Andrew Leigh (Fraser, Australian Labor Party) Share this | Hansard source

Too many Australians live in circumstances of entrenched disadvantage. Too many Australian children are in households where their parents and sometimes their grandparents have not known regular employment and have not known the dignity of work and the social inclusion that comes from being part of the labour market. It is a concern to see children growing up in households where the example of work is not there in the morning, when the alarm goes off and a parent leaves for work or study, and it is important that we ensure the benefits of work are available to as many Australians as possible.

I left high school as Australian unemployment was beginning to spike in 1990 and am acutely aware of what it is like to be a young person in a labour market where it is difficult to get a job. Unemployment then spiked at 11 per cent, and that had an impact on school leavers but it also had an intergenerational impact on those children in households where parents could not find work. One of the great achievements of this government has been avoiding a thing that never happened—avoiding the global economic experience of unemployment that has blighted so many developed countries.

This bill is a difficult one. It puts in place incentives for work that will now apply equally to all parenting payment recipients. The changes will encourage parents to participate in the labour market sooner, and our hope with this bill is that it will provide intergenerational benefits for families and children—that more young children will have the opportunity of growing up in a household where people work. This was the great achievement, I think, of social policy under the Clinton administration.

Under Bill Clinton, through the move to an earned income tax credit spearheaded by his campaign slogan 'If you work, you shouldn't be poor', there was a substantial increase in employment rates in low-income communities, among single parents and among African Americans. The intergenerational impacts of that are, I hope, positive. American Dream, a book by Jason DeParle, the New York Times writer, speaks about the experience of three women going through the Clinton employment reforms of the 1990s. Part of the impact was having a little more money, but part was also the power and the control of moving from welfare into work.

Jason DeParle talks in his book about the attitudes of behaviour that come from participating in the labour market. One of the benefits for us in Australia is that the bottom end of our labour market is well above the bottom end in the United States, now with a $16 an hour minimum wage. We have a minimum wage which is above the average wage paid by many large US companies including, for example, Apple and Costco.

A significant proportion of those subject to the provisions of this bill will be single mothers and partnered mothers. We want their contribution to the workforce. We want them to participate in the economy. We are now, with an unemployment rate of five per cent, in a situation in which many sectors of the economy face labour shortages. The ABS labour force survey showed in May that the number of people employed in Australia is now over 11.5 million and we have a national participation rate of 65 per cent: 59 per for women and 72 per cent for men.

It is important that we create the right incentives to encourage people to move from welfare to work, and I commend the work of the Treasurer and the Minister for Families, Community Services and Indigenous Affairs, over the course of more than a decade now, through their advocacy from opposition and into government about reducing the disincentives for work that welfare tapers represented. The unpardonable situation of welfare tapers that exceeded 100 per cent meant that when you earned another dollar you lost more than a dollar in income support. We have now gotten rid of those disincentives.

It is vital that we increase employment rates, and it is such a contrast to be here in Australia, looking at the unemployment situation in other developed countries. The Economist magazine recently noted that, if all unemployed people in developed countries lived in the one nation, it would have a population about the size of Spain's. For us in Australia, we now have a five per cent unemployment rate and only 19 per cent of unemployed Australians were long-term unemployed as of July last year, meaning they had been unemployed for more than a year. That is in contrast to 2003 and 2004, when the long-term unemployed share was 21 per cent. So not only have we brought down the unemployment rate over the course of the last decade but we have also brought down the share of the unemployed who are long-term jobless.

We know the cost of unemployment goes beyond the economic. We know that the loss of dignity that accompanies losing a job can be associated with depression, family breakdown and dissatisfaction with one's life. Nick Carroll, who was a PhD student when I was at ANU, wrote a paper for the Economic Record titled 'Unemployment and psychological well-being'. Dr Carroll found the adverse impact of unemployment on life satisfaction was large and significant. He also found that past unemployment also had a similar effect. Even once somebody had found their way back into the labour market, the effect of having been unemployed was still there and you could still see a scar on their happiness levels. We do know that the longer someone spends unemployed, the more difficult it is to find their way back into the labour market. If you are an office worker, the computer programs would have been updated and it takes a while to learn the new programs. But more than that, there is also a psychological effect from the loss of self-confidence that can come with being out of the labour market for a long time.

As I said before, the United States and European unemployment rates are significantly higher than those here, as is the unemployment duration. The US average jobless period is now 40 weeks. Only four years ago it was 17 weeks. Americans, if they find themselves unemployed, tend to be unemployed for a very long period—three-quarters of a year. In Italy the average duration of unemployment for the unemployed is over a year, so the average unemployed person in Italy is long-term unemployed. As people become detached from the workforce, it makes it harder to re-enter. That has an impact not just on the individual but on the society, with lower growth rates, lower economic activity, and less public finances because of lower tax receipts.

According to the Australian Bureau of Statistics figures from June last year, Australia had about 96,000 jobless couple families, 210,000 jobless single parent families. Of those single parent families looking for work, 23 per cent had been jobless for more than a year. We have a responsibility to ensure that those people are part of our nation's productivity and of our economic and social wellbeing.

This bill abolishes grandfathering to parent payment single and partnered recipients. Grandfathered parenting payment recipients will have participation requirements when their youngest child turns six for partnered parents and eight for single parents. It will bring these requirements into line with parents who have claimed parenting payment since July 2006 and now treats all parents claiming parenting payment equally, fairly and consistently. The current rules state that parents have different entitlements according to when they first claimed. So parents who claimed income support after 1 July 2006 are eligible for parenting payment until their youngest child turns eight if the parent is single or six if the parent is partnered. Parents who received parenting payment before 1 July 2006 were therefore grandfathered and may continue to receive payments until their youngest child turns 16. Grandfathered recipients have participation requirements when their youngest child is seven, unlike new recipients who have participation requirements when their youngest child is six.

The bill brings forward the gradual alignment of parenting payment rules announced as part of the Building Australia's Future Workforce package in the 2011-12 budget. It will create better incentives for parents to return to the workforce and recognises that parents' capacity to undertake work or study increases as children get older. We have more generous income test provisions for single principal carers on Newstart allowance. Those will apply to eligible single parents affected by the earlier cessation of grandfathering. Single parents already studying while on parenting payment can continue to receive the pension education supplement when they continue on the same course as a Newstart recipient.

The bill also introduces new liquid asset waiting period maximum reserve amounts. They are doubled from the current levels. That strikes, I believe, an appropriate balance between requiring people to rely on their own resources and providing fair and reasonable access to support. It will allow many people to access income support more quickly and reduce the extent to which they have to draw down their liquid assets before getting income support. Those new thresholds will commence on 1 July.

Grandfathering by its nature is a complicated matter and there are always going to be tensions between the needs of those for whom the new measures apply and those who are exempt. I do not think economics or social policy or ethics gives us a right way of doing grandfathering but, as the member for Farrer noted before, this is a difficult area of policy. The provisions for grandfathering parenting payments were introduced by the Howard government. What we have done is make the various entitlements consistent and fair for all parents. It is not a radical change, and I believe it introduces equality between parenting payment recipients who claimed before 2006 and those who claimed after 2006.

It is important also to recognise assistance provided by the government to parents re-entering work. Parents affected by the change will have access to professional career advice as well as childcare assistance and individually tailored employment services. A particular program I believe is important is the JET program, which recognises that access to affordable and accessible childcare is really important for parents who want to get the skills and training to move into the workforce. The JET program provides considerable childcare subsidies for parents on income support, mostly single parents, so they can study or train to develop the skills to get a job. We have seen the number of families using this program increase from over 20,000 in 2007-08 to more than 31,000 in 2010-11. In this budget we announced another $225 million to be invested in the program over the next four years. That will mean around 130,000 parents across the country will be supported to join the workforce and provide for young families.

JET recipients pay a parental co-contribution of $1 per hour of child care per child, and 50 per cent of the co-contribution can be claimed under the childcare rebate, meaning that JET recipients pay a childcare cost of 50c an hour. Those investments support record numbers of Australian parents, particularly single mothers, to enter the workforce.

The changes to the parenting payment grandfathering will reduce the average duration on income support and supports the dignity of work. I commend the bill to the House.

Debate interrupted.

See this speech in context