Mike Symon (Deakin, Australian Labor Party) Share this | Hansard source

I rise to speak in support of the Social Security Amendment (Liquid Assets Waiting Period) Bill 2009. At a time when the global financial crisis and the global recession are starting to impact on unemployment queues around Australia, this bill will help workers who have been retrenched by making it easier for them to access financial assistance from the federal government. We know that unemployment has now risen to 5.2 per cent, and national job agencies, such as Employment Services Holdings, are now reporting that, in the last six months, their services have gone from dealing largely with the long-term unemployed to dealing with those whose jobs have been entirely wiped out by the financial crisis. That was noted in the Financial Review only a couple of weeks ago. As much as we had hoped Australia would remain immune from the effects of the global recession, inevitably we are going to see even more job losses over the next 18 months. This is something about which we, as a government, have been very upfront with the Australian public.

In my electorate—and this came quite recently and was certainly a big shock—we saw Pacific Brands scale back their manufacturing operations in Australia: 1,850 jobs overall. Two hundred and fifty-five of those jobs were at the Holeproof factory in Nunawading, which is right in the middle of my electorate of Deakin. A lot of those workers at Holeproof had worked there for most of their working lives, or for many years. Although they have skills that are particularly suited to the textiles industry, they are not necessarily suited to other industries and a lot of them, unfortunately, are going to have quite a hard time finding alternative employment, especially in the current employment market.

It is a terrible thing to be suddenly thrown into unemployment and financial uncertainty, especially in current conditions where local businesses, panicked by a sudden drop in demand, can shed jobs in the blink of an eye. It is certainly true, as in the case of the Holeproof workers and everyone else in this situation, that losing your job does not mean that the bills stop coming in or that the mortgage goes away; it certainly does not mean that you do not need to find the money to put food on the table, send your kids to school or meet all of life’s other day-to-day necessities. People who are thrown into this situation very quickly find themselves under a lot of financial pressure, and it is very easy for them to quickly erode what money they have in their family savings accounts.

Under the current Social Security Act, liquid assets can affect your payment if you receive youth allowance, Newstart Allowance, sickness allowance or Austudy. If your liquid assets are above $2,500 for a single or $5,000 for a couple or a single with dependants, there is a waiting period before you can receive any of the payments that I have just mentioned. At times that waiting period can be as short as a week but it can go right out to 13 weeks, and it also depends very much on the financial circumstances of the individual. Under the act, liquid assets are defined as things like cash on hand, shares, term deposits or other money available at short notice. Importantly, in the current climate, liquid assets can include payments made or due to be made by a person’s last employer—that is, redundancy payments or accrued entitlements. This means that a worker could find themselves in a situation where they are laid off by their employer and cannot receive any assistance from the government for as long as 13 weeks, potentially resulting in any savings that they may have being reduced to very low levels, if not wiped out completely. I can certainly tell you how it feels to wait that period of time before you can access benefits.

Before I came to this place, most of my years were spent in the construction industry. Certainly good times and bad times occur in the construction industry. In the good times, the money is good and there are jobs aplenty; in the bad times, you find that you cannot get a job as a skilled tradesperson anywhere in a major city. It is like someone switching off a light. I have been through that. I have saved a bit when I was in a good paying job and I have been thrown into unemployment with no idea of when the next job was coming up. When that happens, it is all very well to think, ‘Okay, I will get a job soon’—and I hope that is the case for many people—but it is not always the case. We need to have certainty in the process, and we also need to have certainty that you do not have to run your savings down to a tiny amount before you can get some help from the government.

Currently, we may also face the silly scenario where people who have become unemployed  and who have recently received a bonus payment in some form from the federal government may not be able to spend that bonus over a longer period of time in the way that they might want to while they are unemployed. They might literally be forced to go out and spend it all in one lump sum. This is, of course, good for the economy; but, if people have just lost their jobs, I do not think too many of them would be going out and spending every last cent in their bank account. Michael Raper, the President of the National Welfare Rights Network group, stated back in 2005, following the then Howard government lump sum family payment, that it would be completely wrong for the government to claw it back with the other hand. We must not forget that, in the situation where a job is lost, some of the most financially vulnerable people—single parents, the disabled and the ill—are subject to the same requirements.

The changes to the liquid assets waiting period contained in this bill will double the maximum thresholds for liquid assets to $5,000 for singles without dependants or $10,000 for others, for a two-year period, starting on 1 April 2009. In practical terms, this means that the length of the liquid assets waiting period for most people will be reduced and they will have some much needed breathing space as they consider their move back into employment. The current threshold levels were set by the Howard government in the 1996-97 budget. It was one of a number of measures that they took during their time in office to try and restrict income support to people. The level set by the previous government in their first budget has remained unchanged ever since, despite the obvious fact that $2,500 buys a lot less now than it did in 1997. When the 1997 changes were announced, the then government was criticised by welfare groups and other representative bodies as being overly harsh and arbitrary—two key qualifications for Howard government policy, it seemed.

The Australian Council of Social Service, the country’s peak council of community services and the welfare sector, has pointed out what the effect of these thresholds can be:

… unemployed people are forced to spend almost all of their (often meagre) reserves before becoming eligible for income support. In doing this, they have very little left to meet expenses such as car registration or repairs, replacement of whitegoods, or expenses associated with illness. In many cases they are forced to rely on advance payments and other forms of credit to meet lump sum expenditures, thus reducing their already small weekly incomes. The liquid assets test can also act as a disincentive for people to save during periods of employment.

Under the existing thresholds, a couple with $18,000 saved would be forced to wait 13 weeks before they could receive support. When no income is coming in, it does not take long for that amount of money to evaporate.

The changes made to the liquid assets test are typical of the former Howard government’s brutal approach to the unemployed seeking assistance from their government. Indeed, they should not be viewed in isolation but as part of an 11-year pattern of targeting the most vulnerable people in society. The Howard government destroyed people’s job security with Work Choices and made it easier for bosses to cut their workers’ pay, with AWAs. They made it harder for people to receive income support, with their changes to the social security system, and consistently attacked those groups in society, such as trade unions and non-government organisations, who stand up for those people who have the most trouble getting their voice heard. While we are focused on fairness and acting to protect the Australian economy and jobs, those that sit opposite, as usual, prefer to remain ideological and nasty.

The then Labor opposition opposed these changes. We believed they were regressive and unfair and we are now acting to solve that situation. These changes will, in many cases, ensure that this is not the case. It is a small but potentially significant change that the government can make to help working Australian families. And I believe it is an appropriate and responsible change in the current climate. While the opposition are in the habit of arguing against the government doing anything in the face of the global recession, we on this side of the House understand the necessity, indeed the urgency, of acting to help cushion the impact of the crisis on the Australian people. In light of the current extraordinary economic circumstances, the new thresholds will apply for a two-year period, until 31 March 2011. In a year’s time, a review will take place that will examine the effectiveness of these changes, including consultation with stakeholders—something the previous government did not bother with. Had they done so, the thresholds may have been appropriately adjusted over time.

The bill also amends the Social Security Act to exclude the surrender value of life insurance policies from the definition of ‘liquid assets’. As it currently stands, people who hold a life insurance policy are expected to cash in their policy in order to support themselves before they are able to access income support. I can tell the House that I once had a life insurance policy—many years ago, before super was in—and I put money aside month after month and year after year. I did one day cash it in for its surrender value. The surrender value was not much and, of course, my life insurance cover was gone from that day on. If I had just put the money in the bank, I would have been a lot better off. But I needed the money at the time, so I took the surrender value.

The unfairness of a policy like this should be apparent—people should not be penalised for taking responsibility for their family’s future. It is unreasonable to expect people to do this, and the proposed amendments will remove this anomaly. Under the bill, the value of surrendering a life insurance policy will not be taken into account in determining either a liquid assets waiting period or severe financial hardship.

This is another step in the range of measures taken by the government to lend a hand to those who need it during these tough economic times. They should be contrasted with the opposition, who oppose us every step of the way. Whilst they are busy playing politics and working out what their position is on any given issue from day to day, the government will keep working for the Australian people. This bill is but one part of our commitment to them, and I commend it to the House.

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