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Community Affairs Legislation Committee - 18/08/2014 - Social Security Legislation Amendment (Stronger Penalties for Serious Failures) Bill 2014

MESTAN, Dr Kemran, Private capacity

[12:06]

Evidence was taken via teleconference—

CHAIR: Welcome. I understand information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. Is that correct?

Dr Mestan : Yes, that is correct.

CHAIR: I now invite you to make an opening statement before we move to questions.

Dr Mestan : Thank you. There is a need to enforce requirements. However, the particular part of the amendment I have most concern about is subsection 42R(4), which maintains an eight-week period of non-payment even when the individual intends to commence compliance with requirements. My concern is that the policy is not an effective means of meeting the desired objective of activating people. If the policy is designed to get people to comply with requirements and thereby help people gain employment, it seems unwarranted to punish people once they have complied or intend to comply. Worse than ineffectual, the policy is likely to be counterproductive because, once a person is sanctioned, they have no incentive to meet requirements, whereas in the current regime, where payments are recommenced upon compliance, there is a strong incentive for a sanctioned person to quickly meet requirements.

Regarding the existing sanctioning regime, the minister in his second reading speech said:

These penalties were waived not because the job seekers were vulnerable or the jobs were unsuitable, but simply because the job seeker elected to do an intensive activity instead.

Hence, the minister seems to be acknowledging that the current waiver system is having the desired effect: people are engaging in an intensive activity, such as work for the dole, doing job search training or undertaking more intensive job searches. This is surely the purpose of an employment activation support system, not to punish people.

There is an insufficient number of jobs for all unemployed people. According to the Australian Bureau of Statistics, there is one job for every five job seekers on Newstart allowance. Those without jobs will usually be the least competitive in the job market. It should be expected that such people will often suffer from multiple disadvantages, especially mental illness. We know there is a nexus between unemployment benefits and disability benefits, and the main reason people are in need of disability benefits is mental illness. Hence, it is unsurprising that some such people will occasionally not meet various requirements. Evidence from the previous automatic sanctioning regime showed that many highly vulnerable people were punished, such as homeless people and people with illnesses.

Although there might be a very small number of people who are playing their system, changing the legislation to target those people would have the consequence of greatly harming other highly vulnerable people who find themselves in breach of requirements due to various personal problems, such as mental illness. Hence, in addition to undermining the very purpose of helping people gain employment by continuing to sanction people, regardless of whether they commence compliance, the amendment is likely to harm some of the most disadvantaged people in society. Thank you.

Senator MOORE: Dr Mestan, Can you give me some idea about what your interest is, in this area? We have your CV that talks about the work you have done in research with the Brotherhood and other areas, but what is your interest and what stimulated you to get involved on this particular piece of legislation?

Dr Mestan : I was actually requested to provide evidence. I was emailed and rung early last week to provide my perspective, based on my previous research. I published an article in the Australian Journal of Social Issues. That research was based specifically about whether or not various welfare reforms that are designed to help people gain employment are, in fact, promoting their interests. My particular research interest is based on what extent compulsion can be legitimised, whether or not people's wellbeing is being advanced through policies that compel them to gain employment.

Senator MOORE: One of the questions I have been asking people is whether they see who benefits from this legislation. I can see that you have looked at it closely, in terms of your knowledge of the various subsections, so from your work in the area can you see who benefits from this legislation?

Dr Mestan : I am not convinced anyone will benefit. I feel it is not constructive to getting—the main aim does not seem to be to get people into employment. I feel it can be counterproductive. It could prevent people from getting employment, because they will be sanctioned even if they try to re-engage in intensive activities. It could actually reduce the amount of intensive employment activity people have.

Senator MOORE: The argument you articulated in your opening statement is that if someone gets the penalty of eight weeks—and under the proposed changes it will be an eight-week imposition, if they have been found to have met the suitability of replacements—they will be inclined to say, 'Eight weeks—stuff it,' rather than go back into the system with the Work for the Dole scheme and so on, which the current legislation has.

Dr Mestan : That is correct. I think it removes an incentive.

Senator MOORE: So if you are not engaged, it might just be a further push away.

Dr Mestan : Correct.

Senator MOORE: In terms of the work you have done, as well, can you identify where the demand for such a change would come from? Is it from employers, is it from job-search agencies, is it from people concerned about any laxness in our system? Who wants it?

Dr Mestan : I can only speculate. I do not think it is coming from employers or from people in the employment-services sector, because I do not see how they can benefit from this. There must be various political reasons why it is being introduced, but I do not think it is about improving our employment system.

Senator MOORE: Who is the delegate and decision maker, under this piece of legislation?

Dr Mestan : I am not sure I understand. Who is the delegate and decision maker?

Senator MOORE: Yes, who makes the decision, in terms of whether the eight weeks is imposed or not?

Dr Mestan : In the legislation it is the secretary, but of course that is delegated down to someone who is employed as a case manager in the employment-services sector.

Senator MOORE: I have read it. The delegation is with the Secretary of Human Services, there is no doubt about that. I am trying to find out whether people are really clear because, in the evidence, we have had people who are unsure whether this is going to be translated to the job-service providers, as you have just said, or whether this part is going to be retained by Centrelink. The question will go to the department. But my reason for asking it is to see whether there are still unsure responses from people who are really interested in the process.

Dr Mestan : I am unsure too. I cannot be clear how that will pan out, in practice.

Senator MOORE: I can promise you, Doctor, it was not a test! It was just to see whether people are absolutely clear of their situation, with all the things that are flying around at the moment.

Senator CAROL BROWN: In some of the submissions that we have received to this inquiry, there has been a suggestion that a broader range of reasons for noncompliance should be accepted. Do you have an opinion on this view?

Dr Mestan : When you say a broader range of reasons, do you mean than the amendment suggests, not the current legislation?

Senator CAROL BROWN: Yes.

Dr Mestan : Yes, I do agree. I think there is a need for a broader range of reasons.

Senator CAROL BROWN: What sorts of reasons do you think should be included?

Dr Mestan : I think, for example, if they provide reasons that explain why they were unable to meet the requirement, and they intend to meet the requirement, then that should be sufficient. My specific concern is to try to incentivise them, to try and get them to meet the requirement, so if they show that it was just a one-off—maybe it was illness, or, of course, there can be some issues around transport and they can miss interviews for various other complications in their life—it is more about ensuring that they intend to meet the future requirement. I am interested in future orientated policies that try to get people to engage. If they can provide a reason to suggest that they intend to engage, I think that is the most important thing for me.

Senator CAROL BROWN: Are you aware of any research that would indicate that mandatory penalties or one-time waivers would be any more effective than the current system?

Dr Mestan : No, I am not aware of such research. I am of research showing that particularly vulnerable people were affected during the automatic sanctioning regime, but I have not come across research showing that by enforcing sanctions that will help people engage more.

Senator CAROL BROWN: So having a more flexible system, such as the use of waivers, would encourage people to engage more—is that what you are saying?

Dr Mestan : Sorry, I understand your question now. No, I have not come across that research.

Senator CAROL BROWN: Do you have a view about the use of waivers in this regard?

Dr Mestan : Yes, I do. I think that providing a waiver can be effective. The Department of Education actually provided the data showing that most people who are given waivers are given that waiver because they had decided to re-engage. So I think the data suggests that waivers are actually an effective way to get people to re-engage.

Senator CAROL BROWN: And obviously meet, you would suspect, the objects we are trying to achieve?

Dr Mestan : Yes, exactly. It provides an incentive to re-engage because if your payment has been cut off and you quickly want to get your payment back you are more likely to quickly try and comply with various activity requirements, but if there is no chance of getting your payment recommenced you are less likely to. I think the department's data suggests that even though it is true that the amount of serious failures increased when the automatic sanctioning regime was amended to allow waivers, many of the waivers were as a result of people re-engaging. That is exactly the outcome that you want; you want to encourage people to re-engage, I believe.

Senator CAROL BROWN: So the impact of these measures could possibly have the opposite effect of what the government is trying to achieve?

Dr Mestan : Yes, I believe that is true.

Senator CAROL BROWN: Have you done any work on the effect—on the impact—that these measures will have?

Dr Mestan : No, my recent research has not been involved with empirical data collection from participants in employment systems.

Senator CAROL BROWN: Have you done any work on the type of job seeker affected?

Dr Mestan : Only secondary reading. I have not actually done empirical data collection on that. I have come across research that shows that some of the most vulnerable people are affected: people with mental illnesses and homeless people, and single parents as well.

Senator CAROL BROWN: Do you have a view on if this legislation is necessary or why this legislation has been put forward?

Dr Mestan : I do not think it is necessary. I think the current regime is actually working quite effectively. There are only a very small number of people who are being sanctioned. I do not think there is any budgetary reason to do this; I do not think it is about saving money. Many of the people who are provided waivers, they are given a waiver because they are engaging in intensive activity. Although it can have a very big impact on and harm some of the most vulnerable people in society, I do not think it has much of an impact on society or the national accounts generally, so I really cannot imagine why there has been any need to introduce this amendment.

Senator CAROL BROWN: Have you done any work on this measure and how it will interact with the measures about the six-month waiting period for job seekers under 30?

Dr Mestan : No, I have not done work on that. It has all happened very rapidly, hasn't it, so I have not actually managed to do any research on that.

Senator CAROL BROWN: Do you have a view on the impact of those measures taken together?

Dr Mestan : I guess they are similar in the sense that they are about reducing people's access to payment, so I think it is likely to have—I really cannot imagine what some people will do; some people will simply have no access to income of any sort. I notice that in this legislation it also removes 'being in serious financial need'. This is no longer a reason for a waiver, so I really cannot imagine how people are going to access income. It will create an additional burden on charities, and I am sure there are people from the charity sector providing evidence who will have more to say on that. I do not think they will be able to cope with the increased numbers of people who are reliant on finding some other source of income.

Senator CAROL BROWN: I will ask you this question, but you might not be able to answer it. We have received evidence about how this eight weeks of no payment may work. It has been suggested, and we will talk to the department about it, that it may actually prolong, for those under 30, the six-month waiting period where there is no payment to eight months. Have you had a look at that?

Dr Mestan : No, I was not aware of that.

Senator CAROL BROWN: We are going to obviously ask the department, but that has been put to us—that is, it will actually extend the period of no payment for some job seekers.

Dr Mestan : Yes, and I can imagine that it will intensify the difficulty people have with trying to secure some other form of income.

Senator CAROL BROWN: Do you have a view about which way the government should go to assist long-term unemployed people?

Dr Mestan : I definitely think people need more support. There is an insufficiency of jobs out there, so the reality is that there is always going to be unemployed people under this current economic system. I do not think we should be punishing the unemployed; ideally we should be in some way sharing unemployment. So if we have decided that a five per cent or six per cent level of unemployment is tolerable in our society we should not impose that burden on that very same section of society, we should try to help people circulate off unemployment—that is, not the same people who are in long-term unemployment. We should help people receive the training and support they need to enter the job market.

There is another issue. There is a lot of circulation from unemployment to short-term or temporary work, so addressing some of the least secure and least rewarding employment would also help some of the most disadvantaged people gain more secure employment, so some industrial relation issue is related to the unemployment and employment issue as well.

Senator CAROL BROWN: We have received evidence that there is only one job for every five job seekers on Newstart, but when you add in, as you indicated, those who are underemployed then there is only one job for every 10 job seekers—is that your understanding?

Dr Mestan : Yes, that is my understanding. There is another unemployment measure called the underutilisation rate, and this includes people who have given up looking for work. Unemployed people are only those who are technically seeking work. It also includes people marginally attached to the workforce, including people on various disability benefits and people who are underemployed, so if you work only one hour a week you are considered employed. So if you include all of these different kinds of people who are not technically in the official unemployment figures, there is a much higher level of unemployment than the official rate of six per cent or so at the moment. There is no doubting that it is not just about the individual's failing; there is also a systemic issue around the availability of work.

CHAIR: Thank you very much, Dr Mestan.