Senate debates

Tuesday, 9 October 2012


Social Security Legislation Amendment (Fair Incentives to Work) Bill 2012; Second Reading

12:33 pm

Photo of Arthur SinodinosArthur Sinodinos (NSW, Liberal Party, Shadow Parliamentary Secretary Assisting the Leader of the Opposition) Share this | Hansard source

The coalition will be supporting the Social Security Legislation Amendment (Fair Incentives to Work) Bill 2012, as it is a continuation of Welfare to Work reforms that were initiated by us in government in 2006. I go first of all to the intent of the bill, which is to amend the Social Security Act to remove the grandfathering provisions for parenting payment recipients from 1 January 2013. This will affect those parenting payment recipients who have been continuously receiving parenting payments since before 1 July 2006. Under the previous legislation introduced by the Howard government, recipients of a parenting payment could be grandfathered—or, as we sometimes say these days, grandparented—on this payment until their youngest child turned 16 years old, provided that the child was in their care before 1 July 2011. In addition to removing the grandfathering clause for parents, this bill seeks to double the permissible liquid assets, raising the maximum limit from $2,500 to $5,000 for singles and from $5,000 to $10,000 for those with dependants. It also seeks to define which payments should be categorised as termination payments to ensure that there is consistency across the board when considering the income maintenance period. This will bring the definition of termination payments into line with the policy intent of the Guide to Social Security Law, ensuring that termination payments such as for untaken long service leave, untaken maternity or paternity leave, early termination payments and other such payments are included in the income maintenance period.

However, while the coalition's Welfare to Work reforms were aimed at assisting Australians off welfare and into work, the main aim of this bill is to realise much-needed savings for the government, with expected savings from this bill of around $691.9 million over four years. That is a fair whack of money, and that is why the government has had this damascene conversion to Welfare to Work after years of opposing and indeed demonising the very measures that we are talking about here today.

For many years there has been a view within the OECD that we should increasingly move from passive income support to active income support—in other words, we find ways in which to use the public dollar, if you like, to encourage and support people in making a transition to work. This the Howard government did in 2006, when it invested $3.6 billion into Welfare to Work. It is good to see that Senator Bilyk is listening so intently! There were four under-represented groups of people who were targeted for assistance from Welfare to Work under this initiative, with parents being one of those groups. The 2005-06 budget saw an investment of $389.7 million over four years to specifically assist parents into work. The Welfare to Work reforms of 2006 built on our Australians Working Together initiative from 2003, when parents with children aged between 13 and 15 were required to undertake one or more activities such as job search, education, training or community work to assist them in preparing for a return to work.

From 1 July 2006 new applicants were eligible for parenting payment single when their youngest child was aged less than eight, and they moved to Newstart or another payment when their youngest child turned eight. Single principal carer parents in receipt of the Newstart allowance were also given access to the pensioner card, the pharmaceutical allowance and the telephone allowance. New partnered applicants would receive a parenting payment when their youngest child was six, and they would move to Newstart when their child turned six.

Both parenting payment single and parenting payment partnered recipients had a requirement to look for 15 hours or more of work a week. Parents who were on parenting payment single or partnered as at 30 June 2006 were grandfathered, enabling them to stay on that payment under the current eligibility provisions until their youngest child turned 16. However, job search requirements would apply from the later of 1 July 2007 or when their youngest child turned seven.

Where there were extenuating circumstances, such as a child with a disability or another reason why a parent may have full-time caring requirements, the Welfare to Work legislation permitted temporary exemptions. It was a very deliberate decision on the part of the government to grandfather people who were on these payments at a certain date. The reason for that was actually to make it easier for the public to accept the reform by making it clear that it was not having a retrospective impact but rather that it was focused on new recipients. This has been an important principle in a lot of social security legislation and, indeed, tax legislation over the years. Its purpose was to make it easier for the community to accept the reform.

In addition to access to concessions for single parenting payment recipients, the Howard government ensured that additional out-of-school-hours care was available for parents. However, recent childcare reforms are seeing out-of-school-hours care at great risk, with many centres to close as a result of the national reforms. A new employment participation service was offered to parents with school-aged children, ensuring that they had the skills needed to gain a job.

As part of the coalition policy, parents could refuse a job—and this is quite important—if they were not more than $50 a fortnight better off once we took into account the costs of employment, such as child care, or if they had to travel more than 60 minutes each way to work. Currently, parenting payment recipients are subject to different rules depending on when they first claim payment; so this legislation will bring all parenting payment recipients onto the same standard.

The research undertaken by the Department of Education, Employment and Workplace Relations on the Welfare to Work reforms demonstrates clearly that there was a 23 per cent increase in the number of single principal carer parents leaving income support after six months in comparison to the previous three years, with 38 per cent moving off payment during 2006-07. The report also showed that over 70 per cent of principal carer parents left income support for employment. In other words, they did not drop out of the workforce: they actually got a job. Similarly for partnered principal carer parents on Newstart allowance, 45 per cent were no longer in receipt of income support payments after six months compared to 32 per cent in 2005-06.

At the time of the Welfare to Work reforms the Howard government introduced a range of complementary services to assist parents in their transition to employment once the youngest child had reached school age. These were all designed to boost workforce engagement and to reduce the dependency on welfare. Regrettably, under the current employment services model many of these forms of assistance are no longer available and the government has not proposed any alternatives.

We recognise that the best way to help parents and their children is to help them get a job. Tony Blair used to speak about fairness in the workplace starting with the opportunity of getting a job. The coalition understands that those children who grow up in a jobless household often face greater disadvantage in their community and an increased likelihood of being welfare dependent themselves. We have seen over generations the intergenerational transmission of poverty, where people grew up in households where neither their grandparents nor their parents ever had a job and going down to the Centrelink office was seen as the way that you picked up your pay.

Intergenerational unemployment is a growing concern in this country, and the longer people remain on welfare then the more difficult the transition to paid employment becomes. That is why these measures are sometimes seen as tough love; in the short term they are seen particularly as applying the stick, subject to certain carrots. It is for the good of the welfare recipient in the long run, so they get back their capacity to participate fully and actively in the job market. With that goes their self-esteem—that goes up—their confidence goes up and their capacity to contribute to the community more generally goes up.

We do have concerns with this bill, even though we support it. Unlike the Welfare to Work agenda introduced by the coalition in 2006, there is no additional funding to support parents into work. This legislation is sending a very negative message: all stick and no carrot. If the government was truly committed to assisting parents back to work it would provide additional assistance. It would do it as part of a coherent, comprehensive, credible strategy around the return to work, or getting people into work. Instead, this government has slashed $162.2 million from Job Services Australia assistance for jobseekers and it has cut a further $44.3 million from outcome payments for Job Services Australia providers.

Parents who are working could be worse off financially as their participation requirements may force them into accepting a job where they are worse off financially. This is in contrast to the Howard government reforms, where parents were promised that they could refuse a suitable job offer if they were not better off by at least $25 a week. In the 2005-06 budget an underlying cash surplus of $8.9 billion was predicted, demonstrating strong economic growth. Unemployment was at its lowest level—5.1 per cent—since 1976, and forecast to trend down further. This is in contrast to Labor's most recent budget, which continued their unmitigated trend of running a deficit, and that is the context in which this legislation has come forward. That is why, as I said before, it is a grab for cash. It is a dash for cash, precisely because the government are running out of other options in order to try and get their budget into a wafer-thin surplus of $1.5 billion in 2012-13.

This means that the government has had to eat humble pie. Hypocrisy, thy name is Labor! Labor voted against the Welfare to Work reforms of the Howard government in 2005, even though those reforms included extensive assistance to help get people back into work—unlike this particular package. Just a few short months ago Labor moved to decrease the parenting payment cut-off age of the youngest child from 16 to 12. Making this further decrease now shows that this is more about achieving a budgetary saving than about a policy that is genuinely committed to assisting people from welfare to work, particularly given the tough economic times that are facing Australian families today.

As I said before, Labor have been hypocrites. On 15 September 2005, ACOSS Advocacy Day—ACOSS being the Australian Council of Social Service—describing the Howard package, Penny Wong said:

This package has nothing to do with moving people from welfare to work and everything to do with extreme cuts to the household budgets of Australian families who can least afford it.

This is even though the legislation at the time provided that you could refuse a job if you were not at least $25 a week better off. Under the government's package, some people will be forced to take a job even if they are worse off. You can have a no-disadvantage test in the labour market under this government because the unions will demand that, but if you are a welfare recipient you cannot get a no-disadvantage test under this government. We were trying to encourage people to go into the workforce and make it a positive experience. All stick, no carrot!

Kelly Hoare, a former member of the other place, said on 1 December 2005:

Labor is opposed to the changes in this bill and it opposes them on the basis that these changes simply dump people from one welfare payment onto a lower welfare payment and push the most vulnerable Australians over the edge by making extreme cuts to their household budgets.

The reality, as I indicated earlier, based on research commissioned by the Department of Education, Employment and Workplace Relations was that a significant number of people got into paid employment and were better off as a result.

Dr Carmen Lawrence, a member of the other place, said on 1 December 2005:

… the vulnerable people at whom this legislation is targeted are the ones not able to get the ear of the government. They are not able to walk these corridors with expensive, paid consultants to influence the government's policy, and the government refuses to listen to their advocates.

We did listen to the people who said that if you want to get people into work you have got to make it a positive experience and you have got to give them the assistance to do it. When I worked in the former Howard government, I was one of the people who advocated in 2005-2006 that we grandfather existing recipients, because it was important to get public acceptance of the reform. Labor has now gone further but has provided only stick and no carrot. Dr Carmen Lawrence, if she were here today, would be saying that the people who are not being listened to down the corridors and in the ministerial wing are the most vulnerable in our community.

We will support this legislation. There is no doubt in my mind that it is important we continue the journey of welfare to work. It is also important to recognise that the government have come to this damascene conversion, if I could call it that, on welfare to work simply by the exigencies of their own budgetary situation. It is a pity that, because of that budgetary situation, they cannot see their way clear to actually provide assistance which will facilitate and make the transition to employment a positive experience for parenting payment recipients and their families.


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