|
|
|
 |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PPS no paid work | NSA with 15hrs paid work | |
| Private income @ $12.75 per hour | 0 | 191.25 |
| Income support | 247.35 | 134.95 |
| FTB A – includes rent assistance | 138.88 | 138.88 |
| FTB B | 46.90 | 46.90 |
| Tax | 0 | -24.17 |
| Total | $433.13 | $487.81 |
Table 3.2: Difference between weekly disposable income for a principal carer single parent (one child aged 8, no earnings) on PPS versus Newstart Allowance
| Current PPS | New NSA | |
| Income support | 247.35 | 221.70 |
| FTB A – includes rent assistance | 138.88 | 138.88 |
| FTB B | 46.90 | 46.90 |
| Total | 433.13 | 407.48 |
Table 3.3: Difference between weekly disposable income for a person (no children) in receipt of DSP with no job, versus a person (no children) in receipt of NSA with a job
| DSP no paid work | NSA with 15 hrs paid work | |
| Private income @ $12.75 per hour | 0 | 191.25 |
| Income support – includes rent assistance | 296.95 | 168.00 |
| Tax and Medicare levy | 0 | -24.36 |
| Total | 296.95 | 334.89 |
Table 3.4: Difference between weekly disposable income for a couple (no children) with one partner in receipt of DSP, and one NSA (DSP/NSA), with no job versus a couple (no children) both in receipt of NSA with one job (NSA/NSA)
| NSA/DSP no paid work | NSA/NSA with 15 hrs paid work | |
| Private income @ $12.75 per hour | 0 | 191.25 |
| Income support (partner with no disability) – includes rent assistance | 182.50 | 119.15 |
| Income support (partner with partial disability) – includes rent assistance | 252.35 | 207.35 |
| Tax | 0 | -21.22 |
| Total | 434.85 | 496.53 |
Source: Submission 47, pp.33-34 (DEWR).
3.2 The Department concluded:
The important point to note there is that many of those will be on a partial payment because they will also be working part time and meeting that 15-hour requirement. So, in fact, they will be getting their income from work. This, in a sense, will be a top-up to that work. Those people will absolutely be better off than if they were sitting on the disability support pension or parenting payment single without work.[90]
3.3 DEWR indicated that the Government is also implementing several significant changes to income support provisions and concessions from 1 July 2006. These include a more generous allowance income test for Newstart Allowance. The key changes are a reduction in the 70 per cent personal and partner income test taper rates to 60 per cent, and an increase in the income threshold at which the higher taper rate (60 per cent from 1 July 2006) applies; from $142 to $250 a fortnight for Newstart and Youth Allowance (Other). DEWR stated that this will be 'advantageous to all recipients who have earnings' and 'will improve the rewards from part-time work and help people move from welfare to work'.[91]
3.4 The Committee also notes that there is other significant support for families with children available through Family Tax Benefits. The rate of Family Tax Benefit A for each child under 13 years is $134 a fortnight. For each child between 13 and 15 it is $170 per fortnight.
3.5 A further benefit of working is access to superannuation. Those in paid employment and earning more than $430 a month receive a 9 per cent employer superannuation contribution. DEWR noted that even with earnings at the minimum wage of 15 hours per week, the accumulated Employer Superannuation Contribution Guarantee after 15 years would be $16,400. DEWR concluded that 'this provides income for retirement that would not otherwise be available if a person were to remain on a pension payment and undertake little if any paid work'.[92]
3.6 The Department also noted that there is continued access to the Pensioner Concession Card, Pharmaceutical Allowance and Telephone Allowance for single principal carers and people with disabilities with reduced work capacity receiving Newstart or Youth Allowance (Other). Principal carer parents with part-time work requirements will also be eligible for an Employment Entry Payment when they gain or increase hours of work to 15 or more a week for four consecutive weeks. Single and partnered parents will receive a payment of $104 while those with partial capacity to work will receive $312.[93]
3.7 The Department provided evidence that research indicated that participation requirements are necessary to increase the up take of employment as indicated by analysis of the Australians Working Together reforms. Parents with participation requirements had the largest increase in the reporting of earnings compared to other parent groups with lesser obligations.[94] Other research indicates that 'income support payments have a suppressing effect on people's labour supply because income support can help them reach their desired level of income with less work'. DEWR tabled a list of specific studies.[95]
3.8 Submissions raised concerns about the impact of the proposed changes on parenting responsibilities.[96] Of particular concern was the impact of the changes on sole parents. Submissions noted that for single parents, combining paid work and parenting can be difficult.[97] The Sole Parents' Union argued that 'this is a clear example of government policy which devalues parents' responsibility to their children once their children turns 6 and starts school'.[98] It was also noted that parenting responsibilities change from time to time, particularly when a child is sick or during adolescence when many children need additional parental care and supervision. Participation by parents in school activities is also valued.
3.9 The Smith Family stated that the Bill itself makes little reference to the potential impact of its reforms on family life, and perhaps assumes that 'the supposedly increased monetary benefits of employment more than compensate for this'.[99] The Human Rights and Equal Opportunity Commission (HREOC) stated that while it agreed with the Government's statement in the Explanatory Memorandum that the best support for families is paid work, this should not be at the expense of parents' ability to care for their children, particularly those of primary school age.[100]
3.10 Concern was voiced about the impact on vulnerable families. For example, the National Alliance for Children and Families at Risk noted that the current child protection and alternative care systems are already overloaded and rife with problems stating that 'it is more than likely we will see more children "at risk" and in some cases in need of care and protection' as the reforms will place additional stressors on single parents.[101] WEL commented on the impact on separated parents who share child custody where there may be more difficult child care arrangements, particularly if parents are working weekends or on shift work.[102]
3.11 The Committee notes that the aim of the Welfare to Work package is to improve the economic position of the many parents who are locked into disadvantage by lack of paid employment. Much research shows that increased workforce participation by parents is highly beneficial at all stages of working lives: families benefit through improved wellbeing and increased income and therefore standard of living. Of significance is the impact of a working parent on the wellbeing of children and the outcomes for their later lives. DEWR pointed to research by the Australian Institute of Family Studies where parents reported positively on the role of employment in their lives and the Smith Family commented that its research:
...has highlighted how strongly important it is, because of the dual generation focus, for a young person to experience a parent – whether a sole parent or two parents – who has a good work ethic and can instil the values that would be needed to enable them to develop the capacity to engage.[103]
3.12 The Committee also notes that there are mechanisms within the reforms to ensure that the needs of children are not overlooked. For example, temporary exemptions from participation requirements are available to parents when children are ill or have a disability and for reduced hours of schooling in the first few weeks of a child's first year at school. These are discussed in more detail later in this chapter.
3.13 Under the proposed changes, principal carers on Parenting Payment, Newstart Allowance or Youth Allowance will have part-time job search requirements. The commencement date of their participation requirement is dependent on the age of their youngest child.
3.14 Witnesses raised a number of concerns with regards to the part-time participation requirements. WEL for example commented that the cost of going to work and child care fees may leave very little benefit in going out to work.[104] VCOSS stated that a sole parent who has recently left a situation of family or domestic violence should not be expected to look for work until they are able and ready to do so. In addition, a person's geographic location, travel costs and employment prospects relative to their location should be taken into account when activity requirements are imposed on them.[105]
3.15 The Committee notes that there are significant safeguards in the Welfare to Work package for principal carers. These safeguards relate to the requirement to undertake 'suitable' work and to participation requirement exemptions. Together they ensure that principal carers will be able undertake their participation requirements while taking heed of their particular circumstances and the work they are capable of doing.
3.16 The concept of 'suitable' work foreshadowed by the Government ensures that principal carers will only be required to undertake part-time work of at least 15 hours per week that the person is capable of doing, taking into account their caring responsibilities. If a person is offered a suitable job of less than 15 hours a week the recipient will be required to accept the offer, but will also be required to continue looking for additional work until they are working at least 15 hours per week. For a job involving employment outside school hours to be suitable, child care requirements are to be taken into account (child care is discussed below). In addition to these safeguards, a principal carer would not have to accept a job if it would mean the person would need to give up a higher paying job (in terms of total pay) that the carer already holds.
3.17 In relation to the concerns received that travel, child care and other costs associated with being compelled to accept suitable work would mean that earnings would be negligible, DEWR indicated that financial costs will be taken into account in the assessment of suitable work. For example, a person cannot spend more than 10 per cent of their gross wage on travel.[106] DEWR concluded:
Basically, if there is a negative or low return from work, again, they are not obliged to take the job. As part of the guidelines, we will be producing issues such as the cost of transport, child care et cetera in that regard.[107]
3.18 In addition, a range of payments are available that may contribute towards the costs of participation; for example supplements paid for participation in Work for the Dole, Community Development Employment Programme, and the Language Literacy and Numeracy Programme; Employment Entry Payment; and Mobility Allowance.
3.19 Finally, a person would not have to take up a job if commuting between the person's home and the place of work would be unreasonably difficult. This also includes the time required to travel to and from the place of outside school hours care. As a general rule, travel time of more than 60 minutes from home to work and vice versa (including any side trips in this journey to drop off or pick up children from care or school), would be considered unreasonably long for principal carer parents with part-time jobs.[108]
3.20 The second raft of safeguards relates to access to exemptions for principal carer parents. This recognises that certain principal carers will have special circumstances that make it appropriate for the participation requirements to be reduced or exempted. In particular cases automatic exemption can be applied:
3.21 Temporary exemptions will be considered on a case-by-case basis and are available for a wide range of circumstances: these include caring for a child with a disability; sick children; very high stress associated with recent separation; parents with large families (4 or more dependent children); parents looking after frail/aged persons and parents with episodic illness.
3.22 One very important temporary exemption is that which is available where a person has experienced domestic violence. In such cases, exemptions of 16 weeks are granted. Further exemptions may also be granted. Principal carer parents who are exempted because of domestic violence will be connected to an employment service provider such as Job Network, but will not have to attend an appointment during the period of the exemption. They will be temporarily exempted (initially for 16 weeks) from meeting requirements until their situation has stabilised. Centrelink will be provided with guidelines detailing how domestic violence exemptions are to be administered.
3.23 DEWR concluded that 'activity requirements for principal carer parents will be applied flexibly, and parents will not suffer any penalty for refusing work which is not assessed as suitable given their circumstances'.[109]
3.24 The approach taken was supported in evidence by the National Employment Services Association (NESA) which stated:
Reforms in welfare systems are complex and NESA is pleased that the Government has reflected in its Bill the need to be mindful of the fragility of the many people who may be affected by these changes. NESA notes that there have been many provisions made within the Bill to ensure our most vulnerable income support recipients such as those who have experienced domestic violence or traumatic family breakdown are considered.
It is clear that it is inappropriate to build such a system on absolutes and individual need and circumstance must form part of the equation however equally there must be mechanisms to ensure that there is consistency and equity in these considerations. Particularly, when we are referring to the most vulnerable of Australian citizen's a reliance on their ability to appeal decisions and advocate on their own behalf would be an inadequate safety net. NESA believes that the broader community would disapprove of initiatives that were portrayed as being unfair or inequitable in their implementation.[110]
3.25 Another concern raised in evidence was that the part-time participation requirement is for paid work only. Volunteer work in schools or elsewhere, tertiary or other long-term study, or caring for children, is not considered an adequate or acceptable fulfilment of requirements.[111] The National Foundation for Australian Women also noted the importance of volunteers in Australian society and stated that the legislation is 'completely destructive towards, and demonstrating no recognition of the importance to the fabric of Australian society of volunteering'.[112]
3.26 In relation to the comments concerning volunteers, the Committee notes that the part-time participation requirement requires a principal carer to undertake part-time work or job search and undertake an annual Mutual Obligation activity. The Mutual Obligation activity may include volunteer work. DEWR also commented that an employment service provider may consider that undertaking voluntary work was contributing towards getting an employment outcome, in which case they could write that into the Newstart activity agreement. Voluntary work would 'then become more than just mutual obligation; it could contribute to your job search'.[113]
3.27 A major area of concern was the provision of adequate child care and the proposed requirement of a 'suitable' job being one where there was appropriate child care.[114]
3.28 UnitingCare stated that to participate in the workforce, sole parents require flexible quality childcare that is affordable. The major issues concerning child care are access; availability; affordability; flexibility and high quality child care that caters for the wellbeing of children.[115] WEL argued that a parent would be compelled to take shift work even if it interferes with family care and responsibilities.[116]
3.29 St Vincent de Paul stated that 'the promised funding for more child care places will not go anywhere near meeting the needs of people trying to participate in work or education and training'.[117]
3.30 There was also concern that those on income support would be required to access inadequate and/or expensive child care in order to meet their participation requirements. NCSMC for example, argued that:
3.31 Other witnesses pointed to the discretion given to the Secretary to establish that work is unsuitable if the person does not have access to appropriate care and supervision for their children when the person is required to work. HREOC stated it remained 'concerned that this still vests significant discretion in the Secretary on a matter that is vital to the ability of families to provide care for their children'.[119] HREOC considered that public servants are not in the best position to make decisions about the caring needs of a young child and that it is unfair and unreasonable to expect public servants to exercise discretion in what are frequently complex circumstances. HREOC also considered that the Bill too greatly lowers the age of the child at which the sole parent's participation requirements start.[120]
3.32 In relation to the number of child care places, the Committee notes that the Commonwealth is providing a $266 million package to child care over the next four years. It considers that this will assist parent in the transition from welfare to employment, education and training. The package includes:
3.33 The Department responded to concerns about child care arrangements for those with participation requirements. It noted that child care arrangements were an important element in whether a job was regarded as being suitable work for a principal carer. A job will be considered as unsuitable if the principal carer does not have appropriate child care or supervision available for the times when the person would be undertaking work. Appropriateness includes the cost and accessibility of the child care.[122] In response to concerns regarding shift work DEWR stated:
The child care has to be available for people as a condition of suitable employment. So if the child care is not available, the employment can be deemed unsuitable and they do not need to take that job.[123]
3.34 The Department also rejected suggestions that a parent would be required to to accept child care available at antisocial hours or risk being found in breach. DEWR stated 'they [single parents] would be able to decline a job in nearly all instances'.[124]
3.35 There was also much discussion in evidence in relation to child care for teenage children. The Department commented that in most instances, no approved child care is available for a teenager. However, a job would not be seen as 'suitable' where there was not appropriate care for the child. DEWR noted that the parent will make a decision as to whether they are happy having informal or other formal but non-approved child care arrangements. DEWR stated:
Essentially the parent would make the decision. It would be basically what the parent says to the [Centrelink] officer as to whether they do or do not have care arrangements for teenage children. All that Centrelink would be able to do would be to see if there was any approved child care as defined under the legislation available...If there is not, it is up to the parent.[125]
3.36 The special circumstances of foster carers were noted in submissions. The Commonwealth has responded to concerns about foster carers who may be on Newstart Allowance or Youth Allowance. Principal carers who are registered and active foster carers will be exempt from participation requirements for a period of up to 12 months at a time. Single parents will also receive a new rate that tops up their income payment to the equivalent of the Parenting Payment Single rate. Active foster carers will also access the Pensioner Concession Card, Telephone Allowance and Pharmaceutical Allowance.
3.37 DEWR also stated that foster carers who are needed for respite and emergency care will be considered to be active foster carers and will get the automatic exemption.[126]
3.38 During the course of the inquiry, a number of organisations expressed concern about the impact of the reforms on people with disabilities. People with Disability Australia (PWDA) argued that the reforms will keep people with disability 'marginalised and at a low ebb'.[127] The Physical Disability Council of Australia (PDCA) expressed concerns that some people will fail to benefit from the reforms.[128] Concerns were also expressed about some specific issues including the impact of discrimination in the work place, the cost of disability, difficulties of travel, and the special circumstances of people with mental illness.[129]
3.39 PDCA suggested that 'existing DSP recipients will have reduced incentive to find work because of the risk that if it does not work out, they will be forced onto Newstart'.[130]
3.40 The Committee notes that the Welfare to Work package also contains considerable safeguards for people with disabilities. Importantly, to address the problems suggested by PDCA, from 1 July 2006, a person on DPS who leaves payment for work can return to DSP within two years without having to make another claim if they are unable to maintain their employment for any reason. This will provide a safety-net for people with a disability who trial work and remove a significant barrier for those who wish to attempt a job placement but are fearful that it may not be within their capacity to do so.
3.41 A further safeguard incorporated in the legislation is that people with disability who are assessed as being able to work 15 or more hours per week within the next two years taking into account programs that could increase their capacity will be granted Newstart Allowance or another appropriate income support payment (subject to satisfying the other eligibility criteria). If, after the two years in such a program, their work capacity has not increased to at least 15 hours per week (because of a physical, intellectual or psychiatric impairment) these people will be able to qualify for DSP. DEWR stated:
This new qualification rule recognises that despite the provision of assistance to a person, at times, a person's capacity to perform work may not increase to the level that was initially anticipated. This may be because a person’s impairment has deteriorated, or his/her recovery from an injury has taken longer than anticipated, or his/her residual level of impairment is greater than would have normally been expected.
This qualification for DSP recognises that for people who have made every effort to increase their work capacity, but have been unable to, the appropriate payment is DSP.[131]
3.42 The Committee notes that a person must be able to work at award wages independently of a program of support otherwise the person will have a 'continuing inability to work'. The Explanatory Memorandum stated:
This ensures that people who are working at full award wages in the open labour market who require significant support in the workplace on an ongoing basis to maintain that employment, such as attendant carer to assist with toileting and eating in the workplace, will continue to qualify for the disability support pension.[132]
3.43 The Committee received evidence about the work availability of people who experience episodic illness or temporary illness for example epilepsy and schizophrenia. DEWR noted that in these instances, so long as the person has documented evidence from a treating health professional, he/she can apply for a temporary exemption from participation requirements or seek reduced activity test requirements. The person will still have participation requirements, but the requirements and the level of activities will be reduced to match assessed work capacity, or they may attract a temporary exemption.[133]
3.44 In addition, Centrelink and employment service providers must take into account a job seeker's personal circumstances including any disability when setting a person's activity requirements. Both the legislation and policy guidelines ensure that the activity test is flexible, fair and reasonable for people with partial capacity. For example, when negotiating an activity agreement, consideration will be required to be given to such matters as family and caring responsibilities, the length of travel time required to get to a job or activity, and the financial costs to the job seeker of participation and their capacity to pay, including travel costs. The legislation also states that where an illness, disability or injury that would be aggravated by the conditions in which the work would be performed, the work would be considered unsuitable for the person. Under the new arrangements, the 90 minute rule applying to travel time will be reduced to 60 minutes for those with a partial capacity to work.[134]
3.45 The Committee believes that the Welfare to Work reforms will only be successful if there are jobs for people to move into. Some organisations told the Committee that this was a fundamental flaw to the Government's aims, as there was insufficient employment available for those that will be moved on to Newstart Allowance. For instance, the St Vincent de Paul Society submitted that:
Australian Bureau of Statistics figures show that the labour market is clearly failing to provide sufficient work for those already unemployed and underemployed.[135]
3.46 The Brotherhood of St Laurence stated in evidence that compelling people to move off welfare and onto work would not assist in making jobs available:
We believe that unemployment is not caused by individual deficits. It is caused by a failure of labour market policies to provide sufficient jobs, which is still evident in the fact that there are currently nine job seekers for every vacancy, using the ABS extended labour underutilisation rate.[136]
3.47 The Department disputed claims that there are poor work opportunities, particularly in non-metropolitan areas, for those seeking employment. DEWR stated that 'the labour market in non-metropolitan Australia is actually very strong'. In the last 12 months to October 2005, employment growth in non-metropolitan areas was up by 3.7 per cent, compared to 2.8 per cent in metropolitan areas. In addition:
DEWR concluded:
There is not one single region in Australia which had a double digit unemployment rate in October 2005. Long-term unemployment fell by 18,300, or 30 per cent, in regional labour markets, and that was a much better outcome than in metropolitan areas, where it fell by 9,900, or 17 per cent [over the year to June 2005].
3.48 DEWR went on to state that the claims regarding lack of jobs 'are made on the basis of a very static model which says there are this many job vacancies in Australia on a particular day and there are this many people unemployed, plus bringing in all the marginally attached et cetera'. This does not take into account 'the fact that there is a massive amount of employment turnover every year in Australia...When they do that, it leaves the job that they have moved from vacant in many instances'. Australian Bureau of Statistics research shows that, in the 12 months prior to February 2004, 'there were about two million people who had commenced a new job in that year – very significant numbers in terms of a turnover effect'.
3.49 Analysis conducted by DEWR into 20 labour market regions showed that for labourers and related workers in the 12 months to September 2005 there were about 210,000 vacancies and 48 per cent remained unfilled after 28 days. On the clerical side – for example, elementary clerical, sales and service workers at the lowest level – there were about 38,000 vacancies and 40 per cent remained unfilled after 28 days. In intermediate clerical, sales and services – including retail, and general services – there were 55,000 vacancies and 56 per cent remained unfilled. In total, for those groups that are low- to medium-skilled, there were 417,000 vacancies. Of those, 192,000 were filled within 28 days and 54 per cent remained unfilled after 28 days.
3.50 The Department examined the ACOSS analysis of the 50 electorates with the greatest number of people at risk because of the Welfare to Work changes. DEWR noted that 26 were in regional areas. Of the top five electorates identified by ACOSS as likely to be most affected by the Welfare to Work changes:
...three actually recorded a lower unemployment rate than the national average, so that suggests that there are significant chances of employment for those groups. Also, a couple of non-metropolitan regions, which were identified by ACOSS, are also showing very robust employment outcomes. Two examples are lower western WA, which increased employment by 18,600 or 14.6 per cent in the last year, and Wide Bay Burnett, which is traditionally a high unemployment area in Queensland, where there was a significant increase of 10,600 or 10 per cent in employment. Across the 26 regional electorates that ACOSS listed as part of that 50, the average unemployment rate was 5.9 per cent in June 2005. At the time, the national average was 5.3 per cent, so they were just 0.6 percentage points above the national average.[137]
DEWR concluded:
All that indicates that there is significant potential to employ people with disabilities and parents across Australia.[138]
3.51 The Committee concludes that the job market across regional Australia is not as parlous as some have suggested.
3.52 During the inquiry, the Committee heard evidence that the Welfare to Work package did not provide mechanisms for job seekers to gain appropriate skills to enter the work force. ACOSS noted that many sole parents have only Year 10 level education, making it extremely difficult for them to access any but the most unskilled low-wage jobs, if they are able to attain employment at all. [139] The National Welfare Rights Network told the Committee that:
People who have dependent children or a disability may have been out of the workforce for some time and or have additional barriers to obtaining employment. Making these people solely look for work in order to comply with their activity agreement without allowing other types of activity, such as training, will be counterproductive.[140]
3.53 Those with disability are also disadvantaged in the labour market because of their lack of skills. It was argued that without a sufficient level of skill, many will remain on income support. Ms Julia Perry told the Committee that a high proportion of DSP recipients did not complete Year 12 or have post-secondary level education. She stated:
This is a disadvantage in the labour market, particularly for those who are incapacitated for manual work. The labour market is suffering from skills shortages and requires higher education levels among the potential workforce.[141]
3.54 DEWR indicated that the integrated employment services model addresses educational and skill needs. Job Network members are able to determine the needs of an individual which will lead to an employment outcome. These needs may include study and training. The Job Seeker Account is a dedicated pool of funds which Job Network members are able to able to use flexibly to purchase a wide range of employment related assistance for eligible job seekers.[142]
3.55 The Committee notes that a new service, Employment Preparation, will be available to provide assistance to principal carer parents, mature age people over 50 and carers to prepare them for a return to the workforce. This service is tailored to the individual and may provide a diverse range of assistance such as referral to courses to update skills or qualifications, addressing self esteem or self-confidence issues and improving job search skills and techniques. People without recent workforce experience will participate in this service as soon as they are referred to Job Network (while in Job Search Support) while those with recent workforce experience will participate after three months in Job Network (while in Intensive Support).[143]
3.56 The Committee believes that, although provisions exist in the legislation to provide mechanisms for job seekers to gain appropriate skills to enter the work force, this issue remains a sensitive one in the eyes of many stakeholders and needs to be kept under review. ACOSS asserted that:
...the package creates a disincentive to study to improve future job prospects, including denial of access to pensioner education supplement.[144]
3.57 While supporting the 'work first' emphasis of the Welfare to Work package, the Committee believes the Government should from time to time re-examine how it supports parents and people with disabilities seeking further education full time and/or on Austudy – and how it could improve the skills base of the targeted groups.
Recommendation 1
3.58 The Committee recommends that the Government closely examine the interface between further education, welfare and the needs of a changing labour market on a periodic basis.
3.59 Witnesses pointed to the significant barriers facing people with a disability in the workplace with ACROD stating that 'the low employment rate of Australians with disabilities owes much more to the barriers to employment that people with disabilities face than to their lack of willingness to work'.[145] Those barriers include the cost of transport; the cost of disability; discrimination; lack of flexibility in work practices and hours; employer prejudice; risk aversion by employers and people with disabilities; and access to buildings and public places.[146]
3.60 In evidence, DEWR noted that one barrier to moving from welfare to work for people with disability identified was the fear of trying to move into employment while on DSP. DEWR indicated that providing for a person to move back onto DSP within two years if they are unable to cope with work for any reason would address this barrier.[147]
3.61 DEWR also stated that to maximise the prospects of moving people into work, it is important to address demand side issues in the short term. To do this the package provides funding for an employer demand strategy, part of which is directed to measures to assist and encourage employers to employ people with disabilities.[148] The Commonwealth has provided increased funding for these measures which include:
3.62 Mobility Allowance will be increased to $100 per fortnight for people on Newstart Allowance or Youth Allowance (other) with an assessed work capacity of at least 15 hours per week and for those people on DSP being assisted by an employment services provider. If these people increase their hours of work and move off income support and continue to work, they will retain eligibility for this Mobility Allowance.[150]
3.63 There was general agreement that the proposed increase in Mobility Allowance was a positive move by the Government. However, a number of submissions felt that the eligibility criteria for the increased rate of the Mobility Allowance was too restrictive and should be widened to include all persons on DSP and supported employees in Business Services, and that the rate was still low given the high cost of taxis.[151]
3.64 PDCA recommended that all people with disability who cannot use public transport should be eligible for Mobility Allowance at the higher rate to assist in working, retaining work and looking for work or training and education.[152] Brain Injury Australia suggested that the eligibility criteria for the increased rate of Mobility Allowance may be too strict.[153]
3.65 The Welfare to Work package introduces an integrated working age support system that incorporates a range of assistance that a person of working age receives when they apply for income support. DEWR noted that:
An integrated system successfully assesses a person's needs and capacities and from this point provides the most appropriate type of financial and employment (or other related) assistance. This system provides a safety net to those who require it while also providing assistance to enable each person to actively participate and join the workforce to the level of their capacity and availability.[154]
DEWR provided estimates of additional funding for services over three years for the Welfare to Work measures as follows:
Table 3.5
| Welfare to Work Package announced in the 2005-06 Budget: | Estimated Programme Cost ($m) | |||
| 2006/07 | 2007/08 | 2008/09 | 3 Year Total | |
| Vocational Rehabilitation | 68.645 | 59.616 | 57.770 | 186.031 |
| Disability Open Employment Services | 37.364 | 71.967 | 64.232 | 173.563 |
| Other disability services (including workplace modifications) | 8.200 | 9.160 | 10.671 | 28.031 |
| Personal Support Programme | 21.068 | 23.895 | 21.041 | 66.004 |
| JPET | 0.136 | 0.085 | 0.087 | 0.308 |
| Community Development Employment Project | 9.662 | 6.934 | 7.744 | 24.340 |
| Work for the Dole | 32.326 | 36.714 | 38.150 | 107.190 |
| Job Network* | 165.475 | 284.097 | 283.815 | 733.387 |
| Total | 342.876 | 492.468 | 483.510 | 1,318.854 |
Notes:
3.66 Central to the new system is RapidConnect. RapidConnect is a 'work first' initiative to ensure unemployed people receive early access to Job Network assistance and employment opportunities, to improve their chances of finding work quickly. Some witnesses commented on the emphasis on the 'work first' approach. National Welfare Rights Network, for example, stated that the RapidConnect structure 'imposes on and requires of people activities before they are even on payment. In all our experience, clients do not understand any requirements, activities or anything that is being sought to be imposed on them until they have their income sorted out'.[155]
3.67 The Department explained that following contact with Centrelink, job seekers will immediately undertake the Job Seeker Classification Instrument (JSCI) and where it is deemed to be appropriate, are referred to an appointment with a Job Network member (JNM) within two working days. Attendance at the JNM interview will be a condition of a job seeker being paid income support. This arrangement does not preclude job seekers who are not able to connect quickly with the Job Network from continuing to access income support under current provisions.
3.68 DEWR noted that the basis of RapidConnect is that the sooner a job seeker connects to the Job Network member, the sooner it is that they are likely to be able to get an employment outcome. DEWR stated:
There is no real logic in waiting several weeks until they have received their first income support payment and then be referred to a Job Network member when there are many job opportunities that might have gone by the way in the meantime. So, yes, the requirement would be that they would have to attend that interview. Then they would negotiate with that Job Network member what services they need, what support they need, what jobs are on offer, what they can and what they cannot do et cetera. This is based on a work for you program in New Zealand, which works very well. Essentially the outcomes from that are that 10 to 20 per cent of people do not actually need to go on income support. That is a very strong finding and something which the government has chosen to implement here.[156]
3.69 The Committee notes the assurances that this new requirement will be applied flexibly: RapidConnect will not apply to job seekers who require either further assessment, such as a Comprehensive Work Capacity Assessment, or require a service other than Job Network. RapidConnect also does not apply in a range of other circumstances where it is not possible for a person to attend an appointment within the timeframe.[157]
3.70 A further feature of the integrated approach to the employment services model is the Comprehensive Work Capacity Assessment (CWCA). From 1 July 2006, people applying for DSP and other job seekers with a disability or special needs will undergo a CWCA conducted by appropriately experienced and qualified staff. DEWR noted that:
The new service will provide a holistic and comprehensive assessment of a job seeker's barriers to finding work. Assessors will also assess the job seeker's capacity to work and the interventions required to overcome any barriers the person has in finding and keeping a job.[158]
3.71 ACROD supported the new approach:
We strongly support the government's intention to streamline assessment. The assessment and referral system at present does not work particularly well. It involves multiple assessments for people with disabilities and their referral to appropriate services is, on the whole, patchy.[159]
However, it called for a system of review of decisions and cross referral of services, while MS Society of Victoria argued that the time period of the 'test capacity' of two years was too long particularly in the case of degenerative conditions such as multiple sclerosis.[160] Queenslanders with Disability Network commented that the CWCA provisions 'have a strong emphasis on a "positive 'work first' focus" which may mean people with a disability are forced into accepting menial low paid jobs which do not reflect their true employment potential or ambitions'.[161]
3.72 Once a person has been assessed they will be referred to the most appropriate service for overcoming their barriers and assisting them to find work for example Job Network, Disability Open Employment Services or Vocational Rehabilitation Services. DEWR noted:
People who stay on DSP or new people going onto DSP would be those who would have an ongoing support need if they were going to move into employment. Disability Open Employment Services currently have about 39,000 to 40,000 places around the country. Capped places or places for the existing people on DSP are used in vocational rehabilitation. There are approximately 23,000 places a year, and there will be some people who might move into the personal support program...approximately 25,000 new places over three years for the personal support program. These people are not necessarily disabled as such, in the context of their moving into vocational rehabilitation, but they have multiple barriers, and mental health is a strong identifier within that PSB group.[162]
3.73 For some time, the current compliance framework has drawn criticism for being punitive, inflexible and resulting in those who breach incurring long-lasting financial penalties. National Welfare Rights Network generally welcomed the cessation of the current 'rate reduction' breach and penalty regime because of its excessively harsh penalties and emphasis on punishment well after the breach. The Network stated that:
In this context, there is much about the new compliance regime, as presented in the Bill (as opposed to the provisions announced at Budget time) that NWRN also welcomes, in particular the shift towards an emphasis on encouraging re-connection and compliance rather than punishment.[163]
3.74 However, as with a number of other organisations, the National Welfare Rights Network argued that there were a number of problems with the provisions in the Bill. In particular, they emphasised the 8 week no payment period; the introduction of a number of immediate 8 week no payment penalties; the removal of the distinction between activity and administrative breaches; and the extension of the new compliance framework to people with disabilities and parents.[164]
3.75 Catholic Welfare Australia stated that the proposed breaching regime is unduly and unnecessarily harsh and 'if the ultimate objective of the breaching regime is to actively re-engage with job seekers, it is counterproductive'.[165] Many submissions expressed concern about the impact families and disadvantage people faced if payments were not received for 8 weeks. It was argued that without financial support families with children are at serious risk of homelessness and that people who are already disadvantaged will be further disadvantaged.[166] VCOSS stated:
VCOSS fears that a complete loss of income for even a short period of time for people in these circumstances, who will be financially worse off on lower payments and so have even less capacity to accumulate savings to 'tide them over' in an emergency, would have grave implications for their health and wellbeing, and that of their children...As well as making their lives more precarious, such a penalty measure would also negatively impact on their ability to look for, and find, work, or participate in education and training programs.[167]
3.76 The Salvation Army also expressed concern that the penalties in the proposed compliance regime may result in more demands being placed on charitable organisations. It stated that 'such an increase in welfare support through the charitable sector would not achieve the real aim of the Bill to move people from welfare-assisted living to independence'.[168]
3.77 NFAW expressed concern at the proposed 10 per cent penalty for false declaration of income, pointing out that the new Social Security legislation requires fortnightly declaration of earnings for Newstart Allowance, but many businesses pay monthly. In addition, where people on casual shift work often don't know the actual details of their income when they lodge their fortnightly return, and estimate it. Reconciliation of these estimates with actual income is complex for all concerned, including Centrelink staff.[169]
3.78 Witnesses did not view the suspension regime as a better alternative. The Sole Parents' Union stated that payments could be suspended for up to 13 days if Centrelink determines that there is no 'reasonable' excuse for non-compliance. However, there are currently no guidelines on what constitutes a 'reasonable' excuse.[170]
3.79 The Physical Disability Council of Australia supported the modification of the suspension system for people with disability, particularly those whose condition affects their memory or their ability to initiate and follow through action.[171] Hanover Welfare Services also pointed to the special circumstances of homeless people 'who are most likely to lose income support under the new compliance measures because they are difficult for Centrelink or a Job Network provider to contact or when in crisis, are unable to attend appointments'.[172] The National Ethnic Disability Alliance commented that the compliance system disadvantaged people from NESB:
People with language barriers would experience further difficulty and frustration trying to negotiate a more complicated system. Many already experience difficulties when communicating with Centrelink. The new system will put these people at the risk of significant financial loss for not complying, even when non-compliance is due to a communication barrier.[173]
3.80 In response to these concerns, DEWR indicated that there is little incentive in the current system to re-engage following the imposition of a rate reduction period. DEWR stated that it appears that 'job seekers are more often than not prepared to serve out the penalty rather than seek to have it reduced or removed through active participation'.[174] DEWR also noted that the fixed rate reduction penalties in the current system can impede re-engagement because the substantial loss of income over time makes it difficult to meet the costs of job search and other forms of active participation.
3.81 Under the new framework, participation is more clearly linked to payment and those who are willing to re-engage quickly will be rewarded. A job seeker who does not have a record of repeated non-compliance and who commits a participation failure such as missing an interview with an employment service provider will be given the opportunity to avoid any financial penalty by quickly re-engaging with that provider or another activity as directed. However, a job seeker who persists in their non-compliance, despite being warned, will lose payment for each day until they do comply. DEWR noted that this 'effectively means that the job seeker determines the duration of the penalty, providing a significant incentive to re-engage quickly'. In addition, job seekers who have an acceptable reason for not complying will not incur any financial penalty, and will not have these instances of non-compliance counted towards an 8 week non-payment period.[175]
3.82 The Department noted that the eight week non-payment is for serial and serious non-compliance; that by the time a job seeker faces an eight week penalty they will have demonstrated either a lack of responsiveness to such an approach or a willingness to exploit the warning mechanisms in the system:
Not attending the interview will basically require serial failures to occur. You would need to have three participation failures over a period of time for that to occur, along with all the warnings and checks and balances which I mentioned at the start of the hearing. The only groups which would go straight to an eight-week non-payment period are people who voluntarily leave their job without a good reason and people who refuse a reasonable job offer. They are the ones that are at risk. Again, the reasons for it would need to be taken into account, but they are the only ones who are at risk of having an eight-week non-payment period straight up.[176]
3.83 DEWR stated that 'the Government believes that by this stage a strong deterrent is required. An eight week non-payment penalty is also a feature of the current breaching system'.
3.84 DEWR provided detailed evidence of the protections within the system for vulnerable people from the intervention by the Job Network member to action by Centrelink.[177] Ultimately, a large number of contacts and interventions will generally be made before Centrelink will impose any penalty, including that Centrelink must talk to the job seeker to see if they had a reasonable excuse for failing to meet their requirements. DEWR indicated that while the meaning of the term 'reasonable excuse' is discretionary, 'the excuse must be one that would seem plausible to a member of the public'. In determining this, it is important to consider whether or not the reason for the failure to meet the requirement was foreseeable or within the person's control. A failure can only be recorded where the person’s non-compliance was deliberate or avoidable.[178]
3.85 In addition, when determining if a person has a reasonable excuse for failing to meet a requirement, the person's personal circumstances must also be considered. People who are vulnerable will be 'flagged in the system'. DEWR stated:
That aims to cover people, for example, with episodic mental health conditions who may not be responsible for not attending interviews and so on. Again, in those sorts of scenarios, there is a safeguard there for those people to ensure that they do not end up with an eight-week non-payment period, for example.[179]
3.86 Before a person loses their payments for eight weeks a Centrelink specialist officer will talk to an individual and will attempt to identify whether there are particular vulnerable circumstances related to the individual. DEWR commented:
If there are not, and the third participation failure does occur, there is an eight-week non-payment period and that lasts for a full eight weeks. There is no way to get out of it at that stage. However, what has certainly been overlooked at these hearings so far is the fact that there is a case management system in place, particularly for parents who have dependent children but also for other vulnerable people.[180]
3.87 The case management system enables a specialist officer to follow up the case of any job seeker who has children or another vulnerable dependent or who is themselves considered exceptionally vulnerable. If it is established that the person needs financial assistance, they will be offered case management and will be eligible for limited financial assistance.
3.88 The Committee notes another very significant safeguard: if a person is on a non-payment period, Centrelink will have authority to pay essential expenses for that family expenses relating to electricity, rent, basic food needs etc. Those basic expenses will be paid during that period and will be met up to the cost of their equivalent income support. This is not a loan and will not have to be repaid. A further safeguard ensures that principal carer parents will not lose any other concessions or their family tax benefits as a result of a financial penalty. People with partial work capacity will also retain access to concessions, including the Pensioner Concession Card.[181]
3.89 Greater fairness has also been brought into the compliance system. Under current arrangements all prior activity test breaches during the past two years are counted for the purpose of determining whether the penalty applies. Under the new system, only participation failures incurred during the last 12 months will count. There are also fairer penalties for wilful faulty declaration of earnings. The legislation also abolishes earnings-related breach penalties for Newstart, Youth Allowance and Austudy Payment recipients. Instead, it introduces a more equitable means of deterring all working age income support recipients from deliberately failing to declare or under-declare their earnings, in the form of a recovery fee set at 10 per cent of the debt incurred.[182]
3.90 DEWR also reported that the same compliance framework will apply to all job seekers with activity test requirements. It is anticipated that principal carer parents, mature age job seekers and people with disabilities will not be adversely affected by the compliance framework for the following reasons:
3.91 ACOSS and other witnesses raised the issue of the use of administrative guidelines to provide the detail in relation to many aspects of the legislation. For instance, ACOSS made the following observation in regard to activity requirements:
A major weakness of the Bill is that many aspects of the activity requirements for different groups, and proposed exemptions from them, are left to be specified in 'guidelines' which can be changed at the discretion of the Secretary. While we recognise the need for flexibility in this area, the Bill does not provide the degree of protection from unreasonable or inappropriate requirements that is needed, especially for those groups who are subject to activity requirements for the first time. Guidelines can be changed at the Ministers' discretion, without reference to the Parliament.[184]
3.92 However, ACROD stated that the situations covered by the legislation are diverse and that to quantify or formulate some of the requirements in the legislation, for example on exemptions, would make it too inflexible. ACROD stated:
It is hard to anticipate. The population of people with disabilities is a very diverse population and the impact of disability is very diverse. Sometimes we talk about disability as if that were not the case, but it is the case. It is hard to anticipate all the situations that may occur where a person would have an unfair obligation imposed upon them. That is why it would be difficult to codify in legislation.[185]
3.93 While primarily a tool to assist decision-makers in Centrelink, the Guide (as the guidelines are collectively called) is also used by the Social Security Appeals Tribunal, community organisations and the general public. The Guide explains in simple, practical terms, the meaning of social security legislation. Its purpose is to assist staff in applying the legislation by providing detailed explanations of the policy intent of the different sections of the legislation, and examples of common scenarios and how the legislation should be interpreted in each case.
3.94 The Committee raised this issue with DEWR during the public hearing on 21 November 2005. DEWR explained that much of the detail underpinning the legislation is contained in guidelines to assist in the interpretation of the legislation. The proposed legislative amendments provide a broad framework for the Welfare to Work measures, while the guidelines themselves provide the operational policy direction and detail underpinning each measure, particularly those involving new areas of discretion that the Secretary may exercise.[186]
3.95 The Department told the Committee that generally, anything affecting the level of a person's eligibility for income support would be in the legislation. If it affected work requirements and participation then it would normally be covered in guidelines.[187] DEWR also informed the Committee that there are already very flexible arrangements for the job search requirements for Newstart and assured the Committee that the guidelines would be consistent with the purpose and intent of the Social Security Act.
3.96 However, DEWR acknowledged that the balance between what is enshrined in legislation and the clarification of legislative intent provided by the guidelines would be altered as a consequence of this legislation:
Compared with the current Social Security Act...there would be more guidelines in the future.[188]
3.97 The Committee notes the proposed extensive use of guidelines to implement key parts of the Welfare to Work package. This represents a shift in the balance currently maintained between the use of legislation or disallowable subordinate instruments and the use of guidelines to implement the social welfare system. Further, the extensive use of guidelines limits Parliamentary scrutiny: unlike disallowable instruments, guidelines are not laid before the Parliament.
Recommendation 2
3.98 The Committee recommends that the Department of Employment and Workplace Relations reassess which of the guidelines under the package are to be disallowable by the Parliament; that is, that it ensure key aspects of the guidelines be determined by disallowable instruments. This will ensure consistency in application as well as appropriate Parliamentary scrutiny. In particular, the Committee recommends that guidelines dealing with what constitutes unsuitable paid employment, special family circumstances, suitable and unsuitable activities for participation, and compliance issues are based on disallowable instruments.
3.99 DEWR indicated that work has commenced to revise the Guide to take into account the Welfare to Work changes; a complex task that will take several months to finalise. There are ten parts to the Guide and over 2000 subsections (or topics), many with links to subsections in other parts. The revision task will involve checking individual subsections for potential Welfare to Work effects and liaising with Department of Family and Community Services and Department of Education, Science and Training, as they have policy responsibility for some of the payments and arrangements affected by the changes. A list of key topics/issues where drafting is taking place is at Appendix 3.
3.100 The Committee notes the numerous concerns expressed by witnesses regarding the emphasis on the use of guidelines, as non-disallowable instruments, to effect so much of the thrust of the Welfare to Work package. The Committee appreciates that such an approach preserves a large amount of flexibility in the implementation of this package, and that such flexibility will assist in adjusting the effect of the package's provisions so as to ensure outcomes are not excessively harsh or go beyond what was intended. Of course, such flexibility could also provide for inconsistent applications to be perpetrated in the interpretation or implementation of the guidelines.
3.101 In this respect, the Committee notes that the legislation before it is merely the skeleton to which much flesh must yet be attached. In many respects it is the flesh, not the skeleton, that will be the measure of this package's success or failure. As such, the Committee counsels that great care be exercised in both the development of the guidelines and the training of officers of Centrelink and others in the administration of this new regime. The potentially beneficial impact on the overdependence of many Australians on welfare will be diminished if the net of this package is cast so wide as to capture those who cannot or should not, in any reasonable calculation, be candidates to participate in the workforce.
3.102 Given this need to proceed down the path of reform with care, the Committee notes the recommendation of Catholic Welfare Australia that the data on the implementation of the Welfare to Work package be collected and presented to the Parliament on at least an annual basis. It was envisaged that the data collected should include information on income, employment and other matters affecting those income support recipients targeted by the Welfare to Work legislation.[189] The Committee considers that this recommendation has considerable merit. The changes proposed are extensive and have been enormously controversial with much debate about how successful the changes will be and what impact they will have on income support recipients, particularly families and vulnerable people. The Committee also considers that the provision of such information will add significantly to the accountability and transparency of the welfare system.
Recommendation 3
3.103 The Committee recommends that the Department of Employment and Workplace Relations table in the Parliament, on an annual basis, key data on the implementation of the Welfare to Work package.
3.104 The Committee generally supports the Welfare to Work package. The Committee accepts that the changes proposed in the Employment and Workplace Relations Legislation Amendment (Welfare to Work and Other Measurers) Bill 2005 are aimed only at those people on income support who are able to work. The Committee can see nothing in this legislation which ineluctably will force or coerce any person who is not able to work off an income support benefit. Of course, inconsistent implementation of the guidelines, once created, could lead to unintended adverse outcomes. That possibility however is no valid reason not to proceed with the legislation itself.
3.105 The Committee notes the provisions to safeguard those who are disabled: DSP is retained if a person is working but requires support to do so and a person on DSP who leaves payment to attempt work, but cannot continue because of any reason, can return to DSP within two years. There is also recognition that a person with mental illness may only have a partial capacity to work and the episodic nature of the illness.
3.106 There are also significant safeguards for principal carers and mechanisms to ensure that the system will be flexible and responsive to their needs. The use of the 'suitable' work standard, ensures that parents will only be required to undertake work they are capable of doing and which, importantly, recognises the needs to care for children. The use of exemptions on a case-by-case basis will allow parents to combine their caring responsibilities with their participation requirements. The Committee notes that there are currently three automatic exemptions proposed: for foster carers; those parents who home school and those facilitating distance education. The Committee considers a further group should be given automatic exemptions – large families. The Committee believes that caring for four children or more where some are under the age of 16 imposes significant demands and the automatic exemption should be extended to these parents.
Recommendation 4
3.107 The Committee recommends that an automatic exemption from participation requirements be extended to parents of large families.
3.108 The Committee notes that the Welfare to Work reforms are 'not about making parents and people with disabilities who may have the capacity to work part time worse off'.[190] It also must be remembered that grandfathering provisions will generally apply to those currently receiving Parenting Payment (612,866 recipients) and DSP (708,410 recipients).[191]
Recommendation 5
3.109 The Committee reports to the Senate that it has considered the Employment and Workplace Relations Legislation Amendment (Welfare to Work and Other Measures) Bill 2005 and recommends that the Bill, subject to recommendation 4, be passed.
Navigation: Previous Page | Contents | Next Page
