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Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009

CHAIR —Welcome. Ms Edwards, do we have a submission from you?

Ms Edwards —We are appearing in support of the council.

CHAIR —I do not believe that we have a submission from the Sole Parents Union, but I would presume they are part of the network with the National Council for Single Mothers.

Ms Edwards —Yes.

CHAIR —I would think so. I would expect no more.

Ms Edwards —We thought Kath was speaking later.

CHAIR —No, it is at the same time. We have got you sharing a segment between 10.00 and 10.45. We are just waiting for the telephone connection with Ms Swinbourne to work. In the meantime, I welcome Ms Edwards. I know you have done this before. Could you continue with your statement about supporting the written submission that we have got? I think it would be easier for senators who may not have spoken with you before.

Ms Edwards —Yes. It is from the National Council of Single Mothers and their Children from Victoria and Solo Mothers. We support both of them. They have asked me to speak to that and also provide our own information.

CHAIR —Thank you. Would you like to make an opening statement and then we will go to questions.

Ms Edwards —Certainly. First of all, thank you for allowing us to speak and also for having an inquiry. We see this as a really good opportunity to address some oversights that were part of the pension bill. We welcome the increase for the other pensioners, the ones that are doing it tough, but we are still not quite sure why sole parents were left out of the increase in the first place. Evidence overwhelmingly supports that this is one of our poorest groups in Australia and poverty on the children is certainly a great concern.

We would like to see quite a few things. We think this is a great opportunity and scope to make some changes, but we would really like the poverty to be recognised for sole parent families and children. We would like the past policies that have added to the hardship of parents to be recognised. The two that I would particularly like to draw your attention to are the welfare to work and also the child support reforms. I suppose the key message that I want to get across is that it is our belief that sole parents are actually starting from a deficit place and have had a really difficult time over the last few years, which is not a good starting place for the current government.

CHAIR —Thank you. Senator Boyce, would you like to start with some questions?

Senator BOYCE —Ms Edwards, are there any benefits of any sort in this bill for sole parents?

Ms Edwards —There were some benefits. The benefits were not in this bill.

Senator BOYCE —Carer payments?

Ms Edwards —Yes. There were some benefits around participation. There was certainly a relaxing of the first work requirements. There was acknowledgement that childcare is particularly difficult to secure over the Christmas period and there was also some acknowledgement of the difficulties in supporting a child with a disability. They were part of the participation. In terms of this bill there were a few nasties. There was also the family tax benefit indexation. I am not sure if you are aware that the indexation is going to be changed.

Senator BOYCE —It will be based on CPI in the future.

Ms Edwards —Yes. That does not keep up with the cost of living. The gap will start wide, but it will increase over time.

Senator BOYCE —Have you done any modelling or any work on what the effect of that is going to be for single mothers?

Ms Edwards —Yes, quite a few people have. It comes in on 1 July this year.

Senator BOYCE —That is right.

Ms Edwards —The concern is particularly for children. Do you mind if I put my head down to read this bit?

Senator BOYCE —No, please do.

Ms Edwards —What will happen for the family tax benefit A is that the partner rate of the pension will bring to a close the previous efforts to reduce child poverty. The maximum level of family payments for each child aged less than 13 and 13 to 15 years in a lower income family was tied to 16.6 per cent and 21 per cent respectively. This is going to be reduced over time and it is thought—because it depends on the size of the family and age of the family—that it will reduce by anything from $50 to as far as $120 a year for families, depending upon their circumstances.

Senator BOYCE —Are you saying $120 a year less?

Ms Edwards —Yes.

Senator BOYCE —Would you like to tell me what the effect of that is going to be?

Ms Edwards —What I would like to try to relay is that the families are already in poverty. The most recent data that I have read from the family studies in 2008 was that this is probably going to be our poorest group of families that we have in Australia. They are already starting from a place where the income coming in is not sufficient to meet the cost of living. We know with sole parents that the greatest number of families is headed up by women. That is around 85 per cent. If you go to the younger cohort, the under-fives, we hit around the 90 to 93 per cent. We have a situation where we already know that what is the current state of play is inadequate, so if that is further reduced then it is quite reasonable to assume that they are going to fall further behind.

Senator BOYCE —Are single mothers with the under-fives group coping—that is not a word I like—with the payments that they currently receive?

Ms Edwards —No. I know you are speaking to a few of the emergency services today. They will probably talk about the increase in sole parents coming to them for food. We know that sole parents have more difficulty in paying bills. We know that the ABS said that around six per cent of children of sole parents skip their meals, whereas it is around one per cent in partnered families. It is also quite difficult in regional and rural areas where sole parents are moving to because there is cheaper rent, but there is less infrastructure and less opportunity to find a job, but secure tenancy is a real issue.

CHAIR —I believe we have Ms Swinbourne on the line now. Good morning, Ms Swinbourne. I am sorry for the technical hitches. We have Ms Edwards with us in the room so we started evidence there in order to make best use of the time. In the room we have Senator Furner from Queensland, Senator Boyce from Queensland, Senator Williams from New South Wales, and Senator Siewert from Western Australia will be returning very soon. Senator Boyce is in the middle of asking questions. What we will do is ask the senator who is asking the question to refer questions to you specifically so you are part of the whole process.

Ms Swinbourne —Thank you.

CHAIR —Ms Swinbourne, do you wish to make an opening statement?

Ms Swinbourne —I would like to say that I appreciate the opportunity to give evidence. It is very encouraging that you have actually asked for presentations from people who do represent sole parents, as sole parents seem to have been ignored in this legislation. We do appreciate the measures that are being put in place to improve access for sole parents to training opportunities.

We would like to focus on what is lacking in this legislation for sole parents, which is access to pension, to any increases and to a guaranteed pension rate which does try to get them and their children out of poverty. Unfortunately, the moves that have been made up to this point are about reducing security and reducing income. I would have to agree with what has already been said about pushing sole parents and their children further into poverty.

CHAIR —Thank you. I will go back to Senator Boyce.

Senator BOYCE —I have one last question. We have talked quite a bit about single mothers. Ms Swinbourne, is there anything different to add on the topic of single fathers? Are their problems the same?

Ms Swinbourne —Sole parents are sole parents and their children have the same issues regardless of whether they live with their mother or their father. I think the evidence is that sole fathers who used to be less likely to live in poverty because they had greater access to paid employment than did sole mothers, for a variety of reasons, have recently found that these things are becoming more and more difficult. Sole fathers are also finding it harder and harder to work, particularly in trying to balance their work and family responsibilities, given the lack of childcare and the lack of flexibility in the workplaces that many can access and the problems and situation of sole fathers is becoming much more similar to the problems and situation of sole mothers.

Senator BOYCE —Would either of you like to quantify what is needed to restore relativity for single parents?

Ms Swinbourne —I can address that first. I am sorry, it is difficult to know whether or not I am jumping in here. There is the access to the pension and the rate and conditions of the pension for sole parents, which now cuts out when the youngest child turns seven. Sole parents do not have the same capacity as single people to look for and participate in paid work and putting the same conditions on them as with single people is disadvantageous to their children. They need the security of knowing that they have an ongoing income and that their children can be fed and can be housed. Unless that is re-established the situation is not going to improve.

Senator BOYCE —Ms Edwards.

Ms Edwards —We do have some recommendations that we would like you to make. First of all, we would certainly like an immediate increase to parity with the other pensions, just based on common sense. If the Harmer review has already found that single people are living in poverty, there is no reason to believe that single families are not living in poverty, because the family tax benefit is about raising children.

The other thing that we are deeply concerned about which might be an outcome of this legislation is breaking the nexus between this pension and the others. This pension was brought into play in 1974 by Bill Hayden, who was very proud of it. He has written to me recently to remind us that he was the architect of that. But recent history has shown that this pension and this population group have not been really high in the thinking and the considerations. Our fear is that if that nexus is broken between that and the other pensions it will be marginalised and it certainly could be vulnerable. There are already indicators and signals that it will not be increased as per other pensions. We wish for the legislation not to break that nexus. We feel that actually gives us some strength.

We would like to see the reversing of the target indexation decision. There is no sense in it being changed to CPI. It should stay the same. If you look at the principles of the family tax benefit, it is actually to raise children, so therefore it needs to keep up with the cost of living.

The other thing that we would particularly like to see taken into consideration is if we are really talking about securing and raising our children, keeping them out of poverty and having a practice that is aligned to the government’s principles of social inclusion and early childhood, certainly when single parents enter into the workforce it would be good if the taper rate of 40c remained and also the current amount that parents could earn before it was affected by the threshold. That would really send such a positive signal to parents about their ability to work out of poverty, and it would also be a positive message for their children.

The last thing I would like for this committee to recommend is that this payment was not part of the scrutiny of the Harmer review. It was excluded. It is documented in the Harmer report that it is excluded. Here we have a significant part of our population and also our future population and we do not know what has happened. I talked about three almost invisible hammers coming over and hitting sole parents, one in the disguise of welfare to work, one in the disguise of family law reforms, one in disguise of the child support and now this one. Although we have a lens where we are looking at it singularly, the parents that are trying to raise their children and the kids that are trying to have the access, the means and the disposable income to purchase the things the same as their mates, they do not know which part of the government policy has reduced their income, so the whole lot needs to be looked at. If the capacity were there then that would answer some of your questions regarding what we really know.

My wish would be for this pension to receive the same scrutiny and that the principles that are behind the Harmer report be afforded, so we are working from an informed basis. We are quite often finding that there is an interaction between policies which was not always intended. We have a point now where we have also got a disparity between the impact of some coupled parents and the family tax benefit, and also sole parents and the family tax benefit. It would be tremendous if this pension payment and the circumstances for these families could receive that same scrutiny.

Senator BOYCE —I may have missed this in the legislation, but the change in the taper rate for earning income will apply to parenting pensions in the same way that it is going to apply to the increased age pension; is that correct?

Ms Edwards —No. What we are fearful of is that because we did not get the pension increase, we also did not get the increase in the taper rates or thresholds. What I am fearful of and what I am signalling to you is that if we do get that increase will we then enter into that other area.

Senator BOYCE —Thank you. That was a double message.

CHAIR —Ms Swinbourne, would you like to add anything?

Ms Swinbourne —Yes. With this new legislation and the increase in the pension rate which is not being passed on to sole parents, there will be a gap of $43 a week between the standard pension rate and payments for sole parents. This is the payment that they get for looking after children. It is not just for themselves, it is for them and their family. It costs more money to look after children than it does to look after yourself. This is clearly inequitable and what we are doing is increasing the inequity in society. As has been pointed out, the Harmer review did not cover this. It did not cover sole parents. The pension rate has been increased in response to the Harmer review, yet those people who are living on the bottom now are falling further and further behind, which is something that really needs to be addressed.

Senator BOYCE —Thank you.

Senator FURNER —I would like to take you to the proposal in respect to the maternity immunisation allowance changes. Currently it is applicable to earn $245.50 per child. Would you have any statistics available of how many people access that allowance? Do all of them, or are there some figures that we can rely upon to give some indication of what that might be?

Ms Edwards —Sorry, I do not.

Ms Swinbourne —No, neither do I.

Ms Edwards —The Family Assistance Office would be able to provide that information.

Senator FURNER —It is currently proposed to amend the increases which are applicable from March and September of each year through CPI to make it an annual indexation increase. Do you foresee any issues associated with those minor amendments?

Ms Edwards —I do not specifically around that, but it is not a long bow to draw for children from sole parents who the ABS has confirmed often do not have the level of medication or the doctor’s visits that are available to others. I cannot add any more than that.

Senator FURNER —In the CSMC’s submissions you quite rightly draw upon some issues associated with incidental matters outside of this bill’s scope. Your first dot point relates to some issues associated with family friendly arrangements for single mothers dealing with hours of work, their employment and issues with school holidays, curriculum and so on. I am sure you are aware that the government has recently passed legislation for more friendly hours and assistance for people, whether they are in that situation or otherwise. Do you foresee that alleviating some of the concerns you expressed in this submission?

Ms Edwards —First of all, they are fantastic changes. The whole participation and the focus upon trying to make work more accessible is really positive, but what happened before the last recession in the early nineties is that sole parents were one of the groups who were disproportionately and highly impacted upon because they were the groups that had the casualised, low-skilled, seasonal type of employment. Even with that foundation in place I think it would certainly improve if we were in a more prosperous time. It is our belief that sole parents will probably suffer quite dramatically through this economic downturn, just because the jobs will not be there.

Senator FURNER —Can you point to any circumstances where there have been impacts, particularly from around about September last year when the financial crisis was starting to bite, of any circumstances of sole parents suffering or having issues associated with employment?

Ms Edwards —Yes. The biggest correlation is the increase in emergency requirements. I would like to point out that there is a myth about sole parents not being employed. Single mums are in the workforce. From the last statistics that we have there were around 24 per cent in the workforce and partnered mums were around 21 per cent of the workforce. The other statistics that we had were that sole parents who were Centrelink recipients were one of the highest groups that already had participated in the workforce. They were also volunteering their time.

We have not collected data regarding the exact impact of the economic downturn. The biggest thing that is coming through is that there is just not enough money to start with, so the economic downturn for sole parents is probably of a little less concern because the biggest concern is that ongoing allowance income coming into the family.

We recently put out a request for sole parents on our Solo Mothers website to indicate what were their key issues and concerns, and it is that big pot of income not keeping up with costs. That is part of that pot, but we have not been able to disaggregate it to see where it has come from.

Ms Swinbourne —I can add to that. We have a number of stories from people who have either had their hours cut back or have lost jobs completely because, as has already been said, they are working in a casualised economy. They are working in service industries in retail or they have jobs where their hours are not set, anyway. We have had situations where sole parents have been replaced by 16-year-olds because they are cheaper. This is happening. I can point you to any number of case studies and I am sure there are many around the unions; other people will be collecting them as well. Centrelink data will reflect it. For those people who are working, their reliance on social security payments will be going up because their income is going down. It is happening across the country.

Senator FURNER —I would like to put you on notice to provide those case studies. We would appreciate that.

Ms Swinbourne —Certainly.

Senator FURNER —I believe it is no myth out there about the participation rate of solo mums or parents in the workforce. I know this from the past; they are a great asset to our economy and workforce. I would like to go to the third dot point of CSMC’s submission where it indicated the lack of availability of childcare and out-of-school hours care. It has been some years since I had my children in those arrangements, so I am wondering what the issues are?

Ms Edwards —I would like to thank Ms Swinbourne for following up on that last question because that certainly fits within her domain. With childcare, the real pressure point is once the children have turned 12. We know that out-of-school care and vacation care are already tight, but where parents are finding it particularly difficult is once their youngest is 12 and has started high school or secondary education, because the places are not there. That is where the lack of a second person in the home to provide that back-up care is particularly harsh.

Ms Swinbourne —I would like to tell a story about one of my personal experiences. This was back in 2000, but I happen to know the situation has not changed a lot. When I was working full time I had three children who at the time were nine, 10 and 11 years old. It was school holidays. I was working full time for an organisation that should have known better. However, it is not always the ones that should know better that do implement what they talk about. Whilst there was vacation care available for them, at 10 and 11 years of age they do not want to go. They consider themselves too old for this sort of thing because these places are filled with much younger children. I had a situation where I was at work full time and I had three children to care for. I took them into the office with me one day. I was in the city. They could go to the movies, come back and I could send them in and out to do different things. I could take them out to lunch and so on. I had my employer tell me that my children were not allowed in the office. This still happens. It happens continually. It is not just about having the places available. These places are no good if kids will not go to them. Vacation care and out-of-school care hours, whilst they are ostensibly available for 12-year-olds, are not really because they are focused on younger children. In order to get 10-, 11-, 12- or 13-year-olds into care you need care dedicated to that age group, otherwise it does not work.

Senator FURNER —Thank you.

Senator WILLIAMS —Ms Edwards, one of the things that concerns me immensely in your report is that 57 per cent of sole mothers were unable to pay utility bills. That is obviously a situation. Do they get support from the Salvation Army or St Vincent de Paul?

Ms Edwards —No.

Senator WILLIAMS —What happens if they do not pay their electricity bill? Do they have their electricity cut off?

Ms Edwards —Often, yes. There is then the reconnection fee as well. An ABS study in 2007 indicated:

Loss of utilities due to non-payment of bills and reconnection and debt collection fees means living without electric lighting, hot water, refrigeration, cooking facilities, temperature control and washing machines. This makes it difficult to prepare home-cooked meals, wear clean clothes, stay warm, do homework at night.

That is ABS 2007.

Senator WILLIAMS —You said that six per cent of children are skipping meals.

Ms Edwards —Yes.

Senator WILLIAMS —Are they skipping meals because there is not enough food in the house? What is the reason?

Ms Edwards —Once again, it is ABS data and it is quite contemporary. It is 2007. These are just some examples of how poverty is actually played out. It states:

Inability to purchase nutritious food. Developing children will have skipped meals, eat low-nutrition, cheap and unhealthy foods such as cordial, packet noodles and white bread … ABS data (2007, p.75) identifies that 6% of one parent families with dependent children went without meals compared to 1% of couple families with children.

Senator WILLIAMS —I cannot give an argument over white bread because I love white bread.

Ms Swinbourne —So do most of us.

Senator WILLIAMS —Obviously there are single mums who have lost their husbands or partners by sickness, accident or tragic events. Excuse my ignorance because I am new to this committee. I am here to learn as well and perhaps have an input. Obviously there are a lot of single mums where the father of the children has simply left or they are divorced. What has been done about that father contributing financially for the help and the raising of those children? Obviously there are a lot that do not contribute. In your opinion what can be done in that area?

Ms Swinbourne —The Child Support Agency is trying to do a lot of work in this area and child support is designed for that. There have been changes to the Child Support Scheme which have reduced the child support most sole parents receive. It is extremely difficult. If somebody disappears and you cannot find them, you cannot collect money from them. I think the Child Support Agency figures show that there is an enormous child support debt which means a lot of people just are not supporting their kids.

Single parents, the custodial parents, actually lose income from family tax benefit if they do not receive this child support, which makes it even more difficult for them. Child support is an extremely difficult area. There is a lot of effort going into it, but if people refuse to pay, they refuse to pay. We would like to see a lot more work put into actually collecting money where it is due. It is not just that, it is not allowing debt to rack up in the first place. I think one of the problems is that it is left too long so a debt gets unmanageable before the Child Support Agency really steps in and says, ‘That’s it, you must pay.’ If that action was taken earlier in order to continue payments and to keep debt low, we think it would be much more effective.

CHAIR —I would like to follow up on a question that I asked the department to chase up for me. We have had anecdotal reports that there has been an increase in the number of people not paying their child support because of the recession and that it is starting to cause some very significant hardship. Have you got any comment on that and is that anecdotal evidence that we are hearing consistent with what you are hearing?

Ms Swinbourne —We have heard from some people that they have stopped getting child support, which has been fairly recent. People are saying, ‘I can’t afford it.’ Where the income of the paying parent is reduced they can ask the Child Support Agency to reduce the amount that they are supposed to pay. Honestly, where people have good relationships they work these things out together and they say, ‘You can’t afford it this week. You haven’t got the income.’ It is something that the Child Support Agency is keeping an eye on and it is something that they do need to keep an eye on. How much of it is in fact due to the recession and how much of it is opportunistic, I do not know. I do not have any exact figures. I would hope to get them from the Child Support Agency.

Unfortunately, the Child Support Agency’s stakeholder engagement group that we have been on has changed the rules and now stakeholders actually have to pay their own expenses to get to Canberra and to stay in Canberra in order to engage with the Child Support Agency to discuss these issues. Unfortunately, as an unfunded organisation we cannot afford to do that. I cannot afford to be out of pocket for any time that it takes them to get money back to me; therefore, we have not been able to take part in these groups.

CHAIR —Thank you for that. I will follow that one up at estimates.

Ms Swinbourne —Thank you.

Senator WILLIAMS —Ms Edwards, I have another issue. I know prior to the 2007 election when I was elected to this job I had a lot of contact from fathers who did not have access to their children. Some were very angry and some very dejected. For example one was where his former partner had taken an AVO out against him to prevent him going near her or the children. He went to a football match to watch his son play football and as a result he spent two days in jail. These are tragic events. Am I correct when I say that when we have a situation where the dads do not have access to the children it would encourage them even more not to give any financial support?

Ms Edwards —Can I go back to your other question?

Senator WILLIAMS —Yes.

Ms Edwards —I am not sure what goes through a lot of dads’ minds so I do not want to respond to that, but with regard to the Child Support reform that you were talking about there have been some policy changes that have eroded the income. That goes to answer some of your prior questions. A big one is if the non-residential parent—that is a parent that does not have the bulk of the caring—see their child one night a week it reduces the amount that they pay by 24 per cent. For me, mathematically, that does not make any sense at all. That is a huge incentive.

Senator WILLIAMS —Is that to see their child or to actually have their child with them?

Ms Edwards —One overnight visit a week reduces the amount that they pay by 24 per cent. Also what happened in the recent child support reforms that are still playing out is that there has been a cap on the assessment of the person who earns and, furthermore, there has been a decrease in the amount that the residential parent can earn. You were asking what could be done. That needs to be looked at because out of those changes, particularly in many low-income families that have children aged between nought and 12, the outcome of those formula changes has actually resulted in a lot less disposable income for those children. That 24 per cent reduction is a significant incentive for men to see their children. It is one that I certainly do not support. I think the incentive needs to be one that is fairly managed.

Ms Swinbourne —I would also like to say that we do not like this change to the child support at this level. We fully support any moves to keep children and both parents engaged, and to try to keep that relationship a good one. However, we do not think a financial incentive is the way to go. We do not think people should have to be paid to see their children. If you have costs in your household to support your children, then it is only fair that child support is divided, but one night a week is not picking up on the day-to-day costs of the children and all that is happening is that, again, they are missing out even more in their residential household.

Senator WILLIAMS —I would like to finish by saying that I have no problem with men being responsible for their actions and I think they should do their bit. I know circumstances vary right across these scenes. Some can be friendly split-ups and some can be very bitter, but I would say that men are responsible for their actions.

Ms Swinbourne —We agree.

Ms Edwards —We have not even touched on domestic violence. Chair, I would like to go to your point. The National Welfare Rights did put out a press release regarding the impact of the recession and the income, and I think they are speaking today.

CHAIR —Yes, they are. We have a representative sitting in the audience.

Ms Edwards —I have given them a bit of a guernsey.

CHAIR —Thank you very much. I apologise; I had to go to a previous speaking commitment. If I have any further questions that were not covered, I will put it on notice.

Ms Swinbourne —That will be great.

Ms Edwards —Once again, thank you for your interest and your inquiry. Let us hope that you make some fantastic recommendations.

Proceedings suspended from 10.47 am to 11.00 am