Andrew Bartlett (Queensland, Australian Democrats) Share this | Hansard source

Like Senator Wong, the Democrats do not oppose the Employment and Workplace Relations Legislation Amendment (Welfare to Work and Other Measures) (Consequential Amendments) Bill 2006 per se. It does make some improvements here and there to the existing regime. But it must be stated once again that the Democrats strongly oppose the current new regime that goes under the Orwellianly misleading title of ‘Welfare to Work’. It is one of the worst examples in this government’s 10 years in office of the gross abuse of the English language and the deliberately misleading description of government policy and legislation. It is a simplistic slogan of just three words—welfare to work—and that is all the government has used as a fig leaf to try to deflect every single criticism and cover up every single flaw in this highly flawed package. Every single complaint, every single concern that is raised, every single flaw that is pointed out in the Welfare to Work package is simply responded to by government ministers saying, ‘You must be against people getting off welfare and into work,’ and then dismissing the substance of the complaint and the concern. Frankly, I am appalled not only that this government has done that and continues to do it but that to date it has got away with it.

I was extremely disappointed at the end of last year when this legislation was guillotined through the Senate at how little attention was paid to its extremely unjust components by the press gallery and by the wider public. I acknowledge that there were other very serious pieces of legislation also being guillotined at the same time, most notably the workplace relations changes—also going under the Orwellianly misleading title of ‘Work Choices’. And, of course, there was antiterrorism legislation, which at least some of us might suggest could potentially inadvertently increase the risk of terrorism—but I will not go to that separate debate at the moment. There was also the VSU legislation and a range of other bills being guillotined through, so there is perhaps a reason why there was not as much attention to and recognition of what was being done at that time. But as we now move to 1 July, when these changes kick in, there is more awareness of what is involved and there is a recognition that the title ‘welfare to work’ is at best an extremely inadequate description of the legislation and the government’s package or, at worst, a deliberate and flagrant lie.

Under these changes a large number of people will not be assisted from welfare into work. They will be assisted from one form of welfare to a worse form of welfare. In some cases, they will be assisted—as it is called—from welfare to no income at all. That is a negative outcome. There undoubtedly will be people assisted into work through various aspects of this government’s package, but those changes and those areas of assistance are quite able to be provided without the accompanying components that cut the income of many sole parents and many people with disabilities. There is nothing about reducing people’s income that assists them into work. It is quite clear from the overall package that, in total, this was a savings measure for the government under the guise of the feel-good Orwellian title of ‘Welfare to Work’. We actually had a savings measure for government to try to reduce the number of people on the disability pension and parenting payment single and move them onto the lower payment of Newstart.

It is particularly galling now that the federal budget has appeared because, as all senators would know, there was a significant community debate about the need to change our taxation system. We have had some debate on that with the Tax Laws Amendment (Personal Tax Reduction and Improved Depreciation Arrangements) Bill 2006. There were a lot of people across the community contributing to that debate on the need for wide-ranging structural tax reform. About the only people who did not contribute to the debate were the senior ministers of the government—even a lot of government backbenchers constructively contributed to it. The Treasurer and the Prime Minister did not contribute to the debate. The Treasurer’s response was to try to squash that debate with a farcical comparative study that was supposedly independently done but basically was written by Treasury anyway to divert attention from the real issues of the need for structural tax reform.

There were a lot of issues and a lot of views put forward across the community. That is understandable and as it should be. It was also interesting how much common ground there was across the community—across the different sections and philosophical viewpoints of the community. There were some key areas of common ground, and one very common area that was mentioned was the need to reduce the tax burden on the lowest income earners through measures such as raising the bottom tax threshold, on which we have just had a debate, so I will not repeat it. Also, almost all comments talked about the need to fix the growing and serious problem of the very high effective marginal tax rates that people pay, particularly low- to middle-income earners.

The Treasurer’s response to this was to say, ‘They call it an effective marginal tax rate but it is not really tax; it is a withholdings test.’ It is like Wayne Swan and Mark Latham’s notorious claim that the family payment was not real. The Treasurer’s income withdrawal supposedly is not real either, according to him. I can assure him that it is very real and it is effectively a tax, which is why people call it ‘an effective marginal tax rate’ when they are calculating its impact.

One aspect of this government’s changes that has not been acknowledged, that needs much greater attention and that categorically is a major disincentive for people to take up work is the fact that, under these laws, many people will have their effective marginal tax rate increased. By pushing them off the disability support pension and parenting payment single and pushing them onto Newstart, you change their income test so that, if they earn small amounts of income, the withdrawal rate is significantly higher. Therefore their effective tax rate is much higher.

These people, who are amongst the lower income earners in our community, are paying tax rates much higher than people who are earning $150,000 a year or more. That is completely unjust; it is also gross inefficiency by people who are talking about the need to make our economy as productive at possible, to get people into the workforce and to meet some of our workforce shortages. This is a massive disincentive. It is a grotesque distortion and it is clearly impacting on the ability of the employment market to fill available jobs. To do all that under the label of ‘Welfare to Work’ is a disgrace. It is appalling that this government is getting away with it. The Democrats will continue to do all we can to make sure that the government does not get away with it in the long term.

We all know that people who have been on welfare for a prolonged period—particularly people who have personal issues such as being the sole parent caring for a child or children or having disabilities, even if they are termed ‘mild’ by a bureaucratic formula—are far more likely to take up part-time work than get into full-time work. That is good. The more people who can be assisted to do that, the better. Of course, it is precisely people taking up part-time or casual work who are most hit by high effective marginal tax rates because they will have those sorts of income levels—a couple of hundred dollars a week—from paid employment and they will have very significant reductions in their overall take-home income as a result of working, particularly when you add the costs of transportation and other costs involved in getting, holding down and performing a job.

The farcical formula that the government is applying in deciding whether or not people will have to take up a job on the basis of how much better off they are each week would be a joke if how it impacts on people’s lives were not so serious. But it is a very serious matter. One of the other very disturbing aspects of this debate and the misleading language that the government has used is the way that it has completely turned the notion of welfare reform on its head. These sorts of changes that the government made have again been excused and promoted under the label of ‘welfare reform’. It is a phrase the government has been using for a while but the agenda has been very different to what the phrase implies and, indeed, what was initially proposed.

Going back quite a number of years—at least five—if you look at what is known colloquially as the McClure report into welfare reform, you see that it is a fairly simple and quite readable report, which is not necessarily the case with many of these sorts of reports. It clearly demonstrated that a major aspect of trying to assist people into work is not just looking at it as a narrow, linear line from one position to another but also recognising that there is a range of barriers to people getting into the workforce and to people basically being able to have opportunity—and that means ‘opportunity’ in the widest sense of the word. Some of those key barriers are housing costs, transportation, access to training and particularly the ability of work to meet the needs of people, whether they are family needs because of being a sole parent or personal needs because of a disability. They were all recognised as key factors.

Another key component that was highlighted is the need to reduce the gap between the pension payment and what is colloquially known as the dole—the Newstart payment. The two payments have been getting steadily further apart over time because they have different indexing measures attached to them. The other aspect, which is less recognised but equally important, as I flagged before, is that different income tests apply. There is a much more generous income test for pensions than for Newstart, a more generous assets test and other concessions such as health care cards and the like. All of those things are lost to those people that are now not eligible for those payments; they will now be put on Newstart. That will mean, undoubtedly, significantly lower incomes and levels of assistance for many Australians who are already amongst the most disadvantaged. It is a contemptible approach that the government is taking and it is disgraceful that it is still pursuing it. This is one area where there needs to be a lot more attention paid to the impacts on families—on human beings—and on individual people around Australia who are affected as a result of the legislation that was passed in this place. The legislation, I might say, is supported by the Family First senator, which I find quite extraordinary, given how negatively it is going to impact on so many families around the country. That is something that needs to be monitored and followed much more closely, and the Democrats commit to doing that, as I am sure many other senators in this place will.

Finally, I want to indicate the wider problem with the approach that has been taken in the government’s welfare legislation. Whilst the changes, as far as they go, are welcome, there are still changes being made within the broader context that are going to cause major hardship to a significant number of people. We need to remember that we are talking about people’s incomes. One area of the public debate that is very misleading—and I do not blame the government alone for this one, at least—is the common assumption amongst the community and the media about what the average income of Australians is. The assumption, which is often quoted, is that the average income is $50,000 or $55,000 per annum. People hear that and assume that most people earn that amount or over. That is completely incorrect. That figure is the mean income. The median income, which is the midpoint, is much lower down—around the $30,000 mark. If you count those people who are not in the workforce and who have no income at all then the figure moves down into the $20,000 to $30,000 range, depending on which statistics you read. And so the average Australian actually earns less than $50,000 per year—around $30,000 per year. They are the sorts of people who are impacted significantly by any sort of increase in the effective marginal tax rate. That is another reason that these sorts of measures are so negative. It is about time, when we are talking about the income of people in the community, that we recognise that the majority of Australians do not earn $50,000 or $55,000 a year; the majority of Australians earn $30,000-odd or less. That is not a lot of money; obviously, that is a key reason that many families need to have two incomes. Even the average household income median, or midpoint, is only in the $50,000 to $60,000 per year range.

We need to keep those facts in mind when we are looking at measures that can affect people’s incomes, whether they are taxation or welfare changes or some of the interconnects between them. In that respect, the government is clearly putting in place changes that will mean a significant group in the community will become less well off. There has been a lot of talk from the government in recent times suggesting that there has not been greater inequality in Australia. The government denies the common phrase ‘the rich are getting richer and the poor are getting poorer’ and says, ‘Everybody is getting richer.’ It has even suggested that the gap between the so-called rich and the so-called poor is not increasing. Inasmuch as there is truth in that, the government should acknowledge that that is in large part because of the Democrats—particularly during the period when we had the balance of power in the Senate. The Democrats prevented some of the more extremely draconian and unjust welfare and tax measures that the government was going to put in place and that would have undoubtedly increased inequality. The government once again refuses to acknowledge that, in the same way that it refuses to acknowledge the significant role the Democrats have played in producing the positive workplace environments and workplace statistics that the government continues to gloat about.

But of course the key thing now is that the government have control of the Senate. In the period of time since gaining that control, they have destroyed the workplace relations system that they themselves continually say has produced such good economic outcomes. They are introducing draconian measures—like the one before that Senate today—which never in a million years would have got through the Senate before. As the government well know, measures that were far less draconian than today’s were not passed previously, because they were unjust and increased inequality. Even inasmuch as there is some truth in saying that inequality has not increased as much as some people might think, that has not been the government’s doing. It has been the Senate and the Democrats in particular that have protected that equality. Whatever might happen to the Democrats in the future, that is certainly a legacy that I will remain proud of.

It also needs to be emphasised that, despite the best efforts of the Senate and the Democrats and others, there has clearly been a growing inequality in Australia. It is not just measured, and you cannot just measure it, on straightforward income through employment. But if you measure it on overall income, unearned as well as earned, and particularly if you measure it in terms of wealth, there has been a massive increase in the gap between the haves and the have-nots in this community. This is particularly between those who have housing assets and those who do not. Those who do not are less and less able to get into the housing market and have housing based assets. Measures such as the government’s Welfare to Work package will increase the number of people who have little prospect of getting into that area. It will therefore increase the number of have-nots, who are being left behind.

As that wealth gap grows bigger, particularly the component of it that is based around those who can purchase their own the house and housing investments, people’s ability to cross that gap will become less and less. It will become, eventually, an unbridgeable gap. Once it is an unbridgeable gap we have a permanently divided society, and that is not in the interests of those of us who are on the ‘haves’ side of that chasm—let alone those who are the have-nots. That is a path this country should not be going down, and we need to reverse it urgently. The changes in the legislation are okay, but the Welfare to Work changes need to be monitored. The disadvantages and injustices not only need to be highlighted but need to be reversed, and they need to be reversed as soon as possible.