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Community Affairs Legislation Committee
26/07/2017

MANDERSON, Mr Roland, Acting Executive Director, Anglicare Australia

McGAVIN, Dr Elli, Policy and Program Development Manager, The Salvation Army

Evidence from Mr Manderson was taken via teleconference—

CHAIR: Welcome. Can I confirm that you've received the information on parliamentary privilege and the protection of witnesses?

Dr McGavin : Yes, thank you.

CHAIR: Great. We have your submission. Would you like to make an opening statement?

Dr McGavin : I have prepared a statement to be concise and get to the point. I will read from that, if that's all right with you. The Salvation Army welcomes the opportunity to appear before the committee hearing to reinforce the comments contained in the submission that we have already made to the inquiry. The Salvation Army is grateful to, again, relay the voices of those we seek to assist from our services. Many of these are Australians for whom the impacts of continuing inequality, through measures such as ending carbon tax compensation, will have the most severe and ongoing impact.

In 2016, the Salvation Army provided more than 486,000 occasions of support for people seeking assistance from our services in Australia. This support was provided to more than 200,000 individual Australians—26,000 within homelessness and housing services and more than 144,000 in our emergency relief services. Put another way, for instance, in the Salvation Army's emergency relief services, that is nearly 600 people a day seeking some of the most basic help and support, such as food and utility support. I provide these statistics as a way of validating my claim that the comments that follow are informed by the experience and insight that comes from providing such broad services to Australians. The Salvation Army is engaged with the community on a daily basis and, as a result, we're aware of the day-to-day struggle that many of these people face.

I also wish to note that there have been a number of in-depth submissions from other organisations pointing out the detailed impact on a variety of income support payments which range from a reduction of between $8 and $14 per fortnight. In addition, a number of the submissions that you've already received have established the rapid increases in electricity and gas costs across the nation, so I will not go over that detail for your benefit. As pointed out in our submission, the Salvation Army's main concern is that disadvantaged Australians—the people seeking assistance from us—are already struggling to meet their daily living expenses and simply have no capacity to live on less. Therefore, my remarks will highlight the reality of that circumstance.

In our submission, we quoted data from our annual ESIS—our Economic and Social Impact Survey. I have a couple of copies and key findings, if you'd like them. It was a survey of 1,380 of our emergency relief clients. One of the key findings that I think is important here is around the cost of living. After we'd taken away the amount that people paid for rent, accommodation or whatever their housing situation was, they had as little as $17.14 a day to live on—averaged out on government support income—with single parents with children recording the worst amount left, which was $14.35 a day. When we look at the average spend of the people we surveyed, they were spending $109 on groceries and other essentials and $73 on utility bills a week. This includes a phone bill as well as all the other utilities. It's important to note that the average equalised disposable household income, using ABS data, was $998 a week. This is part of our ESIS report. This compares with the $356 for our survey respondent households. These are people for whom the choice is to pay the rent or buy food for their children for the coming week.

Recipients of income support have already experienced a 2.5 per cent cost-of-living increase in real terms over the last 12 months. As the proportion of income spent on utilities is much greater for disadvantaged Australians than for the average household, the result is increasing inequality and a greater call on services like the Salvation Army. It should not then come as a surprise that 49 per cent of respondents to the survey were unable to pay or delayed paying their bills. In fact, there are people who present at the Salvation Army and our services who have not eaten a proper meal in days and cannot afford to turn on their heating as they have paid for their accommodation as their very first priority to prevent a slip into homelessness.

At this point, I want to acknowledge that it is children who often experience disadvantage in a very particular way. There's plenty of research on the impact on their wellbeing and development. With 730,000 children living in poverty, any reduction for those whose households rely on income support payments, no matter how tiny, will have an impact. Our research also found that, of households with children 17 years or less, one-fifth could not afford medical treatment or medicines prescribed by a doctor, one-quarter could not afford three meals a day for their children and one-third could not afford a yearly dental check.

In summary, the Salvation Army maintains its concern that income support recipients are already unable to adequately meet their daily needs. Therefore, any call on their limited resources to meet the increasing cost of living is just not sustainable. The Salvation Army does not support the proposed changes to the Social Services Legislation Amendment (Ending Carbon Tax Compensation) Bill 2017, as these changes would directly and negatively impact on many of the individual families that the Salvation Army already supports.

I just want to give a final quote from one of the respondents in our ESIS survey for 2017.

Life these days is too hard and no one wants to help except the Salvos.

I am sure there are others as well.

There is so much pressure because everyone wants money and they want it now—rent gas, electricity, water, etc. Centrelink do not give you near enough money. Everything these days is overwhelming and I do not know what to do or what the future may hold for me. I am lonely and lost and I am living in a world that is cold and dark.

We would urge you not to let that world get any colder or darker.

Senator WATT: Thanks very much, Dr McGavin, for coming along. They were some pretty interesting and sobering statistics that you were able to provide us with. What was the source of that information again?

Dr McGavin : The source of that information—the vast majority of it—is our The hard road report, which is our economic and social impact survey for 2017. I have some copies that I can leave. It is online, as well. I can provide that.

Senator WATT: That would be great. Thanks very much for that. In practical terms, what would you expect then to be the impact on income support recipients if this supplement were to be abolished, given the very small amount of disposable income, if you like, that these people have?

Dr McGavin : It is tremendously disproportionate because of the small amount of disposable income that people have. Traditionally, people will try and hang on to their accommodation as long as possible, because once that is gone everything else unravels. So they will go without meals. In particular, parents will go without meals. They will go without health and all those other basics to preserve the family home. So we would expect to see an increase in people coming to our services requiring food and utility support, and also an increase in people perhaps being disconnected from their utilities as well.

CHAIR: Mr Manderson is now available. Can you confirm that you received the information on parliamentary privilege? Then you can provide your opening statement.

Mr Manderson : I have received information on parliamentary privilege. I accept the conditions that come around that. My opening statement is extremely brief. I notice that none of the introductory speeches that came with the legislation, nor the legislation itself, addressed the issue of income—adequate income or inadequate income. As we have just heard from the Salvation Army, the issue of adequacy of income is very confronting for people who are living on these very low inadequate income supports that our society offers people.

The other point that I would make, and which we made in our submission, is that while this might be called a clean energy supplement it was simply another way of repackaging a whole lot of CPI increases. By taking this away from some people who are now coming onto income support, they will not just lose the $8.80 a fortnight less than current recipients who will still get the energy supplement; they will actually be $3.60 worse off than they would have been had the energy supplements never been introduced. So it is furphy to say this about climate change carbon tax compensation. It was when it was first introduced, and it still is, a furphy to say that that is what it is. Energy prices have continued to rise at a great rate, whether or not there has been a carbon tax in place. So all that is happening here is that money is being taken from those who have the least on the basis that a previous government called it compensation for a carbon tax.

CHAIR: We will go back to Senator Watt's questions now that you are onboard, Mr Manderson.

Senator WATT: Dr McGavin, as you know the government has recently frozen the income-free area for recipients of Newstart. So the amount of money that a recipient with a casual or a part-time job can earn each fortnight before Centrelink reduces their payment has been frozen. What do you think the cumulative effect of that freeze and the abolition of the energy supplement would have on jobseekers?

Dr McGavin : A lot of our research indicates that it's difficult enough for people and jobseekers, because of the stress of daily living, to actually focus and get themselves to any sort of employment. People who are on casual work et cetera are going to suffer that double disadvantage. Some of that will lead to some of our findings here, which are that, when people run out of money, 31 per cent of our respondents indicate that they sell or pawn things, 45 per cent have gone without meals when they've run out of money and 51 per cent access services like ours. We expect that that will increase. So there will no doubt be an ongoing impact, and it will be to a larger group because it will extend out further as well, we would expect.

Senator WATT: The government is also planning to restructure and cut the pensioner education supplement and the education entry payment. I'm not sure how across those proposals you are. If that is successful, how do you think this will impact on a single parent's or a carer's ability to re-enter the workforce, when combined with the abolition of the energy supplement?

Dr McGavin : We have a very particular view with single parents. They are the largest cohort that we see, and they are by far the most disadvantaged. Anything that puts them further to a point of disadvantage will have impacts not only on them but on their children, and it will further inhibit their capacity to get themselves to a point of work or whatever is necessary for them. A lot of single parents are only on a single parent payment for a limited time, so it's a time when we should actually be supporting them and boosting them back into the community. So we would have very strong views that this would be a huge problem.

Senator WATT: Mr Manderson, I've got a couple of questions for you as well, but did you want to add anything on what I've just asked Dr McGavin?

Mr Manderson : I'd just point to some of the research that Anglicare Australia has run through our networks and which we have especially commissioned. We did an analysis. Along with some of the other religiously based care providers, we combined to commission some work on what people on low incomes spend their money on. This was in 2012, so it has got worse since then. But, essentially, people on the lowest incomes are going backwards; they spend 122 per cent of their income every year. We then commissioned another piece of work—living standard trends in Australia—which looked at what the living standard trends are in the future from 2015, and the people on the lowest incomes in that obviously do include single parents and people on Newstart and people on youth allowance. They are facing falling living standards—significantly falling living standards—over these next few years. They would be experiencing it now. That factored in things such as this cut to the allowance. Then, when we looked at some of the work we've done—on food insecurity, in 2012, and on who's being left behind, in 2016—we are finding that there are people, particularly people in the rental markets, who do not have enough money to be able to feed themselves and maintain their rent and keep themselves warm.

We are talking about hardship. I think that many people in Australia who don't experience hardship imagine that poverty is just a relative term. I would say that, for people on these lowest incomes, poverty is an absolute experience. There is hardship which is destructive that people—they and their family—experience. There was a research paper given last week here in Canberra which showed that you have seven times the chance of ending up homeless if you grow up in poverty than you do if you just grow up in normal circumstances. What I'm saying is that the hardship and the poverty compound. So it is kind of for the sake of—I actually don't know what it's for the sake of, but let's pretend it's for the sake of spending less money. To take away an amount from the already incredibly small income of a proportion of the population is simply to compound the social and health problems that those people in our community experience. This shows, firstly, that we have a government and a society that are happy that some people get left behind and, secondly, that we are foolish in that we are then investing in greater need across our society rather than—and we're coming back to that point you were making before about the education supplement—investing in opportunities for people so they don't get left behind.

Senator WATT: Mr Manderson, I want to ask a couple of things about your submission. You have cited research from the Parliamentary Library that stated that the energy supplement was used to offset indexation increases, which would have otherwise applied to the payments themselves and that, effectively as a result of that abolition, payment rates would decrease by about $7 a week.

Mr Manderson : It was $3.60 less a week less than what they would have had anyway had the supplement not been introduced. So on top of the $8.80 a fortnight less than they get now, these people would be finding themselves $3.60 worse off than they otherwise would have been. It is not just failure to get the supplement but actually losing where they would have been had the supplement never been introduced, so they are doubly disadvantaged or left behind.

Senator WATT: Would you be able to provide the committee with a copy of that research?

Mr Manderson : Sure. It is just a Parliamentary Library paper, but I am happy to send the link through at the finish if this hearing. It is on page 6 and 7.

Senator WATT: I think the secretariat will be able to track that down as well.

Mr Manderson : It is a reminder that just because a bill is called something, it does not mean it is what it says it is. It is fair enough. You are flying the flag of what it is you are trying to do but, when you look at a bill, you should not just believe the title; you should look and see what does it do.

Senator WATT: It is always wise. Mr Manderson, is there anything further you would like to say about what you consider would be the practical day-to-day consequences for income support recipients if this bill were to pass?

Mr Manderson : I think we have already heard it in detail. Any one of us can find more information about the experience of living on falling living standards, inadequate incomes, with a failed housing market and with skyrocketing energy prices. There is no shortage of information on that. While I could refer you to more of our papers or dredge up more anecdotal stories about what it means to people, I think there are three questions here. The first is: why is it okay to create yet another class of people who are further left behind? Why should any government think that that is a morally appropriate action to take? The second is: when will we actually have an independent process that will give us a way of evaluating what is an inadequate income so that is not simply a question of balancing the budget, and those people who have the least power are the ones who have to balance the budget for everyone else? The third one is: if this is going to be passed then surely it is time everyone admitted that it has got nothing to do with carbon prices; it is simply to do with cutting an income where it is possible to cut it.

Senator WATT: Was there something you wanted to add?

Dr McGavin : From our research, the personal wellbeing index, which is an indicator across a number of domains about how people feel about their lives and their circumstance—health, mental health—our respondents scored 25 points lower than average Australians, so there is already an indication of wellbeing. Wellbeing leads to all sorts of outcomes such as mental health, physical health and people's capacity to deal with life—their psychological wellbeing. Already we are seeing those sorts of scales telling us something about the future. In a lot of ways, it is a ticking time bomb. We would be much better to invest in people and prevent people falling further behind than trying to pick up the pieces in our mental health system or whatever.

CHAIR: Dr McGavin, I want to seek some clarification on something you said in your opening statement. I will paraphrase it here. The cost of utilities to the budget are harder for disadvantaged people than most others. I have not repeated it correctly but can you just explain that to me, if you recall the statement you made.

Dr McGavin : I quoted a figure of $73 a week as being the cost to people for utilities.

CHAIR: I think the point you made after that was that the proportion of the weekly budget is higher. Is that because the overall budget is smaller?

Dr McGavin : My comment after that was that, from ABS figures, the average equalised disposable household income was from ABS $998 a week for households. This compares with our survey respondents, for whom the household income is $356. If you take the utilities out of that, the proportion is astronomical compared to the disposal income.

CHAIR: Sorry; I didn't quite understand what you meant there. I thought that they used more power or something—but, no; that makes absolute sense to me.

Dr McGavin : I am sure someone is doing a research project on this. People who are in poorly appointed housing may in fact per hour not have efficient energy, but it is not a matter of squandering power.

CHAIR: In Tasmania you see a lot of those older social housing projects where they had bar heaters or whatever and they are reinstalling heat pumps and things to try to lower the costs.

Dr McGavin : That is a really good move.

CHAIR: I suspect that, in the documentation that you have agreed to provide to the committee, the report that you were talking about will cover off on a question like how many people your organisation is dealing with on issues like this in broad terms.

Dr McGavin : I can provide a number of those for you. There is a report is about emergency relief and then we have another policy document that has some higher level figures as well.

CHAIR: It would be great if you were able to provide that. Mr Manderson, if there are any figures that Anglicare have—

Mr Manderson : Sure. There are a couple of papers that I referred to in passing that are evidence that we have and we will put some numbers to that. We are happy to send those through to the committee.

CHAIR: That's great. For your information, we have set 2 August—so next Wednesday—for the return of this sort of information. Unless anyone had anything else to add, I think that is it for us. Thank you both for your time. Sorry that we caught you off guard, Mr Manderson, but thank you for speedily getting ready. We appreciate your time.

Mr Manderson : I had a simple measure, though.

CHAIR: And well rehearsed.

Mr Manderson : I am really looking forward to whether we hear anything back that actually addresses those questions.

CHAIR: We will be in touch. Thank you very much.