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

by leave—I move opposition amendments (1) to (7):

(1)    Schedule 1, page 3 (line 2) to page 27 (line 19), omit the Schedule.

(2)    Schedule 4, item 2, page 61 (lines 8-9), omit the item.

(3)    Schedule 4, item 3, page 6 (lines 10-11), omit the item.

(4)    Schedule 4, item 4, page 6 (lines 12-26), omit the item.

(5)    Schedule 4, item 5, page 6 (lines 27-28), omit the item.

(6)    Schedule 4, item 8, page 7 (lines 3-15), omit the item.

(7)    Schedule 4, item 9, page 7 (lines 16-29), omit the item.

In addressing the Social Security Legislation Amendment (Employment Services Reform) Bill 2008 it is important to remember the role of employment services. Employment services are the oil which reduces the friction in the labour market. In Australia we have a system of contracted employment services involving a balance between the incentives for employment service providers, support for job seekers, compliance measures and ultimately, as a last resort, sanctions. What we have seen over a 10-year period is that the Job Network has been highly successful. It reduced unemployment from 7.7 per cent in May 1998 to a low point of just below four per cent in February this year. But that is not the view of everyone, because the Minister for Employment Participation will always be famous as the guy who said in May 2008:

The Job Network is no longer suited to a labour market characterised by lower unemployment …’

That was the quote from the Minister for Employment Participation in May 2008 in a discussion paper—and his colleague is looking very grim. And that is actually the central problem. The massive elephant in the room in this discussion is that the model that the minister is proposing was designed for a strong labour market. It will not work in a labour market that is characterised by rising unemployment. It will not work in a labour market that is characterised as a soft labour market. So the minister’s quote ‘The Job Network is no longer suited to a labour market characterised by lower unemployment …’ will be remembered in the future as like the IBM executive saying that there was only a market for five personal computers or the guy at Western Union saying that the horse and buggy days were here to stay and Ford was no threat.

The central problem here is that there is a complete lack of early intervention in their new model. Under Labor’s proposed replacement for the Job Network, 12.8 per cent of the funding for employment services will go to the vast majority of job seekers—61 per cent of new job seekers—who will be classified as stream 1. Frank Quinlan, the Executive Director of Catholic Social Services Australia, has said:

The Government is not prepared for this influx of job-seekers at all. Their scheme and their funding is premised on new job-seekers being easily able to find another job, but jobs won’t be so easily available now, and it is not clear how they intend to cope with that.

He can see the problem that is obvious to everyone in employment services: the new model will simply fail in an environment of rising unemployment. The Job Network was successful in dramatically reducing unemployment.

There are a lot of other aspects of the new employment services model. Community, Work for the Dole, team based projects will be a thing of the past under Labor’s replacement for the Job Network. Green Corps, as a youth development program, will be a thing of the past.

This bill deals mainly with the compliance measures for the new employment services model. The purpose of these compliance measures is to assist and encourage job seekers to move from welfare to work. For example, in the Netherlands temporary benefits sanctions have been found to substantially increase the transition rate from welfare to work. My question to the Minister for Employment Participation is: what evidence is there that the no-show, no-pay model will see improved employment outcomes and improved transition? We do not want ideological arguments; we want the actual analysis. We want objective analysis to show us that the new system proposed by the government will see improved rates of transition from welfare to work.

Compliance measures and sanctions have been a feature of the Australian welfare system since the unemployment benefit was introduced in 1945. The no-show, no-pay failure will be the lightest sanction ever applied by any Australian government. (Time expired)

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

I rise to oppose the amendments. The amendments would fundamentally alter the intention of the Social Security Legislation Amendment (Employment Services Reform) Bill 2008. The amendments would contradict the intentions of the government to improve opportunities for job seekers in this country. I have to refute the assertions made by the shadow minister that the changes would not be suited to all circumstances. In fact, the employment services model proposed by the government is a demand driven system. It will focus on the particular needs of job seekers. That is why we have removed the complexity and the levels of red tape that have become a great burden for providers. Instead of having providers focused on job seekers, we have a current arrangement that has those providers focused on accounting for their expenditure and spending all of their time reporting rather than dedicating their efforts towards helping job seekers.

We have had to streamline the way in which the services operate. We have seven programs which bear very little resemblance to each other. As a result, it is a very difficult task for employers to navigate their way through the programs to match their needs with job seekers who are looking for work. There is certainly a lack of coherence around the arrangements. That is partly due to the fact that the previous government, rather than making substantive reforms when required, just continued its tack of small changes and therefore did not really fundamentally tackle the problems.

What I have said all along, and will continue to say, on behalf of the government is that these proposals will improve the opportunities for job seekers. The job seeker classification instrument will allocate people according to their needs. There will be four simple streams in the process. Those streams will be based on relative needs of job seekers. There will be a broader notional account, the Employment Pathway Fund, which will replace the job seeker account. As we also know, in combination with this particular bill there is to be a great deal more resources provided for job seekers who are undergoing training, particularly accredited training. Why do we need that? We have been told by employers that we need a work-like culture in this area. They believe that the current arrangements do not provide for the needs of employers and do not assist employers matching up with job seekers. So we have, on the one hand, much greater access to accredited training, which is determined by an employer driven system through Skills Australia. That runs alongside the new compliance arrangement—and that is why I do refute the assertions made by the member opposite—which also provides a work-like culture.

The member opposite’s main charge, I would have to say, is that the arrangements that we would put in place would prevent early intervention. That could not be further from the truth. The fact is that the no-show, no pay culture intervenes early in the failure to participate by a job seeker. But the intervention is a measured response. The problem at the moment is that there is a letter in the mail to provide one warning but there is no penalty whatsoever. Then there is a second letter in the mail, which is hopefully read by the job seeker, but again no penalty whatsoever. Then you have the third strike of an irreversible, eight-week non-payment period. As I have indicated in the summing up, that has lead to all sorts of adverse consequences and it certainly has not led to the likelihood of those job seekers finding work. But I can tell you this: it has lead to greater evictions of people from their homes, particularly people whose accommodation is precarious, and it has lead to allowing people who have diagnosed mental illnesses to be placed in more difficult circumstances. Indeed, the eight-week non-payment period does not require any form of participation whatsoever by the job seeker, so it does not even ensure greater engagement in order to get off welfare and into work. So, for a whole host of reasons, this bill is required. It brings substantive changes to the outdated, red tape ridden Job Network system and it will be a better thing for job seekers, a better thing for employers and a much better thing for this country.

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

I think the Minister for Employment Participation has misunderstood me. Essentially, in the employment services model that is being proposed, there are no placement fees for stream 1 job seekers who have been out of work for up to three months and there are no outcome payments for stream 1 job seekers who have been out of work for up to 12 months—that is, for people who are in the stream 1 job seeker stage. The problem is this. In a climate where on 1 July next year there may be as many as 100,000—and the number may be as high as 200,000—more Australians out of work, we are using a model that was designed for low unemployment and a strong labour market. My concern is that you will have job seekers falling between the two stools. The whole premise has been that the labour market is so strong that stream 1 job seekers will be able to find a job themselves; that they will not need much assistance from an employment service provider. That is one of the problems. We have a contracted employment services model and it has worked very well, but you need to get the balance right between all of those things—that is, the support for job seekers, the incentives for employment service providers and the compliance regime.

If we look at the top five reasons for failure by failure type and at how they will be treated in the future, included are these three reasons. Failure to comply with an activity agreement with the provider will now be treated as a no-show, no-pay failure. Unsatisfactory attendance at a Work for the Dole project will now be treated as a no-show, no-pay failure. Failure to attend a Work for the Dole interview will also be treated as a no-show, no-pay failure. Taken with the generous discretion at the level of Centrelink and the employment service providers, these are unlikely to make any change to the behaviour of job seekers at all. Missing a day’s Work for the Dole, for example, will see a job seeker on the single rate of Newstart allowance lose $44.93. That is for missing a day of Work for the Dole or another work experience program with no excuse. Such a small sanction is unlikely to have the desired effect, which is to encourage job seekers to look for work and get off welfare.

The previous government had a system of sanctions, with financial case management for the severely disadvantaged. Very few people received eight-week sanctions, and that sanction was only for three breaches without an excuse. Labor are moving to a system of insignificant sanctions with widespread discretion to not apply the sanctions but are removing financial case management at the same time. There is an inherent contradiction to this weakening of mutual obligation by the government. On the one hand, the Rudd government are talking up their quarantining of welfare for the parents of truants. On the other, they are dismantling this very system for job seekers. It is almost as if the Minister for Employment Participation has not received the message from the hollow men in the Prime Minister’s office.

Another issue is the treatment of job interviews. Incredibly, missing a job interview will mean a no-show, no-pay failure. A job seeker will lose $44.93 for missing a job interview. There will be no other consequences. It is possible to miss six job interviews in a six-month period without any real repercussions. Missing a job interview is a serious failure to look for work and should be treated as such. In their submission to the Senate committee examining this bill, the National Employment Services Association felt that missing a job interview—

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

Mr Shorten interjecting

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

So the member for Maribyrnong thinks it is acceptable to miss a job interview?

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

No, but I do think—

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

That is outrageous. That is simply outrageous. In their submission to the Senate committee examining this bill, the National Employment Services Association said that missing a job interview should be regarded as a serious failure. It is being treated far too leniently in this model and needs to be addressed. The opposition does not support the introduction of no-show, no-pay failures. They are the lowest sanction our welfare system has ever had and the lowest I have been able to find anywhere in the world. Over the years, various governments have had sanctions ranging from two weeks to six weeks to eight weeks to 12 weeks. The British Labour government have just gone for a much tougher compliance regime. It is incredible that the Labor Party here are going in a different direction. The Labor Party are in fact proposing a new level of sanction, which is a level of sanction for one day. Taken with the widespread discretion envisaged in this bill, it is likely that this penalty will rarely be applied and, if it is, will not encourage improved behaviour, which is the object of the—(Time expired)

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

I do not want to take up the time of the parliament, and I do not want to keep repeating myself. I did say this in summing up the second reading debate on this bill, but obviously the shadow minister was not listening. It is important to get the penalty right. I think it is important to work out what measure we require to have an influence over the behaviour of people, including job seekers. Of course we have to get the penalties right. The shadow minister refers to the no-show, no-pay penalty as not being sufficient. But I would like to remind the shadow minister that currently a person can miss an interview, be in breach and receive no more than a letter warning them that, if they have another breach, they will get warned again. Finally, a third breach will see an eight-week, irreversible non-payment. But there is no penalty attached to the first two warnings under the current arrangements. The reason why that is a problem is that, if they are not in any way materially affected, people do not fully understand that not complying is going to lead to a withdrawal of income.

That is why we have designed a work-like approach to the compliance arrangement. It will mean that a person who misses a day of activities without reasonable excuse will lose a day’s income, just like would happen in a job. That is exactly the way in which we believe we can assist job seekers to realise that their actions have consequences. Currently, you can miss an activity and not have any adverse material effect. I would also like to indicate that the government consulted widely in relation to these matters and in relation to the new compliance arrangements being proposed by the bill. Indeed, we have had support from NESA, the peak employment provider body. We have spoken to employers, and I can tell you that employers would like to see a more work-like approach to the compliance arrangements for job seekers.

The shadow minister opposite refers to Frank Quinlan from Catholic Social Services. Can I say that, whilst Catholic Social Services do not agree with everything we do, I know in the main they are very happy with the changes we are making to the employment programs. Indeed, they certainly believe we are moving in the right direction in relation to compliance. They have no time for the current arrangements, which of course is something that was sadly forgotten in the contribution made by the member for Boothby today.

I believe it is important for the shadow minister and the opposition to understand that within 12 months we have seen a doubling in the number of eight-week non-payment penalties. There have been more people affected by the eight-week non-payment penalty this year than in any other year. A significant proportion of those people suffer great harm as a result of having that penalty inflicted upon them. I do not think it is the intent of people for them to suffer great harm, but that is what happens. In many cases people are evicted from homes because of this penalty. There is a significant proportion of people who cannot pay their rent and therefore their accommodation is under threat. There are people who have not been diagnosed and people who have been diagnosed with mental illness who have had this penalty applied to them.

What we want to do is ensure that the arrangement allows for people to re-engage. That is why we say that whilst wilful and persistent noncompliance will attract the eight-week penalty—and that is why we have kept it—we want to focus on re-engagement. So we say to people, ‘If you re-engage and undertake 25 hours activity throughout the course of the week, equivalent to a full-time Work for the Dole program, then you can resume your income.’ What is the gain in having people lose income, not participate with their provider, not participate with Centrelink and find themselves, one way or another, a greater burden on the state and social services because they cannot afford to stay in their homes? That is why we have struck the balance. I think the balance is right. I believe the opposition should reconsider the bill. We cannot support the amendments because they fundamentally change the intention of the government. (Time expired)

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

I rise to support the amendments. In doing so I would like to take the House back to even just a few short years ago when in Australia we had a chronic problem of long-term unemployment. This is without a doubt the most stubborn unemployment that we need to deal with in Australia. Once you have been long-term unemployed it is more and more difficult over time to get you to reconnect with the workforce. The Howard government, as well as creating two million jobs over the life of that government, had incredible success in helping the long-term unemployed find work—and that is an extraordinarily difficult thing to do. We had tremendous success in tackling what is ultimately the scourge of long-term employment. This is the unemployment that can be handed down from generation to generation, that damages the social fabric of the communities where people find themselves unemployed for long periods of time.

We have an extraordinarily generous welfare system in Australia. However, to maintain this system we need to ensure that people recognise that the welfare system has to be used as a safety net. It is never intended to be a way of life. It is never intended to support people from cradle to grave. We must ensure that those who are capable of work do work and that they are given every opportunity to fulfil their potential within the workforce. That is not just for society; that is also to benefit them as individuals. In Australia we like to see people reach their full potential, and that was the whole point of what Welfare to Work was about. It was not a punitive system; it was about assisting people to get back into the workforce. And, quite frankly, appropriate compliance measures are part of that just welfare system. We have an interlocking system that is based on incentives, welfare and assistance in job search, and appropriate compliance measures are designed within the system to best meet the interests of both job seekers and the community supporting them. That was the whole point behind Welfare to Work. It emphasised mutual obligation, whereby, in return for income support payments, people were helped to find employment. But job seekers were also expected to play their part in seeking work and to participate in activities that were designed to benefit the community that supported them.

The problem with Labor’s model is that there are three types of participation failures: no-show, no-pay failures; connection failures; and serious failures. Under this proposal, connection failures will be applied when a job seeker does not attend appointments with their employment services provider or they do not comply with the requirements in the employment pathways plan. A connection failure will not incur a financial penalty in the first instance but will instead trigger a reconnection appointment, giving the job seeker 48 hours to make contact and reschedule the appointment. If they fail to attend this reconnection appointment they will lose their payments until they make contact. If a job seeker were to incur three such failures in a six-month period, they would be referred to a comprehensive compliance assessment. This no-show, no-pay proposal shows a total disregard for any sort of reciprocal, mutual obligation. Under this proposal job seekers who fail to attend a work experience activity such as Work for the Dole will lose a day’s pay. At present, that equates to about $45 a day for a single person on the maximum rate of Newstart allowance. If they incur six failures within a six-month period—that is one failure a month—they will be referred to a comprehensive compliance assessment.

I echo the point made by my colleague the member for Boothby, the shadow minister, that if a job seeker has a job interview lined up by their employment services provider and they fail to attend, this will be classified merely as a no-show, no-pay failure. Under Labor’s system they will actually be able to miss one job interview a month before being referred for a comprehensive compliance assessment. Once they have had this assessment, regardless of the outcome of that assessment, the clock starts over again. So you can miss a job interview once a month. I find that extraordinary. Our welfare system relies on having appropriate compliance measures in place. These measures water down those appropriate compliance measures and therefore they water down the whole framework of Welfare to Work and we reject them. (Time expired)

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

I will not take up the entire time allotted; I just want to respond to the shadow minister who just rose to contribute to the debate on the amendments. I remind the House that, in relation to the very long term unemployed, things have not got better in the last decade; they have got worse. In 1998 there were one in 10 jobseekers defined as very long term unemployed. It is now almost one in four—

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

The point is there is a lot—

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

I say to the member for Stirling, who now wants to try a better argument because he failed for the last five minutes to say anything of any cogency: the fact is that it is not just the proportion that has changed, otherwise his argument might have some bearing; the numbers have changed. There has been a numerical increase from 75,000 to 110,000 this year in the very long term unemployed. So both in proportionate terms and numerical terms, the figure for the very long term unemployed has risen and this was at a time of the most unprecedented boom in the minerals industry. We had a modern-day gold rush and the previous government failed to address the concerns of the very long term unemployed and that is why that figure grew both by proportion, as I have said, and by number. So I have to refute the assertions made by the shadow minister opposite.

I do agree with him, however, that it is a real problem and we have to get it right. We have to make sure we do not have people indefinitely on income support. We have to make sure that if people have the capacity to work then we have to find new ways to ensure they work, because currently, under the arrangements that are in place, it is not working. Every time that unemployment fell while we were in opposition, every one of us welcomed the decline—as we should. But I can tell you now that when I was appointed minister in this portfolio I was surprised to learn the extent to which the previous government failed to address the concerns of the very long term unemployed. That is why we have changed the arrangements to allocate resources pertinent to the needs of job seekers. We have now shifted some resources to ensure that those job seekers are indeed provided with better opportunities so that they get off income support and get into work.

I say in relation to the member for Boothby’s comments earlier about those people in stream 1 not being provided resources: we do not need resources being provided if those job seekers are work ready. We do not need to provide too many resources in one area when people are entirely capable of finding work and at the same time neglect those people who have vocational and non-vocational barriers to employment. That would be a nonsense. There is a thing called deadweight loss. If the member for Stirling wants to understand it, deadweight loss is wasting resources by allocating them in a way that will not change the outcome whatsoever. The taxpayers of Australia would not want us to do that. We will not do that. Instead, we have made sure that the resources provided are based on the needs of job seekers. This is the result of extensive consultations throughout this country with job seekers, employers, employment service providers and registered training organisations, and they all agree we have to do more to focus on those people who have great disadvantage.

I have heard the arguments by those opposite and I do not agree with any of the arguments they have put. Those points are wrong, the arguments are weak and the facts are quite often wrong. I ask the opposition to reconsider their position in relation to this bill as they would be doing employers and jobseekers a disservice in this country if they did not support the government’s bill.

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

According to the Department for Education, Employment and Workplace Relations labour market and related payments monthly report, the number of long-term unemployed fell from 205,212 in June 2006 to 146,533 by August 2008. That is the department’s own figures from their labour market and related payments monthly report. That represents a drop of almost 30 per cent in just over two years. Also in response to the minister’s comments about stream 1—the job ready job seekers—on the department’s own figures they still estimate that 34 per cent of those job seekers will still be unemployed in 12 months time. With the lack of support that will be there for stream 1 job seekers, there is a real concern that they will just be languishing there for 12 months. There will be no incentives to connect them up with a job. I might say those figures are based on historical figures. They do not take into account what seems to be a consensus amongst market analysts that we will have rising unemployment, we will see more Australians lose their job over the next 12 months and we will see higher unemployment over the period that we are considering.

But the reality is this: in order to sustain our welfare system we must be assured that it is appropriately fair. By this I mean we provide support to those who need it and in return they accept their responsibility to actively seek work. Labor’s model does nothing but encourage increased welfare dependency by watering down mutual obligation to the extent it provides no real incentive for people to attend their appointments. By watering down mutual obligation, we are condoning people not turning up to Work for the Dole, provider appointments or even job interviews. There will always be those who want to push the boundaries, and by loosening mutual obligation requirements like this more and more jobseekers may be encouraged to do so.

Labor has not made the case for watering down the compliance regime. We need to ensure that the system is firm but fair. The current system is fair. Sanctions are a last resort. Safety nets are in place to ensure that job seekers are not penalised if they have a reasonable excuse for failing to engage. Financial case management is offered to ensure that vulnerable job seekers do not lose their accommodation and remain able to support their families during any non-payment period. But Labor’s proposal does away with financial case management.

Of further concern is the decision to empower the departmental secretary to use legislative instruments to determine whether a job seeker is in breach of their mutual obligations. The parameters determining these guidelines should be set out within the act to ensure consistency and should not be determined on the whim of the secretary or the minister. Legislative instruments will grant discretion to the departmental secretary to determine whether someone should be exempt from mutual obligation. This allows for enormous discretions at all levels—at the level of the minister, the department, effectively Centrelink and employment service providers. The effect of this will be that very few people will incur a no-show, no-pay failure, ultimately giving job seekers the impression that the system does not really require them to engage with mutual obligation.

I conclude where I began: Job Network was very successful in reducing unemployment. It was a very bold reform; it was a bold innovation. Australia, when it went down this path in active labour market programs, was doing something that no other country around the world had done. What we see in the net impact studies for the Job Network and all of the labour market programs is that they are amongst the world’s best. It does require a very fine balance between the incentives that are there for employment service providers to connect up job seekers with a job, the support that we provide for job seekers, the compliance regime and ultimately as a last resort the sanctions. We argue as the opposition that Labor have got this balance wrong and that their employment services model will not work in an environment with rising unemployment where more Australians are likely to lose their jobs, where we could see up to 200,000 more Australians out of work by the time this employment services model begins. It is for those reasons that we support these amendments. We do not support Labor’s weakening of mutual obligation and the no-show, no-pay failures.

Question put:

That the amendments (Dr Southcott’s) be agreed to.