Andrew Southcott (Boothby, Liberal Party, Shadow Minister for Employment Participation, Training and Sport) Share this | Hansard source

The Social Security Legislation Amendment (Employment Services Reform) Bill 2008 enables the government’s new employment services, which will run from 1 July next year to 1 July 2012. Some of the changes in this bill are minor, but there are major changes to the compliance framework. The Job Network was introduced by the former coalition government in 1998. Since it was brought in to replace the ailing Commonwealth Employment Service, unemployment has dropped from 8.1 per cent in May 1998 to a 33-year low of 3.97 per cent in February this year. While sound economic management and an environment of economic growth certainly played a major role, ultimately the reduction in unemployment was facilitated by an employment services system that had a focus on employment and reiterated the mutual responsibility of the job seeker to actively engage with the system supporting them. By having a firm but fair compliance regime that commits job seekers to actively seeking employment and engaging in activities that can help improve employment prospects, the former government discouraged welfare dependency.

As I have said previously, the Liberal and National parties support some of the elements of the government’s proposed new system. For example, the blending of the employment programs is something that we would have done had we been re-elected; we think it is a good idea. We think that the concept of employment brokers and the $41 million innovation fund panel are both sensible reforms to the new employment services. In the minister’s foreword to the discussion paper entitled The future of employment services in Australia, the Minister for Employment Participation states:

The Job Network is no longer suited to a labour market characterised by lower unemployment, widespread skill shortages and a growing proportion of job seekers who are highly disadvantaged and long-term unemployed.

This has been the government’s rationale for some of their changes to employment services—that the Job Network ‘is no longer suited to a labour market characterised by lower unemployment’—and it is hard to think of a document which has become out of date more quickly than this one. The new universal employment services model was designed at a time when the labour market was still strong. The work on this was done in February 2008, when we had the lowest unemployment in a generation. But now, six months later, we have had speculation in the media at the weekend that an additional 200,000 Australians may lose their jobs within the next 12 months. It has taken Australia the last six years to reduce unemployment by 200,000, yet in the space of one single year that achievement is set to be undone.

The Liberal and National parties cannot support the new ‘no show, no pay’ system which has been proposed by the government. We believe it will undermine the successful inroads the previous government made into long-term unemployment and welfare dependency. We are also concerned about the discretion which will be given under this legislation to the departmental secretary to undermine these hard-won reforms to welfare. Since the unemployment benefit was first introduced in 1945, Australians have had an expectation that those receiving benefits would be required to look for and accept work. It was the Chifley government that first introduced laws which said that if a job seeker were not taking reasonable steps to obtain employment then they would lose their benefit for between two and 12 weeks. Since then, the notion of mutual obligation has had broad community support, and it is consistent with our own values. Unemployment benefits are designed as a temporary measure to help the unemployed when they require it, but with the right to receive this assistance comes a responsibility to do the right thing and look for work. Many groups were critical of the previous Howard government’s approach to welfare reform, but this approach was important in breaking the cycle of welfare dependency and reducing the numbers of long-term unemployed.

Under the latest round of Welfare to Work changes, according to the Department of Education, Employment and Workplace Relations’ Labour market and related payments: a monthly profile, the number of long-term unemployed fell from 205,212 people in June 2006 to 146,533 by August 2008. This represents a drop of almost 30 per cent in just over two years, which makes it more surprising that the Labor Party has decided to introduce a much softer set of sanctions for those who do not attend Work for the Dole training or even a job interview. In the future, for those on Newstart, parenting payment or youth allowance with activity requirements, Labor will introduce a ‘no show, no pay’ system which involves the loss of one day’s benefit for those who do not turn up.

To demonstrate how much of a departure this is for Labor, we should look at what they did when they were last in office. Under Paul Keating’s Working Nation, not attending a job interview would see a job seeker’s payment suspended for between two and six weeks. Under Labor’s proposed new change, a job seeker who does not attend a job interview will lose just one day’s payment—$42.98 for someone on the single rate of the Newstart allowance. It will be possible to not turn up to six job interviews in a six-month period before a Centrelink review is triggered. The Labor Party have defended the ‘no show, no pay’ concept by saying it is more work-like, but see what happens at your workplace if you start regularly not turning up to work without an excuse. It is unlikely you would simply be docked a day’s pay. The problem with weakening the compliance regime is that it will be much less effective in changing behaviour for the positive. It will become a toothless tiger. At present, the most common reasons for an eight-week suspension of benefits are failing to attend an interview with your employment services provider, failing to comply with an activity agreement or failing to attend Work for the Dole. These will all be treated much more leniently under Labor’s proposed new scheme.

Looking internationally, countries similar to ours have recognised the importance of a strong compliance regime. In their July 2008 green paper on welfare reform, the British Labour government emphasised the importance of a stronger sanctions regime and, in fact, proposed losing a week’s benefit for missing a job review or appointment and escalating the sanctions for failures after that. In the United States, it was Bill Clinton who declared ‘an end to welfare as we know it’ and supported welfare reform which has dramatically reduced the numbers on American social security rolls.

When the former Howard government introduced the Welfare to Work reforms in 2006, they were designed to reduce welfare dependency, establishing a patent link between receiving income support and actively seeking employment or, failing this, contributing back to the society that supports you. It was recognised at the time that there were still far too many long-term unemployed who appeared destined to remain on welfare indefinitely. Providing an opportunity for job seekers to gain skills and training through a mutual obligation activity helps with their employability and reintroduces them to a work-like environment. By tackling welfare dependency head on, we can break the cycle of welfare dependency by keeping job seekers on track and job ready.

Mutual obligation is crucial to help break this cycle of welfare dependency. Not only does this help reduce the cost of welfare on society as a whole but it also assists in reducing the significant human cost of welfare dependency and intergenerational unemployment. Mutual obligation activities, such as Work for the Dole, help to make job seekers job ready. These activities can provide training and skills for job seekers, boosting their confidence. However, these requirements to participate were never intended to punish job seekers who did the right thing. Job seekers were entitled to miss three appointments over a 12-month period without a valid excuse before they would incur a financial penalty. If a job seeker had a legitimate reason for missing an appointment, they would not have a participation failure recorded. They would then be referred to Centrelink, who would determine whether there were in fact any additional factors that may have prevented a job seeker from participating.

The Labour market and related payments report published monthly by the Department of Education, Employment and Workplace Relations shows a strong decrease in the overall numbers of long-term unemployed. In August 2008, there was a 14.4 per cent decrease in the number of long-term unemployed job seekers in receipt of either Newstart or youth allowance over the preceding 12 months. In human terms, that is 24,574 fewer long-term unemployed in the space of one year. That is an achievement the former coalition government is happy to take credit for. In meeting the objectives of reducing welfare dependency and reducing the numbers of long-term unemployed, the employment services system was working; it was effective. The compliance system was working; it was effective. Our Welfare to Work reforms helped to discourage the long-term unemployed from languishing on the dole queue and have provided the encouragement needed to improve their situation.

Labor’s new changes will herald the return of the dole bludger. In striking a balance between engagement and sanction, the government have got the balance wrong. As a result, the compliance regime will be much less effective. Going into the future, we will see, sadly, increased numbers of long-term unemployed if the Labor government have their system for employment services passed by this parliament intact. This new system is farcical, providing no incentive for people to do the right thing. It will undoubtedly result in an increase in noncompliance as some people decide that losing a day’s welfare—$42.98 for a single person on Newstart—is worth a day at the beach or that it is financially more beneficial doing three hours work in the cash economy at the local pub or babysitting.

These changes proposed by the government do not encourage people to do the right thing. People who are in receipt of welfare have an obligation to the wider community that supports them. They have a moral obligation to look for work and, if they are unable to find work, they should contribute to the society that supports them. The coalition will be opposing this bill and moving amendments during the consideration in detail stage. These amendments have been circulated in my name.

By weakening the compliance regime, we are likely to see an increase in intergenerational unemployment, where children follow their parents onto the dole queue. A strong compliance regime is about tough love but it helps people get out of the poverty trap. The Rudd government need to rethink their lenient approach, which will encourage high levels of welfare dependency and sadly see the numbers of long-term unemployed continue to rise again.

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