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

CHAIR —Welcome. You have information on parliamentary privilege and the protection of witnesses. We have your submission: thank you very much. If any or all of you would like to make an opening comment, you can, and then we will go to questions. Have you worked out amongst yourselves who is going to do that?

Ms Bolton —Yes, Kate, as president, will make the opening statement.

CHAIR —Ms Beaumont, the floor is yours.

Ms Beaumont —I wish to thank the committee for providing us with the opportunity to talk to you today. We are appearing on behalf of the National Welfare Rights Network, a national network of 14 community legal centres which specialise in delivering information and advice about social security, law and policy to clients all around Australia. During the last year, the National Welfare Rights Network has facilitated and supported the secondment of four welfare rights workers working in the Northern Territory providing social security assistance and advocacy to those impacted by the Northern Territory intervention. The perspective which we bring to this inquiry is derived from the casework we undertake on behalf of our clients, including the experiences gained in our work in the Northern Territory.

We wish to set out some of the key issues we see in relation to the impact of the provisions of the proposed bill. At schedule 1 it incorporates changes to remove the delivery of family tax benefit, including claims for past periods from the Australian Taxation Office. At schedule 2 it extends appeal rights to the Social Security Appeals Tribunal to decisions made under part 3B of the Social Security (Administration) Act and particularly the Northern Territory income management category. At schedule 3 it includes major changes to the Community Development Employment Project, which will see a two-tiered CDEP scheme in operation from 1 July 2009 until the eventual removal of CDEP from 1 July 2011.

The National Welfare Rights Network is broadly supportive of schedule 1 of the proposed bill, which relates to the removal of the option of claiming family tax benefit through the Australian Taxation Office, including claims for past periods. The current family taxation system, introduced in 2001, permitted families the choice of delivery through direct fortnightly instalments from Centrelink or the taxation system from the ATO as a lump sum payment. Since its implementation family tax benefit has been riddled with issues in its design, which have resulted in far too many families ending up with debts that should have been avoided. One major flaw with the current system is that different assessment methods are used, as claims made through the ATO are subject to self-assessment whilst those made through Centrelink and Medicare are subject to a decision-making process.

From our casework experience, the differential processes resulted in inconsistencies and were particularly vulnerable to error, which often resulted in debts, especially in shared-care cases. These debts when challenged administratively were routinely overturned, as the claims made through the ATO were often unscrutinised and unsubstantiated. The proposed changes will still allow individuals the flexibility to choose to be paid in a lump sum rather than to receive fortnightly instalments to avoid incurring family tax benefit debts, although these will be delivered through Centrelink and Medicare rather than the ATO. The National Welfare Rights Network supports the changes to achieve consistency in decision making.

The second schedule of the proposed bill relates to addressing an area that the National Welfare Rights Network has long believed required urgent action from the government and which is in line with one of the recommendations of the Northern Territory Emergency Response Review Board. The schedule removes the barrier contained in the Social Security and Other Legislation Amendment (Welfare Payment Reform) Act 2007 that stipulated that decisions made under the Northern Territory income management category in part 3B of the Social Security (Administration) Act were not subject to review by the Social Security Appeals Tribunal. The current provisions bar decisions made under the Northern Territory income management category from access to any external review or scrutiny available for other decisions made under social security law.

Whilst the National Welfare Rights Network are supportive of the proposed change, we remain concerned that despite providing access to external appeals this will not result in any discernible change as long as other deficiencies in the construction of the Northern Territory income management legislative provisions are not addressed. Specifically, we highlight that the legislation permits only very limited exemptions from the income management regime for those who reside in a declared Northern Territory area, thus making challenge of decisions in the first instance or through the appeals system a futile exercise. Again, the National Welfare Rights Network call for an end to the current blanket application of compulsory income management in the Northern Territory and urge the committee to give serious consideration to this issue in its deliberations.

The third schedule of the proposed bill will have the most impact, as it relates to major reforms of the Community Development Employment Project scheme, which will see CDEP phased out completely by 30 June 2011. CDEP has been a major employment program within Indigenous communities since its establishment in 1977 and has been, in our network’s view, a preferred alternative to unemployment or reliance on income support. Whilst the CDEP has enjoyed mixed success, it has provided significant infrastructure and services in remote Indigenous communities through the provision of services which would not have been provided if left to government. Though the government has announced that there will be a jobs package to allow for conversion of CDEP positions in government service delivery to properly paid jobs, it is unlikely that all CDEP jobs will be replaced.

Whilst our network acknowledge our area of expertise lies in social security law rather than in relation to employment programs per se, we are well aware of the potential outcomes of the phasing out of CDEP. From 1 July 2009 all new CDEP participants will receive income support payments rather than CDEP wages or CDEP supplement. These new CDEP participants on income support, if in declared Northern Territory communities, will also be subject to income management, whereas CDEP wages have not been subject to income management in the past. Those who are continuing on CDEP after 1 July 2009 will retain access to CDEP wages and CDEP supplement.

The practical effect of the bill will be to create two schemes for participants, with differential treatment of old and new participants on CDEP that will add an extra dimension of complexity. Additionally, if continuing CDEP participants have a break of two weeks from CDEP, they will lose access to CDEP wages and CDEP supplement. The National Welfare Rights Network agree with the proposal of NAAJA that a longer break should be permitted. However, we have argued for 12 weeks, which aligns with the grandfathering provisions that exist for parenting payment (single). With new CDEP participants being placed on income support, it is likely most will be placed on activity tested payments such as Newstart allowance and become subject to the compliance system, which includes financial penalties for infractions.

The network has observed a pattern of repeatedly high incidences of social security penalties incurred by Indigenous people over a long period of time under the various permutations of the social security compliance arrangements. In 1999 Sanders found that Indigenous breach rates were higher than non-Indigenous breach rates across all age groups and genders. Indigenous people were also four times more likely than non-Indigenous people to incur at least three administrative breaches. In 2002, as a consequence of a disproportionate number of calls being taken from Indigenous people in certain areas, the National Welfare Rights Network requested data under freedom of information which confirmed that Indigenous people were two to three times more likely to incur a penalty than non-Indigenous people.

Figures released by the Department of Employment and Workplace Relations in early 2007 showed that in the first three months of the new penalty system Indigenous participation failures were at 47 per cent compared to 39.9 per cent for non-Indigenous people. Data from Western Australia were particularly concerning, showing that out of a total of 170 eight-week non-payment penalties incurred in Western Australia 50 were imposed on Indigenous people. In August 2007, in answer to questions on notice in the Senate, the government provided data on the number of eight-week no-payment penalties in the first year of the new system, ending 30 June 2007. In relation to Indigenous Australians, the figure had jumped from 658 people losing payments for eight weeks to 1,644 in the first year of Welfare to Work—representing 9.4 per cent of all eight-week non-payment periods.

Whilst it appears that penalty numbers have fallen recently, as noted in our written submission, it is difficult to obtain an accurate picture of the incidence of Indigenous penalties because the data on the Department of Education, Employment and Workplace Relations website for the year 2007-08 is not comparable to data that has been previously provided to Senate estimates committees, which give a breakdown of Indigenous penalties by Centrelink area. We are also reliably informed that, due to the sensitivity of the issues associated with the Northern Territory intervention and income management, a much more flexible approach has been applied by Centrelink to avoid the imposition of penalties. However, our experience has shown us that the evidence of ongoing and consistent efforts to minimise and reduce the incidence of penalties on Indigenous job seekers is mixed. Unfortunately, the focus on prevention and harm minimisation waxes and wanes, often spurred on by public exposure of the problem, the high incidence of penalties upon Indigenous job seekers and the political will of the day.

National Rights Welfare Network is justifiably concerned that the greater number Indigenous people forced onto income support payment rather than CDEP from 1 July 2009 will significantly increase the risk of penalties again climbing, particularly because systemic factors which have historically placed Indigenous job seekers at high risk of having penalties imposed in the first place have never really been addressed. Also, given the intent of the new compliance regime to impose a work like culture through the use of a complex system of no show, no pay, the risk of Indigenous people losing income without the capacity for this to be recovered will be even greater. This is particularly concerning given that Indigenous people are less likely than others within the community to challenge decisions made by Centrelink. The National Rights Welfare Network urges the committee to recommend to parliament that the CDEP reforms in their current form should not be supported. Thank you.

CHAIR —Thank you, Ms Beaumont. Senator Siewert.

Senator SIEWERT —Ms Beaumont, you touched very quickly on the external right of appeal, saying that it was long overdue, but you also made the comment that it is of little value, of no practical benefit. I am very conscious of time, so I am trying not to take up too much time, but are you able to explain your comment about it having no practical benefit, please.

Ms Beaumont —In relation to the exemptions that are provided with the Northern Territory legislation, there are very limited circumstances in which the exemptions can be granted. Usually that is by someone being able to show that they are not part of that community, and the minister also has discretion in relation to that. So, if someone is residing in a Northern Territory declared community, even if they are able to manage their money, they are able to provide for their priority needs and for their children and there are no instances of neglect or anything like that, there is still no way for them to show that they should not be income-managed. That is the difficulty that is there within the legislation.

Senator SIEWERT —My reading of it, as with your comments, is that it means nothing.

Ms Beaumont —Well, next to nothing, and that is very unfortunate—that the way the legislation has been structured there is very little discretion that can be exercised. That is the difficulty that the welfare rights workers in the Northern Territory have had, because individuals cannot necessarily prove that they should not be income managed just because they live within a certain community. In a way it is similar to the child protection income management in Western Australia: if Child Protection make the decision that someone should be under that income management stream, although that person has a right of appeal to the SSAT and the Administrative Appeals Tribunal, they cannot necessarily appeal the decision that they should be under child protection income management.

Mr Thomas —A further reason why the granting of appeal rights to the SSAT is not going to have a significant impact is that Indigenous people simply do not use the appeals system. At Senate estimates a few years ago, there was a breakdown given of who appealed through the various levels of appeals, and in one case in one year there was one person in the Northern Territory who appealed to the SSAT. So that is what we are facing. Certainly, Welfare Rights Network has raised the issue of the low level of appeals with Centrelink for quite a number of years. That is a different issue, but it is relevant to the issues that you are considering today.

Senator SIEWERT —I wanted to quickly move on to the issue around breaches, compliance and CDEP. First off, I think you were here when I asked Professor Altman about a number of breaches, which you mention very briefly in your submission. The other question is: what do you expect to happen when the new compliance regime comes in at the same time that the changes to CDEP come in?

Mr Thomas —I might start with that. I think we will see the number of eight-week no-payment penalties fall quite considerably. But, in relation to participation failures, I think we will see a significant number being imposed on Indigenous job seekers. In 2006-07, there were 26,000 participation failures applied to Indigenous job seekers; in 2007-08, there were 32,000.

Roughly speaking, those participation failures under the new system will translate to no show, no pay penalties. That will be a loss of income for one day’s loss of activity, payment, interview or connection—something that is not attended to—of $45 per day. That is the sort of impact. And that is, from last year’s situation, without getting rid of the CDEP. We are certainly concerned that there will be a significant jump in those numbers, particularly as there are a whole lot of changes happening to Job Network anyway. It will take some time for that to settle down.

Senator SIEWERT —When you say that instead of being breaches there will be no show, no pay, my concern is—and I raised this in the debate in the Senate with the changes in the employment reform process—that three no show, no pays is where the comprehensive compliance assessment kicks in. I acknowledge that that does not necessarily then kick you straight into a breach, but it has the potential to. If they strictly enforce the new rules, if you do not show up for three days you can get a compliance assessment and then you can end up being breached. You commented about it not increasing the number of breaches. Have you looked at that potential, or am I being too worried?

Mr Thomas —Certainly that is a potential. My understanding is that some of the technicalities around this are going to be in disallowable instruments and you would hope that the eventuality that one event is counted as three periods does not occur. I think that is something certainly for the committee to consider as a real possibility—unless it is addressed by the instruments, which have not seen the light of day in parliament yet.

Senator SIEWERT —When I raised the issue in the Senate, I certainly was not given any assurance that that would not be the case. So there is a potential there, unless it is dealt with through the instruments?

Mr Thomas —Obviously and quite clearly.

Ms Bolton —The other point we would make is that the linchpin of the new system, particularly in relation to the example you have given of three no show, no pays, is the operation of the comprehensive compliance assessment. We understand that the intention is to provide those assessments, wherever possible, face to face. That is in recognition of the purpose behind those assessments in terms of there being greater capacity to be able to identify what might be going on and what the particular needs might be. It certainly raises further concerns in relation to the ability for that to happen in remote and very remote communities. If that is not there our further concern would be the extent to which that might act as an effective safeguard mechanism in terms of being able to identify the reasons for the alleged noncompliance.

Senator SIEWERT —Thank you. I want to go back to the first schedule and your comment on page two of your submission. You say that you would oppose any attempt to remove the option of making a payment period claim through Centrelink or Medicare. Are you concerned that that is in fact the case or are you just flagging that to make sure it is not going to happen?

Ms Bolton —I am just simply flagging it to recognise that that can be a very effective mechanism for some people who receive family tax benefit payments and can in actual fact act as an effective debt prevention mechanism.

CHAIR —You have not checked with the department if that is their intent?

Ms Bolton —No.

Senator SIEWERT —That is an issue we will ask the department about. I have one final question. I want to go back to the CDEP and the issue around the number of Aboriginal people who have been breached, the number of people on CDEP and access to data. You were here when I was asking Professor Altman about the numbers on CDEP. He expressed concern about getting access to data from DEEWR. Do you have similar problems?

Mr Thomas —Yes. There is data on the DEEWR website, but it is simply not comparable to previous data. It does not show the number of three-strike failures, which lead to eight-week no payment penalties, in Indigenous communities, for example. It is very difficult to flesh out what is happening unless there is an agreement about a set range of data so we can make sure that this system is working as intended, that it is not having negative consequences, particularly for Indigenous people.

Senator HUMPHRIES —Professor Altman said that he felt that there was some justification to the argument that in some cases CDEP became a bit of a crutch, but he felt that there ought to be a community-by-community approach where you could phase out CDEP where there were real jobs for people to transition to but you would retain it where it was important—where those jobs were not available or where you needed backup for the jobs that were provided on a full-time, normalised basis. You do not suggest an alternative to the present CDEP reform, so would you embrace the approach that Professor Altman has put forward, which I have just summarised, would you suggest some other course of action or do you take the view that CDEP is fine and there is no need to reform the operation of CDEP at the moment?

Mr Thomas —We do not think that CDEP is fine. Certainly it has been a mask for the lack of attention to the employment of Indigenous people, not paying them for real jobs and for real work. We have recognised for a number of years that some CDE programs work well and some do not. There are a range of barriers to the employment of Indigenous people and I think the CDEP has a good record where it works well, so I do not think a blanket approach is going to work, but I think it sounds reasonable on a case-by-case basis. At least CDEP does provide a safety net and an organised activity, and it is of great assistance to the community and to the infrastructure in the community. It is quite vital that those things continue.

Senator HUMPHRIES —I have one other question. You say on page 4, in respect of appeals to the SSAT:

There is also a real issue as to whether the jurisdiction of the SSAT or AAT would extend to reviewing decisions made by the Minister.

The decisions that SSAT and AAT would be able to review would generally be decisions of the department. Why do you raise the issue of decisions by the minister? Are you suggesting that the amendments as they are framed potentially encompass decisions made by the minister?

Ms Bolton —I do not think that is a clear issue. It is raised in the context that currently the legislation provides two avenues for an exemption to be made: through Centrelink or through the minister. There is a view that the minister has wider discretion and is not bound by the same factors that Centrelink has to take into account in granting the exemption. The point was made in that context.

Senator HUMPHRIES —But do you think the legislation, as framed, could encompass a right of review to the SSAT for a decision that the minister has made using those wider criteria?

Ms Bolton —I do not know and I do not think that it is an area of law that has been settled. Some recent tribunal decisions have looked at the issue in another context and no clear view was expressed. The decision was simply decided on a different basis, so I think that still leaves the issue open.

CHAIR —There are no further questions, but if you think there is something we have not covered in your submission and the evidence you have given this afternoon please get back to us. But I think the issues that you raised in your submission have been picked up in the questions. Thank you very much for your time and the ongoing work you do in this field.

[2.04 pm]