Sussan Ley (Farrer, Liberal Party, Shadow Minister for Childcare and Early Childhood Learning) Share this | Link to this | Hansard source

I rise today to speak on the Social Security Legislation Amendment (Fair Incentives to Work) Bill 2012. Currently parenting payment recipients are subject to different rules on eligibility depending on when they first claimed parenting payment. This legislation will bring all parenting payment recipients onto the same standard, seeing all partnered parenting payment recipients move on to an income support payment such as Newstart when their youngest child turns six and all single parents when their youngest child turns eight. As the requirement currently stands, those who were on a parenting payment prior to July 2006 were able to continue receiving this payment until their youngest child turned 16, although, from July 2007, they were also required to engage in 15 hours a week of either paid work or a work related activity to remain eligible for this payment.

This legislation should be seen in the context of the previous government's Welfare to Work reforms of 2006, which built on the Australians Working Together initiative from 2003, where parents with children aged between 13 and 15 were required to undertake one or more activities, such as job search, education, training or community work to assist them in preparing for a return to the workplace. From 1 July 2006 new applicants were eligible for parenting payment single when their youngest child was aged less than eight and they moved to Newstart or another payment when their youngest child turned eight. Those who were on the payment prior to 1 July 2006 were able to be grandfathered—that is, they retained their eligibility for the parenting payment until their youngest child turned 16. In 2007 these reforms were further extended, requiring those grandfathered recipients to look for work when their youngest child turned seven.

The Department of Education, Employment and Workplace Relations had the Melbourne Institute of Applied Economic and Social Research undertake research into the Welfare to Work reforms, and this research highlighted that the introduction of the mutual obligation requirements for grandfathered parenting payment recipients led to an increase in exits from parenting payment, recognising that many gained employment as a result. So this does prove that the Welfare to Work initiatives assisted parents into paid employment and off welfare.

However, whilst we in the coalition are certainly in favour of assisting people from welfare into work—and we do recognise that the best form of welfare is a job—this particular bill reeks of hypocrisy on the part of the government. Just a few short months ago, Labor moved to decrease the parenting payment cut-off age of the youngest child from 16 to 12. Making this further change to the timing of the transition now shows that this move is more about achieving a budgetary saving than about a policy that is genuinely committed to assisting people from welfare to work, particularly given the tough economic times that are facing Australian families.

Labor has been all over the place on the topic of mutual obligation. When Minister O'Connor had responsibility for this portfolio he promptly ordered the department to water down mutual obligation requirements and go easy on those who were deliberately shirking their mutual obligation requirements. Then, in April 2008, the then minister wrote to Job Network providers urging them to be lenient on noncompliant job seekers. The Department of Education, Employment and Workplace Relations followed this up with a letter where they wrote, 'employment service providers have considerable discretion when deciding if a participation report should be submitted following an incident of non-compliance'.

Further evidence of the contempt this government has for mutual obligation can be seen in its treatment of Work for the Dole. This government has presided over the tragic demise of Work for the Dole, once the premier mutual obligation activity in this country. Where once job seekers, after six months unemployment, engaged in an activity to ensure they gained skills that would assist them into a new job while performing activities to benefit the local community, this government has now pushed it out to 12 months unemployment before it will provide any funding for these valuable activities. Hundreds of thousands of people have benefited from the training offered in these activities and have acquired a real work ethos as a result of their time on such a program.

Alas, the program is now a mere shell of its former self, watered down by a government that has this bizarre fear of mutual obligation as some sort of bogey monster. Those opposite fail to appreciate that 25 per cent of Work for the Dole participants gain employment within three months of completing their Work for the Dole activity. The government's paranoia concerning this program has seen the program reduced to a mere 10,298 placements at present. This is in stark contrast to the more than 80,000 participants a year when the Howard government was in office.

I come back to the hypocrisy of the government in bringing this piece of legislation before the House today. They have changed their change in just a few short months. And they have changed the age of parenting payment recipients required to seek paid employment—they have moved it downwards, and they have now brought in every single person under the same net. This has been a sudden change of heart, no doubt linked to the savings initiative. We have a long and tiresome record from this government on mutual obligation and on Work for the Dole, where they speak out of one side of their mouth in this place and then, when they are out in the community with their stakeholders, they speak out of the other. They need to decide whether mutual obligation and Work for the Dole activities, and the really difficult policy area of moving people from welfare to work, are things that they are serious about. With this legislation, they have crashed the policy in this House. They have crashed it in the community. As a result, they are definitely not serving the interests of the group of recipients that they are targeting.

I should also take the opportunity to remind those opposite of their contempt for the welfare to work bill when it was introduced by the Howard government. Senator Penny Wong stated:

This package has nothing to do with moving people from welfare to work and everything to do with extreme cuts to the household budgets of Australian families who can least afford it.

Clearly those like Senator Wong have now realised that the coalition way is the best way. Plagiarising coalition policy seems to be the best that those opposite can muster. Regrettably for all Australians, too often they decide to slightly customise our policies in an attempt to Labor brand them, and completely botch them in the process.

Regarding this particular bill, I am not certain how those opposite intend to assist parents in their transition from welfare to work as this bill introduces no additional assistance for parents returning to work. By contrast, in 2006 when the Howard government introduced the Welfare to Work reforms aimed at boosting the workforce participation of four under-represented groups—the long-term unemployed, people with disabilities, parents returning to work, and mature age job seekers—the 2005-06 budget committed $389.7 million to specifically assist parents into work. That was a total package of $3.6 billion aimed at those four under-represented groups in what was a serious, genuine and well supported policy initiative to move people from welfare—which is not in their interests, which is not in the economy's interests and which is not in the interests of government—into work, which is where they can win on every level.

On this side of the House we support encouraging people from welfare to work. We support boosting workforce participation. But we also recognise that government has a responsibility to help those making the transition. Our policy at the time provided real assistance to help parents transition. As part of the coalition's policy, parents could refuse a job if they were not more than $50 per fortnight better off once the costs of employment were factored in—child care, for example, or if they had to travel for more than 60 minutes each way to work. When the current Minister for Health, the member for Sydney, was in opposition she attacked the 2005 allocation of additional childcare places by the coalition government, accusing us of coming up with it as 'a way to ensure single parents had no excuse not to work'. She told ABC Radio at the time:

It is part of the government's plan to punish people who are out of the workforce to take away any excuse for them not working.

In addition to this, the Welfare to Work reforms also saw the creation of the Employer Demand and Workplace Flexibility Strategy, which worked with employers to promote the benefits of hiring job seekers from the four targeted areas. Ensuring workplaces were able to look at flexible work hours was a real focus, particularly where parents were concerned.

The general consensus from employers was that parents were more likely to have recent workforce experience than the job seekers from the other three disadvantaged cohorts and, on the whole, showed a greater level of responsibility, making them more reliable. This proves that this group of parents does want to work and does need the support this government is not prepared to provide in order for those parents to move from a parenting payment—that is, a welfare payment—via an income support payment into a sustainable job—into employment.

As I said, this is a cohort of people who, ultimately, have a capacity to work and have a very real incentive to do so, as a job is the best way to provide for their children. We recognise that those children who grow up in jobless households are far more likely to suffer from long periods of unemployment themselves. There is an incredible amount of truth in the saying that the best form of welfare is a job. These Welfare to Work reforms of 2006 built on the Australians Working Together initiative, where parents with children aged between 13 and 15 were required to undertake one or more job search or training type activities to help them back into the workforce.

Research undertaken by the Department of Education, Employment and Workplace Relations on the Welfare to Work reforms shows that there was a 23 per cent increase in the number of single principal carer payments leaving income support after six months, in comparison to the previous three years, with 38 per cent moving off payment during 2006-07. The report also showed that over 70 per cent of people on principal carer payments left income support for employment. Despite all the opposition to the Welfare to Work reforms from those opposite, I am glad that they have finally looked at the evidence and recognised the benefit of our policy. Long-term welfare dependency is a very real risk for many parents, and these changes will encourage parents back into the workforce. Shifting parents from a parenting payment to an income support payment reiterates that, whilst Australians have access to support, there is a corresponding obligation to seek employment when they are in a position to do so. I expect that the vast majority of Australians accept the notion that with rights come responsibilities. Whilst the government undoubtedly has an obligation to provide for those who are not in a position to provide for themselves, we need to be realistic about what this entails. Where people have a capacity to work, they should do so.

Intergenerational unemployment is an ever-growing problem in this country. There are towns where it is pretty much the norm for a majority of families to refer to their fortnightly visit to Centrelink as going to pick up their 'pay'. We have to break this dependency, and measures such as these go a way towards achieving that goal. Parents in work provide a role model for their children, teaching them that work is the norm and that a lifetime on handouts is not. However, almost 70,000 women are not in the workforce because they lack access to affordable child care. These are the types of issues that Labor really does need to address. The coalition's Welfare to Work reforms extended access to after school care, thereby ensuring parents had the support they needed in order to work. Regrettably, where this bill does fall short is in support for these parents. In the last budget, the government slashed $162 million from Job Services Australia's assistance for job seekers. It also cut a further $44.3 million from outcome payments for Job Services Australia providers.

In addition to repealing the grandfathering arrangements for parenting payment recipients, this bill also seeks to increase the liquid assets threshold. Currently an individual is subject to a waiting period for income support when they have in excess of $2,500 in liquid assets. This bill seeks to double the liquid assets that a person can hold to $5,000 before they are subject to the waiting period for income support payments. This measure will assist newly unemployed Australians and give them a little more financial security during what is a tough and stressful time. This measure will also enable people to maintain more of their savings if they do lose their job and it will give them some additional financial security.

The final element of this bill seeks to clarify the definition of termination payments. This will ensure consistency across the board when considering the income maintenance period. It will also bring the definition of termination payments in line with the policy intent of the guide to social security law, ensuring that termination payments such as those for untaken long service leave, untaken maternity or paternity leave, early termination payments and other such payments are included in the income maintenance period. I just mention those two other provisions of the bill; they are not the main ones. The liquid assets threshold for Newstart is a very poor step in the direction that the government should be going but is not. It should help people transition into the workplace with the sorts of genuine services that we provided when we introduced this initiative in 2006.

I am sceptical. This bill is really a desperate attempt by a government to realise savings it is petrified of not achieving in order to realise a surplus anytime soon. Ultimately, this legislation will assist the government in realising almost $700 million in savings, with only, it would seem, a $3 million program for telephone counselling left in place to assist the unemployed. Despite the motivation behind this legislation being nothing more than a desperate cash grab, we in the coalition believe that those in receipt of welfare payments have a moral obligation to contribute to their community through work. Those who have the capacity to work should do so to the extent of their ability. We also acknowledge that families are better off as a result of earning an income as opposed to being dependent on welfare, which is why we will not be opposing this bill.

These are difficult policy areas. For members of this place they are difficult areas in which to consider measures that reduce the weekly payments of those on fixed incomes. It is not a happy position for the government to be in, and I strongly condemn their approach in articulating a policy that is not really theirs, that they never really signed up for, that they never really supported and that they were reluctantly dragged to the table on at the last minute in a way that does an enormous disservice to the group of single parents that it is designed to assist. The supports will not be in place for this group of parents, and the government is throwing them into a job market environment in which it is very difficult to find work in the types of industries and in the type of employment that would typically suit a mother returning to work with school aged children.

The absolute inflexibility of the labour market and the reregulation that we have seen since Labor came to power in 2007 means that it may simply not be worth employers offering a few hours of work between nine and three to suit a parent picking up their children from school. It may not suit them to offer part-time and casual employment because the rules, the regulations and the fixtures around such employment arrangements have made it such that employers are walking away. So I strongly condemn the government for not understanding that this is a difficult market in which to ask this group of parents to seek employment and then not care about putting in place the measures that would help them to gain employment.

I make the point that we in the coalition support this legislation. We also recognise that it actually applies to everybody who is newly in receipt of a parenting payment since 2006. It picks up a group that were grandfathered when the legislation came in. They were grandfathered because we in the coalition understood the difficulties that they faced then, several years ago, in gaining employment, and we did not want to change the rules for them. But we wanted to announce to everybody else who was in receipt of a parenting payment that there would be stronger work and activity tests for them when their youngest child turned six or eight, depending on their personal circumstances. What this government has done is pick up a group of grandfathered single parents—it will affect single parents more—and said to them out of the blue, with no warning, with no support and in a job market being made much harder to enter, come 1 July with the carbon tax: 'These rules now apply to you. We just do not care.' You couple that with the hypocrisy that they have shown towards the coalition's Welfare to Work measures and you see how it is the coalition that has done the heavy lifting in these policy areas for years and years. The government, which recognises the reality of mutual obligation and the reality that it is in the best interest of children to grow up in a household where parents work but really lacks the stomach to do anything serious about it, walks both sides of the street on this issue.

I know what it is like to be a single parent and I know what it is like to be poor. I have not been those things at the same time, but I do feel for the group of parents that will be captured by this legislation and I do acknowledge the representations made to the coalition by the Australian Council of Social Service and the work that they do in representing the interests of those people affected. We in the communities within our electorates—we certainly are on this side of the House—will do all we can to help and assist those parents with the organisations and the facilities that do remain in place to help those on low and fixed incomes at such a difficult time.

I conclude my remarks by saying that we do acknowledge that mutual obligation and that welfare to work are strong coalition principles, that there is equity in applying those principles to everybody and not keeping one particular group grandfathered—if indeed this is what the government's approach is going to do—and that we will not be opposing the bill.

Andrew Leigh (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

Too many Australians live in circumstances of entrenched disadvantage. Too many Australian children are in households where their parents and sometimes their grandparents have not known regular employment and have not known the dignity of work and the social inclusion that comes from being part of the labour market. It is a concern to see children growing up in households where the example of work is not there in the morning, when the alarm goes off and a parent leaves for work or study, and it is important that we ensure the benefits of work are available to as many Australians as possible.

I left high school as Australian unemployment was beginning to spike in 1990 and am acutely aware of what it is like to be a young person in a labour market where it is difficult to get a job. Unemployment then spiked at 11 per cent, and that had an impact on school leavers but it also had an intergenerational impact on those children in households where parents could not find work. One of the great achievements of this government has been avoiding a thing that never happened—avoiding the global economic experience of unemployment that has blighted so many developed countries.

This bill is a difficult one. It puts in place incentives for work that will now apply equally to all parenting payment recipients. The changes will encourage parents to participate in the labour market sooner, and our hope with this bill is that it will provide intergenerational benefits for families and children—that more young children will have the opportunity of growing up in a household where people work. This was the great achievement, I think, of social policy under the Clinton administration.

Under Bill Clinton, through the move to an earned income tax credit spearheaded by his campaign slogan 'If you work, you shouldn't be poor', there was a substantial increase in employment rates in low-income communities, among single parents and among African Americans. The intergenerational impacts of that are, I hope, positive. American Dream, a book by Jason DeParle, the New York Times writer, speaks about the experience of three women going through the Clinton employment reforms of the 1990s. Part of the impact was having a little more money, but part was also the power and the control of moving from welfare into work.

Jason DeParle talks in his book about the attitudes of behaviour that come from participating in the labour market. One of the benefits for us in Australia is that the bottom end of our labour market is well above the bottom end in the United States, now with a $16 an hour minimum wage. We have a minimum wage which is above the average wage paid by many large US companies including, for example, Apple and Costco.

A significant proportion of those subject to the provisions of this bill will be single mothers and partnered mothers. We want their contribution to the workforce. We want them to participate in the economy. We are now, with an unemployment rate of five per cent, in a situation in which many sectors of the economy face labour shortages. The ABS labour force survey showed in May that the number of people employed in Australia is now over 11.5 million and we have a national participation rate of 65 per cent: 59 per for women and 72 per cent for men.

It is important that we create the right incentives to encourage people to move from welfare to work, and I commend the work of the Treasurer and the Minister for Families, Community Services and Indigenous Affairs, over the course of more than a decade now, through their advocacy from opposition and into government about reducing the disincentives for work that welfare tapers represented. The unpardonable situation of welfare tapers that exceeded 100 per cent meant that when you earned another dollar you lost more than a dollar in income support. We have now gotten rid of those disincentives.

It is vital that we increase employment rates, and it is such a contrast to be here in Australia, looking at the unemployment situation in other developed countries. The Economist magazine recently noted that, if all unemployed people in developed countries lived in the one nation, it would have a population about the size of Spain's. For us in Australia, we now have a five per cent unemployment rate and only 19 per cent of unemployed Australians were long-term unemployed as of July last year, meaning they had been unemployed for more than a year. That is in contrast to 2003 and 2004, when the long-term unemployed share was 21 per cent. So not only have we brought down the unemployment rate over the course of the last decade but we have also brought down the share of the unemployed who are long-term jobless.

We know the cost of unemployment goes beyond the economic. We know that the loss of dignity that accompanies losing a job can be associated with depression, family breakdown and dissatisfaction with one's life. Nick Carroll, who was a PhD student when I was at ANU, wrote a paper for the Economic Record titled 'Unemployment and psychological well-being'. Dr Carroll found the adverse impact of unemployment on life satisfaction was large and significant. He also found that past unemployment also had a similar effect. Even once somebody had found their way back into the labour market, the effect of having been unemployed was still there and you could still see a scar on their happiness levels. We do know that the longer someone spends unemployed, the more difficult it is to find their way back into the labour market. If you are an office worker, the computer programs would have been updated and it takes a while to learn the new programs. But more than that, there is also a psychological effect from the loss of self-confidence that can come with being out of the labour market for a long time.

As I said before, the United States and European unemployment rates are significantly higher than those here, as is the unemployment duration. The US average jobless period is now 40 weeks. Only four years ago it was 17 weeks. Americans, if they find themselves unemployed, tend to be unemployed for a very long period—three-quarters of a year. In Italy the average duration of unemployment for the unemployed is over a year, so the average unemployed person in Italy is long-term unemployed. As people become detached from the workforce, it makes it harder to re-enter. That has an impact not just on the individual but on the society, with lower growth rates, lower economic activity, and less public finances because of lower tax receipts.

According to the Australian Bureau of Statistics figures from June last year, Australia had about 96,000 jobless couple families, 210,000 jobless single parent families. Of those single parent families looking for work, 23 per cent had been jobless for more than a year. We have a responsibility to ensure that those people are part of our nation's productivity and of our economic and social wellbeing.

This bill abolishes grandfathering to parent payment single and partnered recipients. Grandfathered parenting payment recipients will have participation requirements when their youngest child turns six for partnered parents and eight for single parents. It will bring these requirements into line with parents who have claimed parenting payment since July 2006 and now treats all parents claiming parenting payment equally, fairly and consistently. The current rules state that parents have different entitlements according to when they first claimed. So parents who claimed income support after 1 July 2006 are eligible for parenting payment until their youngest child turns eight if the parent is single or six if the parent is partnered. Parents who received parenting payment before 1 July 2006 were therefore grandfathered and may continue to receive payments until their youngest child turns 16. Grandfathered recipients have participation requirements when their youngest child is seven, unlike new recipients who have participation requirements when their youngest child is six.

The bill brings forward the gradual alignment of parenting payment rules announced as part of the Building Australia's Future Workforce package in the 2011-12 budget. It will create better incentives for parents to return to the workforce and recognises that parents' capacity to undertake work or study increases as children get older. We have more generous income test provisions for single principal carers on Newstart allowance. Those will apply to eligible single parents affected by the earlier cessation of grandfathering. Single parents already studying while on parenting payment can continue to receive the pension education supplement when they continue on the same course as a Newstart recipient.

The bill also introduces new liquid asset waiting period maximum reserve amounts. They are doubled from the current levels. That strikes, I believe, an appropriate balance between requiring people to rely on their own resources and providing fair and reasonable access to support. It will allow many people to access income support more quickly and reduce the extent to which they have to draw down their liquid assets before getting income support. Those new thresholds will commence on 1 July.

Grandfathering by its nature is a complicated matter and there are always going to be tensions between the needs of those for whom the new measures apply and those who are exempt. I do not think economics or social policy or ethics gives us a right way of doing grandfathering but, as the member for Farrer noted before, this is a difficult area of policy. The provisions for grandfathering parenting payments were introduced by the Howard government. What we have done is make the various entitlements consistent and fair for all parents. It is not a radical change, and I believe it introduces equality between parenting payment recipients who claimed before 2006 and those who claimed after 2006.

It is important also to recognise assistance provided by the government to parents re-entering work. Parents affected by the change will have access to professional career advice as well as childcare assistance and individually tailored employment services. A particular program I believe is important is the JET program, which recognises that access to affordable and accessible childcare is really important for parents who want to get the skills and training to move into the workforce. The JET program provides considerable childcare subsidies for parents on income support, mostly single parents, so they can study or train to develop the skills to get a job. We have seen the number of families using this program increase from over 20,000 in 2007-08 to more than 31,000 in 2010-11. In this budget we announced another $225 million to be invested in the program over the next four years. That will mean around 130,000 parents across the country will be supported to join the workforce and provide for young families.

JET recipients pay a parental co-contribution of $1 per hour of child care per child, and 50 per cent of the co-contribution can be claimed under the childcare rebate, meaning that JET recipients pay a childcare cost of 50c an hour. Those investments support record numbers of Australian parents, particularly single mothers, to enter the workforce.

The changes to the parenting payment grandfathering will reduce the average duration on income support and supports the dignity of work. I commend the bill to the House.

Debate interrupted.