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Family Assistance and Other Legislation Amendment (2008 Budget and Other Measures) Bill 2009

CHAIR (Senator Moore) —Our inquiry this afternoon is into the provisions of the Family Assistance and Other Legislation Amendment (2008 Budget and Other Measures) Bill 2009. Welcome, Professor Altman. We have your submission—thank you very much. Do you have any comments to make on the capacity in which you appear today?

Prof. Altman —I appear in an individual capacity but also as Director of the Centre for Aboriginal Economic Policy Research at the Australian National University.

CHAIR —Thank you. The small number of members here today does not reflect the interest in this bill; it is rather the workload and the other committees that are meeting around the country. But your evidence will be in Hansard and available to the whole committee. I invite you to make an opening statement and then we will go on to questions.

Prof. Altman —Thank you very much. I will just say a few things. There comes a time when one needs to continue to reiterate that a policy direction that a government is taking—in this case, the Rudd government and the abolition of the CDEP, the Community Development Employment Project scheme—is wrong. This direction is wrong structurally and wrong because of the economic downturn, which is being interpreted by most as just cyclical. It is also, I should add, morally wrong because in October 2007 the government, when in opposition, committed to reinstate, not effectively abolish, CDEP.

The complex changes to the Social Security Act that this committee is looking at have been brought about by the clumsy process developed to dismantle the CDEP scheme. Policy reasons for these appear to be twofold. First, CDEP is inferior to properly paid work, which no-one questions, including those who choose to exit CDEP when such work is made available. Second, CDEP is inequitable with Work for the Dole, which is true, but this inequity is what makes CDEP worse. Giving most CDEP participants less pay and less work will not assist their predicament.

At a time when we hear much talk of middle-class welfare and industry welfare, the equity concern seems rather disingenuous as a reason to dismantle CDEP, as one is left with the first policy argument, which is empirically disproven with the government’s own provision of jobs, especially in the Northern Territory, under programs such as Working on Country and other properly paid positions in community services, which CDEP participants exit to when available.

Inactivity, especially intergenerationally, has terrible social consequences in many Indigenous communities, as it would anywhere else, and yet the proposed reform to CDEP is likely to create more inactivity, not less. This is because, while reform will move people into some public sector funded work, it will not address the structural circumstances of most Indigenous communities linked to remoteness, historical neglect and an inadequate economic base. Nor does it address the likely problems associated with the disempowerment of community controlled organisations and the growing dominance of the state in such communities, a situation that has existed historically with poor outcomes. There is a suggestion in all this that a top-down, externally imposed project of improvement will work better than bottom-up, community controlled local knowledge, which a vast development literature and comparative experience indicates is wrong. At the heart of CDEP’s success are community organisations with the capacity to drive projects and to unite often politically divided communities to common development action for improvement. Such an approach needs to be replicated, not undermined.

It is reported by FaHCSIA that there are only about 17,000 CDEP participants remaining, although I question this figure in our submission. If it is correct, though, it would be interesting to know what has happened to the about 20,000 who have moved off CDEP in the last three years. Some figures in our submission suggest that more than 40 per cent are moving to income support, but in remote Australia I would estimate that this figure is likely to be far higher, possibly as high as 70 per cent, depending on the number of jobs made available.

The number of CDEP participants will decline further from 30 June this year in non-remote Australia, while in remote Australia two categories of CDEP participants will emerge incrementally from 1 July: existing grandfathered participants and new entrants. Those grandfathered will be able to work more, earn more and have a more benign income taper—arguably features at the heart of CDEP’s success—while those who join after 1 July will be treated no different from other income support beneficiaries. They will only earn welfare equivalent and have limited capacity for top-up work or wages beyond the free zone available to others. This is inequity writ large. It is also likely to undermine incentives for organisations to perform, given that they only have a wage subsidy time frame of two years until grandfathering provisions end. It is because of this reform that we are seeing the complicated administrative issues that this committee is looking at.

In my view—and I have made this clear now on a number of occasions—effectively abolishing CDEP within a limited time frame is creating an administrative nightmare, and this is poor policy making. What Aboriginal communities need is productive activity, community control and development of organisations, capacity and community infrastructure. What government should be targeting is long-term unemployment in these communities, which is currently of similar proportions as CDEP participation in terms of numbers and is likely to get far higher quickly.

In structural terms, the absence of commercial opportunity means that we need to think creatively about how to grow meaningful activity, and we need to be realistic about how long such a development process might take. We will not close the employment gap even with CDEP in the immediate term, and even in the long term it is unlikely that Indigenous communities will be subvention free, especially in remote regions, like much of non-Indigenous remote Australia.

I end by appealing yet again to this committee to advocate for a serious reconsideration of the government’s decision to affectively abolish CDEP and the intended and unintended negative consequences that are likely to occur because of this decision, especially at this point in the Australian macro-economic cycle when we are going to see growing unemployment rather than growing employment.

Senator SIEWERT —You mentioned in your proposal that we are now going to have to bifurcate—as I think you put it. Basically we are now going to have two categories under the CDEP. We already have problems with the Racial Discrimination Act. Is that a further problem with the RDA?

Prof. Altman —I do not see an RDA issue in this because I think this is being done to all participants in the scheme. It is interesting, because of course historically in the scheme you used to have Indigenous and non-Indigenous Australians, but now that has changed and it has become an Indigenous-specific program. I guess you have a change in terms of the time frame in relation to the program. According to one point of view, what you are doing with grandfathering is giving people a two-year opportunity to continue the status quo. In my opinion, if you are going to effectively abolish the scheme, I think that the two year grandfathering period actually does introduce an administrative complexity rather than one that is differentiating people on the basis of race.

Senator SIEWERT —Can we go through those numbers again. You have gone through them in your submission but you have also talked about the number of people participating and the number of people who are going to be affected. There is anecdotal evidence that suggests that a lot of people have in fact dropped out of the system, but other information that I have had from estimates indicates that the previous compliance regime impacted disproportionately on Aboriginal people; the number of breaches went up. Certainly the anecdotal evidence that I have had is that people got rolling breaches and then disappeared from the system. I have concerns about the number of people. Do you have any evidence or information that would indicate the number of people this has happened to? Also, my strong concern with these changes is that we are going to see more people come up against the new compliance, and we may see the same thing happening because there will be a cohort of people that have never been in the income support system; they have been in CDEP.

Prof. Altman —I think your concerns are well grounded. Historically we know that Indigenous people do run the risk of greater breach rates with the income support system, the welfare system. There is a risk that, as people shift from working from the community based organisations under CDEP and become accountable to Centrelink offices, the breach rate might increase. There is a risk that people will leave income support and basically exit either the labour market or the social security system. That is a risk.

One of the very positive elements of the CDEP scheme is that people were employed by their community based organisations that knew a great deal about their ‘clients’, who were generally members of these community organisations. What you are going to do now—and this is the way I see it anyway—is have different participants accountable to different organisations in different ways. One will be a community controlled organisation and another will be a state agency. I think that is potentially extremely problematic.

Senator SIEWERT —Will they be accountable to both in some instances? They will, won’t they?

Prof. Altman —It is a little unclear to me. From the way I read it new participants will be getting their income support from Centrelink but probably the reporting will come from the community based organisation. From the perspective of a CDEP organisation, how do you explain to your membership that you now have two categories of client? And, again from the perspective of that organisation, isn’t it likely that any dissatisfaction with that new system is going to be, if you like, grounded with the organisation rather than being grounded with a remote government that has imposed this change in direction?

Senator SIEWERT —Can I take you back to the question I first asked, and I realise I asked multiple questions. In the research you have been doing have you had any indication of the numbers or that what we have been hearing anecdotally has in fact happened—and that is people are dropping out of income support completely, so they do not show up in the figures anymore?

Prof. Altman —We certainly have not got any empirical evidence for that. At a more general level, it concerns me that there is a real lack of transparency about the number of CDEP participants and where they are located. I guess if I go back now three or four years to when CDEP was administered by ATSIC one could get very accurate data about the number of participants, where they were located and the activities in which they were participating. That sort of information is just not readily available from DEEWR or FaCSIA at the moment.

The latest information that we have received is that there are only 17,000 people still participating in CDEP. We question that and we question whether that includes the Torres Strait. Also, when we have asked for a breakdown between remote and non-remote Australia, we have been told that we cannot get that information. When the first round of CDEP abolition comes in on 1 July this year we will not know how many people in non-remote Australia will be moved off CDEP and then of course we also will have no sense of how many of the participants after 1 July are likely to be grandfathered as distinct from new entrants.

The way people leave CDEP is to either get another job or go into unemployment, but often what happens is they get breached from CDEP by their own organisations because they have gone on extended leave or do not turn up for work. These community based CDEP organisations hold people accountable, so they can breach them as well. That will generate places for new entrants, but it is quite unclear how the mix between old and new participants in the scheme might unfold.

CHAIR —Have you always had this difficulty getting figures?

Prof. Altman —It has certainly been difficult to get figures since about 2005. There seems to have been a different culture of accountability in relation to CDEP. ATSIC used to publish information annually in the annual report—

CHAIR —Regularly, yes.

Prof. Altman —But since DEEWR took over CDEP during the Howard years and it was treated as a labour market program, figures became increasingly hard to come across. Increasingly we have had to rely on resources like the census and the labour force survey to get a sense of how many people are on CDEP. I was quite surprised when FaCSIA informed us that there were only 17,000 people still on the scheme, which again suggests to me one way or another through either exits or abolitions we have lost about 20,000 since about 2004-05.

CHAIR —If it has gone to 17,000—if that figure is the publicly accepted figure—you have not been able to ascertain what has happened to the gap? You have not been able to get that information from anybody?

Prof. Altman —No.

CHAIR —We will be asking the department this afternoon.

Prof. Altman —The best figures we have are for the Northern Territory where we know approximately 1,100 have now moved to properly funded employment.

Senator SIEWERT —That is 900 fewer than they said were going to.

Prof. Altman —It still leaves, according to the government’s figures, 6,600 on CDEP.

Senator SIEWERT —We are assuming 6,600 are still on CDEP?

Prof. Altman —I think that was the figure that was given in the recent update on the Northern Territory emergency response intervention.

Senator SIEWERT —In paragraph 10 of your submission you say—and you touched on this before—that the most disadvantaged groups, including Indigenous Australians, are the worst affected in terms of job losses when we are going into an economic crisis, and you have referenced that there. One issue that has been raised with me is that, particularly with the Aboriginal Australians who have moved into real jobs or been taken on through the new job creation schemes—the Twiggy Forrest examples—they are last on so they will be the first off. It is going to be harder to get jobs for Aboriginal Australians but where they have recently gained employment are they then likely to be the first put off? Is that the reality or a myth?

Prof. Altman —Generally in labour market economic literature that would be regarded as the reality. We do not want to overlook the fact that 20,000 Indigenous Australians did gain employment over the five years between 2002 and 2007. I agree with you that we need to watch very carefully how many of those 20,000 might be laid off in relation to existing employment because they would have been late entrants into the labour force.

Again, while it is very hard to get firm figures, certainly discussions that I have had with some mining companies suggests that while every effort is being made to preserve Indigenous positions in large mines, Indigenous workers are not fully protected from the downsizing that you will see. So you can expect some proportion to lose their jobs. In some situations, they may be advantaged because they are local people; they are not fly in, fly out. Also, it depends on what position they fill at a mine site. But nevertheless, I think there is a real risk that not only will you see growing unemployment as CDEP is abolished, as employed CDEP participants become unemployed, but also you are likely to see that some of those 20,000 new jobs are also shed and so you are likely to see a growth in Aboriginal unemployment. There is a paper on the CAEPR website that Boyd Hunter recently published that looks at this issue quite carefully, including by industry sector.

Senator HUMPHRIES —You said in your opening remarks that we would all agree that a full-time job is a better alternative than CDEP. What has been put to me is that CDEP has been around for 30 years and it has become, in many communities, a crutch which effectively acts as a barrier for people to transition to full-time work because this easier option is available. What you have said suggests that in many communities that is just not true, and I could accept that. But isn’t there still some force to the argument that while CDEP operates widely across Indigenous Australia, it will in many cases effectively be a barrier to full-time proper employment and that to transition towards a more normalised working environment, you need to greatly minimise the accessibility to CDEP, if not abolish it altogether?

Prof. Altman —I do not disagree with what you say, but I do think you need to look at the labour market situation and labour market opportunities community by community. What you will find in most communities is that there is some what you might call full-time or proper employment, because that proper employment may in fact be structured in a less than full-time way, as it often is with the Working on Country program. It might be structured as 26 or 30 hours per week. But you are also going to find in those communities that, as well as CDEP employment, you also now have Work for the Dole, so you basically have three categories of opportunity. I would argue that CDEP, which almost represents a form of secondary labour market, is far superior to people being on Work for the Dole or being inactive. My argument would be, to use your metaphor of a crutch, that it is probably better to have crutches than to have none in these sorts of circumstances. It is better to recognise that we will never have in the foreseeable future adequate full-time employment for everybody who wants work, so we are better to structure the balance of the people of working age population to become actively engaged in CDEP.

In saying that, I do recognise that in some communities, CDEP works exceptionally well and in others it works very badly. Again, the challenge we face is to recognise that where we run a CDEP program, we really should be doing that in a fair dinkum way so that people are given an opportunity to engage productively and work or to participate in training, to have additional hours of work and to have the capacity to earn additional income. They are the positive things you see where CDEP is working properly. And then the evidence says that when people participate, possibly over several years, in CDEP, when a properly paid job comes along, they are able to exit into that position. It is no surprise that when programs like Working on Country came along, the people who took up those opportunities exited CDEP. They were not coming from the long-term unemployed, they were coming from people who were, in that local circumstance, relatively work ready and relatively well trained. It is CDEP that provided them with that stepping stone, if you like, to that proper employment. I guess I do not buy the argument that the wholesale abolition of CDEP will somehow give people incentive to move to full-time employment, even if that full-time employment were available. In most circumstances, we know that adequate full-time employment just is not there at the community or regional level.

Senator HUMPHRIES —If we accept that the goals should be to transition as many people as possible into full-time employment, are you arguing for a discretion based approach towards communities, where you say, ‘These are the sorts of jobs we can potentially create here and we’ll help the provision of those jobs, but for those areas where we can’t provide a full-time job, we will have CDEP as a fallback,’ and you take each community on a case-by-case basis?

Prof. Altman —Absolutely. That is what I am advocating, that you look at opportunities and you look at them in a rigorous way, which I think we do not tend to do on either a community by community basis or a regional basis. You also look at people’s aspirations because that is important. In many situations people are not looking for full-time work, but they might be looking for properly paid part-time work, and that is an aspiration that is shared by several million non-Indigenous Australians who also have a preference for part-time work. But the main thing I would be emphasising is that by focusing too much on CDEP, we are overlooking a high-level problem in these communities—that is, lying behind CDEP are many people who are long-term unemployed, who cannot even become CDEP participants. What I would be arguing is that we should be growing the number of CDEP participants, bringing in those who are long-term unemployed, to give them work experience, opportunity for training, opportunity for structured work for a community-based organisation, and it can be in community services or it can be in enterprise development—whatever area you want. But in all of this debate about CDEP, we are overlooking the fact that there is probably a larger number of people who are long-term unemployed than people who are participating in the CDEP scheme. I think policy focus should be on those people to a greater extent than on CDEP.

Senator HUMPHRIES —Can I put to you another point of view—that is, in a large number of remote Indigenous communities around Australia, normal jobs are effectively a mirage and that the best you can do is create pretend jobs, that in reality a better long-term policy would be to say that we might expect some migration of younger people out of those communities into larger regional communities or capital cities to find work in much the same way that a lot of non-Indigenous Australians leave small country towns and go to the big smoke to get a job. Is there any strength to that argument in your opinion?

Prof. Altman —I think in some situations you will see young people migrate for employment. In some situations you might see that migration being circular—in other words, them exiting the home community for a period of employment but then going back. I do not have a problem with a large proportion of employment in remote communities being public sector funded. I think that is not unusual in many remote circumstances in Australia. But I do think that you have to be cognisant of the fact that Indigenous people—again, without making blanket statements—in many situations have a much stronger connection to country and place than other Australians who, research shows us, are much more open to migrating for employment than Indigenous people.

The other comment that I would make—and I made it in my opening statement, but maybe I made it too quickly—is that I think our policy approach in the last two or three decades has not focused enough on developing an economic base in these remote places. I think part of what we are seeing is a legacy of that. I would also add that now, as we are seeing fundamental changes in our views about security of water, climate change and emerging new industries like carbon abatement and sequestration, with the right investments there might be far more employment opportunity in these remote communities than we might have thought historically.

So I think, again, what we need to do in a policy sense is look at regions one by one and look at communities one by one and undertake an audit of what is available in terms of opportunity, what opportunity could be grown and what is the capacity of the labour force and the population to take up these opportunities. I am not saying that is something that can happen very quickly but, again, many of these employment problems have been with us now for a very long time, and maybe we need to start recognising that we need to start thinking about these solutions as a longer term process rather than thinking that quick abolition of CDEP will force people into real employment or that quick abolition of CDEP will see some sort of exodus of the Indigenous labour force to other urban centres where, again, the evidence suggests people will find it just as hard to get jobs as they do in remote localities.

CHAIR —We do apologise for running out of time, Professor. If there is anything you think we have not covered sufficiently, given your evidence and your submission, please let us know, please get back to us. I know you have followed this so closely and will continue to do so. When you have a look at it and you think we have missed something that you would like to have on record, please do so. We thank you for your ongoing interest.

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