Dean Smith (WA, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) | Hansard source

I thought I might rise to make some brief remarks in regard to the Social Services and Other Legislation Amendment (Strengthening the Safety Net) Bill 2023 and make very clear what the coalition's position is. We have heard some contributions from government senators which tell half the story, so I'm keen this afternoon to make sure that people understand exactly what the full story is and why the coalition's amendments should be supported and why they concur or align with some comments that were made by the Secretary of the Treasury earlier this year.

To reiterate, the coalition will support expanding the eligibility for assistance for single parents, which is contained at schedule 1 of the bill. It will also support expanding the higher rate of JobSeeker for those aged 55, which is contained at schedule 2. It will support the increase in Commonwealth rent assistance, which is detailed at schedule 3. It will oppose increasing payments by $40 per fortnight; instead, we will move amendments this afternoon or tomorrow to increase the relevant income-free threshold by $150 and remove the government's proposed $40 increase from the bill. Fundamental to this is the idea that, in a period of very low unemployment such as we're experience in Australia now, where job opportunities are at their greatest and at a historic high, we must use this unique set of economic circumstances to give people the opportunity to enjoy the benefits of work. We know that when Australians have the benefit of employment their state of mind improves, they are happier and they are able to make a much greater contribution to our community. That's a view that is reflected in the HILDA report. It's not a guess; it's not an idea. It is something that is supported by the evidence in the HILDA review.

I want to turn particularly to some comments that the Secretary to the Department of the Treasury made in April this year in an address to the Policy Research Conference. At that conference, which was hosted by the Treasury, the secretary made some very important remarks, I think, when commenting on the white paper on employment, which is expected to be released soon. The secretary made some observations with regard to income support recipients—exactly the sorts of people that we are talking about this afternoon. He made these remarks in trying to draw to people's attention some of the disincentives in our current system that deny people the opportunity to work more. I think these comments are very illustrative of why the coalition's forward-thinking amendments deserve to be supported, amendments that are about using the unique set of very positive circumstances in our employment situation to deliver better outcomes for people who are on JobSeeker.

In his 3 April address to the Policy Research Conference, the secretary said:

Income support recipients, those people receiving payments such as unemployment benefits and pensions, can also experience work disincentives resulting from the tax-transfer system. I will focus on the JobSeeker Payment as it is most directly linked to the labour market.

He goes on to say:

Conversations around JobSeeker often assume that recipients are unemployed. This leads to an analysis of benefit rates relative to the minimum wage. The reality is far more complex. Around one-quarter of JobSeeker Payment recipients had some form of earnings in the previous fortnight, with many employed in part-time, entry level jobs. Indeed, reforms like the Working Credit, which allows JobSeeker recipients to accumulate credits while not working that can be drawn down to reduce withdrawal rates when working, have sought to incentivise part-time work as a stepping stone to full-time employment and self-sufficiency.

This is the most important paragraph, I think. He goes on to say:

Given this complexity as people move from unemployment into work, it is useful to think about the effective marginal tax rates, or EMTRs, to measure financial disincentives for income support recipients. It is the proportion of each additional dollar earned that is lost through increasing tax and decreasing transfer payments.

What he means is that when people on JobSeeker are earning some additional income, which they are free to do, there comes a point where it becomes a disincentive to work to earn additional income, in addition to the JobSeeker payment, because the effective marginal tax rate starts to eat into every extra dollar earned.

The coalition's amendment seeks to remove or change that disincentive. What we're proposing is that people will have an opportunity to earn $150 a fortnight, in addition to the $150 per fortnight they can currently earn, without it impacting their JobSeeker payment. This is very, very important, because it will encourage people who are on JobSeeker to take up the opportunities that exist in the market already for extra work. We know that those opportunities exist because we have small and medium enterprises in Australia crying out for more workers. We have people who are interested in taking up the opportunity to work some extra hours without it affecting their JobSeeker payment, and what we're saying is that they should have greater incentive to do that.

If the government can't put its mind to accepting what are very reasonable and forward-thinking ideas about how to maximise the opportunities that we get at the moment from having a very strong labour market—ideas that I think are endorsed by the Secretary of the Treasury, based on his comments in April of this year—if the Labor Party can't bring itself to be forward-thinking and use these opportunities, then I hope that the Greens and Independent senators might allow themselves to open their eyes, to expand their minds, about how we can use this unique set of positive opportunities to deliver better employment outcomes for people and solve a labour shortage challenge in our economy.

As we move into debating the amendments and the detail of this bill, I encourage Senator Ayres and others to, at a minimum, familiarise themselves with the comments that the Secretary of the Treasury, Dr Kennedy made earlier this year. He is a reputable, professional, dedicated public servant—the Secretary of the Treasury no less. I hope that Senator Ayres will be able to jump to his feet and talk about why the Secretary of the Treasury's ideas should be repudiated.