Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

Pursuant to order and at the request of the chairs of the respective committees, I present the report of the Education, Employment and Workplace Relations References Committee, The adequacy of the allowance payment system for jobseekers and others, the appropriateness of the allowance payment system as a support into work and the impact of the changing nature of the labour market, together with the Hansard record of proceedings and documents presented to the committee.

Ordered that the reports be printed.

I move:

That the Senate take note of the report.

I do wish to speak to the report, but I seek your guidance—I want to make sure that there is adequate time for others to contribute.

John Hogg (President) Share this | Link to this | Hansard source

We have got until 12:45, so there is time.

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

Thank you, Mr President. I thank the secretariat, those who participated in the series of hearings that we did have and those who made submissions, of which there were 78. We heard from witnesses in Melbourne, Canberra and Sydney, and we considered a number of reports prepared by charities and the not-for-profit sector, academics, government, professional bodies and, most importantly, those who are deeply affected by the legislation.

The committee made seven recommendations that I commend to the Senate. If implemented by government, they would improve the allowance payment system, not least by further encouraging those on Newstart to get work if and when they can even if it is temporary work as a first step to longer-term employment. The recommendations relate firstly to increasing the resources available to jobseekers during the first few weeks and months of unemployment. The committee heard evidence of many instances where the length of time from a person losing their employment to when they get back into meaningful employment or its opportunity is critical to their own wellbeing, to the maintenance of their skills and, most importantly, in their presentation to potential employers of their capacity to get back into the workplace.

The second recommendation relates to improving the cooperation between government agencies to appropriately target training and support for mature aged workers. Whilst time does not permit me to go into all of the elements, I do commend the report. I particularly commend the secretariat for the work they have done in preparing a wealth of background information which is well worth reading. There are summaries of reviews that have been undertaken, including the Henry review into this area. I would commend people to read this in some detail. Mature aged workers at the moment fall into a void because very often at the time they lose a job, whether it is due to redundancy or whatever, they actually have sufficient cash and assets, as an older person, to put them above the limit that would immediately allow them access to the sources and resources available. All of us would know that, when an older person does lose their employment, the days, weeks and months between them losing employment and becoming re-employed will dictate their capacity and their ability to get back into the meaningful workplace.

The third recommendation is to develop programs to assist former carers back into the workforce. I particularly commend a witness here in Canberra—a person who was trade skilled and a great contributor to his community—who ceased work to care for aged relatives. Some years later, when his mother passed away, he found great difficulty in getting back into meaningful employment through the processes. The committee actually asked him whether he would go away and give us a template for the best mechanism and process by which a person finding themselves as a carer whose relative or the person for whom they were caring has now passed away, can find their way meaningfully back through the system and towards employment. I recommend that to those who are interested.

The fourth recommendation relates to increasing the income-free threshold for long-term Newstart allowance recipients to enhance incentives to work, and I know there are others who may speak to that. I do nevertheless commend that there needs to be an increase in the income-free threshold to encourage people to actually get back into work.

The next recommendation relates to increasing the working credit for Newstart recipients to the equivalent of three months work at the minimum wage to again create the incentive for those who have lost employment or who are not in employment to actually move in that direction.

Next is reforming governmental processes to enable departing Newstart recipients to remain on departmental systems for one year after they cease receiving payment. We found instances where a person would be receiving payments, they would be in the system and they would then have the offer of employment, but a fear of them falling out of the system may have led them to a decision to not seek that employment, however short term; however temporary. We recommend that the circumstance should be there that a person could actually remain on the books, in a sense, without being a recipient, so that, in the event of them losing that source of employment, they can get back into the system without an unnecessary delay.

The last recommendation is assessing the viability of creating an online calculator to enable allowance recipients to calculate the costs and benefits of work and the impact of work on allowances. I want to acknowledge the effort made by the combined departments in evidence presented to us in Sydney. I thought it was a very collaborative and collegial approach to the questions that we put to them. What came out of it for the committee was an absolute plethora of entitlements that might be due to some people but not to others; of circumstances in which there may be an opportunity which is either denied to them or they do not know about. Of course, I am sure there is also a movement in the staff of Centrelink and in the other agencies, and I think it lends itself to some form of database with online access so that people can participate.

The predominant theme in the evidence to the committee went to the adequacy of allowance payments and, in particular, the Newstart allowance. We received information from those who put in written submissions and from other witnesses about how difficult it was for them to eke out an existence and to gain secure paid employment whilst living on Newstart. We certainly could relate to that. But I would say from my position that there are all sorts of reasons for increases in the cost of living—the carbon tax being one and other expenses which are not brought into account in the consumer price index. I would make the point that the CPI itself is not an adequate indicator in determining the adequacy of these payments for these people. The committee agreed on the whole with the argument that the Newstart allowance does not allow people to live at an acceptable level in the long term. But, of course, it is important to remember that the allowance is not intended to be a long-term solution to unemployment. We hope that Newstart will be a prop so that people who have lost employment or who have not yet gained it will be able to use it on their way back into gainful employment.

We do know that there has been waste and there has been a lack of spending, and that has now come home to roost. We now know that the interest burden alone on the debt in Australia is some $20 million a day, or $600 million a month. It was interesting that an earlier hearing considered the question of moving people from the parental leave back to Newstart, and that was to save the government $700 million over four years. In fact, that $700 million is the equivalent of about one month's interest on the national debt at the moment. It is when we do run up debts of this level that we see the end result.

The committee was concerned to learn that 42 per cent of recipients who commenced Newstart each year do not transition quickly back into the workforce. We believe that the allowance payment system could better encourage a rapid return to employment. The committee focused on how policy makers might make best use of the resources available for job seekers to speed up their movement from Newstart back into employment. The committee also made recommendations that resources be boosted to assist job-seeking for those in what is known as stream 1—most of whom are likely to be relatively newly unemployed people—so that their term of unemployment can be minimised.

This has not been an easy hearing for the committee. I commend my colleagues and I commend the secretariat. I also commend the report and its recommendations both to the Senate and to the wider community as being a bipartisan attempt to come to a resolution on this very difficult and long-term issue in Australia.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

I would also like to contribute to the debate on the Education, Employment and Workplace Relations References Committee report entitled The adequacy of the allowance payment system for jobseekers and others, the appropriateness of the allowance payment system as a support into work and the impact of the changing nature of the labour market.I am very pleased to be able to contribute to this debate as it was the Greens that referred this very important issue to committee inquiry.

The Greens have submitted additional comments because, while we welcome the primary finding of the majority report, which is that the current rates of Newstart and other allowances are inadequate—let me say that again: the committee found that the current rates of Newstart allowance are inadequate—and we support that finding, the overwhelming evidence that the committee received was in fact that Newstart is inadequate. Where we have concerns is that the committee did not then go on to make the most obvious recommendation, which of course the Greens have done, which is: Newstart needs to be increased. Newstart needs to be increased by at least $50 a week because it is inadequate. We also go on to recommend the need to address the issue around indexation because we know that is separate as well, and we document that in our committee report findings. We also recommend that, with the increase in payment, there should also be proportional increases across the other payment allowances.

The reason that we needed to give additional comments is that the committee in their majority report failed to make that increase. In fact, they say that they are not able to make that recommendation. They go on to say how we cannot afford it because of other wastages of money, which Senator Back has just articulated. The committee's majority report says that there are two possible solutions: either Newstart allowance should be increased to raise the standard of living available to recipients, or more careful thought needs to be applied to how best to ensure that people spend as little time as possible on welfare between jobs.

The committee were not forced to take that approach. What they should have more carefully looked at was: what impact does a low rate of Newstart have on people in driving them into poverty, what impact does that poverty have on them and what cost does that poverty have on society? We document that in our additional comments to highlight the need to address an increase in Newstart. It is quite obvious that Newstart is inadequate and that it needs to be increased. I am really disappointed that the majority of the committee did not take the step to make that recommendation. The Greens have of course taken that step and made that recommendation.

Another issue that the Greens address in our comments is around the inadequacy of some of the joint agency submissions. We raise two points in particular in our additional comments. We believe that they run two particular arguments to dull the overwhelming evidence from the community and from the experts that Newstart payments are inadequate. One of the arguments they run is that measuring 'adequacy' is a subjective measure and so it is difficult to measure. My question is: what is so difficult to measure about Newstart being $130 below the poverty line or only 45 per cent of the minimum wage? It does not seem to too hard to me.

On top of that, of course, there are a lot of international frameworks around, guiding measurements of this sort. So it should not be too hard now because of the frameworks that we have. It is a pretty poor argument that we cannot raise Newstart because it is a bit of a subjective measure.

The other line that they continue is trying to mess with the fact that other allowances on top of Newstart mean that families can earn almost as much as the minimum wage or more than it. Of course, that line was run very early on and the media picked it up because the government were trying to make it look as if was not too bad being on Newstart if you get these other payments—but they were measuring it against the minimum wage for a single. If you are a family on the minimum wage, you are also entitled to those same allowances such as family tax benefit. This is done to disguise the fact that Newstart is too low. I am really disappointed that the agencies that are supposed to be looking after the welfare of the most disadvantaged Australians feel it is necessary to muddy the waters to try and confuse people about the inadequacies of Newstart—and so we address those issues in our submission.

The other issue that we raise is that we think that the committee did a good job in addressing issues around older workers. We had some very strong evidence around that, including the contribution that, if only three per cent of older workers were able to gain employment and get over discrimination against the aged in our workforce, they would make a very significant contribution to our economy. The report, as Senator Back just touched on, addressed the issues around carers going back into the workforce. However, I do not think the committee really adequately got to grips with the issues around partial disability, with one in 10 people on long-term unemployment being Indigenous, one in 15 being a sole parent—and we are about to see a whole lot of sole parents dumped onto Newstart—and the fact that one in two have not completed year 12.

The department and the government like to use these confusing figures saying that nearly 60 per cent of those going onto Newstart come off within a year. As Senator Back said, 42 per cent are actually on Newstart longer than a year, and 62 per cent of people that are on Newstart have been there long term, trying to survive on an inadequate payment. The majority committee report addresses this bit with quite a piecemeal approach. With issues around better employment service support, they make some recommendations but they are not comprehensive.

The Greens believe that there was certainly enough evidence given to the committee to point out that we need to be having an independent review of the functioning of Job Services Australia. There is enough evidence to show that major cohorts are missing out and that we need to better support people trying to find work. We need to be addressing their barriers to employment, even it is a single barrier—though many of them face multiple barriers to work. So we also need to be improving our employment support to those most disadvantaged job seekers.

We have identified the inadequacies of Newstart and we are about to dump tens of thousands—in the first instance, 84,000—single parents and their families on to an inadequate payment that is clearly documented as inadequate. On 1 January we dump 84,000 single parents and their children onto a clearly documented inadequate Newstart payment. I had an email just this morning from one of those single mothers. I would like to read it out:

I am absolutely in shock that my parenting payment is about to be reduced by around $200 a fortnight. I had a Centrelink employee ask me if I needed to talk to counsellor. I need to have the $200. I am in a legally binding lease. I have payments for my car, internet for my son and all the other expenses in life. I have been given two months' notice of the changes. I do the right thing. I work double what Centrelink requires but I cannot find fulltime work. It would be like tapping the highly paid Centrelink employer on the shoulder and saying, 'Oh by the way, at Christmas we are halving your wage.' It is outrageous. There are going to be a lot of homeless people and children. Somebody please help us with no voice.

That is the human face of what is about to happen on 1 January.

What this report clearly articulates is that we need to be changing direction. We need not to be dumping these single parents onto Newstart. We need to be increasing Newstart. We need to be indexing it better and supporting those workers who have faced multiple barriers to employment. They are the most disadvantaged workers. They need better employment support to enable them to find meaningful work, not just cycling people in and out of casual work. That is the other thing the department could not tell us about. They do not even have the data systems to track whether people are cycling in and out of work and how many times. Of that 60 per cent who find work, we do not know how many return to unemployment within a short period of time. We have to do this better, Australia. This report clearly articulates that.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

Senator Siewert's passion on these issues is there for all to see. I certainly commend her advocacy in these areas. I know she is very genuine and takes a very active and constructive role in the committee's deliberations.

I would like to commend the report that Senator Back has tabled today and thank him for his chairmanship of that committee. As always, we have striven to reach consensus, and in the bulk of the report we have achieved consensus. It is a report which Labor senators absolutely endorse, even though we have included some extra comments and recommendations because we believe there are issues not dealt with comprehensively enough in the report. We do support all the recommendations that are in the report.

Whilst the recommendations in the committee's report go some way to addressing the immediate concerns of Labor senators, it is plain that the Newstart allowance is too low, particularly for single recipients. For this reason, Newstart allowance single should be increased, taking into account other potential increases consequential to recommendations made in the committee's report.

Labor senators believe that indexing arrangements for Newstart need to be reviewed and that consideration be given to whether, like pensions, the payment should not decrease in real terms.

Labor senators note that recommendations 4, 5 and 6 in the committee's report are targeted at increasing incentives for Newstart recipients to engage with the workforce as they transition away from the payment. These recommendations are a good beginning. However, Labor senators believe that it is more appropriate that the income-free threshold for Newstart allowance recipients should be increased to the equivalent of eight hours per fortnight at the minimum wage. That, in effect, is half a shift per week before people lose payments. We believe that is a good incentive to get people into the workforce. Hopefully, half a shift a week will then lead to more hours, more days and will build confidence in an experience and skill base that people require in the workforce before people start to lose payments. We recommend that.

We also note and refer to Senator Back's comments about the enormous complexity that the committee was confronted with on how different payments intersect with different circumstances that people are in. It was very difficult to get our head around many of those issues. While I have the greatest respect for Senate committees, we effectively write reports based on evidence presented to us. Unfortunately, in this instance we neither had the time nor the ability to actually drive down and do any investigative work ourselves to look at some of the ways that the policy might need to be changed to deal with some of the enormous complexity.

It has been 12 years since the last significant review of the payment system. In the last 12 years the nature of work has changed quite dramatically. We believe that 12 years on from the last review, the McClure review, it is timely to conduct another comprehensive review with a particular focus on allowance payments. The SenateEducation, Employment and Workplace Relations References Committee had neither the capacity nor the time to do that. Such a review should consider indexing arrangements; adequate payment rates; participation requirements; incentives and support to work; supplements such as rent assistance; job support services, including the Job Services Australia incentives framework for providers; and the changing nature of the labour market.

The review should also consider how tailored assistance can be better provided to people who face particular barriers to employment—for example, young people, sole parents, people with a partial capacity to work and people who have been unemployed for more than a year. Newstart is designed to transition people from unemployment into work. Unfortunately, because of a whole range of reasons, Newstart allowance is the only support for a significant number of people in our community. So let me again say that, as far as Labor senators are concerned, the payment is too low. Labor senators have recommended, in addition to the good recommendations in the bulk of the report, which we agree with, that the government increase Newstart allowance single, taking into account the relationship with the base rate and other payment design changes already recommended by the committee.

Labor senators also recommend that the government review the indexing arrangements for Newstart allowance and other allowance payments. We also recommend that the government increase the income-free threshold for Newstart allowance recipients to the equivalent of eight hours work per fortnight at the minimum wage. Labor senators recommend that the government commission a comprehensive review of Newstart allowance and other allowance payments.

Let me thank the secretariat. They always produce reports of the finest quality for us. This report is no exception. I know that a power of work went into getting a report that the whole committee signed onto. Again, I want to thank not only Senator Back but also the secretariat for achieving a unanimous report. I recommend the report to the Senate and I recommend the additional comments and the additional recommendations of Labor senators. I seek leave to continue my remarks later.

Leave granted; debate adjourned.