability supplement the job seeker may receive but does apply to any supplement the job seeker is receiving for participation in Greencorps or Work for the Dole.

Under the eight-week no-payment penalty, if a job seeker refuses an offer of suitable employment Centrelink will impose a serious failure. If a job seeker misses three appointments or six days of activity—for example, Work for the Dole or employment service provider requests—Centrelink will consider whether the job seeker is wilfully and persistently not complying with their obligations. This is called a comprehensive compliance assessment. Centrelink will consider whether the job seeker’s participation requirements are suitable, whether the job seeker should be referred for a job capacity assessment to receive assistance in a different stream or receive a different payment type—for example, a disability support pension—or whether a serious failure should be imposed. The consequence of a serious failure is an eight-week non-payment period. However, unlike the current legislation, a non-payment period may be ceased if the job seeker participates in intensive activity. If the job seeker does not have the capacity to participate in intensive activity and they can show that serving that penalty causes them to suffer from severe financial hardship then the non-payment period can also cease.

What we have here is a graduated compliance system, one which strikes a better balance in relation to fairness but which also continues to make sure that there is mutual obligation. Where there are penalties, the penalties occur at the time of the breach and are graduated. A job seeker who receives an eight-week non-payment period can have their payment reinstated at any time during the eight-week period if they agree to participate in intensive compliance activity. The compliance activity is on a no-show no-pay basis.

The great failing of the previous system was that during this eight-week period nothing happened. The participant, the job seeker, was not required to do any training and was not required to go for job interviews. They were just left there. Under this legislation there is the ability during this period to come off the eight-week non-payment period if the job seeker agrees to participate in a compliance activity. This encourages good behaviour on the part of the job seeker and encourages them to adopt a culture that will assist them to find employment.

This requires the job seeker to participate in an activity for 25 hours a week for up to eight weeks, usually in full-time work or Work for the Dole. For parents and job seekers with partial work capacity it involves an intensive activity of 15 hours a week for up to eight weeks. A job seeker who does not have the capacity to participate in an intensive compliance activity and who does not have liquid assets of more than $2,500 for a single person or $5,000 for a partnered person will continue to receive income support and will continue to have participation requirements. This replaces the current restrictive financial case management arrangements.

Hardship provisions also apply to job seekers who are undergoing a waiting period. A person who has become voluntarily unemployed without a reason or unemployed due to misconduct, other than for minor transgressions, will have to wait eight weeks before they can receive income support. Presently, there is an eight-week non-payment penalty for job seekers in this situation. The guidelines for what constitutes voluntary unemployment and misconduct have been revised to ensure that employees are protected. The eight-week period commences on the day that the person becomes unemployed.

An employment service provider will be able to report noncompliance to Centrelink if they believe that compliance action is the best means of securing re-engagement and is not counterproductive to the job seeker obtaining employment. A provider can instead negotiate for the person to make up an activity on another day, further reinforcing the importance of participation.

The Liberal government presided over a harsh and counterproductive compliance regime. An effective compliance regime would result in fewer breaches because it would encourage job seekers to meet their requirements and obtain employment. But there were more than 30,000 eight-week non-payment penalties imposed last financial year, around double that in the preceding year. The current compliance regime introduced in 2006 replaced a decade-old system. Before the third-strike, eight-week non-payment penalty was activated, job seekers received an 18 per cent rate reduction for 26 weeks for the first breach in two years and a 24 per cent rate reduction for 26 weeks for a second breach.

An effective compliance system should encourage job seekers to look for work. But,under the current regime, when an eight-week non-payment penalty is imposed the job seeker is not required to have any contact with their employment service provider and is not required to undertake any training. There is enough evidence to suggest that job seekers do not engage during the eight-week non-payment period. The current system provides too little deterrent in the early stages of noncompliance and is too harsh, too late. Under the current arrangements, job seekers can miss up to a fortnight’s participation before any action is taken and then, after three failures, they get hit with an irreversible eight-week non-payment period. The previous government went too far.

Welfare groups have told us that it is costing them too, because vulnerable job seekers turn to them for support. It costs the broader community through health, welfare and justice systems. The National Welfare Rights Network told us that the relationship between this eight-week non-payment penalty and major dislocations including homelessness, relationship breakdown, increased stress, illness, violence and crime is both categorical and direct. Homelessness Australia told us that research from the University of New South Wales Social Policy Research Centre found that up to 20 per cent of people who underwent an eight-week breach lost their accommodation or were forced to move to less appropriate housing.

Australians believe that if you are on taxpayer funded income support then you should work hard to find work. Job seekers who do not look for work will continue to be penalised. As part of instilling a work culture in the new employment services, the no-show no-pay penalty will apply. Just like a job, if you do not turn up to compulsory activities and do not have a reasonable excuse, you will not be paid. While most job seekers do the right thing, the government will not tolerate people who deliberately rort the system. This is why we are keeping the eight-week non-payment penalties for wilful and persistent noncompliance. The government is determined to maintain a strong but fair compliance regime to encourage people to look for work and improve their chances for employment. Through this bill the government is restoring the balance. I commend the bill to the House.

See this speech in context