Brendan O'Connor (Gorton, Australian Labor Party, Minister for Employment Participation) Share this | Link to this | Hansard source

I rise to sum up in this debate. Indeed, before I go to the substantive matters I thank the very large number of members who have taken part in the debate on the Social Security Legislation Amendment (Employment Services Reform) Bill 2008. The bill proposes compliance arrangements that provide a two-way nexus between participation and payment that is genuine mutual obligation not the ham-fisted mutual obligation of those opposite. The new compliance system does not seek to punish job seekers for punishment’s sake. Rather it is a tool to maximise job seekers’ participation in activities that will better assist them obtain employment. This bill introduces a more work-like, no-show, no-pay penalty that will apply when a job seeker fails to comply with a required activity without a reasonable excuse. It retains a deterrent eight-week non-payment penalty for persistent and wilful noncompliance. It predicates payment on the job seekers’ participation. In short, it will be a more effective compliance system than the one it is replacing.

The current compliance system, which the opposition says ain’t broke, has not improved compliance. If the current system were working as the opposition claims, it would result in declining breaches because it would encourage job seekers to meet their requirements and would ultimately support them in getting them off income support and into employment. Yet 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. An effective compliance system should result in improved participation. However, since the introduction of the present compliance system, there has been no improvement in attendance at Job Search training, Job Network interviews or customised assistance. An effective compliance system should clearly link the receipt of income support and the obligation to look for work. Again, the compliance system falls well short. A job seeker can miss up to two weeks of Work for the Dole before any action is taken. Then a job seeker has a chance to reconnect and, if they do, they incur no penalty at all. To use the opposition’s inaccurate stereotype, that is two weeks at the beach without any penalty.

An effective compliance system should provide a timely and proportionate response. Presently there is no real or immediate consequence for deliberately failing to attend activities or job interviews initially. If a job seeker does not turn up to a job interview, there are no consequences. If that same job seeker does not turn up to a second job interview, still nothing happens. Yet, if that job seeker misses so much as an appointment with their provider any time in the 12 months after they failed to turn up the first time, there is no choice but to impose an irreversible eight-week non-payment penalty, effectively suspending participation. There is no doubt in my mind that the lack of an early deterrent, something more than a letter in the mail, is a key reason for the explosion in eight-week non-payment penalties in recent times.

Under the new system, job seekers will receive, proximate to when the breach occurs, a clear message that their actions are unacceptable, resulting in more work-like conduct in the future. The eight-week non-payment penalty will continue to deter persistent and wilful noncompliance. In addition, job seekers who fail to comply with activity requirements will incur a no-show, no-pay penalty. The Liberal opposition is out of touch if it thinks the no-show, no-pay penalty is not enough money to deter a job seeker from noncompliance. One-tenth of a job seeker’s main income support payments—around $44.90—may not seem a large sum to those opposite. The equivalent lost income for those opposite would be around $500 a day for nonattendance. If I may again revert to the opposition’s cheap shots, that is an expensive day at the beach. To discourage job seekers from leaving employment voluntarily without finding another job, the government will also retain an eight-week preclusion period. In future, we will refrain from labelling this behaviour as a failure warranting a penalty, as presently occurs. Indeed, although it reflects poorly on the shadow minister, I am duty bound to point out that this so-called penalty is the single largest reason for an eight-week non-payment penalty, not failure to attend an appointment or Work for the Dole as he claims.

The opposition has relied on the absurd proposition that the current compliance system is responsible for the recent decline in unemployment. The former minister, the member for Murray, has tried to make an even more ludicrous link between the global financial crisis and the compliance system. The compliance system has nothing to do with employment growth and whether a resources boom or the global financial crisis affects it, and it is scaremongering to suggest otherwise. What we do know is that the current compliance system makes it harder for people to find employment. A departmental survey of job seekers who received eight-week non-payment penalties found that around three-quarters of job seekers reported that having no income support made it harder to look for work. However, they do not have to look for work. Job seekers serving an eight-week non-payment period under the current compliance system are not required to participate whatsoever in activities that could help them find employment. They do not even have to turn up to Centrelink or their employment service provider. It is no wonder that 75 per cent of job seekers who received an eight-week non-payment penalty went back onto benefits, most of them within a fortnight of finishing their non-payment period.

I also need to correct another falsehood by the opposition members in this debate. I know it has been a while since the member for Murray was the Minister for Workforce Participation, so one could almost forgive her for her blatant mischaracterisation of financial case management. It is not, as she stated, available to all job seekers. In fact, only 4,050 job seekers were eligible for financial case management last year, which is around 10 per cent of all the penalties applied. Indeed, the shadow minister for employment and workplace relations, the member for Stirling, also needs to be better briefed. His contribution reveals his profound ignorance in this area of public policy generally and this bill in particular. He does not understand that we are replacing a limited financial case management scheme with financial hardship provisions. The new provisions apply to all job seekers who incur serious failures but do not have the capacity to participate in compliance activities and also to vulnerable job seekers who are subject to the eight-week preclusion period.

Peter Dutton (Dickson, Liberal Party, Shadow Minister for Health and Ageing) Share this | Link to this | Hansard source

Mr Dutton interjecting

Brendan O'Connor (Gorton, Australian Labor Party, Minister for Employment Participation) Share this | Link to this | Hansard source

‘Why do we get rid of financial case management?’ he asks. There are two simple reasons. Firstly, it is administratively complex. Secondly, and more importantly, job seekers who receive financial case management currently have no participation requirements. The new financial hardship provisions of the bill will oblige job seekers to continue to look for work or engage in activities that will improve their prospects of finding employment. A job seeker who receives an eight-week non-payment penalty for persistent and wilful noncompliance will have the opportunity to demonstrate a renewed commitment to finding employment by participating in an intensive compliance activity. A job seeker who agrees to participate in an intensive compliance activity will continue to receive income support while they work off their penalty through full-time Work for the Dole or a similar activity for 25 hours per week.

This bill is designed to instil in the job seeker a greater level of personal responsibility. Therefore, the job seeker may suspend the penalty at any time by resuming their activity requirements or attending their reconnection appointments. The opposition, I would contend, have misunderstood the essence of this bill, and that has been revealed in this debate. They love inflammatory, demonising language like ‘dole bludger’; they revert to meaningless pop culture references like ‘tough love’; however, to claim that the current compliance regime has helped people escape the poverty trap is contrary to the evidence. Over half the job seekers have been on income support for more than one year, almost half the people on income support in 2001 were still receiving income support in 2007 and three in four young women with little education who were on unemployment benefits in 2001 were still on income support in 2007. Indeed, in less than a decade the proportion of unemployed people who have been on income support for more than five years has increased from one in 10 to almost one in four. This proportion has remained a constant since the introduction of Welfare to Work in 2006. In real terms, this is an increase from 75,000 job seekers in 1999 to 106,000 job seekers at June 2008.

Why do we on this side of the House keep using these figures? Because they tell us that people have not been getting the right assistance at the right time in order to be able to put income support behind them. The previous government thought that the way to get those long-term unemployed off income support was to hit them with an eight-week $2,000 stick. They ignored the characteristics of job seekers who remain unemployed. Mental illness, drug and alcohol problems and unstable accommodation are among the vulnerabilities to which substantial numbers of job seekers are subject. Even with the supposed protections in the current system, the lack of discretion available inevitably means harsh outcomes. More than one in 10 job seekers who had received an irreversible eight-week non-payment penalty had reported a mental illness. This figure is likely to understate the scale of the problem because of the difficult issue of job seekers not wanting to disclose personal issues. The current compliance system takes vulnerable people and makes them more so. The departmental survey of eight-week non-payment penalty recipients found that over half of these job seekers had failed to pay rent or board on time and around 15 per cent of this group were evicted as a result. It is difficult to see how anyone could think this tackles poverty, let alone helps people find work.

The compliance system proposed by this bill allows us to distinguish between someone who does not want to meet their obligations and someone who cannot meet their obligations. Unlike the present automatic three strikes rule, a job seeker will trigger a comprehensive compliance assessment when they miss three appointments or six days of activity in a rolling six-month period. Centrelink will use the comprehensive compliance assessment to consider a job seeker’s circumstance to determine whether there is a reason for noncompliance, such as episodic mental illness, before applying any penalty. Furthermore, providers will be able to exercise their professional judgement about whether to report behaviour as a no-show, no-pay penalty or reconnection failure. A provider can use alternative means of maintaining participation if they reasonably believe that there is a better way to ensure a particular job seeker is moving towards employment.

The new employment services will provide job seekers with the right mix of training, work experience and other support they need to find and keep work. The new employment services will support innovation and will ensure job seekers meet the needs of employers. The new compliance arrangements and other measures proposed by this bill will form an important part of the new system. This government, along with most Australians, believes that a person on income support should make every effort to find work. Governments should and will support job seekers who do the right thing. Job seekers who do not do the right thing should not expect to receive income support. This is the fundamental principle underpinning mutual obligation. This is the fundamental principle underpinning the compliance system proposed in the Social Security Legislation Amendment (Employment Services Reform) Bill 2008. This bill is a key component of the government’s employment participation agenda and I urge all members to support it.

Question agreed to.

Bill read a second time.