Jenny Macklin (Jagajaga, Australian Labor Party, Deputy Leader of the Opposition) Share this | Hansard source

The amendments before the House ought not be necessary. Last December, if the Howard government had finally, after 10 long years, delivered the real welfare reform that Australia needs, the Employment and Workplace Relations Legislation Amendment (Welfare to Work and Other Measures) (Consequential Amendments) Bill 2006 would not be before the House. However, as history will regretfully record, the Howard government did not deliver real welfare reform. It did not tackle the reasons people are not working and it did not deliver practical solutions. Instead, it used its complete control of the parliament to ram through extreme and incompetent changes. Some of that incompetence has already come home to roost, with the need for additional amendments that the government, in its unseemly haste, failed to make in the previous bills.

In the context of the new welfare regime, Labor does not oppose this bill. The bill largely adds consistency to the botched changes of last year. It extends some benefits that are open to single parenting payment recipients, such as the 14-week bereavement period, to principal carers on the dole. But, of course, it would be unnecessary to do this if the government were not dumping people onto the dole in the first place. The bill also applies some more consistency across similar groups receiving different payments, such as providing for a seasonal workers preclusion period for students and new apprentices claiming youth allowance.

However, the bill does not amend what needs to be amended most: it does not scrap the incompetent welfare changes that leave people with less incentive to work than they had before. These changes cut income support for vulnerable Australians and reduce the rewards from work. The government has consistently ignored and, with this bill, continues to ignore the impact of putting people on lower welfare payments. That means not just an immediate loss of money but also a disastrous effect on people’s ability to work their way out of poverty.

The basic cut to the money in people’s pockets is bad enough—a cut of around $20 a week for single parent families and a cut of around $40 a week for people with a disability—but, from 1 July next year, many people who would have received the disability support pension or the single parenting payment will instead be dumped onto Newstart, which most people call the dole. By 2008-09, according to the government’s own figures, 60,000 people with a disability who previously would have received the disability support pension will receive instead the dole, as will 77,000 single parents who previously would have received the parenting payment. The dole not only provides less money to these vulnerable Australians, whose circumstances are associated with many additional expenses; it also has a lower ‘free’ area, higher withdrawal rates and a harsher tax treatment than both the disability pension and the single parenting payment. That means that, when they are dumped onto the dole, these people will get to keep less of each dollar that they earn.

Last year the National Centre for Social and Economic Modelling undertook modelling research on these changes. According to their research—which the government never even tried to refute—if a sole parent with one child did the right thing and worked 15 hours a week, they would only keep $81 of their earnings while the government would claw back the other $114 in tax and in social security payments they would lose. That would make such a parent $91 a week worse off by moving into work under these changes than if they had moved into work under the previous arrangements. The government was effectively telling sole parents to work for a return of $3.88 an hour. For their 15 hours of work a week, they would be only $58 ahead of somebody who was not working—and that is before they have to pay for the costs of work such as travel, clothing and other things.

For people with a disability, the situation is even worse, because the disability support pension is not taxable but the dole is. According to NATSEM again, if a person with a disability worked 15 hours a week at the minimum wage, they would keep only 25c of every dollar they earned, while John Howard would take back the other 75c. That would make such a person $122 a week worse off by moving into work under these changes than if they moved into work under the previous arrangements. Effectively, the government was telling people with a disability to work for a return of $2.27 an hour—and, again, that is before taking into account the costs of work. Under these changes, people could very easily end up paying to work.

What greater symbol of incompetence could there be than promising welfare reform but delivering a policy to make work less desirable than welfare? That is exactly what these changes have meant for these very vulnerable people. In Tuesday’s budget, Treasurer Costello announced $37 billion in tax cuts and a $10 billion surplus but, unfortunately, he could not find a way to fix this mess. He could not find a way to reverse the damage that these welfare changes have done to incentive.

It is fair to say that the budget finally has provided some financial work incentives, largely as a consequence of the government adopting tax proposals that have been outlined by Labor over the last year. The new effective tax threshold of $10,000 goes some way to improving incentives for those moving from welfare to work and for parents returning to work. But, despite these changes, sole parents and people with a disability will still go backwards when Welfare to Work measures are implemented from July this year, with marginal tax rates increasing by up to 20c in the dollar.

Since the legislation was rammed through in December, the government has broken its promise to provide an extra 4,000 places in disability open employment services to help people who already receive the disability support pension to move into work. These places will go instead to people with a disability who are on the dole, which is further evidence that the government is not serious about helping people on the disability support pension move to work. Then there is the government’s refusal to encourage people who are on welfare to get training so that they can acquire the skills that employers need. Once you are on the dole, you cannot satisfy your mutual obligation requirements by studying or training and you cannot access the pensioner education supplement. This bill does nothing to fix these very major flaws in last year’s changes. Of course, you cannot fix faulty foundations with a very thin coat of paint.

Labor supports welfare reform that goes far beyond moving people from a welfare queue to the dole queue. Labor believes that people who can work should work and, for those who cannot work, we should provide care and respect. Instead, unfortunately, these changes make it harder for people on welfare who cannot work—and they make it harder still for those who can.

(Quorum formed)

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