Many of the submissions to this Inquiry were from individuals facing hardship, deprivation, and poverty. Life circumstances, including the loss of a job, illness, location, structural changes in the economy, family violence, homelessness, and housing insecurity, as well as disability make it incredibly difficult for many Australians to secure suitable employment.
There are around 1.4 million Australians currently relying on unemployment payments, almost double the number before the pandemic. Our social security system is part of the Australian social contract: providing support for people when they need it.
The introduction of the Coronavirus Supplement early in 2020 was supported by Labor and the Parliament. It lifted many people out of poverty and prevented those who lost their jobs from falling into poverty.
The practical impact of the Government’s decision on the future rate of working age payments is that almost 2 million Australians will have their household budget cut by $100 a fortnight at the end of March, when the $150 per fortnight Coronavirus Supplement is replaced with a $50 per fortnight increase to the base rate of working age payments.
As outlined out by the Chair’s report, many submissions have pointed out that the increase in the base payment proposed by this Bill is not adequate to meet the needs of Australians who need to rely on social security.
Labor Senators share this concern about the level of support afforded to Australians facing poverty and hardship, including in relation to; access to affordable health and dental care; social, public and affordable housing, child poverty and access to quality education.
The Committee heard that an additional 100 000 people could be relying on the JobSeeker Payment when the JobKeeper program ends in March. Mr Ben Phillips from the ANU Centre for Social Research and Methods told the Committee:
I have not done any modelling on that. It's a concern that I have. I forget the exact number of people on JobKeeper at the moment; it might be in the order of a million people, or a little bit over. I think Treasury has done modelling that suggests that 100,000 people would move into the JobSeeker category. Jeff Borland from the University of Melbourne did some research that suggests it might be a little bit higher.
While the change to the base rate of $50 per fortnight will reduce the depth of people’s hardship and poverty, it will not lift large numbers of people out of poverty, particularly if they are in circumstances where they must rely on payments for an extended time. Mr Ben Phillips also said:
For the people who were on that payment prior to COVID, basically it returns to the previous rate. With the slight increase we have seen in the JobSeeker payment by $50 a fortnight, there is a small reduction in that poverty rate. So, instead of it being around 83 per cent, it has come down to about 80 per cent.
Professor Gray emphasised that there are not enough jobs available – let alone suitable – for people on payments:
So there is a problem, and there are quite significant numbers of discouraged or marginally attached workers—people who don't have a job and would like one but are not actively looking, quite often because they think the prospects of finding a job are very low.
Many submissions pointed out substantial failures in Government policy that are not addressed by this Bill, including:
the Government’s policy to re-introduce the Liquid Assets Waiting Period, and double it, so that people will have to wait up to 26 weeks to receive unemployment payments if they have modest savings;
the effective reduction in the Income Free Area from $300 per fortnight to $150 per fortnight, for many people, from the end of March; and
the failure to fix the indexation arrangements for unemployment payments, which will lead to the further erosion of their real value relative to wages over time.
Labor Senators believe that the Government’s plan to reduce the Income Free Area for people receiving unemployment payments is at odds with its stated desire to see more people take up paid work, even if that work is casual, temporary or seasonal. The National Youth Commission explained the shortcomings of the Government’s policy in their submission:
The income free area applying to unemployed income support recipients proposed in the Bill is far too low. The low-income free area is a disincentive to seek work…. The existing income test cuts in when young people begin to pay income tax, reducing the rewards from work. The combined effect of income test taper rate and income tax is the ‘effective marginal tax rate’. The taper rate at 50-cents in the dollar plus the actual marginal tax rate of 19 cents for incomes over $18,000 per year creates an effective marginal tax rate of 69 cents above the income free threshold. The effective tax rate becomes 79 cents in the dollar at the 60-cent taper rate. These are higher than the top marginal tax rate of 47 cents applied to annual incomes over $180,000.
Many submissions also indicated very significant concerns with the Government’s plans to increase mutual obligation requirements – announced at the same time as the policies in this Bill. Dr Cassandra Goldie from the Australian Council of Social Services summed this up:
We're strongly opposed to what the government has announced in terms of its approach to mutual obligation. I note again the hearing this morning is not hearing from, for example, the National Council of Single Mothers and their Children, Australian Unemployed Workers Union, Anti-Poverty Network, Anti-Poverty Week or from all the social services from all the business groups. But you will have heard, on the day the government made this announcement, that overwhelmingly there was a strong condemnation of the approach the government took to say that, for a measly $3.50 a day increase, the government was going to bring back 'get tough on you because you're on social security'.
Mr Paul Zahra from the Australian Retailers Association pointed out that the Government’s proposals for a dob-in-a-jobseeker hotline and increased mutual obligation requirements are also a burden for business:
We haven't had many positive conversations with our retailers around this particular issue. We believe it will drive anxiety more than anything else so, broadly, we're not in support of it. We think it doesn't really add to solving the real problem here… I guess we see the anxiety that drives individuals and we're concerned about the impact it will have on the community… The concern we would have is it may just drive the wrong behaviour: that people go through the process just for the purpose of securing unemployment benefits. That could just add more administration and costs to the retailers going through that process.
Labor Senators note that only Government Ministers can increase expenditure and that amendments moved by the Opposition or the Crossbench to increase the rate of payments, or otherwise increase expenditure, would not be considered by the House of Representatives. Only the Government is in a position to determine payment rates after March.
If this Bill does not pass the Parliament in the next sitting week, current legislative settings mean that payment rates will revert to pre-pandemic levels by the end of March.
Labor Senators also note that in late 2020 the Government used its numbers in the House of Representatives to defeat a Labor amendment which would have allowed the Minister to continue paying the Coronavirus Supplement after 31 March 2021.
Recommendation
Labor Senators recommend that the Senate does not stand in the way of the modest increase in payments contained in this Bill.
Recommendation
Labor Senators recommend that the Senate notes the strong concerns of the community, businesses, experts and service delivery organisations that:
the Income Free Area proposed in the Bill does not allow people to keep enough of their earnings from part-time, casual, or seasonal work, to effectively help people move into employment; and
the Bill does not do enough to support Australians facing poverty and hardship – including in the areas of adequate payments to those who need them, housing, addressing child poverty, and better health and education services.
Recommendation
Labor Senators recommend that the Government abandon its counterproductive and punitive plans for a hotline for employers to report people who haven’t agreed to a job – regardless of the reason – that will inevitably see the Government hound people, rather than help the 2 million Australians currently looking for work.
Senator Malarndirri McCarthy