Government Senators' Majority Report
Reference
1.1
The Senate referred the provisions of the Social Security Legislation
Amendment (Employment Services Reform) Bill 2008 (the bill) to the Education,
Employment and Workplace Relations committee on 25 September 2008 for inquiry and report by 24 November 2008.
Conduct of the inquiry
1.2
Notice of the inquiry was posted on the committee's website and
advertised in The Australian newspaper calling for submissions by 31 October 2008. The committee also directly contacted a number of relevant organisations
and individuals to notify them of the inquiry and invite submissions. Thirteen
submissions were received as listed in Appendix 1.
1.3
The committee conducted a public hearing in Sydney on 18 November 2008. Witnesses who appeared before the committee are listed at Appendix 2.
1.4
Copies of the Hansard transcript from the hearing are tabled for the
information of the Senate. They can be accessed on the internet at https://www.aph.gov.au/hansard.
Acknowledgements
1.5
The committee thanks those who assisted with the inquiry.
Background to the bill
1.6
In early 2008 the government commenced a review of employment services. As
part of the review, the Minister for Employment Participation, the Hon Brendan
O’Connor MP, sought the views of employment services providers, employers, employer
associations, welfare organisations, unions, program participants and other
stakeholders on the future direction of employment services. Job seeker
satisfaction surveys, program evaluations and reports of the Auditor-General
also informed the review.[1]
1.7
The current system of employment services was criticised during the
consultations for being a 'one-size-fits-all, time-based approach', where job
seekers are part of a production line which takes no account of their
individual needs.[2]
1.8
To address the deficiencies, on 29 September 2008 the government
released a $3.9 billion request for tender to deliver reformed employment
services from 1 July 2009.
Changed labour environment
1.9
In addition to addressing the deficiencies identified in the current
system of employment services, the government has also stated that these
reforms will address a number of changes in the labour market environment. The
new system is intended to address current skills shortages and respond more
flexibly to changing unemployment rates. Recent changes in the world and
domestic economy will mean a rise in unemployment. However, the new system will
be more flexible in meeting these changing economic circumstances.
1.10
At the hearing Mission Australia told the committee that although there
may be rising unemployment in streams one and two, with newly unemployed job
seekers requiring vocational training, job seekers in streams three and four present
non-vocational difficulties and this is where the non-payment and
non-compliance issues are centred.[3]
The new system is intended to address the needs of the high numbers of long-term
and disadvantaged job seekers through a focus on engagement and assistance.
Increased numbers of disadvantaged
job seekers
1.11
A key reason for the review of employment services was the recognition
that there needs to be an increased focus on getting highly disadvantaged
people into work. The government has recognised that over the last ten years
many thousands of job seekers have become increasingly detached from the
labourforce. While the unemployment rate has fallen to 4.2 per cent[4],
it is clear that a significantly higher proportion of job seekers are highly
disadvantaged and have experienced long-term unemployment.[5]
1.12
The committee majority agrees that Job Network has failed disadvantaged
job seekers, as illustrated by the following figures noted in the second
reading speech:
The proportion of people on unemployment benefits for more than
five years has increased from one in ten in 1999, to almost one in four today –
an increase from 74,000 people in 1999 to more then 110,000 ten years later.[6]
1.13
These job seekers are some of the most disadvantaged in the community.
Some are suffering from mental illness. Others have significant language and
literacy problems and poor educational attainment. Some have a neurological
impairment and others are homeless or at risk of homelessness.[7]
The Department of Education, Employment and Workplace Relations (DEEWR) reported:
Various Centrelink and DEEWR data sources indicate that 32 per cent
of job seekers on Newstart and Youth Allowance have a reported mental illness.
Other barriers to participation include drug and alcohol problems (18 percent)
and unstable accommodation (five per cent). Almost 13 per cent of job seekers
are ex-offenders.[8]
1.14
The Australian Council of Social Service (ACOSS) also highlighted to the
committee that the profile of job seekers has changed resulting in greater
numbers who are disadvantaged:
There is a higher proportion of people with limited education
and a higher proportion of people with various health problems, including
mental health problems—that is, exactly the kinds of people who will stumble
over administrative requirements.[9]
1.15
Dr Robert Simons, Head of Research and Evaluation for the Smith Family,
told the committee that the current challenge of finding employment for greater
numbers of disadvantaged job seekers was inevitable. He explained that the previous
government's strategy to increase participation and make the transition from
welfare to work had some merit but it was incomplete. Now the government is
faced with this increased number of people who require more assistance,
including lone parent families.[10]
1.16
The National Employment Services Association (NESA) supported the
current reform of social security legislation stating it is necessary to
provide adequate safeguards for the most disadvantaged in the community.[11]
1.17
The bill initiates changes to the compliance system which will form part
of the broader changes to employment services to take effect from 1 July 2009.
Purpose of the bill
1.18
The bill will amend the Social Security Act 1991 and the Social
Security (Administration) Act 1999 to give effect to measures announced in
the 2008–09 Budget to support the new employment services. As part of a package
of reforms to employment services, the bill will introduce a new job seeker
compliance system.[12]
1.19
The new compliance framework will affect all job seekers in receipt of:
- youth allowance for persons who are not full-time students or new
apprentices;
- parenting payment for persons who have participation requirements
and are not new apprentices; and
- special benefit for nominated visa holders.[13]
1.20
Minister for Employment Participation, Hon Brendan O'Connor MP, stated
that the intention of the bill is to provide a more effective compliance system
which will encourage participation and make job seekers more accountable for
their efforts to find and keep a job.[14]
1.21
A key element of the bill focuses on the current mandatory, irreversible
eight-week non-payment penalties largely because it results in disengagement from
employment services. In submissions to the Employment Services Review, welfare
agencies advised of the direct relationship between this penalty and consequences
for vulnerable job seekers including homelessness and relationship breakdown. These
problems place additional pressure on charitable organisations in providing
support.[15]
1.22
A survey of job seekers by DEEWR in 2008 on the effect of eight-week
penalties found that 'while reliance on welfare organisations is quite low
among the job seeker population generally – at around two and a half per cent –
it is double that for those who incur eight-week non-payment periods'.[16]
The survey also found that 50 per cent of job seekers relied on family for
support during non-payment periods which indicates that the effect of the
penalty often extends beyond the job seeker.[17]
Further, the survey found that:
Over 50 per cent of job seekers serving eight week penalties had
failed to pay rent or board on time during the penalty period and around 15 per
cent of this group were evicted.[18]
1.23
The National Welfare Rights Network (NWRN) supported these findings
saying the penalty is counterproductive, has caused extreme hardship and has
contributed to both homelessness and social exclusion.[19]
1.24
In addition, DEEWR noted that a finding from their survey that was of
particular concern was the negative effect of the penalty on the motivation and
ability of job seekers to look for work. It found:
...the imposition of an eight week penalty made around 50 per cent
of job seekers more motivated to find work. However, around 75 per cent of job
seekers reported that having no income support made it harder to look for work,
with over 50 per cent reporting that it made it a lot harder. [20]
1.25
It was also highlighted that this penalty is not successful in
compelling job seekers to find sustainable employment as:
75 per cent of job seekers who receive an eight week non-payment
penalty are soon back on benefits, most of them within a fortnight of finishing
their non-payment period.[21]
1.26
DEEWR explained that the clearest indication that the current compliance
system is not achieving its aim is the doubling in the number of people who
have received an eight-week penalty in the last two years it has been in
operation.[22]
The intention is that a more effective compliance system will result in reducing
the number of penalties as participation is increased. ACOSS agreed that the
introduction of the discretion not to automatically impose an eight-week
non-payment penalty and the ability to take individual circumstances into
account and exercise judgement about the best action for an individual, should
reduce the incidence of the penalties and assist re-engagement.[23]
1.27
Currently there is no capacity to take into account the individual
circumstances of job seekers before an eight-week penalty is applied. The new
system will introduce the Comprehensive Compliance Assessment (CCA) so that
individual circumstances can be investigated and taken into account to find
better ways of compliance where a job seeker faces barriers such as mental
illness.
1.28
The eight-week penalty will still be retained for wilful and persistent
non-compliance known as 'serious failures',[24]
but the system will recognise a series of lesser offences which can be
responded to more immediately.
Support for the bill
1.29
Participating organisations expressed support for the intent of the
changes proposed in the bill to increase participation in employment and
engagement with employment service providers. At the hearing, organisations
such as Mission Australia and ACOSS emphasised the importance of keeping people
connected and communicating with their job providers and Centrelink, as in
their experience, this greatly increases the capacity to move them into
employment. Mission Australia stated:
We have found at Mission Australia is that, the more we can
connect with the job seeker and the more rigour we can put around the
connection, the more positive impact it has on them in getting them engaged,
whether it be for Work for the Dole, work experience moving forward or looking
at other complementary programs around personal support.[25]
1.30
Organisations were also encouraged that the new model will offer the flexibility
to support job seekers according to their levels of disadvantage to address
vocational and non-vocational barriers to finding jobs. Mission Australia
pointed out the central importance of employment to address non-vocational
barriers:
What we find from an employment perspective is that once you get
a job seeker into permanent employment and earning a salary a lot of the other
social barriers go away—things like the ability to pay rent and homelessness.
We feel that employment is really at the centre of getting disadvantaged
Australians included rather than excluded, because, once they have an ongoing
salary and start to build self-esteem, they start to build relationships in the
workforce and some of the other social barriers they have around housing, around
interaction and around vocational issues start to diminish.[26]
1.31
Organisations pointed to a number of very positive elements in the bill.
Mission Australia strongly identified the following elements which it believed
are likely to have beneficial effects:
- the introduction of a staged compliance regime consisting of 'connection'
failures, 'reconnection' failures and 'no show no pay' failures before
consideration is given to the imposition of an eight-week non-payment period;
- the introduction of non-payment periods ('reconnection' failures
and 'no show no pay' failures) that are intended to reflect a work-like
culture;
- the intention to introduce a Comprehensive Compliance Assessment
by a specialist Centrelink officer prior to an eight-week non-payment period
being imposed;
- the provision that the Secretary may exercise discretion in the
application of an eight-week non-payment period; and
- the introduction of provisions whereby the job seeker can work
off an eight-week non-payment period by engaging in a period of intense
activity and the ability for the Secretary to apply hardship provisions if a
job seeker is unable to work off an eight-week penalty.[27]
1.32
Submissions strongly supported the application of financial hardship
provisions in cases of 'serious failure' where job seekers are unable to comply
with requirements and where an extended non-payment period would result in
severe financial hardship.[28]
Provisions of the bill
1.33
Item 1 inserts a new Division 3A in the Social Security
(Administration) Act 1999 (the Act) which provides for a new legislative
framework for compliance for job seekers as outlined in paragraph 1.19. Previously,
the Act contained different compliance provisions for these four payments,
which will be consolidated.[29]
1.34
Proposed section 42B provides for the object of Division 3A which is to
encourage participation and engagement with employment services, secure
compliance with their obligations and requirements in relation to participation
payments and ensure re-engagement with employment services as quickly as
possible. In addition, the Division is not intended to punish a person who has
a 'reasonable excuse' for failing to comply with their obligations.[30]
1.35
Proposed section 42A provides an outline of the operation of the new
Division 3A and states that the Secretary may to determine that a job seeker
has committed a:
- 'no show no pay' failure;
- 'reconnection failure'; or
1.36
These compliance tools which are detailed below provide a staged system
which is likely to be more effective for highly disadvantaged job seekers.
'no show no pay' failures
1.37
At the centre of the new compliance arrangements is a 'no show no pay'
penalty (proposed section 42C) which relates to activities. As noted in the
second reading speech, the intention is to instil a 'work like' culture, as job
seekers will lose a day's benefit for every day they fail to turn up without a 'reasonable
excuse'. Thus, a job seeker will receive an immediate penalty for their
actions. Paragraph 42C(1) (a) sets out the four grounds which determine a 'no
show no pay' failure. Of note is that the 'no show no pay' failure will be
imposed if the job seeker does not attend an interview, or if they attend but
behave in a way which would foreseeably result in a job offer not being made.[32]
1.38
A 'no show no pay failure' will result in job seekers losing one-tenth
of their fortnightly payment for each day they don't attend. This does not
affect rent assistance, the pharmaceutical allowance or the youth disability
supplement but it does apply to any approved program of work supplement. Access
to Health Care Cards and Family Tax Benefits will not be affected. Resuming
participation will result in a resumption of income support and employment
services.[33]
1.39
Proposed section 42U empowers the Secretary to set out in a legislative
instrument what is considered to be a 'reasonable excuse'. There is no intended
change in policy to the 'reasonable excuse' exception with the intent being
that job seekers should not be penalised for actions that are beyond their
control.[34]
Connection and reconnection failures
1.40
The proposed section 42E provides for the Secretary to determine that a
job seeker has committed a 'connection failure'. These apply to appointments,
where a job seeker does not attend an appointment without a reasonable excuse.
There is no immediate penalty for a 'connection' failure.[35]
1.41
Instead, the job seeker will have to attend a 'reconnection requirement'
which will involve a further appointment or further job search requirements. If
the reconnection requirement is not attended without reasonable excuse a
'reconnection failure period' will be imposed until they comply with a further
'reconnection requirement'.[36]
The job seeker will lose one-fourteenth of their fortnightly payment for each
day they do not comply.[37]
Eight-week non-payment penalties (serious failures)
1.42
The eight-week non–payment period has been retained for job seekers who
refuse a suitable job, or if they have been wilfully and persistently
non-compliant. This is termed a 'serious failure'. Centrelink will decide
whether there has been a serious failure after conducting a Comprehensive
Compliance Assessment.
The Comprehensive Compliance
Assessment (CCA)
1.43
Section 42M sets out the grounds on which a serious failure may be
determined.[38]
This section presents one of the main differences between the proposed system
and the current system where an eight-week non-payment penalty is automatic for
job seekers who incur three failures.
1.44
A job seeker who misses three appointments or six days of 'no show no
pay' failures in a six month period will be referred to Centrelink for a CCA.
Employment service providers can also initiate a CCA. Centrelink will consider
why the job seekers failed to meet their participation requirements and
identify any barriers to employment and alternative service options in the
following way:
A specialised Centrelink officer will consider the job seeker's
compliance history and will talk to the job seeker to find any evidence of
personal issues, including those that may not have previously been disclosed.
Such issues might include homelessness, physical or mental health problems or
domestic violence that may have impacted on the job seeker's ability to meet
their requirements.[39]
1.45
A non-payment period may be stopped if the job seeker participates in an
intensive 'compliance activity' or if the job seeker does not have the capacity
to comply with the 'serious failure' requirement and serving the penalty would
cause severe financial hardship.[40]
Eight-week preclusion period
1.46
The current eight-week non–payment period for job seekers who become
voluntarily unemployed without good reason or unemployed due to misconduct will
be retained. However, this will no longer be described as a penalty but as a
'preclusion period'.
1.47
DEEWR explained the terminology as follows:
The eight-week preclusion period applies to people who are not
already on income support. In other words, it is like a waiting period now;
they are basically precluded from payment for that eight weeks by virtue of the
fact that they are voluntarily unemployed...[41]
1.48
DEEWR also explained that voluntary unemployment and misconduct are
subject to the reasonable excuse provision.[42]
1.49
Disadvantaged job seekers who would be in severe financial hardship as a
result of this period will have their payment reinstated as is the case under
financial case management. However, the job seeker will have participation
obligations while they are receiving income support payment. They will also
have an obligation to access employment services to help them find work.[43]
1.50
Chapter two will outline the key issues raised with the committee.
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