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Wednesday, 23 October 2002
Page: 5682

Senator MARK BISHOP (11:23 AM) —I rise to speak on the Family and Community Services Legislation Amendment (Australians Working Together and other 2001 Budget Measures) Bill 2002. Finally we are now nearing the end of what has been quite a drawn-out process on the government's implementation of its Australians Working Together proposals. The bill before us today originated in 1999, when the former Minister for Family and Community Services, former Senator Newman, heralded a `seminal' address at the National Press Club. According to media reports, the speech and discussion paper were to announce a major welfare shake-up, including cuts to payments for parents with children over 12, cuts to disability pension recipients and more mutual obligation. But the minister was forced to abandon the proposals after community backlash and simply announced the McClure committee process. The bill before us today forms the government's response to the McClure welfare reform committee.

The measures included in the bill are incremental. After more than six years in government and three years specifically contemplating welfare reforms, we have a set of proposals that take us back rather than appreciably forward. We have wasted six years of unemployed Australians' lives; for six years we have denied them opportunities to assist them back into work. The central spending measure—the work credit—is essentially the restoration of Labor's earning credit scheme that was abolished by the coalition in 1997. Other elements of the package essentially restore the tailored individual case management that was a feature of Labor's Working Nation reforms, which were dismantled by the coalition on coming to office. Given the prospect of a continuation of the status quo, the elements contained in this bill are a marginal improvement, but we do have concerns.

Apart from the government's slash-and-burn mentality when it comes to making the necessary investments to assist people to move off benefits, over the past few years it has demonstrated its cold-heartedness. It has presided over a `shoot first, ask questions later' breaching policy that saw a trebling in the number of people being breached—many unfairly. Labor has no objection to proper compliance in the social security system— indeed, it was Labor that introduced data matching and most of the other compliance tools that are in use today. This is essential to ensure that the public has absolute confidence in the operation of our social security safety net.

But this government went too far and penalised people without sufficient justification. It has used a ramped-up breaching regime as a crude tool to reduce benefit outlays. It did this rather than make the proper investments in people and decent financial incentives, coupled with a fair compliance regime, to assist people to get off benefits and back into work. And Labor was not alone in its criticism. Some of Australia's largest charities rang the alarm bell: St Vincent de Paul, Uniting Care, and even those who have had close dealings with the government, such as the Salvation Army and Mission Australia. They had to help the flood of people who were left without an income, many of whom had been breached unfairly.

How do we know that they had been breached unfairly? We need look no further than the stories of people being breached for not turning up to appointments that they had never received advice of or that clashed with other compulsory activities. The Pearce review and, more recently, the Ombudsman exposed patently unfair breaching activity. We also need look no further than the government's own statistics on appeal. Up to 50 per cent of people who appeal their breach have it overturned. Belatedly the government acknowledged that there were problems and announced a range of administrative measures to improve the regime. In all honesty, though, it is not enough. The government is going to have to accept that further changes need to be made. And in the context of this bill, we are going to insist that they are made if the government is to receive support for its changes in relation to the parenting payment and the mature age allowance.

Before I discuss what Labor will propose to restore the balance in relation to breaching, I intend to outline Labor's position on the detail of the bill before us. Schedule 1 sets out proposed new arrangements for people receiving parenting payment, PP. The measures apply to both parenting payment partnered, PPP, and parenting payment single, PPS, recipients. PP recipients with a youngest child between the ages of 13 and 15 may be required to participate in one or more activities—such as Jobsearch, education, training or community work—of up to 150 hours duration over a six-month period; that is, up to six hours per week. A participation agreement will set out the activities that the person agrees to undertake or participate in during the life of the agreement. This requirement will not apply to a person with a severely disabled child. The penalty regime proposed for PP recipients subject to the new arrangements differs significantly from the breaching regime for Newstart and youth allowance recipients. The regime has more checks and balances in place before a breach is applied and also has the ability to reinstate and fully backdate payments on compliance.

Before a breach may be applied to a person, Centrelink must first examine whether the person had taken reasonable steps to comply with the agreement, then examine whether the terms of the agreement were appropriate, and then establish whether the person does not have a reasonable excuse for the failure. If at this point it is decided that a breach will be imposed, the person's compliance will then be monitored at shorter intervals until the person starts to comply. Compliance with the terms of an agreement will trigger waiver of a breach penalty. Their payments will be reinstated and, if compliance occurs within 13 weeks, payments will also be fully backdated. There will be no administrative breach penalties applicable to parenting payment customers, as is the case now.

Labor is broadly supportive of the government's efforts through these measures to provide a better transition for parents who are just two short years off being placed on a full activity-tested benefit like Newstart. There is compelling evidence that more needs to be done to assist parents to gradually return to the work force as their children become older. Bob Gregory's research using longitudinal data has reinforced this point. Whilst Labor's view is that these are not onerous requirements, we believe there needs to be greater scope for exemptions and more flexibility in the participation agreements. In the light of the government's `shoot first, ask questions later' breaching regime, Labor is concerned to ensure that the application of financial sanctions to parents is an absolute last resort. Accordingly, Labor will be moving amendments in the committee stage to broaden exemptions and improve the flexibility of the participation requirements, with particular attention paid to ensuring that the terms of the participation agreements properly take into account the circumstances of parents and their children.

Schedule 2 establishes a tax exempt language, literacy and numeracy supplement of $20.80 per fortnight to assist people who undertake approved language, literacy or numeracy training and who receive one of the following payments: DSP, mature age allowance, Newstart allowance, parenting payment, partner allowance, widow allowance or Youth Allowance. This is a positive measure and will assist with the costs of participating in such training programs. It receives our full support, although we encourage the government to examine other areas of participation where a payment such as this could be paid to help offset costs.

Schedule 3 establishes the Personal Support Program, the PSP, which replaces the Community Support Program, the CSP. The PSP is designed to assist people who have multiple non-vocational barriers, such as homelessness, drug and alcohol problems, mental illness or domestic violence. These people have been judged to be unable to participate in employment related activities or to benefit from employment assistance because of their barriers. The PSP is designed to encourage social as well as economic participation by establishing outcomes that match participants' individual abilities, capacities and circumstances. The schedule proposes to make PSP an activity available under the activity test for Newstart allowance and Youth Allowance and an activity that can be included in a person's activity agreement. It also proposes PSP as an activity that can be included in a person's parenting payment participation agreement from 1 July 2003. The schedule also contains breach penalty waiver rules that will ensure that a breach penalty does not apply while a person is participating in a Personal Support Program. This schedule is supported by the opposition.

Schedule 4 seeks to close entry to the mature age allowance and partner allowance from 1 July 2003. Current recipients will be saved. As a result, the respective populations of mature age allowance will be completely phased out by 2008, and of partner allowance by 2020. Mature age allowance is currently paid to people who are unemployed and aged over 60 who have no recent work force experience and have been receiving income support payments for nine months. Partner allowance is currently paid to people born before 1 July 1955 who have no recent work force experience and are not caring for dependent children and who have partners receiving an income support payment.

The changes will involve no loss of benefits or concessions. Newstart allowance recipients aged over 60 who have been in receipt of benefits for nine months will still be eligible for the higher rate of allowance, pharmaceutical allowance and a pensioner concession card. Notwithstanding Labor's concerns about the next schedule and proposed amendments, this schedule will receive our support.

Despite the government's efforts, the application of new participation frameworks for parenting payment and the mature age unemployed is far from perfect. Accordingly, Labor will be moving amendments in relation to these measures. I intend to outline these amendments in some detail shortly. Whilst not attempting to exceed the scope of this bill, Labor will also be moving amendments to improve the fairness of the compliance and breaching regime for other job seekers.

Schedule 5 seeks to establish new participation requirements for those who formerly would have received mature age allowance and partner allowance. People who might otherwise have qualified for these payments will be eligible for Newstart. These requirements are intended to be more flexible than those applicable to other Newstart clients and will be extended to Newstart recipients aged 50 and over. The terms of the activity agreements are made more flexible in line with the changes made to parenting payment recipients. Significantly, a new modified breaching regime will apply which allows full reinstatement of payments upon compliance. The government's changes also incorporate a more flexible reporting period of 12 weeks rather than fortnightly.

Labor are supportive of these changes but we do have a number of concerns. Labor created the mature age allowance in recognition of the fact that many of those who were eligible faced little prospect that they would work again. Mature age allowance removed this group from the requirements that exist under Newstart and, for many, the view that they were part of the active labour market. While the changes bring this group back within the Newstart population and will ensure that some are more engaged in retraining or skilling, for others it may impose participation requirements that may not be appropriate to their circumstances. Accordingly, Labor's approach is to safeguard the population of 50-plus-year-olds from any unreasonable obligations. Labor will move amendments similar to those in relation to schedule 1 to ensure that the participation agreements properly take into account the circumstances of the mature age unemployed.

Labor are also concerned to ensure that the mature age group are not forced to apply for countless job vacancies where they have little or no prospect of success. Accordingly, Labor will seek to introduce caps on the number of job vacancies that they will be asked to apply for. These caps will only apply in circumstances where job search is required in the activity agreements; in many instances, voluntary and paid work may occur in lieu of job search.

Schedule 6 introduces the working credit and a modified implementation date as announced in the 2002-03 budget. The credit is strikingly similar to Labor's earning credit scheme, which the government saw fit to abolish in 1997, a short-sighted cut by any definition. The working credit will provide a benefit of up to $1,000 per year for all work force age income support recipients. Labor are disappointed that the government has had to delay this measure, which is desperately needed and which is the central spending measure in this bill. It goes some way to improving incentives, but more does need to be done. Those who have exhausted their credit or who have sufficiently low levels of part-time earnings for the credit not to accumulate will still face effective marginal tax rates, EMTRs, of 90 per cent or more.

Schedule 7 contains an amendment that enables Centrelink to trial new methods of flagging family homelessness. This measure is the result of extensive research conducted jointly with Hanover and other homelessness services. It is welcome and receives Labor's full support.

I want now to foreshadow other amendments. Labor are heartened by the more constructive approach the government has taken in relation to the activity agreement and penalty regime for the parenting payment and mature age allowance recipients. We have in this legislation a different approach to penalties. There has been an attempt to address the situation of parents and older unemployed people, although we do not necessarily believe that the government has got it right yet.

As I indicated at the commencement of my remarks, Labor will be making some moderate amendments to ensure that the proposed new framework for mature age and for parents will work fairly. However, it is our view that a fairer framework should also be implemented for other job seekers at the same time as we consider this bill. Some of the elements in the proposed regime for parents and for mature age should be incorporated into the activity agreement and compliance regime for other job seekers, namely Newstart allowance and Youth Allowance. This needs to be done.

Despite the government's assurances that its administrative changes have improved the safeguards that protect against unfair breaching, the truth is that the government can just as easily push the changes to one side and ramp up breaching again. The Pearce report, the Commonwealth Ombudsman and Australia's most respected charities have all concluded that there is a gross imbalance between the level of breaching activity and the incidence of wrongdoing on the part of job seekers and other income support recipients. Labor are of the view that the government too quickly dismissed many of the suggestions made by Professor Pearce in his independent report on breaching. The report is a balanced piece of work that, in some cases, pushes tough but fair requirements. Most importantly, the report focuses on ensuring compliance. The government has consistently claimed that its breaching policies are not about revenue raising. If this is the case, it should embrace the logic of Professor Pearce, Julian Disney and their own Heather Ridout and undertake further reform of the system to ensure that it is compliance oriented.

I reiterate that no side of politics should tolerate welfare fraud. We did not in government and in fact we established the data-matching programs that ensure compliance and weed out the fraudsters. But we must respond when our systems are chewing up Centrelink staff time and time in appeals and are costing people on very low incomes who are trying to play by the rules their payments. Accordingly, Labor will move a range of moderate amendments to give effect to a number of recommendations of the Pearce report. Labor will move amendments to ensure greater fairness and improved compliance for Newstart and youth allowance recipients. Labor will move amendments in respect of the cooling-off period for participation agreements. Recipients required to enter into an activity agreement will be able to change the terms of the agreement, with the approval of the secretary, within 14 days of the agreement first being signed. The secretary will be required to advise them of this right. As for appropriate agreement terms, formulation of the terms of participation agreements will need to more thoroughly take into account the circumstances of the job seeker, including costs of compliance, travel, particular barriers to employment, medical conditions and any caring responsibilities. The agreement will also be required to include the assistance to be provided to the job seeker to comply with the agreement. In respect of new safeguards before breaches are imposed, before the application of a breach the secretary is to determine that the terms of the agreement are still reasonable. Before a breach is applied, the secretary will be required to attempt to contact the job seeker by a minimum of two different mediums.

With regard to notice and application of breaches, a notice setting out the reasons for a breach must be sent at least 14 days before the breach is to be applied. As for exemptions from agreements, we will broaden exemptions to include job seekers utilising SAAP funded crisis accommodation. As for measures to ensure that those in housing difficulty are not breached, sections of the act dealing with movement to lower employment areas will be amended to include a clause to protect people who have moved due to housing affordability. In respect of the penalty accumulation period, Labor will move to reduce the accumulation period from two years to 12 months.

These are reasonable amendments and many build into the broader compliance mechanism proposals that the government is seeking to introduce for smaller groups— parents and mature age people—through its bill today. Labor are happy to talk to the government about any technical issues regarding these amendments and are willing to discuss options to make them workable if the government is concerned that they are likely to be difficult to implement. However, we stand by our intentions: we can and must improve the fairness of the system. In addition to these measures, Labor will be moving a second reading amendment urging the government to adopt a fairer and more effective breach penalty regime broadly in line with the Pearce report recommendations— namely, that benefit reductions should not exceed 25 per cent for the first or second breach, that breach reduction and non-payment periods should not exceed eight weeks and that benefits should be reinstated on compliance. I now move the amendment that has been circulated in my name:

At the end of the motion, add:

“But the Senate condemns the Government's unfair application of breach penalties on job seekers and calls on it to amend the breach penalty regime in line with principles outlined in the report of the Independent Review of Breaches and Penalties in the Social Security System (The Pearce review), including:

(a) a rate reduction for first or second breaches of no more than 25 per cent of benefits;

(b) breach and non-payment periods of a maximum of 8 weeks duration; and

(c) reinstatement of benefits on compliance.

I seek advice from the chair, Madam Acting Deputy President. Do I have to speak to that amendment now or can I address the amendment at a later stage of deliberations?

The ACTING DEPUTY PRESIDENT (Senator Knowles)—You speak to it now, Senator.

Senator MARK BISHOP —If I speak to it now, can I return to it or will my time be exhausted?

The ACTING DEPUTY PRESI-DENT —Your time will be exhausted in one minute and 42 seconds.

Senator MARK BISHOP —So, if I choose not to speak to it now, can I speak to it in more detail later?

The ACTING DEPUTY PRESI-DENT —No, it is a second reading amendment, Senator, and you need to make your contribution prior to the second reading.

Senator MARK BISHOP —Thank you for that guidance, Madam Acting Deputy President. In that case, in speaking very briefly to that amendment, it is instructive to look at the current breaches under the bill. They are significant breaches: $863 payable over 26 weeks for a first breach, $1,144 payable over 26 weeks for a second breach, and even higher penalties for third and subsequent breaches. They are indeed significant penalties to apply to those who are seeking employment and whose breach may be of the most minute or incidental nature. When one looks at the history of the current breaching regime in recent years, one notes that in the period from 1996-97 up until 1999-2000 the average monthly number of breaches increased from about 9,400 to 25,200. So there has been almost a trebling in the number of breaches since the government instituted the new regime in 1997. We believe that the government has stepped up breaching activity as part of a concerted attempt to hassle people back into work. This activity reflects a view that the personal attributes of the unemployed are— (Time expired)