Michael Keenan (Stirling, Liberal Party, Shadow Minister for Employment and Workplace Relations) Share this | Link to this | Hansard source

The Howard government introduced the Welfare to Work reforms in 2006. They were carefully considered reforms, and they were widely welcomed by the Australian electorate. The Welfare to Work reforms helped people to break their cycle of dependency on welfare through constructive measures which assisted them back into the workforce. The compliance system we have now was designed and introduced to help break a cycle of welfare dependency that destroys lives. The Howard government recognised that there were still too many long-term unemployed job seekers—and they are always the hardest job seekers to place—who appeared destined to remain on welfare payments indefinitely. This is a great human tragedy, and it is the long-term unemployed who are the hardest people to move from welfare into the workforce. This has been a very well-regarded initiative, and it has also been widely welcomed by taxpayers. You really need to ask, given the success of this system, why Labor feel the need to fiddle with it as they do in this bill. They are effectively destroying parts of that system.

Labor’s Social Security Legislation Amendment (Employment Services Reform) Bill 2008 seeks to drastically change the compliance regime and compliance requirements for job seekers. They do all this while pretending that they support the Welfare to Work arrangements. Meanwhile they come through with this bill and essentially destroy those arrangements. The changes proposed by the government will result in the most lenient compliance regime since the introduction of unemployment benefits. More than just fiddling with the current rules, Labor’s employment services reform bill is going to ruin a system that has worked incredibly effectively. The current system is achieving positive results in helping people to get from welfare into the workforce, but Labor seem to want change, for what purpose I am not sure. Why they would want to upset this respected and well-working system is unclear.

The Howard government introduced appropriate compliance measures, enabling and encouraging job seekers to re-engage with the employment system. Welfare to Work reforms established a clear link between the receipt of income support payments and a mutual obligation to the people who were providing that payment. As a central tenet of Welfare to Work, job seekers who on three occasions within a period of 12 months failed to attend appointments, Work for the Dole activities or job interviews without a valid reason could have their welfare payments suspended for eight weeks.

This measure was designed to discourage wilful noncompliance, and it has been very successful. There was a significant decrease in the number of long-term unemployed—that is defined as those who have been in receipt of welfare payments for a year or more—from June 2006, when there was 205,000 long-term unemployed Australians, to August 2008, when there was 146,000 Australians classified as long-term unemployed. That is an extraordinary result: a 30 per cent decrease in the number of long-term unemployed in a period of just two years. That is a remarkable figure, and it shows that these reforms were clearly working.

A credible compliance regime is crucial to help discourage those people who are intent on long-term work avoidance. Labor’s social security legislation amendment bill seeks to drastically change these requirements. For every day that a job seeker does not attend their Work for the Dole or work experience activity without a valid reason, they will lose a day’s welfare payments, which is approximately $42.90 for a person who is on the single rate of Newstart. If they have six recorded absences without a valid reason in a six-month period, they will be referred for a comprehensive compliance assessment. Job seekers who fail to attend an appointment with the provider will be given the opportunity to reconnect without suffering a financial penalty. If they fail to reconnect, they will not be paid until they do so. If they incur three such failures within a six-month period, they will be referred for a comprehensive compliance assessment.

This is an extraordinarily significant amendment. It waters down the compliance regime that has worked successfully. It imposes a model that encourages noncompliance. The current model contains sufficient safety nets to ensure that people are not unfairly disadvantaged should they have legitimate reasons for being unable to attend appointments or mutual obligation activities and does not penalise those who are endeavouring to do the right thing, which is most. Unlike the current system, which is based on eight-week non-payment periods being triggered after three breaches within a 12-month period, Labor’s model is based on a six-month time frame and allows six absences from work experience or Work for the Dole activities or three missed appointments before a comprehensive compliance review is triggered. What we are concerned about is that this system is far too lenient. It does not provide any incentives for those job seekers who are wilfully non-compliant. Six absences in six months is essentially not turning up to work one day a month.

Labor’s proposed changes to the compliance regime comprehensively roll back the Welfare to Work reforms that were introduced by the previous government. Under the current system, job seekers who miss an appointment with their provider without a valid reason will have a failure to attend recorded. As I said, if that job seeker records three failures without a valid reason within a 12-month period, they are subject to an eight-week non-payment period. As a safeguard—and this is important, because Welfare to Work was never about a punitive approach; it was about encouraging and helping people into the workforce—under the current system financial case management is available to any job seekers who are deemed to be in severe financial hardship.

Sadly, under the changes that have been proposed in this bill, financial case management will no longer be available to those job seekers who may be experiencing severe financial hardship. Quite why this measure is being taken is unclear, particularly in these days of economic uncertainty, when many Australians find themselves struggling under ever-mounting debt. All too often we have seen people who have previously been employed losing their jobs and finding themselves unemployed. There is also the fact that credit is so easily obtained from financial institutions that have little regard for the ability of their customer to service that debt. I acknowledge what the member for Robertson was saying earlier on about GE. People can very quickly find themselves in financial hardship. Quite why the government would axe the financial case management program is unclear, particularly when the need for it is getting ever greater.

The new system being proposed within this legislation is based on a no-show, no-pay principle. For each day of the mutual obligation activity a job seeker misses, they lose one-tenth of their fortnightly welfare payment. As I said before, for a single on Newstart allowance, this is $42.90 a day. The new system allows for six recorded failures to attend Work for the Dole in the mutual obligation period within a six-month period, and after that Centrelink will impose a no-show, no-pay failure. This is, of course, not turning up for work one day a month. The comprehensive compliance assessment will be conducted by Centrelink and will result in one of five outcomes: a new job seeker clarification instrument, a job capacity assessment, a review of the employment pathway period or an eight-week non-payment period, or no action could be taken. With so many options available, it is unlikely that many people will have their payments suspended for eight weeks. Once a comprehensive compliance assessment has been undertaken, irrespective of the outcome, the clock resets back to zero.

Labor’s no-show, no-pay concept is based on their belief that this somehow replicates the real world. I am not sure what real world that might be, because which employer would put up with somebody not turning up for work one day every month? This is a fairly out-of-touch view of how the real world works. In the real world, if people do not show up for work without permission or a plausible excuse then, quite frankly, they probably will not be employed for much longer. This measure is not a good incentive for instilling good work practices into somebody who may have been out of the workforce for a long time. A financial penalty of one day’s welfare payments missed is not likely to deter people from wilfully not attending. It also has the potential to encourage an increase in the black-market economy, with job seekers earning more from working a few hours at the pub or babysitting than they might lose if they fail to attend their mutual obligation activities.

Under the proposed changes, failure to attend an appointment with an employment provider will not result in an automatic loss of payment. Instead, job seekers are asked to reconnect with their provider within 48 hours. This is, quite frankly, too lenient, and it does little to instil good work practices that highlight the importance of meeting your obligations with a particular provider.

I am concerned that these changes will cause an ability for a complete rollback of the compliance regime through the utilisation of legislative instruments. The schedule 4 items may result in the ability of the departmental secretary to use legislative instruments to classify job seekers. This may potentially exempt job seekers from the mutual obligation requirements. Items to be repealed are provisions that automatically deemed job seekers who met their activity agreements to be complying. Under the new arrangements, the secretary will be granted the ability to specify by legislative instrument classes of person. Depending on which class the person falls within, this will determine whether there is residual discretion applied should they fail to meet the terms of their employment pathway plan. Under the proposed classifications, it will be deemed inappropriate for some job seekers to be expected to actively seek or undertake employment in addition to complying with the terms of their employment pathway plan.

I started out by saying that our compliance regime is not broken and I do not see why the government would seek to change it, particularly when they have committed to that compliance regime in other forums. The changes that were made by the Howard government have seen real results in moving long-term unemployed people into the workforce, and the outcome of the 30 per cent reduction speaks for itself. The compliance measures that were introduced by the Howard government introduced a clear link between the receipt of income support payments and those persons’ obligations to seek work, something I think that the community expects.

Labor’s proposed changes to the legislation will result in a return to increased welfare dependency and intergenerational unemployment, that worst and most stubborn form of unemployment, where long-term unemployment is transmitted down through family generations, which has the potential to destroy particular communities. The opposition does not support these changes. They are the wrong priorities for the government, and I would urge them to reconsider.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

This amendment bill, the Social Security Legislation Amendment (Employment Services Reform) Bill 2008I note this for the sake of the previous speaker, the member for Stirling—seeks to strike a greater balance between employment and compliance within the country based on the principles of fairness and reciprocal responsibilities. That balance is about giving people more incentives to work, contrary to the previous speaker’s comments, but also is about making it easier for those who have specific impediments in their way to receive benefits and not get dragged down into the mire of the inflexible compliance that existed under the former government.

Under the Howard government, the system was so complex and onerous and ultimately inflexible that it meant many people were forced into noncompliance and hit with heavy penalties, sometimes because they had no other choice. The number of eight-week non-payment penalties applied has doubled over the course of just one year, from around 16,000 in 2006-07 to around 32,000 in 2007-08. This is not a system that is working. What is the point of over 30,000 job seekers a year being given eight-week penalties if nothing is done in the system to re-engage them? The hallmark of an effective compliance system is not the number of penalties handed out to job seekers. A successful system should see fewer breaches because it encourages job seekers to meet their requirements and, ultimately, supports them in getting off income support and finding employment.

The opposition is claiming that its compliance regime reduced the number of long-term unemployed job seekers between June 2006 and 2008. We just heard that template of answers being trotted out by the member for Stirling. But it is not the full story, as we have learnt to our detriment over the last 12 years. Almost half the people on income support in 2001 were still unemployed in 2007. Three in four young women with little education who were on income support in 2001 were still on income support in 2007. That is the story we have not been told.

What reduced the number of unemployed in Australia between 2006 and 2008 was economic growth and the mining boom, which the previous government squandered, as well as a massive skill shortage that it did little to address. We are talking about job seekers and families already relying on these benefits being told to go without because of the harsh approach taken by the current opposition. We want to get it right with an effective compliance system that encourages people to find work and helps them when they cannot.

The reality, as opposed to the opposition’s rhetoric, is that the old system had too few deterrents in the early stages and was far too harsh, too late. For example, job seekers could be out of action for two weeks before any action was taken but then, soon after, they would be hit with an eight-week non-compliance or non-payment penalty—on any efficiency scale, not to mention fairness, this went too far—rather than being guided back to the right track. It is the latter which forms the weakness of the former Howard government’s system.

Restoring the balance for some may be as simple as recognising that a person in a remote rural area does not have access to transport like someone in a city suburb, that there is purely and simply a lack of public transport, as is the situation in my region, for instance. This may make it more difficult to get to important appointments in person. A solution to this may be as simple as using technology to help people overcome that impediment or assisting them with other transport options. We do not want to be taking the big stick to people who are actually trying their best. We do not want a sledgehammer as the preliminary action to an issue of noncompliance.

The opposition claimed that their compliance system established a clear link between the recipient of income support and the obligation to look for work. So let us look at this argument in depth—something the member for Stirling failed to do. A job seeker does not turn up to a job interview. Nothing happens. A job seeker does not turn up to a second job interview. Nothing happens. For up to a year after a job seeker misses that first job interview, if they so much as miss an appointment with Centrelink they receive an eight-week non-payment penalty. How does receiving income support equate with the obligation to look for work? There is no clear link between the first breach and when the eight-week non-payment penalty is applied. Currently, a job seeker can miss up to two weeks of Work for the Dole before any action is taken. Then they are given a chance to reconnect, and if they do so they incur no penalty at all. How does this clearly link income support and a job seeker’s obligations?

Compare that to what the Rudd government is proposing. A job seeker who misses a job interview is penalised almost immediately. They lose 10 per cent of their income support. Job seekers will clearly associate their behaviour with the penalty they receive and will change to a more worklike behaviour in the future. The opposition thinks that someone who misses six days of Work for the Dole will escape without penalty. A job seeker who misses six days of Work for the Dole will lose six working days of their income support. That is 60 per cent of their fortnightly pay. For a single person without children on Newstart allowance this means having to live on around $180 a fortnight. That is a substantial penalty in anyone’s language.

Where do these people turn when they are frozen out of the support system under the current regime? The welfare sector is reporting that vulnerable job seekers are coming to them because they have nowhere else to turn. This is taking support away from others who could be better served by welfare agencies while our job seekers are better catered for under their own system.

Participation in employment is not as simple as it sounds, but thankfully there are people out there trying to provide opportunities. I came across one such example earlier this year in my electorate which I would like to share with you all. I am only too pleased to use them as an example of the potential that exists. The Minister for Employment Participation, the Hon. Brendan O’Connor, visited in August. The vision of the people behind New Life Industries at Lillico, just out of Devonport, is hard to appreciate until you see the scale of their current operation. New Life is a hydroponic grower of capsicums and is planning to see the business grow in a massive way over the next few years. This is a high-value crop with a small physical footprint and high employment needs.

Johann Joubert and his business partner, Ronald van Leerdam, and their wives have big plans for the capsicum operation and are looking to reach this target by including people who have been long-term unemployed and teaching them the skills which will benefit their business. They have great belief in the potential that exists in every person. I have been able to see what they have already achieved with some of their labour coming from people who have been out of the employment scene for years, some for up to a decade.

New Life is already the largest grower of their type of capsicum in Australia, but Dr Joubert says that Tasmania has the perfect climate and conditions to become a world leader in capsicum production. The business currently employs about 50 people and is contracted to supply 900,000 kilograms of premium capsicums a year. They are packaged and identified as Tasmanian grown and compete with imports from New Zealand.

The management and care of the capsicum plants and their environment is very technical, and minor changes can mean big gains or losses. A lot of this depends on the skills of the people involved. Dr Joubert says that he believes that local people can over time be trained up in the skills and eventually become the backbone of the business. But they are not sitting back waiting for trained people to land on their doorstep. They are going through the process of creating their own training program to ensure that they have a skilled workforce for the future to secure their expansion. New Life is also looking to the heartland of the industry in Europe to bring expertise to Australia as part of the growth of their operation and to feed into the in-house training.

Dr Joubert says his is not the only company that sees the potential for large-scale hydroponic food production in Tasmania. He can see the day when hundreds, if not thousands, of people are employed in this field. The meeting and tour with Minister O’Connor was very positive. We are doing everything we can to see that New Life Industries succeed and achieve their vision. Giving people the incentive to be part of the job market, which this bill is all about, is critical to helping businesses like this succeed.

Dr Joubert mentioned during a visit that he sometimes had problems when employees who travelled together for a variety of reasons failed to turn up for work because of mechanical difficulty or the driver was unwell. Because four people may be travelling together he will have not just one person unable to work but all four. This is also an issue for people who are limited in their ability to access job services and opportunities. If they are organised for a ride to meet their obligations and that does not happen, then we need the flexibility to accommodate them in these circumstances. The Rudd government is all about giving this flexibility and restoring the balance between benefits and the need to genuinely pursue employment. But this is not about a free ride, as was implied in the comments by the member for Stirling. Australians believe that, if you are on taxpayer funded income support, you should be working hard to find work. In fact, that has been the principle since 1945 and it has been reinforced since 1979.

Just like a job, if you do not turn up to compulsory activities without a reasonable excuse, then you will not be paid. Noncompliance will have an immediate financial impact, but the size of the penalty will directly relate to the length of time a job seeker failed to participate. So, rather than casting job seekers into oblivion for weeks on end and removing the incentive to be out there and active in the job market, this will encourage them to get back out there.

This government believes there must be some penalty for those that deliberately rort the system, and the eight-week nonpayment will remain for wilful and persistent breaches. But there will not be an automatic escalation in the severity of the penalty. The big difference is that job seekers will be asked why they are not complying. If an eight-week non-payment period is in place, job seekers that focus on getting a job can with proof have their payment restored.

The new system will also look after those who have severe financial hardship and do not have the capacity to participate in intensive job seeking, provided they do not have liquid assets of more than $2,500 or $5,000 if they have a partner. They will continue to receive income support and have participation requirements in line with their situation, replacing the current restrictive financial case management arrangements. It also provides discretion for employment service providers when a job seeker is not complying with their obligations by giving the service provider some flexibility and the option of negotiating with the person to make up an activity or another day, further reinforcing the importance of participation.

The bill also provides more security for job seekers undertaking work experience in relation to superannuation and workplace relations legislation unless they are undertaking paid work. It will include strict guidelines on unpaid work experience activities to protect the employment of current employees and to prevent the exploitation of job seekers. The new system will provide a stronger safety net for vulnerable job seekers while reinforcing that job seekers who are capable have a personal responsibility to actively seek work and participate in activities to prepare them for work.

It will not be a return to the days of the dole bludger but will see us as a government working in partnership with job seekers, employers and employment service providers to offer support and encouragement to get them back into the workforce. It is an essential part of the Rudd government’s $3.9 billion employment service and I commend the bill to the House. In my final comments, I would also like to congratulate the Minister for Employment Participation, the Hon. Brendan O’Connor, on the excellent work that he, his office and the department have done in creating this flexible, more balanced employment support program.

Sharman Stone (Murray, Liberal Party, Shadow Minister for Immigration and Citizenship) Share this | Link to this | Hansard source

I speak on the Social Security Legislation Amendment (Employment Services Reform) Bill 2008 with some experience, as the minister in the coalition government who ushered in the new Welfare to Work reforms. Therefore, I am particularly concerned about this bill. In regard to the further evolution of government employment services, I am pleased to see that the Labor government has in fact picked up on our evolved development from 2007, but what concerns me in particular with this bill is the changes to the compliance regime.

The fact is that all humans, being what we are, look for an easy way out. There is a strong sense in these new compliance components that near enough is good enough. I am very concerned that—whereas we had trends towards fuller employment, our workforce participation rates were some of the highest on record and our unemployment rates were some of the lowest on record—we will see that under this new regime there is not the sort of support there was before for the unemployed. I happen to be very sympathetic to the unemployed given that along with unemployment, especially long-term unemployment, go poverty, intergenerational distress, higher rates of mental health problems, more teenage issues such as engagement with unlawful activities and more homelessness. There are a whole range of problems associated with long-term unemployment, and our coalition government was very concerned to make sure that we reduced this intergenerational blight on big sections of the Australian community.

Of course, the coalition in government supported payments to the unemployed, and now this government supports payments to the unemployed. There has been an understanding over the history of welfare payments in Australia, however, that recipients of welfare support who are unemployed should also look for work. From 1947, the payment systems included penalties for noncompliance with the work test, as it was originally known. The penalties were linked to the failure of an individual to take an offer of work or behaviour that indicated a lack of interest or motivation to work. The penalty periods for a noncompliance, which was at the time called a breach, have varied over many decades from two to 12 weeks. In 1989 the term ‘work test’ was changed to ‘activity test’ to better describe the broadened types of activities that the unemployed were expected to undertake to show that they were serious about improving their prospects and were actively looking for work. Later on, to be more fair, distinctions were made between activity and administrative compliance requirements to separate activities that had a direct relationship to finding work from other activities such as failing to return a form or attend a review interview with Commonwealth agency staff. So different penalties or breaches reflected these different types of noncompliance.

When the former Howard coalition government came into office in 1996, we inherited some three-quarters of a million unemployed, a huge proportion of those being long-term unemployed. The Commonwealth Employment Service was moribund and lazy. It was responsible for seeing people more often directed into training courses, which kept them busy and changed the unemployment statistics but did little to help people into better work outcomes. The coalition were determined to give the unemployed on welfare a better chance. We developed and introduced a revolutionary new service delivery model, using the non-government sector in a competitive provision of employment services for the unemployed, including those with disabilities and special needs. I am not surprised that this Labor government is continuing this revolutionary model, which has now been acknowledged as world best practice. In fact, we have the Prime Minister’s wife very actively involved in seeing that our model is extended to other countries. Quite simply, the employment service provider was paid according to its success in actually placing a person in long-term work. If an individual was, in fact, already long-term unemployed then the payment was greater, recognising the greater difficulties the individual faced.

The new so-called Job Network commenced in May 1998, and at about the same time we introduced what we called mutual obligation. Mutual obligation recognised that human beings want to give back when much is given—much being the fact that the community or taxpayer was trying to support them and their families in their unemployed situation. We wanted mutual obligation to give to the individual respect and a chance to build self-esteem, and that proved to be the case. At the time, in 1998, Australia’s unemployment rate was 8.1 per cent. Single mothers were not required to look for work until their youngest turned 16; by then they had been so long out of the workforce that they had lost all work related skills and any qualifications they had were outdated, although most mothers on pensions had completed little more than year 10 at school. These women were in quite difficult circumstances in that they were often seen as a very unattractive employment option.

After nine years of a new employment services revolution, including the new employment services I have just described, we drove down the unemployment rate to just 4.5 per cent and workforce participation rates were amongst the highest ever, including for women. Let me say, though, that we were still challenged by the statistics for those with disability rejoining the workforce—a work still in progress when we left office. The Job Network focused on helping job seekers engage in activities that would help their employability and support each individual to actively seek employment no matter how disadvantaged they were. This included Indigenous unemployed, people with a disability, people who were in remote and rural regions and people who had very limited formal education. We wanted to take people off the merry-go-round of the old CES where it was: ‘Let’s pop you on another training program and, whether it is basket weaving or xylophone making, it will keep you busy.’

As I said before, the coalition understood that long-term unemployment often became intergenerational. We were not prepared to tolerate this in a country that likes to imagine it is egalitarian and humane. In introducing in 2006 the Welfare to Work reforms, we determined that, for example, single parents receiving welfare support would be helped to return to work when their youngest reached school age—a very significant reform and one still way behind those of some other countries in terms of the age at which parents were helped but a huge step forward. These women—and they were mostly women, although some men too were single parents—were being helped back into work with training support but also they were not expected to travel more than half-an-hour to their new workplace, they were expected to work only if there was appropriate child care and if the payment for their work was more than what they were receiving in welfare. You can imagine that this meant a new life for so many of our mostly women in the single parent category who had needed to work for a very long time but could not break out of the long-term disadvantage brought on by years of lack of employment.

Along with these changes there were compliance measures. The member for Braddon would have us believe that our compliance regime was a bit like some horrific medieval circumstance. Our penalty or compliance regime was extraordinarily fair and humane. For example, if you had three cases of noncompliance with a work related activity, the test was always: is there a reasonable excuse? Was it impossible for you to travel to that job interview? Was it that you were sick on that day? Was it that you could not get child care? Was it that you were a victim of domestic violence in the days preceding? A reasonable excuse was always sought and, if there was one, it was taken into account. If, however, there was no reasonable excuse for a person not attending their job interview or for them chucking in their job after a day or two then, instead of three strikes and being subject to a penalty, there could be one serious breach and they would be subject to a penalty of a number of weeks without welfare.

We did not simply leave a person without support. In every case, the individual who did receive a penalty of nonpayment of their welfare was assessed for case management. Their personal circumstances and the circumstances of any dependants were carefully examined and a number of non-government organisations were, through a tendering process, employed by the government to manage the situation, supplying in-kind support—whether it was rent relief, food on the table or prescriptions to be filled—so that no individual was left high and dry if they were not receiving their welfare payments because they had been in breach of the obligations associated with their welfare. It was a very humane situation.

There is also a real blowing-out of the statistics identifying how many people did in fact end up being breached with a nonpayment of their welfare. I note that the library’s own Bills Digest points out that the statistics are a little different from what is being quoted by the government. In fact it was a very small number—about one per cent or less—of cases that ended up with a breach and were penalised with withdrawal of welfare support. The point about it all was that this was a work-like situation where, if you had no reasonable excuse, there were consequences. We believe that our use of that particular breaching protocol was part of the success of our program. It was humane, it was fair and it was applied very judiciously. There was a full appeal process.

The new mechanism proposed in this bill is that the decision is up to an officer in Centrelink, who may or may not feel good on the day. We know that now in Centrelink there is extraordinary harassment in a number of offices. Centrelink staff are reporting that they are being intimidated by the growing queues of unemployed that Labor management of the economy is bringing about. You are asking those same officers to decide if a person’s reason for not going to their job interview was reasonable or not. That is acceptable, because we had the same first step, but it seems that there is no appeal beyond the individual officer’s decision and it is up to the individual officer alone to decide whether or not this is a breachable situation. Alternatively, if the individual has very poor financial circumstances, it is up to the officer to decide that they are not to suffer a financial penalty in the form of loss of welfare.

We managed such a situation by using case management. There was, as I described before, an alternative system for supporting that individual and their dependants if they lost their welfare. Obviously, most long-term unemployed—or those who have been unemployed even for a short time—are going to have minimal finances to fall back on, not much in the way of savings. It seems quite extraordinary that this government should suggest that if an unemployed person does not have substantial financial resources to fall back on they will not be breached. It is almost a tautology.

I suggest very strongly that the new Labor government make the new penalty regime or breaching regime or compliance regime in this bill a trial. I suggest that they look very carefully at how it works over a 12-month period. If, as I fear, it becomes just a joke, I beg them, for the sake of the unemployed of Australia, to revisit it and have a very close examination of the previous system, which, after quite a period in action, proved to be very humane. It had great results in that individuals adopted a work-like response to a job or to a job interview.

Let me say that the coalition built back the economy we inherited in 1996 with over $90 billion in Labor debt. We left the government in 2007 with a surplus of over $20 billion. We left Labor with one of the lowest unemployment rates in 35 years and with a workforce participation rate that was envied by other nations. We are already plummeting into an extraordinary national economic crisis. Unemployment figures are going through the roof.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

It’s national, is it?

Sharman Stone (Murray, Liberal Party, Shadow Minister for Immigration and Citizenship) Share this | Link to this | Hansard source

It is national. The member opposite thinks we do not have a national crisis in relation to business expectations and putting on staff. Businesses are not looking to put on additional staff. Businesses are putting off staff. Even our miracle mining sector in Western Australia is reducing the number of staff. This, therefore, is a time when we must have extraordinarily good employment services for those who find themselves victims of our economic crisis. It is not the time to play around with ideas which sound okay on the back of an envelope but in reality do not work out for the unemployed.

Let me remind you of some of the innovations that we introduced, such as Welfare to Work, that were world best practice. For example, we introduced work experience where the person on Newstart allowance could go into the workplace and still retain their welfare payments. At no cost to the employer, they could experience that workplace and be trialled. That was extraordinarily important for those employers who said, ‘This individual has been unemployed for 10 years. We are not sure about their capacity.’ We said, ‘Give them a trial and we will pay their workplace insurance and continue supporting them through welfare.’

There was also our relocation pilot. We understood that there were real problems in Australia with the tyranny of distance and with people unemployed, and that was perhaps aggregated on parts of the coast such as Nowra and Coffs Harbour in New South Wales. We put in a special effort to help relocate—completely voluntarily, of course—unemployed individuals from places like Nowra and Coffs Harbour over to Kalgoorlie, Western Australia. This was extraordinarily successful. We paid for travel costs, establishment costs and training on the other side of Australia. I am very sorry to see that this initiative is not being continued by the government. I think you have to look very hard at what we did in government and learn, because we managed to produce world best government employment services. As I said a little while ago, our government services have been praised by the United Nations—the reports are all there—for being innovative, for producing employment outcomes for some of the most disadvantaged and for giving best value for the government dollar in ensuring employment services were delivered to those agencies who did the job.

The coalition achievement figures speak for themselves. Our economic growth averaged 3.5 per cent per year. Full employment increased by 1,177,500, or 18.8 per cent. Part-time employment was up by 863,400, or 41.8 per cent. Female employment went up by 1,040,900, or 28.9 per cent. The female workforce participation rate increased by 3.8 percentage points, to 57.5 per cent—a near record high for workforce participation for women in Australia. Since March 1996 the working age employment rate has also increased by 4.7 percentage points, to over 72 per cent. Not only do we now have an economic crisis on our hands but we have an ageing population. Our demographics in Australia make it imperative that we increase workforce participation. Therefore, I appeal to the government to do better with their proposed employment compliance regime in this bill. I am pleased they are continuing with the evolution of our non-government sector employment service delivery. They would be very unwise to go back to their old CES. I applaud them for, at least, seeing the sense in that. But I beg them to make this compliance regime a trial; otherwise too many lives could be ruined.

Shayne Neumann (Blair, Australian Labor Party) Share this | Link to this | Hansard source

With respect to the member for Murray, the Howard government’s policies in relation to employment services were neither humane nor fair. Those opposite have a certain collective amnesia. Their view on that almost mimics their Work Choices legislation—they really did not understand the consequences. But here they should have understood the consequences because, if they had spoken to anyone involved in the employment service industry, they would have seen the impacts. They should have spoken to the people in the charitable sector—those dealing with the homeless, those dealing with the vulnerable and disadvantaged. If they had spoken to the churches, the charitable institutions and other groups in their electorates they would have seen the rise in activity and attendance at those particular institutions because of the punishment that was meted out by the Howard government. This policy of the Howard government was not about participation in the workforce. It was not about engaging people in employment; it was about punishing those who were their political opponents. That is what it was about.

I support the Social Security Legislation Amendment (Employment Services Reform) Bill 2008 before us today. It is a welcome reform not just nationally but in my electorate of Blair in South-East Queensland. It is a very important bill for my electorate, because my electorate has historically been very vulnerable to downturns in the manufacturing and agricultural sectors. In my electorate I have very large meatworks, the aerospace industry, metal works, industrial parks and many large farms not only in the dairy and beef industry but also in the horticultural area. So my area is particularly vulnerable, and, historically, Ipswich and its surrounds have suffered enormously when there have been downturns nationally and internationally. Often the people in my electorate would be among the first to lose their jobs, so engaging and re-engaging in employment is crucial for my electorate south and west of Brisbane.

It is also important because of what has happened in that area. The Queensland state Labor government’s South-East Queensland Regional Development Plan of 2005-06 is strategically dragging people across into that area. As the Sunshine Coast, the Gold Coast and Brisbane fill up, more and more people are spilling over into Ipswich and rural areas outside it, looking for jobs in whatever sector they can. We have in fact in the Ipswich area about 43 per cent of the designated industrial land in South-East Queensland. We have big housing developments going on, and people are moving there. The streets are becoming more clogged, and we are seeing people looking for employment in whatever industry they can.

We have got big, growing suburbs like Flinders View, Raceview, Deebing Heights and the Ripley Valley, which will have 120,000 people just south of Ipswich and just south of the suburb where I live, Flinders View, in the next 20 years. The Swanbank, Purga, Ebenezer industrial land is slated for further development. That means that people getting access to jobs is crucial, and people not being punished if they cannot get access to jobs is also important. This is not just in Ipswich but also just outside. For example, Gatton will double in population over the next 20 years, with the Woodlands Rise Estate and a new prison going in. Hatton Vale and Glenelg Grove could be any suburb of Sydney, Melbourne or Brisbane when you look at it. So new schools and new hospitals and other health facilities are important in this area.

My area currently has an unemployment rate of about 4.2 per cent. According to the latest figures, there are about 7,887 people looking for a job, the average job seeker’s age is 32 and the average duration of unemployment for a job seeker is about 20 months. That the majority of working age people are engaged in Centrelink and the Job Network, customer populations by allowance, shows that Ipswich and its surrounds are really vulnerable to downturns in the global economic situation. The number of people on disability pensions is very high compared to other areas. There are a large number of people on parenting payments single and also Newstart. I will not go through and bore you, Madam Deputy Speaker, with all the facts and figures, but take it from me that what I am saying is true in that regard. It is true; it is absolutely true. With about 17 per cent of people in employment in the manufacturing industry, about 30 per cent in agriculture, 14.3 per cent in retail and 10.2 per cent in the health and community sector, jobs are crucial to my area.

This legislation will deal with people in my area in a more just and humane way. It will create a new welfare compliance system for people seeking employment in my electorate of Blair. This bill implements announcements made in the May 2008 budget to support our $3.9 billion employment services strategy. The bill is about job seeker compliance, and that is crucial to my electorate. It is about jobs and participation; that is the focus. It is about ensuring there is a balance, an equilibrium, between job seekers and noncompliers—that is, those deserving a penalty. I think average Australians, and certainly the people in my electorate, believe that, if you are healthy and well, if you do not have parenting responsibilities or if you are not so aged that you are entitled to a pension, you should be looking for employment. I think that is how the average Australian feels and I certainly believe that is the case in my electorate. I also think that people feel that, if you are not genuinely looking for a job and you should be, there should be a penalty. We are going to retain the eight-week nonpayment penalty for wilful and persistent noncompliance. I will not go through the legacy of the Howard government and how this will change the noncompliance system, as the member Braddon has already outlined that very well indeed. But I will say that this is about having a just measure; this is about treating people with respect and treating people with dignity.

The Minister for Employment Participation has described the new welfare compliance system as restoring the balance between participation and penalty, and I agree. If you have a good look at the legislation, you see that it is a fair piece of legislation. The changes in employment services begin on 1 July 2009 and it happens after we have reviewed the Job Network and other employment programs. I have spoken to a number of service providers in my area in relation to the review. What we need in our Job Network program and in our employment services system is equity and firmness. We do not need to be soft marshmallows but we also do not need to be to the right of Attila the Hun when it comes to this sort of thing. What we really need is fairness.

I have to say that the Howard government failed in this area—they really did. Their policy in terms of employment and how they treated people failed. They failed to prevent noncompliance. In 2006-07 there were approximately 16,000 eight-week non-payment penalties applied. In 2007-08 that had risen to 32,000. That is double; it doubled in a year. It is not good policy when it doubles. Their idea of three strikes and then an eight-week non-payment penalty is really about punishing. In my electorate of Blair, in 2006-07 there were 104 instances of applied eight-week non-payment periods. In 2007-08, that had risen to 263. That is an increase of 159, or 153 per cent in one year—a 153 per cent increase in non-payment periods. That is extraordinary. That is failed policy. How can they claim it was a success? It is quite astonishing.

Under the Howard government, during the eight-week non-payment period the job seeker who was guilty of the infringement was not compelled to report to Centrelink or the job seeker’s employment service provider or to undertake training or look for employment. Their policy was apparently about doing these sorts of things: getting people into training, getting people into employment. Why didn’t they provide for that as criteria? Why didn’t they do it? They did not do it because their policy was about punishment. That is what it was about. It was not about participation. The draconian penalties imposed under the Howard government failed miserably. It is clear; the facts and figures are there. Despite what the member for Murray has to say, the facts and figures are there. It was failed government policy. There was no improvement in attendance at interviews or at training, for example. Three-quarters of all job seekers in the last year went back into the system of income support within a couple of weeks of finishing the eight-week, non-payment period. So it was not about training, it was not about employment and it was not about getting people off the dole; it was about punishing those who may not be their supporters.

The minister has said that figures show that 15 per cent of job seekers who received an eight-week non-payment penalty have a mental illness, while a further five per cent have unstable housing. So the Howard government’s policy had a disproportionate impact on those who are disadvantaged—those with a mental illness; those who had left, for example, the Challinor Centre in my electorate and are now working in sheltered workshops or are in supported accommodation; those people who are dealing with departments who help them in that regard and the churches and charities that help them. People who have attended my church and continue to attend my church are in that sort of category. That is what the Howard government did to those sorts of people. It meant that those who work in the charitable sector and those who work with homeless people found that they were dealing with more and more people. The idea of penalising first is not the kind of policy that we need in a fair and humane society. What we need in our society is to treat people with dignity and respect. What we need is to ensure that we create new jobs. I am very pleased that as part of the Rudd government’s Economic Security Strategy we are investing in new jobs. We are investing $187 million to create 56,000 new training places this financial year.

The bill that we are dealing with today amends the law for about 620,000 people on Newstart, youth allowance, parenting payment and other benefits. It is about a fairer Australia. The current system has little deterrence or early intervention, as the member for Braddon so eloquently put it.

I have spoken to Brad Strong, who is a Salvation Army officer. I see the member for Oxley here; he would know Mr Strong as well. The Salvation Army run a great facility at Riverview, and I have talked to Mr Strong and other service providers. What they report back to me in my electorate is that they had dealt with the Howard government with real frustration, because it is challenging for people who are working in the church and charitable sector, whose motivation is to care for the disadvantaged, to then have government policy come in like some sort of sword of Damocles, hanging over the top of them, and have to deal with it. It is difficult for those sorts of people because it challenges their faith, their conviction and their human compassion for those who are homeless, disconnected and often suffering intergenerational poverty. The legislation before us today will go an enormous way towards improving the employment participation of people in my electorate of Blair.

Before I finish, I just want to comment about someone who has done more in terms of employment in Blair than just about anyone. Their business is now celebrating 20 years of making a contribution locally in the Ipswich area in getting people into jobs. I want to recognise the great work that Recruitment at Top has done. Jan Gadsden established the Top Office group 20 years ago. She and her husband, John, have been responsible for putting thousands of people in jobs in the Ipswich area. Recently, I was pleased to attend their celebration and to hear Tom Edwards, a very well-known and well-respected businessperson in Ipswich, congratulate them. The Mayor of Ipswich, Paul Pisasale, was also there. That particular business has done a lot for not only Ipswich but the entire Brisbane area. It is a preferred supplier of staff for the Queensland government. In 1994 it became a primary supplier of staff for Queensland Transport and expanded its business. That business deals with people who deal with the system every day. Jan, John, their daughter, Belinda, and their son-in-law, Warren, have made a huge contribution in my area in getting people into employment, recruiting people, training them and giving them the kinds of jobs which they need to feed their families and to ensure that they have the kind of lifestyle they deserve.

The legislation we are dealing with today is about getting people back into the workforce. It is about helping people like Brad Strong. It is about helping people like Jan Gadsden and others to get people into employment, to help people in Ipswich and the rural areas outside. I warmly commend the bill to the House. It is a great piece of legislation, and it is a great shame that those opposite are not supporting it.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support the Social Security Legislation Amendment (Employment Services Reform) Bill 2008. This bill will amend the Social Security Act 1991 and the Social Security (Administration) Act 1999 to give effect to measures announced in the 2008-09 budget to support the new employment services, in particular, the introduction of a new job seeker compliance system. The bill needs to be passed this year to provide Centrelink with the lead time to implement the new compliance framework to take effect from 1 July 2009, to coincide with the commencement of the new $3.9 billion employment services contract.

The measure will affect all job seekers in receipt of Newstart, youth allowance, parenting payments and special benefits including parents. The administration of the new compliance system will take into account the individual circumstances of job seekers in rural and regional areas—for example, where transport difficulties may impact on job seekers’ abilities to meet the participation requirements.

My electorate is a great example of the problems that transport can bring about. It is a major issue in my electorate and I do not ever miss the opportunity to talk about the problems of public transport that are there. For example, for someone living in The Entrance, a popular tourist area in my electorate, and wanting to travel to the major centre on the Central Coast of Gosford, using public transport it would take at least an hour and a half. This, clearly, makes difficulties for people in terms of meeting their job obligations and it needs to be taken into account. Often, public transport is the only option for those looking for work, in terms of attending interviews or taking up training opportunities, because many of them do not own cars. The difficulty with transport for a great many people on the Central Coast is a matter of daily life that they have to put up with, and it makes it difficult when they are seeking work or training opportunities.

One of the key points in the submission from my electorate of Dobell to the national 2020 Summit earlier this year was the shortfalls in public transport generally on the Central Coast and the need to look at better solutions and to provide better links between the various suburbs there to make transport, and the effect that transport has on people’s lives, a little easier.

This new welfare compliance system will restore the balance between participation and penalty. The current welfare penalty system simply is not working. It does not encourage job seekers to look for work. The current system of three strikes and then an eight-week non-payment penalty, introduced by the previous Liberal government, is ineffective. In fact, it has been counterproductive and heavily focused on a penalty culture. Nationally, the number of penalties issued more than doubled over the past two financial years. In my electorate of Dobell, where unemployment is almost twice the national average at 7.4 per cent, penalties have increased by 114 per cent in the last year—a 114 per cent increase. The most counterproductive element of all of this is that during the eight-week non-payment period job seekers are not required to report to Centrelink or their employment service provider to undertake training or look for work.

Believe it or not, Madam Deputy Speaker, those on the other side are opposing these measures—even though it is quite clear that the system as it operates at the moment has failed. Despite our proposals for changes to welfare compliance that will see a more effective system begin next year, as part of the Rudd government’s new $3.9 billion employment services, the Liberal Party—and the two speakers who made their contribution today—continue to not recognise that the changes that have been proposed are about correcting the balance between participation and penalty. The opposition is refusing to see the writing on the wall—that their system of three strikes and then an eight-week non-payment penalty is simply not working. Data from the Department of Education, Employment and Workplace Relations shows that 75 per cent of job seekers who received an eight-week non-payment penalty last financial year came back onto income support, most within a fortnight of finishing their non-payment period. So it is not about changing the culture at all; it is just about applying a penalty—hurting those people who are most vulnerable in relation to their current work situation. It is a system of compliance that simply does not meet the needs of the modern economy and certainly is about penalising those who fall foul of the three-strikes system.

During the eight-week penalty period job seekers are not even required to report to Centrelink or their employment service provider to undertake training or to look for work. This is just one facet of a system put in place by the previous government that, for obvious reasons, simply does not make sense. Figures also show that 15 per cent of job seekers who receive an eight-week non-payment penalty have a mental illness, while five per cent have unstable housing. The opposition has chosen to ignore the fact that the number of eight-week non-payment penalties issued more than doubled over the last two financial years. However, there has been no improvement in the attendance at job network interviews, job search training or customised assistance. Almost half the people on income support in 2001 were still unemployed in 2007. This shows that the system introduced by the coalition is punishing often homeless or mentally ill job seekers for punishment’s sake. It is a good example of the sort of punishment-and-penalty culture that the opposition supports.

From 1 July next year the Rudd government is proposing to introduce a more effective welfare compliance system that includes a no-show no-pay penalty. The new system is more effective because a job seeker is penalised at the time they breach. Just like a job, if a job seeker fails to turn up to a required activity without a reasonable excuse, they will lose a day’s pay. However, any job seeker who wilfully and persistently refuses to look for work or comply will still receive an eight-week non-payment penalty. A major point of difference is that under the Rudd government’s system a job seeker can have their payment reinstated if they agree to undertake a compliance activity such as full-time Work for the Dole for 25 hours a week for those eight weeks. This was something that was never part of the previous government’s system. The government strongly supports mutual obligation but also believes that its obligation is to help job seekers gain the skills needed to break the cycle of welfare dependency.

The bill will amend the social security law to introduce a new compliance framework for the approximately 620,000 people who receive Newstart, youth allowance, parenting payments or special benefits and have participation requirements. The key features of the new compliance framework are new, more work-like no-show, no-pay failures; the retention of connection and reconnection failures; the retention of the eight-week non-compliance penalty for persistent and wilful noncompliance; a new comprehensive compliance assessment before any eight-week non-payment period is imposed; opportunities for payment to be reinstated if job seekers participate in an intensive compliance activity; new hardship provisions to replace financial case management; a waiting period for job seekers who are voluntarily unemployed or unemployed because of misconduct other than minor transgressions; and greater discretion for employment service providers to report on compliance to Centrelink.

Let us have a look at the no-show no-pay failure feature in more detail. If a job seeker without a reasonable excuse does not attend an activity they are required to attend—for example, training or Work for the Dole—Centrelink will impose a no-show no-pay failure. Centrelink will also impose a no-show no-pay failure if the job seeker does not attend a job interview or if they attend the interview but deliberately behave in a way that would clearly see them not being offered the job—for example, telling the interviewer that they do not want the job that they are there to apply for. A no-show no-pay failure will result in a job seeker losing one-tenth of their fortnightly payment for each day they do not attend. This does not affect any rent assistance, pharmaceutical allowance or youth disability supplement the job seeker may receive, but it does apply to any supplement the job seeker is receiving for participation in Greencorps or Work for the Dole. Quite clearly, by imposing this no-show no-pay failure at the time of the indiscretion, a culture is being built. What this compliance regime does is demonstrate that if you do not comply, if you do not turn up at the set time, the punishment is there. It is not something that may happen in the future; it has a direct correlation to the behaviour and the activity of the job seeker.

Under the connection and reconnection failure feature, if a job seeker without reasonable excuse does not attend an appointment they are required to attend—for example, with their employment service provider—Centrelink will impose a connection failure. Centrelink will also impose a connection failure if the job seeker refuses to enter into an employment pathway plan or does not meet their job search requirements. There is no penalty for a connection failure. Instead, the job seeker will have to attend a reconnection requirement—for example, a further appointment or further job search requirements. If the job seeker, without reasonable excuse, does not attend a reconnection requirement, Centrelink will impose a reconnection failure period. The job seeker will lose one-fourteenth of their fortnightly payments each day that, without a reasonable excuse, they do not comply with the reconnection requirement. Again, this does not affect any rent assistance, pharmaceutical allowance or youth disability supplement the job seeker may receive but does apply to any supplement the job seeker is receiving for participation in Greencorps or Work for the Dole.

Under the eight-week no-payment penalty, if a job seeker refuses an offer of suitable employment Centrelink will impose a serious failure. If a job seeker misses three appointments or six days of activity—for example, Work for the Dole or employment service provider requests—Centrelink will consider whether the job seeker is wilfully and persistently not complying with their obligations. This is called a comprehensive compliance assessment. Centrelink will consider whether the job seeker’s participation requirements are suitable, whether the job seeker should be referred for a job capacity assessment to receive assistance in a different stream or receive a different payment type—for example, a disability support pension—or whether a serious failure should be imposed. The consequence of a serious failure is an eight-week non-payment period. However, unlike the current legislation, a non-payment period may be ceased if the job seeker participates in intensive activity. If the job seeker does not have the capacity to participate in intensive activity and they can show that serving that penalty causes them to suffer from severe financial hardship then the non-payment period can also cease.

What we have here is a graduated compliance system, one which strikes a better balance in relation to fairness but which also continues to make sure that there is mutual obligation. Where there are penalties, the penalties occur at the time of the breach and are graduated. A job seeker who receives an eight-week non-payment period can have their payment reinstated at any time during the eight-week period if they agree to participate in intensive compliance activity. The compliance activity is on a no-show no-pay basis.

The great failing of the previous system was that during this eight-week period nothing happened. The participant, the job seeker, was not required to do any training and was not required to go for job interviews. They were just left there. Under this legislation there is the ability during this period to come off the eight-week non-payment period if the job seeker agrees to participate in a compliance activity. This encourages good behaviour on the part of the job seeker and encourages them to adopt a culture that will assist them to find employment.

This requires the job seeker to participate in an activity for 25 hours a week for up to eight weeks, usually in full-time work or Work for the Dole. For parents and job seekers with partial work capacity it involves an intensive activity of 15 hours a week for up to eight weeks. A job seeker who does not have the capacity to participate in an intensive compliance activity and who does not have liquid assets of more than $2,500 for a single person or $5,000 for a partnered person will continue to receive income support and will continue to have participation requirements. This replaces the current restrictive financial case management arrangements.

Hardship provisions also apply to job seekers who are undergoing a waiting period. A person who has become voluntarily unemployed without a reason or unemployed due to misconduct, other than for minor transgressions, will have to wait eight weeks before they can receive income support. Presently, there is an eight-week non-payment penalty for job seekers in this situation. The guidelines for what constitutes voluntary unemployment and misconduct have been revised to ensure that employees are protected. The eight-week period commences on the day that the person becomes unemployed.

An employment service provider will be able to report noncompliance to Centrelink if they believe that compliance action is the best means of securing re-engagement and is not counterproductive to the job seeker obtaining employment. A provider can instead negotiate for the person to make up an activity on another day, further reinforcing the importance of participation.

The Liberal government presided over a harsh and counterproductive compliance regime. An effective compliance regime would result in fewer breaches because it would encourage job seekers to meet their requirements and obtain employment. But there were more than 30,000 eight-week non-payment penalties imposed last financial year, around double that in the preceding year. The current compliance regime introduced in 2006 replaced a decade-old system. Before the third-strike, eight-week non-payment penalty was activated, job seekers received an 18 per cent rate reduction for 26 weeks for the first breach in two years and a 24 per cent rate reduction for 26 weeks for a second breach.

An effective compliance system should encourage job seekers to look for work. But,under the current regime, when an eight-week non-payment penalty is imposed the job seeker is not required to have any contact with their employment service provider and is not required to undertake any training. There is enough evidence to suggest that job seekers do not engage during the eight-week non-payment period. The current system provides too little deterrent in the early stages of noncompliance and is too harsh, too late. Under the current arrangements, job seekers can miss up to a fortnight’s participation before any action is taken and then, after three failures, they get hit with an irreversible eight-week non-payment period. The previous government went too far.

Welfare groups have told us that it is costing them too, because vulnerable job seekers turn to them for support. It costs the broader community through health, welfare and justice systems. The National Welfare Rights Network told us that the relationship between this eight-week non-payment penalty and major dislocations including homelessness, relationship breakdown, increased stress, illness, violence and crime is both categorical and direct. Homelessness Australia told us that research from the University of New South Wales Social Policy Research Centre found that up to 20 per cent of people who underwent an eight-week breach lost their accommodation or were forced to move to less appropriate housing.

Australians believe that if you are on taxpayer funded income support then you should work hard to find work. Job seekers who do not look for work will continue to be penalised. As part of instilling a work culture in the new employment services, the no-show no-pay penalty will apply. Just like a job, if you do not turn up to compulsory activities and do not have a reasonable excuse, you will not be paid. While most job seekers do the right thing, the government will not tolerate people who deliberately rort the system. This is why we are keeping the eight-week non-payment penalties for wilful and persistent noncompliance. The government is determined to maintain a strong but fair compliance regime to encourage people to look for work and improve their chances for employment. Through this bill the government is restoring the balance. I commend the bill to the House.

David Bradbury (Lindsay, Australian Labor Party) Share this | Link to this | Hansard source

It gives me great pleasure to rise to speak in support of the Social Security Legislation Amendment (Employment Services Reform) Bill 2008. I do not intend to speak at length on the detail of the bill, but I would like to address the contents of the bill from a philosophical perspective and to take into account some of the unfair criticisms that the opposition has levelled at it. My personal philosophy when it comes to these matters is quite simple. I have been surrounded in my lifetime by people who have worked hard, though not always for the levels of remuneration that they may have wanted or deserved. Having been brought up in a working family in Western Sydney, I have seen the value of hard work. I appreciate that with hard work comes return. My parents raised five children and never spent a day on any form of unemployment benefits—which is partly a product of good luck but, significantly, is also a product of their contribution to our community and their desire to engage in the labour market. It is also, no doubt, a reflection of the great values that were instilled in them by their parents, who also set a similar example in encouraging them to go out, work and earn an honest, decent living.

This is in the context of acknowledging that there are millions of families across our country that are in the same boat as my parents or my parents’ parents, on both sides. It is very much a part of our country’s commitment to a fair go that we believe that people will make the most of the resources available to them: they will go out, they will work hard, they will make a contribution to society and, as a result of that, they will be remunerated. Where there are elements of society or individuals who are not prepared to make those decisions, not prepared to go out to engage in the workforce, not prepared to make the most of the talents and abilities that are available to them for their own and their family’s benefit, the principle of a fair go that we all adhere to in this country is somewhat compromised. It is threatened where we see others not taking it upon themselves to engage, work hard and earn an honest, decent living.

Often, it is in that context that many people, particularly working people in electorates like mine and coming from families like mine, will look at other individuals who do not have the desire to get out and make a contribution to their community but are prepared to take a free ride on the efforts of everyone else in the economy. My personal philosophy is that that should not be tolerated or accepted, because as a nation we all have a responsibility to make a contribution. If there are some individuals who are not making that contribution then, firstly, those individuals have an obligation to lift their game and, secondly, as a community, we have an obligation to work with those individuals to make sure that their potential is realised and they are able to make a contribution.

It is in this vein that I think it is absolutely essential, in order to preserve the integrity of our overall social security system and our income support systems, for us to have an effective compliance framework in place. It is not good enough for hardworking individuals and hardworking families, when they return from work each day at whatever hour that happens to be, depending on whether or not they are doing shiftwork, to see that there might be other members of their community who have the capacity to work but have chosen, have made a deliberate decision, not to work. It is not fair for one person to see another person receiving benefits that have accrued as a result of the labours of those hardworking members of the community.

As a starting point, so far as I am concerned, we need a system in place that is very strong when it comes to enforcement of a person’s obligation to make a contribution to the community. The principle of mutual obligation has never been one that I have had any difficulty with because, in the same way that an individual has that obligation to make a contribution, there is also an obligation on the community to work with that individual to ensure that they have the opportunities that are necessary in order to realise their potential and to make a contribution.

I begin by making that point because it very clearly needs to be understood. Having said that, the question then becomes not one of whether or not we have an enforcement framework in place; the question becomes: what is an appropriate enforcement framework to have in place? The issue here and the issue that this bill seeks to redress is the imbalance that currently exists in the current enforcement framework, the imbalance that tilts the scales in favour of punishment over participation. Those hardworking people who return home each evening and who see someone in their street, their community or their neighbourhood not working but receiving some of the benefits of the Commonwealth, some of the benefits of our common toil, need to have the comfort and the reassurance that those individuals in their communities who are not pulling their weight, firstly, have the opportunity to make that contribution and, secondly, are doing their bit to make that contribution.

Under the existing system, which this bill seeks to redress, and in the former set of arrangements we have seen that those scales have been tipped too far in favour of punishment over participation. At the end of the day we want to see people engaging in the workforce. We want to see people contributing to the community. Having an eight-week preclusion penalty, as currently exists, is effectively saying: ‘After three strikes you are out; you can go home and do what you please, but the state is not going to provide you with any support.’ There might be some people who say that that is a fair way of resolving the issue, but it seems to me to be an approach that emphasises punishment. It says: ‘Three strikes and then you’re out. Once you are out, we do not really care what you do; the only thing we care about is that, as a community, we will not give you one cent.’ I am not really sure how that is going to facilitate greater engagement within the workforce for the individual affected. I see absolutely no connection between that and how it is providing any assistance or ensuring that that person ultimately does go out and do what we as a community expect, and that is to work hard, to seek out employment, to do their level best to get themselves a job and to make themselves self-sustainable within our economy. That should be the emphasis of any enforcement compliance framework, and that is what the proposals contained within this bill are seeking to do.

I think the ‘no-show, no-pay’ provisions that are set out in this bill are very sensible. They are sensible because, where an individual fails to show up to meet their obligations whilst receiving benefits of the various types that are available, it is not unreasonable to expect their pay or income support will be docked. That is what the ‘no-show, no-pay, provisions will achieve—they will ensure that those people who do not turn up will not get their income support for that day; they will be docked one-tenth of their payment for their failure to turn up.

It seems to me that that type of approach provides a disincentive for someone to do the wrong thing, which is something we generally try to ensure is a part of most of the laws that we pass in this place. Apart from just providing that disincentive, it is important that it is provided in a timely fashion at the time the breach occurs. So we do not have the situation where you have three strikes and then you are out but nothing really happens on the first two strikes. This is a more graduated process. It is not a case of ‘three strikes and you’re out’ but rather a case of saying: ‘If you breach, you pay. If you breach, there will be consequences; and those consequences are consequences that we hope will provide a greater incentive for you to do what this system requires of you—that is, to do your best to go out and get a job.’

One of the key reasons why these provisions are being addressed by the government is that there has been a failure by the current system to achieve the stated objectives of any compliance framework. I noted a bit earlier that the member for Stirling made a number of comments and said, ‘If the system ain’t broke, why fix it?’ I have to say that in many respects I think the system is ‘broke’, and there is evidence before the government and evidence out in the public domain that seems to suggest this.

If we have a look at the figures for 2006-07 and 2007-08 just on this key indicator of the eight-week non-payment penalty having been applied, we see an increase from 16,000 cases to 32,000 cases. So in one year there we see a doubling of the number of cases where the eight-week non-payment penalty has been imposed. If that is not the appropriate measure to look at in terms of whether or not the system is working, I challenge those on the other side to tell us what the correct measure is—because I would have thought that any system that is promoting participation would be seeking to measure its success by whether or not people are complying with a rule such as that. If they are not out there participating, and in increasing numbers they are failing to participate, then it seems to me that we have a system that is not working. Indeed it is because of that that we have sought to bring forward these proposals which we think will make a significant difference in not only restoring some incentive but also ensuring that the penalties for failing to do what you are required to do under the scheme will be immediate and proportionate to the nature of the breach.

I think it is also worth noting that the comprehensive compliance assessment process is one that really does address one of the sticking points that I have seen in terms of the operation of the current system. The comprehensive compliance assessment really will allow judgements to be made that take into account individual circumstances. I think anyone who has dealt with anyone who has suffered homelessness, mental illness, physical illness or even domestic violence would appreciate that there can often be some fairly chaotic arrangements in people’s lives that can complicate their compliance with any set of requirements—and certainly the requirements that are set out within a scheme such as this—and can preclude them from participating in the way that they should. There should be a process that allows an assessment to be undertaken in relation to a person to determine whether they are a fair dinkum case or whether they have just been in breach of their requirements. I certainly believe that the comprehensive compliance assessment process will be one that will allow that to occur.

On that point, earlier this year—it might even have been at the end of last year—the Prime Minister requested that members of the government go out and visit homeless shelters, and that was something that I did. I was very pleased to do that. I visited a number of shelters within my local community and, as I did that, there was a story that was very common—or I should say there were stories that were common, because there were a multiplicity of stories at each of these places. But there was one very consistent thing coming back, principally from the service providers because you do not always get the full story from or have the opportunity to sit down with a homeless person themselves. They are not always as forthcoming as you might like, but the service providers in particular are the ones dealing with the homeless people on a day-to-day basis and the feedback that I picked up from a lot of them was that the nature of the compliance framework that is currently in place, the framework that is in question that we seek to redress through these amendments, can lead to disengagement from the workforce for an individual. The eight-week non-payment penalty, of its nature, can lead to fairly severe consequences for the individual and their family.

Indeed, once someone is pushed outside of the system, if they do not have shelter, if they do not have food and if they do not have income support, then there is a very real possibility that they will end up placing an even greater burden on society in so many other ways. So if we are genuinely concerned—and I think in the first instance we should be concerned about the health, prosperity and future of every Australian, but if we are not concerned about that and we are only concerned about what it means to the hardworking taxpayers that are currently in employment—then I would be suggesting that we should also take a more long-sighted view about what the impact is of failing to provide support to people who might otherwise be pushed out onto some sort of social scrap heap.

If we want to create a social residue, then let it be an express intention of this parliament. I do not believe that anyone in this House really wants to see that happen, but I think the system in place at the moment is leading to outcomes in many cases where people are being disenfranchised. They are disengaging not only from the labour market but from basic and essential services and, as a result of that, they will never have the opportunity to realise their potential and make the contribution to our society that we all demand that they make.

So I think it is important to recognise the failings of the current system that these proposals seek to redress, but I just want to make an observation more generally in relation to the employment services reforms that the minister is undertaking at the moment. I want to take this opportunity to congratulate him, because these initiatives are working in parallel, and certainly the intention is that this new system will be in place to operate in parallel with the new employment services regime. The minister is currently, through the department, going about the business of working out the details of who might actually deliver programs under that package.

One of the great programs that I have observed over the years is a program called the New Enterprise Incentive Scheme, or the NEIS. This is a scheme from which I have seen some great results in my local community over the number of years that I have been involved in my local community. In fact, I remember some seven years ago, as the Mayor of Penrith, attending a NEIS graduation ceremony and hearing the stories of people that had prepared business plans through a period of unemployment and through mutual obligation. They were engaged in the process of establishing a business plan to go out and set up their own small business.

Many success stories have emerged as result of the great work that the NEIS program has been delivering. I know that through the discussion paper process it had originally been proposed that the NEIS program would cease to exist, although it would have been provided by existing employment service providers under the Employment Pathway Fund. After extensive representations were made by people—and I was one of the MPs who wrote to the minister on this issue—the minister has seen the merits of the case that has been put to him and has now decided to ensure that NEIS will continue to operate as a scheme in its own right. I take the opportunity to congratulate him. I think it is the right decision.

As one of the many people who took up this issue, I feel that some results have been achieved. There is no doubt in my mind that the fine decision that has been taken by the minister will assist in achieving the objective that we all have said that this legislation before us is seeking to achieve, and that is to give people an opportunity—and to require of them, to demand of them—to do everything that they can to make a contribution and to realise their potential. I support the bill.

Ms Catherine King (Ballarat, Australian Labor Party) Share this | Link to this | Hansard source

I am very pleased to be here this morning to speak on the Social Security Legislation Amendment (Employment Services Reform) Bill 2008. I extend my thanks to the member for Shortland for giving me the opportunity to speak before her. It is a little tricky juggling some of my work and family commitments.

I want to support the comments made by the member for Lindsay in relation to NEIS. This scheme has been very important in assisting people in my electorate to start their own small businesses. I too am very pleased that the representations that members made, including the member for Lindsay, have been successful in ensuring that the scheme will stay as a stand-alone scheme. It is a unique feature of our employment services in this country.

This is a very important bill. It reverses some of the more punitive measures that were introduced under the previous government’s scheme—measures that the previous government would have had us believe actually helped people to find a job. From my own experiences of working with people in the most vulnerable circumstances, yes, you do need a system of mutual obligation but you also need to be very careful about not punishing vulnerable people to such an extent that you perpetuate their vulnerabilities or the cycle that they are in. I think much of what was done under the previous system did that. It entrenched people in a system where they were punished pretty continuously for failure to engage but it did nothing to assist them in understanding the need to engage or how they could actually engage more properly.

This bill ensures that those who are the most vulnerable are not punished simply because of those vulnerabilities but are assisted through the employment services system. Conversely, this bill ensures that people who are capable of working and who do not make every effort to work or who actively sabotage their chances of finding work are not propped up. The system does deal with them but it deals with them in a compassionate and effective manner.

When reflecting on the previous government’s attempts at developing policy to curtail breaches of noncompliance, I am reminded a little of Einstein’s famous definition of insanity: doing the same thing over and over again and expecting a different result. In 2006 and 2007 there were around 15,000 eight-week non-payment penalties applied. This more than doubled in the following financial year to about 32,000 people who had an eight-week non-payment penalty applied. The system failed to provide employment to job seekers. The system clearly was not working, and you did not have to be Einstein to realise that something needed to change.

The previous punitive system moved very quickly to enforce eight-week non-payment penalties, without asking the right questions. The system did not acknowledge that there were often very real reasons why someone was unable to work or attend an interview. It did not compel someone who was bereft of their payments to continue to engage with the Job Network system or with Centrelink. People were simply cut off—three strikes and you are out—with little or no recourse to have their payments reinstated.

The strike system in itself did nothing in the early stages to identify why someone may be breaching these requirements. There was no follow-up to ascertain why a breach had occurred. Nor was there sympathy, compassion or a desire to work with them to help resolve any difficulties or issues they had encountered. There was little effective intervention to assist someone or to identify if there were issues that someone needed help with in order to fulfil their Newstart requirements. They were not encouraged to engage with training or to attend work programs; they were simply cut off. This may account for the more than doubling of the number of people who were placed in the position of having their payments suspended for eight weeks. The previous government’s system was not supported by welfare agencies, which bore the brunt of supporting the people who were left vulnerable and at risk by the three-strikes-and-you’re-out approach. These agencies, which were already under considerable strain, did not need the extra work, particularly when it was of little benefit. The previous system was simply too harsh and the costs were simply too high—that is, too high for the welfare sector, not to mention for the 32,000 people placed on the eight-week non-payment period and having no income or support and for their families, who were dependent upon that income as well.

Labor is committed to ensuring that everyone who can work does work. The new system will provide personalised assistance to job seekers to help them secure employment. It is not about letting off the hook those who are capable of working, nor is it about letting off the hook those who refuse to work. It is about ensuring that we as a government preside over a compliance system that is not only fair but also effective. If a job seeker is persistently or wilfully non-compliant and they commit a serious breach then Centrelink will conduct a comprehensive compliance test. The decision to suspend payments for eight weeks will then be made by Centrelink based on this comprehensive test. The test will consider the reasons why a job seeker has failed to comply with their job-seeking obligations and it will take into account hurdles they may have encountered and Centrelink will make an informed decision on whether payments are suspended. It will not be an easy test to pass. Those who persistently and wilfully shirk their responsibilities will be dealt with and will pay a penalty. This government does not expect hardworking community members to foot the bill for those who can and should work, but at the same time we should be very careful about decisions that we make about people’s income—the income that they are reliant on—and those decisions should be made in light of all of the circumstances in which a person has failed to comply.

In order to reflect the reality of the workplace, any job seeker who does not attend a required activity—for example, an interview or training—will be issued a ‘no-show, no-pay’ failure. A ‘no-show, no-pay’ failure means that the job seeker will lose one-tenth of their fortnightly payment for each day that they do not attend their required activity. ‘No-show, no-pay’ failures will also apply to those who attend a job interview but actively sabotage their chances of being offered the job. This reduction in payment does not apply to rent assistance, pharmaceutical allowance or youth disability supplement. It does apply to any supplement the person is receiving as a result of participation in either Work for the Dole or a Green Corps activity. Payments can resume as soon as participation resumes, instilling a sense of responsibility onto the job seeker. This represents a far more balanced approach between participation and penalty. It places the onus back on the job seeker to ensure that they are actively seeking work in order to receive payments, but it makes a much better link between the notion of work and reward than the previous system.

This view is supported by the National Employment Services Association, the peak body for employment services. The CEO, Sally Sinclair, stated:

The proposed no-show, no-pay approach is more aligned to workforce conditions and engenders greater individual responsibility by job seekers for their actions.

A connection failure is also imposed on a job seeker if, without a reasonable excuse, they do not attend an appointment they are required to attend. This pertains to situations such as Work for the Dole, a specific employment pathway plan or any other activity that may lead to employment. While there is no penalty as such for a connection failure, there is a requirement for the job seeker to attend a further appointment or other job search requirements. This is referred to as a reconnection requirement. If the job seeker fails to engage in this reconnection requirement and does not have a reasonable excuse then they will lose one-fourteenth of their fortnightly payment each day that they do not comply with the reconnection requirement. Once again, this does not affect rent assistance, pharmaceutical benefits or youth disability supplement. The eight-week non-payment penalty still exists under the proposed bill. However, there is a capacity for the job seeker to re-engage in an activity and to have their payments reinstated.

There are a few circumstances where a job seeker may have an eight-week non-payment penalty imposed. These include where a job seeker refuses an offer of suitable employment—that is, where there is no reasonable excuse to refuse an offer of a job—and where a job seeker does not attend six days of activity, such as Work for the Dole, or misses three appointments. In this situation, Centrelink will consider whether the person is wilfully not complying within the context of a comprehensive compliance assessment. The comprehensive compliance assessment will consider the suitability of work for the job seeker, whether the job seeker should receive an alternative source of income, such as a DSP, and whether a serious failure to comply applies, resulting in a non-payment penalty. The difference with this model is that the job seeker does have an opportunity to have their payments reinstated by participating in an intense activity. The non-payment period will also cease if it is deemed that it would cause severe financial hardship. No government should be responsible for causing hunger, homelessness or other severe hardship to people who are vulnerable. It is our duty to identify when somebody needs real assistance and to do our absolute utmost to help meet their needs.

The comprehensive compliance assessment will be undertaken by specialised Centrelink staff—and I cannot emphasise enough the need for that—who will look at a job seeker’s history and encourage discussion around any personal issues that may be impacting on that person’s ability to engage in appropriate activities. This may include issues that have not been disclosed before, such as mental health issues, physical challenges or structural barriers such as homelessness. This would allow an employment pathway plan that can account for those challenges and provide a way to assist the person with these problems. It does not allow for the job seeker to be thrust into a position of being further disadvantaged by being cut off from payments, cut off from carers and cut off from the system. Having said that, it still provides a system of compliance for job seekers if they are not meeting their obligations and do not have a justifiable reason as to why. They will be penalised and will need to take reasonable action to rectify their wrongdoing.

Any reforms to employment services must focus on engagement, participation and compliance. These three words are essential when talking about employment services reforms. With unemployment sitting at around four per cent and likely to increase, it is crucial to look more closely at who is unemployed and why they are unemployed. Significant proportions of today’s job seekers have experienced long-term unemployment or are particularly vulnerable and disadvantaged.

When I undertook my social work training some 25 years ago, we did a lot of work about how victims are blamed and how many systems blame the victims. My concern has always been that often we blame people who are on unemployment benefits for the circumstances they are in. Some of it may be of their own doing, but some of it definitely is not; some of it is long-term structural disadvantage, and we have to do everything we possibly can to recognise that and to assist these people through it.

Just cutting people off from payments does not change their situation. Cutting them off from a system that can identify their particular challenges and assist them to overcome these challenges does not change their situation. A measure of care and understanding is required in order to assist this segment of the job-seeking population to engage in and to hold on to work. A caring society partnered with and underpinned by an understanding government does not and should not leave these people behind. With the current skills crisis looming, it is an absolute imperative to our economy that these employment services reforms are put in place. We owe it to not just these job seekers but also the many businesses who require skilled and unskilled workers. These reforms are good not only for job seekers and for the Australian economy; they are also good for those people who work at the coalface of unemployment services. Centrelink staff will welcome these reforms, as they can now genuinely engage with job seekers and know that they can provide a service that will make a difference to their clients. They can actively participate and assist job seekers to obtain employment or, if not, work with them to ascertain the reasons and identify ways to resolve them. These reforms will provide satisfaction not only to our country’s job seekers but also to those who work tirelessly to guide and support them through the job seeking process. I also believe that the employment agency staff will be able to provide effective employment plans for their clients.

The Centrelink staff and the Job Network staff in my electorate do a fantastic job of assisting job seekers, and I look forward to those staff being able to offer an even better service and being able to use their skills to the maximum benefit of those who are unemployed. I also look forward to the other helping agencies in my electorate—for example, drug and alcohol counselling services—being acknowledged as having a role in the journey towards stable employment for some job seekers. These reforms are important. Upon their commencement on 1 July 2009, these reforms will provide proper pathways to employment for those job seekers who are long-term unemployed. These reforms provide real balance between those who are facing personal difficulties and who struggle with maintaining stable employment and those who wilfully shirk their responsibilities.

It is not that long ago that my constituents were saying to me that the Welfare to Work reforms were far too harsh. They commented that, while they believed everyone should contribute and be involved in the working life of this country, they understood that for some this was harder than for others. They were saying that some people needed help, not harsh penalties, and that harsh penalties often exacerbated already very difficult situations. I commend the bill to the House and I commend my colleague the member for Gorton and Minister for Employment Participation for listening to people—listening to job seekers and to agencies—who are bearing the brunt of these harsh measures and for providing the right balance in these reforms. I again thank the member for Shortland and the member for Throsby for allowing me to speak a little earlier than I had anticipated.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

It is with great pleasure that I rise to speak to the Social Security Legislation Amendment (Employment Services Reform) Bill 2008. As a person who has had a long history working in the area of employment and working with people who have been quite disadvantaged in entering the workforce, I find that this legislation is a welcome move. It is a move in the right direction. The bill will amend the Social Security Act 1991 and the Social Security (Administration) Act 1999 to give effect to measures announced in the 2008-09 budget. Those amendments were a key plank of the Labor Party’s platform in the lead-up to the last election. There was an undertaking given that we would review employment services, and coming out of that review is the legislation before us today, which will take effect in July 2009.

The key feature of this legislation puts in place a fairer and more effective compliance network. There will be new and more work-like aspects to it, with a ‘no-show, no-pay’ approach to failures to attend work, but it retains the connection and reconnection principle for failure—that is, it retains an eight-week non-payment penalty for persistent and wilful noncompliance, but there will be a new comprehensive compliance assessment before any eight-week non-payment period is imposed and opportunities for payments to be reinstated if job seekers participate in an intensive compliance activity. There are new hardship provisions to replace financial case management, a waiting period for job seekers who are voluntarily unemployed or unemployed because of misconduct, and general discretion for employment service providers in dealing with noncompliance. That is just a brief outline of the components of the legislation.

I welcome this legislation because the previous activity test, which led to breaching procedures, was a very harsh regime. It was all stick and no carrot. It in no way encouraged those people who were breached to reconnect and be involved in the activity of looking for work. Rather, it was nine weeks that the government, the employment services and Centrelink were just not interested in that person. We on this side of parliament actually want people to be able to move from being dependent on welfare to being able to find work and then contribute. I think that most people feel that way.

An interesting aspect is that, even though unemployment has increased recently, unemployment levels, generally speaking, are still relatively low. But I think the key factor is that the length of time that the most disadvantaged job seekers are out of work and long-term unemployed has increased. There has been an increase in the number of people who are long-term unemployed, from 74,000 people in 1999 to 110,000. This is unacceptable. These are the people who are the most disadvantaged in our community, these are the people who the system has failed and these are the people who under the previous system were most likely to be breached.

Under the previous government’s compliance regime, the penalties that were applied to people who were job seekers increased markedly. So we had an increase in the number of people who were being breached and an increase in the number of people who were long-term unemployed. There is no correlation between the two figures. For instance, each year after September 2006, when the new laws were implemented, the number of people who were breached for participation failures increased. It increased from 28.4 per cent in September 2006 to 58.4 per cent, the peak period, in September 2007. These were people who had a compulsory eight-week non-payment period placed on them for administrative breaches. I will share with the House some of those administrative breaches that constituents in my electorate came to see me about.

One woman came to see me when Centrelink was about to impose a breach on her because she changed her time for an appointment to look at her work plan with the Job Network provider three times. On the three occasions that the woman had changed her appointment time she was actually working. For a short period of time her Newstart allowance was cut off, so she had a period when she received no money, until I intervened, because the Job Network provider had reported to Centrelink that she had failed to comply with the requirement to attend appointments on three occasions.

I would like to share with the House another person’s circumstances. This is a person who lived in an area where young children were stealing the mail. It was not only the mail asking them to attend Centrelink or meet with the job network provider; it was their electricity bill, their water rates and numerous other accounts. On three occasions this person did not turn up for appointments. They did not know that they were supposed to turn up for the appointments; they had received no literature whatsoever. It was only when they discovered that they had not received any payment at all that they became aware that they had been sent mail to attend appointments with their Job Network provider.

The previous system was a system that did not work so well for those people who were seeking to reconnect and find employment. The real strength of what we have before us today is that it actually encourages and helps people to get back into the workforce. If a person is failing to comply for one reason or another, an assessment process is put in place. It is important to know, too, that the previous system not only failed to meet its important objectives, which were to encourage people back into the workforce, but 75 per cent of job seekers who received an eight-week non-payment penalty went back onto benefits. What we are hoping to do here is to make sure that people move from reliance on a benefit to actual employment. Most of those people were back on benefits within a fortnight of finishing their non-payment period, which is an indictment of the previous system.

It is important to look at some of the submissions from peak bodies to the inquiry conducted by the Minister for Employment and Workplace Relations. ACOSS, which has a long history of working with people who are disadvantaged, made some pretty telling comments about the impact of the breaching regime under the previous government. It talked about the fact that large numbers of jobless people continued to be excluded from effective participation in the labour market, raising the level of the structural unemployment rate below which inflation is likely to increase. It also impacted on their capacity to be involved in the labour market, and it reduced the possibility of them finding employment. ACOSS has researched this very well and it identifies that we are facing a labour force or a skills shortage in this country. Here we have large numbers of Australians that have been breached and are sitting around idly with no requirement to engage. On the other hand we have a skills shortage. ACOSS made the point that prolonged joblessness and low payments lead to poverty and—and this is very important—45 per cent of people from unemployed households live below the OECD poverty line. Prolonged joblessness together with poverty levels of income are key contributing factors to severe forms of social exclusion. I feel that any scheme that is in place should be about participation. It should be about encouraging people to become part of our workforce. The previous system failed, and failed dramatically, on that level. ACOSS identified that very effectively in its submission.

The National Welfare Rights Network also made a submission to the inquiry. They highlighted the need for reform of the activity tests, which have now been renamed, and they emphasised the need to include a number of things in this review. Be mindful of these factors: people generally want to participate, but at a level that they feel capable of. Some people are not capable of participating at the level that was required under the previous legislation, and I feel very much that the legislation that the minister has put before the parliament takes into account the capability of the person and will work to increase that capability. The Welfare Rights Network also acknowledged that it is harder for people to participate the longer they are unemployed. Once again, we recognise the impact of long-term unemployment, and the assessments that will take place by specially qualified Centrelink officers will provide those long-term unemployed people with the skills that they need to re-engage in the workforce.

The National Welfare Rights Network submission also makes a point about how participation is not always predictable—the higher the level of unemployment, the more likely those people who are marginal or who have lower skills are to become unemployed, and often they are the first people to become unemployed. There is a need to encourage people who are reliant on some sort of welfare payment to understand that participating in the workforce can benefit them. Once again, I think that the legislation before us makes that point of encouraging people to understand and to see the benefits that can come from being involved in the workforce. At the same time, the Welfare Rights Network makes the point that participation should not be harmful to a person’s health, dignity, financial viability or family life and that different people participate at different levels for a variety of different reasons and acknowledges that barriers such as money, education, skills, competence, language and cultural barriers and other issues should be considered.

I also have here a submission from Homelessness Australia. That submission makes the point that unemployment leads to homelessness, that the breaching regime that has been in place has led to homelessness on a number of occasions and that there have been a number of people who, because of the breaching regime, have found themselves unable to maintain their current housing situation and as a consequence have found themselves unemployed and homeless.

In the time that I have remaining I would like to go through some of the changes that are included in this legislation—changes that deal with a number of the key aspects of how people will find it easier to participate. The first goal of this new compliance scheme is to not only ensure that people actually meet their participation requirements but also recognise that people are not participating for a number of reasons. As I have already pointed out, a large number of people—some 20 per cent of people who were breached—actually lost their homes because of the impact that that breaching had on them. There is the ‘no-show, no-pay’ failure. Once again this is creating a real-work-like situation where if a person does not turn up for work then they will be penalised. If this is a constant occurrence then Centrelink will look at why and will look at putting in place an employment pathway plan which replaces the activity test.

I think that is what it is about: it is about employment. It is about people who are unemployed re-engaging and entering the workforce. How do you do this? Is it through an activity test or is it through an employment pathway plan? I would go for the employment pathway plan every time. There will be an assessment by the Centrelink officer, who will look at the reasons for the person failing to meet their obligations, look at developing an employment pathway plan and look at how this can best be achieved. It is important to note that the breaching regime that will be in place will not affect rental assistance, pharmaceutical allowance or youth disability supplement payments. A comprehensive compliance assessment will be done by the Centrelink office. One of its officers will look at all aspects of the job seeker’s reasons for failing to meet their commitments.

This legislation is very definitely a move in the right direction. It is about linking the welfare payment with the activity that government wants to see take place. It is about re-engaging unemployed Australians in the workforce and doing it in a way that will actually achieve the goal rather than punishing the victim as the previous regime did.

Jennie George (Throsby, Australian Labor Party) Share this | Link to this | Hansard source

The bill before us, the Social Security Legislation Amendment (Employment Services Reform) Bill 2008, will amend existing social security laws to introduce a new compliance framework within the context of our decision to overhaul all of the existing employment services. As we are aware, the new employment service will commence operation on 1 July 2009. I commend the minister for the extensive consultations that have occurred with a range of community groups and employment service providers in the lead-up to the announcement about the major components of the new scheme.

Essentially, the new welfare compliance system will, I think, strike a reasonable balance between participation and penalty for nonparticipation. As the member for Throsby I have had a lot of concerns expressed to me by my constituents about the current system. It has been regarded as very punitive and counterproductive by many who have come to talk to me about the impact of the policy of three strikes followed by an eight-week non-payment period. I think the weakness of that compliance system was that it failed to encourage job seekers to find and maintain employment and resulted in many of the most vulnerable job seekers disengaging completely, particularly in that eight-week non-payment period.

As the minister’s figures have indicated, the number of penalties issued more than doubled over the past two years, with more than 30,000 eight-week non-payment penalties imposed in the last financial year. In looking at the figures for my own electorate of Throsby, I saw that 163 local people had eight-week non-payment periods applied to them in 2007-08. This was a substantial increase of 75 per cent from the previous year, when 93 people were affected by this penalty. As we know, the people affected by the penalty—the eight-week non-payment regime—were often the most vulnerable people. They were people suffering from homelessness, people of no fixed address, people with mental illness and other vulnerabilities that made it very hard for them on many occasions to avoid these very harsh penalties. We had local agencies tell us about the distress that many people found themselves in over this period.

So we believe that an effective compliance system should encourage job seekers to continue to engage with and look for work. Under the current regime, the job seeker was not required to engage with their provider or, indeed, with Centrelink for the entire penalty period. It was not surprising, therefore, that three-quarters of job seekers who received an eight-week non-payment penalty came back onto income support, most of them within a fortnight of finishing their non-payment period. It seemed to me a case of punishment for punishment’s sake rather than looking at ways of engaging the job seeker and continuing to provide them with the skills, training and opportunities to find meaningful employment. My concern about the way the system operated locally was not just a one-off situation, as the National Welfare Rights Network argued in their submission:

The relationship between this—

eight-week non-payment—

penalty and major dislocation, including homelessness, relationship breakdown, increased mental stress, illness, violence and crime is both categorical and direct.

So in a sense we really had a system that was punishing those who are most vulnerable in our communities.

The government is determined, however, to maintain a strong but fair compliance regime. We are not abandoning in any way the sense of mutual obligation, but we want to put in place a system that actually encourages people to look for work and that trains and skills them for work opportunity and in so doing improves their chances of gaining meaningful employment. I am very pleased that in the reforms that this bill will introduce there will be a better safety net for the most vulnerable job seekers, particularly those with mental illness or those facing homelessness, while at the same time reinforcing the onus of personal responsibility of participants both to engage in activities that help them prepare for work and then to actively seek work.

I think, overall, the minister has secured in this bill a good balance between participation and engagement and maintaining appropriate penalties, particularly in the event of wilful noncompliance. We need to discern the incidents of wilful noncompliance from those factors that mitigate for a variety of reasons, and I referred to some examples earlier. A key feature of the new compliance framework expressed in this legislation will be based around the principle of ‘no-show, no-pay’. ‘No-show, no-pay’ will result in the job seeker losing a 10th of their fortnightly payment for nonattendance. Connection and reconnection failures are also encompassed in the new regime. If a reconnection requirement is breached without a reasonable job excuse, the job seeker will lose a 14th of their fortnightly payment.

The ultimate penalty for wilful noncompliance will continue to be the eight-week non-payment penalty for serious failures. However, before that harsh penalty is visited upon people there will be some safeguards and provisos attached to that eight-week non-payment penalty. As the bill indicates, prior to the imposition of that severe penalty there will be a thorough and comprehensive compliance assessment. Unlike in the current scheme, a job seeker can have their payment reinstated during any eight-week period if they agree to participate in an intensive compliance activity for 25 hours a week; usually it is some form of work experience or Work for the Dole scheme. I am pleased to note also that, in cases of severe financial hardship and where the job seeker does not have the capacity to participate in an intensive compliance activity, consideration will be given to maintenance of income support.

I think the balance is right. It is not a one-size-fits-all approach. The system will give consideration to the individual circumstances while at the same time make clear to people that we expect the obligation and responsibility on their part to continue. For them to be engaged in meaningful activity is all about helping them to be job ready and to find meaningful employment.

I believe the previous government’s system was very harsh and in some senses counterproductive not just in terms of the compliance regime but overall. There are a range of shortcomings in the current Job Network scheme which I hope will be addressed in the changes that come into place on 1 July. The goal of our improved services is all about helping the unemployed. As clearly articulated, our goal is to provide all job seekers with the vocational skills and other forms of support, outside the traditional range of training and work experience, that people need to both find and keep a job. In that regard, there is a high emphasis on both training and work experience in helping job seekers find ongoing employment.

Ironically, under the current system skills shortages have dramatically worsened, during the period of the Job Network scheme. As we all know, this has acted as a severe brake on economic growth and productivity. While we all take heart from the fact that national unemployment rates fell, far too often little attention was given to the causes of and solutions to regional unemployment, in particular, and to the plight of the long-term unemployed. I know of the frustrations in my own region we all experienced—a region with above-average rates of unemployment, particularly among young people—with the one-size-fits-all approach to finding solutions to regional unemployment. Overall, the proportion of people on unemployment benefits for more than five years in fact increased under the Howard government, from about one in 10 long-term unemployed in 1999 to almost one in four today. In numerical terms, that number has grown from 74,000 people to more than 105,000 now. So, in a sense, while we took great delight in the national unemployment rate declining, when you look behind those global figures you realise that we often failed to see the plight of the long-term unemployed.

In that regard, I think the present scheme has failed too many disadvantaged job seekers, many of them having to wait for up to two years to receive assistance through the personal support program. I know that the job seeker accounts were not used very effectively. In the Illawarra we undertook a trial pilot project under the former government, with the assistance of the then minister, to try and get the Job Network providers to use the available job seeker accounts to assist disadvantaged and long-term unemployed people, but we had quite a battle in trying to get those accounts used effectively. Despite that, with our own solutions to our local problems, we have in the Illawarra successfully placed over 300 young disadvantaged people into apprenticeships. That system was made possible by the commitment of the state government to a range of prevocational opportunities so that young unemployed people were able to avail themselves of prevocational training so that, on leaving, they were at the level of a first-year apprentice. In some instances, but not in all, the job seeker accounts were then used to supplement the incentives for local small- to medium-sized businesses to employ the young person.

My concern has always been that the Job Network scheme, as devised by the Howard government, was too focused on a one-size-fits-all approach without providing incentives for local regions such as ours to come up with their own initiatives or indeed look at sustainable employment pathways for individuals. That resulted in far too many job seekers moving into and out of employment services—with a great capacity for churn—and not receiving the kind of assistance that they needed to get them out of their predicament in the long term. Departmental research shows that almost half the people on benefits in 2001 were still unemployed in 2007. Only one out of every three participants in the Work for the Dole program was employed three months after completing their activity. I think those national trends would be borne out in any detailed regional analysis of the impact of these programs in the Illawarra region.

In recognition of these fundamental flaws in employment services delivery, our minister has put the emphasis in the new system, which will emerge from 1 July, on ensuring that each job seeker will be placed into one of four streams where they will receive a level of assistance commensurate with their level of disadvantage, so the system will be much more tailored to the individual needs of the job seeker. I think that is a really good starting point. Employment service providers will work with the job seeker to develop an individual Employment Pathway Plan supported by a flexible pool of funds to access non-vocational services as well. I think that is very important. Despite the best work experience programs we can provide, we all know that some of our long-term and disadvantaged job seekers need to access other, non-vocational services such as mental health support, counselling and rehabilitation.

The new system is focused on developing a work culture where training and work experience will be provided in a wide range of activities, including the very successful Green Corps program. That will now be open to people of all ages. It has certainly been a very successful local program in the Illawarra. I trust that through the employment brokers program and the innovation fund we can develop better programs to address the barriers to employment at a regional level. Certainly, the emphasis on the Productivity Places Program will help to do that.

In concluding my remarks on the bill, I would like to make some comments on matters affecting local Indigenous employment opportunities. As we know, the rate of Indigenous unemployment is three times the rate of unemployment for other Australians. At the last census, only 48 per cent of Indigenous workforce-age people were in employment compared to 72 per cent of non-Indigenous Australians. Our government’s commitment to halving the gap in employment outcomes means we need to provide a huge number of additional ongoing employment opportunities for our Indigenous communities.

In that regard, I want to say that there is a high level of anxiety about the proposed changes to the CDEP and IEP programs in rural and regional Australia. In my own area, we have a very effective CDEP program, located at Windang, which is a key component of community development and employment opportunities for our Indigenous community, with approximately 120 CDEP participants currently involved. Recent data I obtained from the Parliamentary Library, however, showed a very worrying picture. For the Wollongong statistical area, the number of Indigenous people in the labour force was 1,071, which included participants in the CDEP program. The official number of unemployed Indigenous persons was 250—that is, 25 per cent of those officially recorded as being in the labour force. Equally disturbing, however, was that there were 785 local Indigenous people not in the labour force, of whom 259 were in the 15 to 24 age group.

The local information from Indigenous leaders that comes to my attention seems to suggest that large numbers of Indigenous people become totally disengaged from our existing employment and welfare systems and programs. So any changes to the CDEP and IEP programs locally must take into account the features of our own regional labour market in the Illawarra to ensure that we do not compound the disadvantage facing our Indigenous community members. A number of highly effective programs, including one with the local police force, could be at risk if a decision is made to terminate the existing CDEP programs without a replacement community development and employment program.

I note the minister’s reference in his speeches to the $41 million innovation fund, which will allow the development of place based solutions to address barriers to employment for highly disadvantaged job seekers, including of course, Indigenous job seekers. The minister has also indicated:

Employment services will also improve access to the small business program, NEIS, for Indigenous job seekers …

So I am hoping that with the introduction of the changes from 1 July, the new compliance regime outlined in this bill, we will be able to give much better focus to individual Employment Pathway Plans and that we will bear in mind the continuing disadvantage that long-term unemployed people are facing and the challenges and barriers that face a lot of people in regional Indigenous communities like my own.

I commend the bill and I commend the minister for the extensive consultation leading up to the changes that he has announced. I think our new compliance regime will provide an appropriate balance between participation and penalty, and I am hoping that as time goes on we can look back to the introduction of the new scheme and see the progress that has been made, specifically in terms of addressing long-term disadvantage and disadvantage faced by Indigenous people.

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

I rise today to speak in support of the Social Security Legislation Amendment (Employment Services Reform) Bill 2008, which will amend the Social Security Act 1991 and the Social Security (Administration) Act 1999. The main purpose of this bill is to encourage commitment from job seekers to find work through a tough but much fairer compliance system, a compliance system that reflects modern times and helps job seekers find and keep a job.

These reforms are necessary because over the last decade employment services have been operating under policy and administrative constraints that have failed job seekers and employers alike. This is at a time when the economy is crying out for skilled workers and when we are facing a shortfall of up to 240,000 VET qualified workers by 2016. These reforms will be of benefit to the 620,000 people on Newstart allowance, youth allowance (other), parenting payment or special benefit and having participation requirements.

Before the last election Labor promised that we would review the Job Network and other employment programs. We did so with a view to replacing the current compliance system that is clearly now out of step with a modern labour market—a system that has become flawed, ineffective and, importantly, counterproductive. Compared to 10 years ago, the rate of unemployment is lower. But there is a significantly higher proportion of highly disadvantaged and long-term unemployed amongst the job seekers.

The rate of those on unemployment benefits for more than five years has increased from one in 10 in 1999 to a figure of one in four by March 2008. This only emphasises the need for a modern compliance system that adapts to current challenges, because it is clear that the Liberals’ old, outdated system has failed in its central objective—that is, to improve employment outcomes. Through the new compliance system we will instil a work culture to the process that brings in a ‘no-show, no-pay’ ruling—meaning that, just like a job, if you do not show up without a good excuse then you will not be paid. And, just like a job, the size of the penalty will now directly relate to the length of time the job seeker fails to participate. It is really no different to taking sickies when you do not have leave from a job of employment.

The current system provides too little deterrence or intervention in the early stages of noncompliance, and it comes in too harshly and too late. In fact, as things stand under the current compliance system, job seekers can miss out on almost two full weeks of participation before any action is actually taken. But then, after three failures, job seekers are stung with an automatic and irreversible eight-week non-payment penalty. There is no coming back from that; that is just what you are given. While the new system will still retain the current approach for failure to attend or not showing enough initiative, the emphasis will be on employment outcomes. It will be a case of fairer, not softer, and, importantly, allows a pathway for prompt reconnection into the Job Network.

Under a ‘no-show, no-pay’ failure, job seekers will lose one-tenth of their fortnightly payment for each day they do not attend. However, this action will not affect their rent assistance, pharmaceutical allowance or youth disability supplement payments. For instance, a job seeker who misses six days of Work for the Dole will lose six working days of income support—that is, 60 per cent of their fortnightly allowance under Newstart. This provides a clear message to the job seeker that they need to keep looking for work whilst ensuring they are not thrown into a cycle of poverty or alienation. Under this new system, as soon as a job seeker resumes participating, their income can be restored. There will be more chances for job seekers to re-engage with job providers to avoid sanction. There will be no automatic escalation in the severity of penalty where job seekers are having trouble.

Importantly, job seekers will be asked why they are not complying when there are signs out there that they are not. That is the critical difference between the old and the new compliance system. Centrelink will now have the capacity and the resources to actually talk to job seekers who are in breach, assess their reasons and determine if those reasons are valid or not. For instance, they might have been made homeless or they might be suffering from domestic violence. They might have become ill or they might even have been short of money to get to the job interview. These may all be valid reasons which can be considered by Centrelink through the use of a comprehensive compliance assessment before any penalty is applied.

There is also scope for employment services providers to exercise their professional judgement on when to report or not report noncompliance of a job seeker. Employment services providers will not be required to report noncompliance to Centrelink if they feel it will ultimately be counterproductive to the progress of a job seeker. So we see added flexibility now built into this part of the process.

Whilst the government will not tolerate those who go deliberately out of their way to avoid work, we cannot punish those who miss the chance for work due to genuine personal reasons. Even in cases on which Centrelink has imposed an eight-week non-payment period under the new system, this will no longer be irreversible. Built into the system will be the chance to re-engage. Any job seeker who is prepared to participate can have their payment reinstated by participating in a compliance activity such as full-time Work for the Dole. Therefore, participation in intensive compliance activities such as Work for the Dole for up to 25 hours per week for up to eight weeks will allow for the reinstatement of those payments. For those job seekers who wilfully and persistently are noncompliant, the eight-week penalty will be retained. The compliance system then goes from being about punishment and coercion to being about incentive and re-engagement. I believe that has to produce better outcomes. Under the bill, when passed, these reforms will come into place from 1 July 2009.

Under the existing compliance regime introduced by the Howard Liberal government, a job seeker receives an automatic eight-week non-payment penalty after three breaches. We know that 15 per cent of those who have received the eight-week non-payment penalty suffered from mental illness and over half the job seekers serving eight-week non-payment penalties have not paid their rent or board on time. Even more disturbing, 15 per cent of that group have been evicted from their homes. Under the current regime there is no requirement to look for work, training or work experience, and there is no requirement to front up at the job seeker’s employment provider or even turn up at a Centrelink office when you are in that breach period. Many job seekers are already in a very vulnerable state. In fact, 237,000 of the current case load have a recognised vulnerability. This includes 102,000 job seekers who have a mental illness or psychiatric problems. Many more job seekers have unstable housing or living arrangements. This is backed up by the various welfare groups, who are out there on the front lines dealing with problems caused by the existing compliance regime.

Welfare groups of all types have written to us about this issue because their resources are now under strain as more job seekers whose Newstart allowance has been cut off are presenting for assistance. In fact, over 160 organisations from across Australia, ranging from welfare agencies to job placement companies, unions and peak industry organisations, tendered submissions to the government prior to the introduction of this bill. So many submissions express real concern with the gradual shift of the compliance system from one of employment outcomes to one of coercion and punishment. For instance, the National Welfare Rights Network told us that the relationship between the eight-week non-payment penalty and major dislocation, including homelessness, relationship breakdown, increased mental stress, illness, violence and crime, is both categorical and direct. Homelessness Australia told us about research from the University of New South Wales’ Social Policy Research Centre which found that up to 20 per cent of people who underwent an eight-week breach lost their accommodation or were forced to move to less appropriate housing.

Berry Street, in their recent submission on this issue to the federal government, told the story of a 19-year-old young man who they called Zac so as to conceal his identity. They said that Zac’s literacy and numeracy skills were very limited. He undertook a job capacity assessment through DEEWR and was determined, by that assessment, to be ready for employment. Zac failed to keep appointments and his payments were regularly breached, leading to greater instability in accommodation and a downward spiral towards engagement in more serious self-harm and crime.

We know that, more broadly speaking, many of the job seekers who are in the Job Network at present are extremely disadvantaged. Eight weeks without an income does of course impose severe financial hardship in many cases and this in turn can exacerbate other personal and family problems. Compounding this problem was that there were no requirements during those eight weeks for job seekers to look for any work or to maintain contact with Centrelink or, as I said before, their job service provider. At the end of those eight weeks, they are miraculously expected to have a change of mind or a change of heart and somehow find the motivation after being in financial hardship for nearly two months to go back into job hunting again with the network that they have just been breached from.

There are more and more cases of people in this situation. There is evidence to suggest that job seekers do not engage during the eight-week non-payment period. For many job seekers, the downward spiral of poverty and alienation is only sped up. Under the compliance regime introduced by the Howard government, 75 per cent of job seekers who received an eight-week non-payment penalty went straight back onto benefits, and most of those were within two weeks of the lapsing of their eight-week non-payment period.

Last financial year, there were around 32,000 eight-week non-payment penalties imposed. But in the financial year before, there were around 15,000 non-payment penalties imposed. This means that non-payment penalties have doubled in the space of one year. Even though there was a doubling of the number of eight-week non-payment penalties between the years 2006-07 and 2007-08, attendance at job search training has not improved. This pattern also holds for Job Network interviews and customised assistance. This is a very obvious sign that the current compliance system is more about punishment than results. This is especially so when we consider that the social security compliance system has been changed 10 times since its introduction way back in 1945. Half of these changes were during the term of the Howard government.

In my own electorate of Deakin in Melbourne’s outer east, there was a 59 per cent increase in the number of people hit with eight-week non-payment penalties when comparing this year to last. Of the many electorates surrounding Deakin, the figures were even higher. In light of this, I believe the bill should not be delayed in any circumstance at all. It is vital that we get it put through as soon as possible so that, come 1 July next year, a new system will be in place, ready to go and available to assist those who really do need help in searching for a job. On that note, I commend the bill to the House.

Bill Shorten (Maribyrnong, Australian Labor Party, Parliamentary Secretary for Disabilities and Children's Services) Share this | Link to this | Hansard source

I rise today to support the Social Security Legislation Amendment (Employment Services Reform) Bill 2008. I am rising to support a balance between fairness and effectiveness, between empowering job seekers to participate in the workforce and making sure they do. The unlamented previous Liberal government presided over a compliance regime which did not have balance. It was harsh, it was counterproductive and it failed to bring down noncompliance in the workforce. It was a system that was not working, and we are proposing a better system—one that motivates job seekers to actually go out and look for work; one that looks into individual situations and provides help where it is needed.

Under the current regime, where there is an eight-week non-payment penalty, the job seeker is not required to have any contact with Centrelink or their employment service provider for that entire period. Given this, job seekers are not going to very eagerly look for work in that period. Why should they? There is too little deterrence in the early stages of noncompliance and too much later. Job seekers can miss up to a fortnight’s participation before any action is taken. Then, after three failures, they get hit with an irreversible eight-week non-payment period. The previous government went too far. But that is not news; they always went too far.

Let us examine the figures. In 2006-07 there were around 16,000 eight-week non-payment penalties applied. In 2007-08 this doubled to around 32,000 eight-week non-payment penalties. This was the opposite, I believe, of what was logically intended. There should have been fewer numbers each year because more job seekers will participate. I believe that these figures highlight the imbalance in the existing arrangements and the heavy-handedness of the punishments attached thereto.

An effective compliance system should result in fewer breaches because it encourages job seekers to meet their requirements and obtain employment. And it is just not working. This ‘penalise first’ approach prevents employment services from using their judgement to analyse a person’s circumstances. We acknowledge, and those of us who have a union background especially understand, there are occasions when things can get out of control: you have not paid the rent, you have been evicted and you are on the street on a winter’s night in a city far from where you grew up. No governmental process should leave a vulnerable person without food or shelter or multiply personal hardship the way the current system does.

We have heard through the employment services review that stopping payment for eight weeks places job seekers at great risk of disconnection, personal crisis and homelessness, and we heard it with no surprise. The flow-on effect of this is felt not only by the individual but by their families, their friends and the welfare groups that they turn to for support. I believe it also costs the broader community in tax through the health, welfare and justice systems. The Welfare Rights Network told us:

The relationship between this—

eight-week non-payment—

penalty and major dislocation, including homelessness, relationship breakdown, increased mental stress, illness, violence and crime is both categorical and direct.

Homelessness Australia told us about research from the University of New South Wales Social Policy Research Centre which found that up to 20 per cent of people who underwent an eight-week breach lost their accommodation or were forced to move to less appropriate housing.

With this measure this government is restoring the balance. Australians believe that if you are on taxpayer funded income support then you should work hard to find work; you should look all over. We are encouraging job seekers to find work and also giving them the means to be more work-ready. But there should also be appropriate penalties when people unreasonably fail to do what they said they would, which is look hard. Job seekers who do not look for work will be required to do so. As part of instilling a work culture in the new employment services, the ‘no-show, no-pay’ penalty will apply. It is just like it is with a job: if you do not turn up and you do not have a reasonable excuse then you will not be paid.

Noncompliance will have an immediate financial impact. There will be no waiting until the third strike before handing out unfair punishment, a double whammy, as it were, to the recipient. The size of the penalty under our idea will grow with the length of time that the job seeker plays hooky from their reasonable obligations. The new system will retain the current approach if you fail to attend an appointment or if you do not reasonably look for work. Job seekers can avoid a penalty by reconnecting with their provider or by meeting a further job search requirement. If they fail to do so, they will incur a penalty for the time they have been in absentia. This measure, we believe, will encourage participation and re-engagement.

Most job seekers are doing the right thing. But, like all Australians, the Rudd government will not put up with those who behave unreasonably. We are keeping the eight-week non-payment penalty for wilful and persistent noncompliance, but there will not be an automatic escalation in the severity of the penalty. One of the big differences between the current misguided system and the new system is that we will ask people why they are not complying. You are not automatically guilty until proven innocent with our reforms. We respect, we understand and we comprehend the fact that some job seekers face circumstances beyond their control which prevent them from meeting their obligations.

It seems that the previous government, as was their wont, painted every job seeker with the one brush, as a dole bludger. We will find out if a person has a good reason for not turning up, for not complying. If they do not, we will encourage them after the penalty to take responsibility and re-engage in the system. If they do have a good reason then their payment will be reinstated. This is in stark contrast to the current system, where they never have to look for work, where once penalised they are discouraged from looking for work—work which could improve their lives and provide much needed opportunity.

Our new system is tough but fair. It has a stronger safety net for vulnerable job seekers and a more powerful encouragement for the inattentive and the lackadaisical to get into the habit of work. It is a new compliance system for the new employment service system, an employment service system that focuses on the most disadvantaged job seekers, that provides 253,000 opportunities for training over five years through the productivity places program and that focuses on ensuring that job seekers will have the skills employers need. The Rudd government believes that those people on welfare who can work should work but it will not unfairly penalise those who cannot. I commend this measure to the House.

Debate (on motion by Ms Neal) adjourned.