Issues raised during the inquiry
2.1
This chapter will detail the key issues raised with the committee during
the inquiry. Participating organisations expressed support for the intent and
content of the bill and said their concerns centred on details and the implementation
process.
Discretion
2.2
Organisations were uncertain about the issue of discretion for providers
to apply penalties and requested clarification on the scope of discretion for
the Secretary, employment service provider and Centrelink.[1] While supporting the closer alignment with workforce conditions, organisations pointed
to what they perceived as a lack of discretion to impose the 'no show no pay'
penalty where there is not a 'reasonable excuse'.[2] ACOSS suggested that the discretion to provide a warning for those newly on
income support or for a first breach resulting from a genuine misunderstanding,
where the provider believes they will comply, is necessary. They argued that
without this discretion, a job seeker could incur a number of penalties before
they fully understand the rules or before it is able to be brought to their
attention.[3]
2.3
Organisations also expressed concern that job seekers would not be able
to make up or work off the 'no show no pay' failures through re-engagement.
ACOSS suggested that if providers could require a person to undertake the days
of activity they missed in lieu of financial penalty this might improve
participation rates.[4]
2.4
DEEWR expressed surprise at the issues raised regarding discretion and
the perceived lack of ability for the people of the ground to exercise their
judgement. They clarified this issue by reading from the request for tender
documentation which stated that the employment service provider has the
discretion not to report non-compliance even if there is no 'reasonable excuse'
if it is considered that compliance action will not be the best means of
achieving re-engagement. Providers have also the discretion not to lodge a
participation report if they believe it will not achieve re-engagement. It was explained that this would be the case
for all failures.[5]
2.5
DEEWR officials further explained that the new arrangements are based on
the premise that providers are working with job seekers and will be able to
judge whether an excuse is reasonable for a particular individual or not.[6]
2.6
DEEWR officials advised the committee that the detail regarding
discretion is in the contract in the request for tender document for the new
employment services.[7] DEEWR officials explained that employment service providers do not make decisions
under the social security legislation so the detail about discretion is more
appropriately located in the contract than in the legislation.[8]
2.7
The committee majority was reassured to hear that in cases where there
is a genuine misunderstanding, for example where people are new to income
support, the discretion is available to deal with the situation in ways other
than imposing an immediate financial penalty. Examples could be included in
guidelines to ensure discretion is applied consistently.[9]
2.8
DEEWR officials also clarified the following issues:
- that in relation to 'no show no pay' failures, the provider may
negotiate for the job seeker to make up the day's activities on another day and
thus reinforce the importance of participation;[10] and
- that training will be provided to providers prior to the start of
the new contract which will include a module on the compliance regime.[11]
2.9
Questions were raised by Catholic Social Services Australia (CSSA) on
the extent to which discretion should be monitored.[12] The committee majority was concerned that discretion once monitored too closely
is no longer discretion and this would also add another level of paperwork and
compliance for providers. The committee majority felt the accountability for
the use of discretion should be with those using it and noted existing
mechanisms for internal monitoring which they felt would be adequate.
2.10
The National Employment Services Association (NESA) noted that there is
broad 'in-principle' support for the 'no show no pay' failures. However, they
submitted where preparation and arrangements have been made and a person does
not show up for an interview, they would consider this as a serious breach and
there should be the discretion to treat it equally with a 'serious failure'
where there is no reasonable excuse.[13] NESA advised that both behaviours have an effect on the reputation of other job
seekers and reduce the confidence business and industry has in the
effectiveness of employment services.[14]
Application of the 'no show no pay' penalty
2.11
Organisations questioned how long it will take to apply a 'no show no
pay' penalty. Mr Frank Quinlan of CSSA, questioned the ability of the system to
respond in a timely way and cautioned that because of administrative errors,
mix ups and misunderstandings, job seekers should be given a little time to
organise their affairs before the penalty is applied. ACOSS recommended the
penalty be imposed on the 'payday after the next payday following the
determination of the breach'.[15]
2.12
CSSA also suggested that missed appointments should be included in the
connection/reconnection system[16] and ACOSS also commented that the distinction between the 'no show no pay' and
'connection' failures is not sufficiently clear.[17]
2.13
DEEWR explained that people are paid fortnightly in arrears and
clarified that the intention is for the penalty to apply as quickly as possible
to demonstrate a cause and effect relationship. DEEWR stated that work is
underway with Centrelink on the timing issue but it accepted that there will be
circumstances where it is not able to be deducted in the same fortnight as the
penalty was incurred.[18]
Comprehensive Compliance Assessment (CCA)
2.14
Organisations supported the new approach to the eight-week penalty and
the CCA is seen as a welcome measure. The NESA informed the committee that
there was strong support for the introduction of the CCA as the current system
is considered inadequate to ensure vulnerable income support recipients are
identified and not affected unfairly. To illustrate this they submitted:
In particular, current instruments and processes to identify and
protect vulnerable income support recipients rely on their capacity to disclose
issues and advocate their case. However many disadvantaged income support
recipients particularly those with mental health conditions (diagnosed and
undiagnosed) lack the skills or insight to do this effectively.[19]
2.15
While welcoming the CCA, some organisations expressed the opinion that
the trigger for a CCA should be included in the bill or at least in the
legislative instrument to enable legislative scrutiny and ensure the protection
it promises.[20]
2.16
Organisations such as NESA thought that including the trigger in
legislation may not be the right point of intervention for many job seekers,
stating that taking account of individual circumstances is challenging and the
most important tool for a provider to have is flexibility. They asserted that
the most important issue is the timing of a CCA and the ability to use it for
early intervention.[21] Many organisations advocated the ability to trigger the CCA early and therefore
did not support being overly prescriptive by including it in the legislation.[22]
2.17
DEEWR supported the use of the CCA as an early intervention measure, noting
that the system will have a trigger for a CCA after six days of ‘no show, no pay’
and a provider or Centrelink can request a comprehensive compliance assessment
at any time if they have concerns.[23]
2.18
DEEWR also explained that an individual could request a CCA through their
provider or Centrelink.[24] DEEWR officials advised:
The intention of the early usage of the comprehensive compliance
assessment is to attempt to pick up on barriers that might be there that are
stopping people from participating. It is not the intention to do that to apply
an eight-week non-payment period early.[25]
2.19
Regarding early identification of issues, DEEWR further stated:
The other thing is that the new employment services will focus
very much on those very disadvantaged people who will be in stream 4, and as a
result of that it is likely that the providers will identify them very early on
as people who need special assistance.[26]
2.20
DEEWR also highlighted the fact that the CCA is an administrative
process and not something that in itself determines an action such as a
non-payment period. The intention is for the CCA to look at the circumstances
of the individual to determine whether alternative services or assistance is
required.[27]
2.21
DEEWR further explained that all of the compliance arrangements such as
a decision resulting from a CCA are open to the same appeals process that are
available now.[28]
Committee view
2.22
The committee majority is concerned that the more prescriptive
compliance tools become, the higher the risk of losing the flexibility for
application which is needed to address individual circumstances. It notes this
greater flexibility to address individual circumstances is one of the main aims
of the new compliance regime. The committee therefore supports the use of the
CCA as an early intervention measure to address non-vocational barriers.
2.23
The committee majority is pleased to note that the use of the CCA as an early
intervention measure will mean providers do not have to wait for a breaching to
occur to start to ask questions to identify problems.
Vulnerability indicators
2.24
DEEWR explained that it is the intention of the new system to pick up
issues early with the assistance of vulnerability indicators.[29] Organisations such as NESA noted the need for vulnerability indicators to be
working effectively to support the most vulnerable so that issues can be
flagged early. They noted that currently the range of people who are eligible
to have a vulnerability indicator placed on their record is quite narrow.[30]
2.25
The NWRN noted that DEEWR has revised the vulnerability guidelines which
had resulted in improvements in its use.[31] However, they suggested there was additional work to be done to improve it
further.[32]
2.26
Mr Simon Smith, Executive Officer, Homelessness Australia said he would
welcome a category of vulnerability which recognises people at risk of
homelessness.[33]
2.27
Senators asked DEEWR how many people with vulnerability indicators
received eight-week non-payment penalties. DEEWR officials responded:
For 2006-07, of the 15,216 eight-week non-payment periods, 608
of those were for people with a vulnerability indicator. That represented 3.9
per cent. For 2007-08, of the 28,887 job seekers with an eight-week non-payment
period, 948 were people who had a vulnerability indicator. That represents 3.2
per cent.[34]
2.28
DEEWR officials explained that the presence of a vulnerability indicator
is an alert for decision makers that there may be other issues present.
Centrelink is required to take any vulnerabilities into account in their
decision making to determine whether they affected their ability to participate.[35]
Committee view
2.29
The committee notes the importance of vulnerability indicators as a
safety net for the most disadvantaged and urges DEEWR ensure their use, and the
guidelines for their use, are effective.
Recommendation 1
2.30
The committee majority recommends that the Department of
Education, Employment and Workplace Relations review the effectiveness of
vulnerability indicators and associated guidelines to ensure they protect the
most vulnerable job seekers.
Homelessness
2.31
Mr Smith told the committee that data collected by the Social Policy Research
Centre for a 2005 study indicated that 1 in 9 people were at risk of becoming homeless
as a consequence of the eight-week non-payment penalty.[36] Concerned senators noted the eviction figures from DEEWR[37] and asked what percentage of these people re-engaged with the system and found
employment. DEEWR said these people were not individually tracked to see
whether they reclaimed benefit or moved into employment but noted the
availability of financial case management for eligible individuals.[38]
2.32
Senators further questioned how many of those who were breached had
dependents. DEEWR responded:
For the financial year 2007-08, 4,050 job seekers were assessed
as eligible for financial case management. Of that 4,050, 3,614 were parents
and 436 were people assessed as being exceptionally vulnerable themselves.[39]
2.33
DEEWR officials added that these people still received family tax
benefit and, if entitled, rent assistance as well.[40]
2.34
Homelessness Australia raised concerns that the Act does not include a
definition of homelessness and explained without this there is nothing linking the
definitions used in the instruments and policy guidelines that flow from it.[41] Mr Smith highlighted that the definitions of homelessness being used in the
guide to the Social Security Act and the vulnerability indicator framework are
not clear. He recommended the inclusion of the definition used by the
Australian Bureau of Statistics (ABS) in the Counting the homeless report which is widely accepted. This definition should then be consistent in
all associated instruments and policy guidelines.[42]
Committee view
2.35
The committee majority notes that addressing homelessness is a key
priority for the government as part of its social inclusion agenda.[43] The committee majority recommends that a definition, for example the one used
by the ABS, be included in the documents that flow from the legislation such as
the legislative instruments and policy guidelines.
Recommendation 2
2.36 The committee majority recommends that the government consider
including a definition of homelessness, for example the one used by the Australian
Bureau of Statistics, in documents that flow from the legislation including the
legislative instruments and policy guidelines.
Operational effects
2.37
Organisations such as Mission Australia highlighted some possible
operational effects and requested further consultation to work out the
administrative requirements of the proposed changes so there are no unintended
consequences such as increased administrative burden on providers.[44] The committee majority notes that consultation is underway to address
operational issues.
2.38
Senator Siewert questioned DEEWR on whether an assessment had been
undertaken of the effects of the new process on Centrelink resources. DEEWR
responded that Centrelink have put in a bid for resources to be able to deliver
the new system which is now being worked through.[45]
Consultation
2.39
Organisations such as NESA highlighted their considerable experience in
dealing with job seekers and offered to assist with the development of the
documents flowing from the legislation such as legislative instruments and
policy guidelines.[46] At the hearing DEEWR stated that there will be continuing consultations with
organisations such as ACOSS, the NWRN and NESA in the context of the guidelines
for successful employment service providers.[47]
Communication
2.40
Organisations emphasised the critical importance of communicating the
new system to job seekers. They advocated the need for consultation with
providers and job seekers in the lead up to the implementation of the new
system to ensure people are well informed and know their roles and
responsibilities in order to minimise confusion and ensure consistency. ACOSS
suggested active and creative steps to communicate the new arrangements and
consequences to job seekers.[48] NESA noted the need to better educate the Indigenous community about changes to
their obligations and requirements.[49]
2.41
DEEWR emphasised that there will be continuing consultation and training
with the successful providers to ensure they understand the requirements and
are able to communicate them.[50]
Committee view
2.42
The committee majority is concerned that the legislation is not written
as simply or clearly as it could be. It urges the government to ensure
legislative instruments, guidelines and terminology are written as simply and
clearly as possible to ensure consistency and assist communication.
Recommendation 3
2.43 The committee majority recommends that the Department of Education,
Employment and Workplace Relations ensure that the legislative instruments,
guidelines and terminology are simply and clearly written to assist consistency
and communication.
Recommendation 4
2.44
The committee majority recommends a communication campaign be
undertaken to ensure Centrelink, employment service providers and particularly
job seekers are aware of the changes to the system and understand their roles
and responsibilities. It urges the Department of Education, Employment and
Workplace Relations to consider effective ways to communicate the changes to disadvantaged
and Indigenous job seekers.
Review
2.45
CSSA acknowledged that an enormous amount of data is currently collected
but suggested it is largely for the purposes of tracking bureaucratic
compliance.[51] Mission Australia recommended a review of the effectiveness of the new
arrangements.[52] The NWRN suggested monitoring the effects of the new arrangements on vulnerable
groups, including young people, Indigenous people and job seekers with a mental
health condition.[53] Close monitoring and continuing review was also recommended by CSSA.[54] DEEWR informed the committee that review processes were being developed.[55]
Indigenous Australians
2.46
Senator Siewert questioned witnesses on the possible effect of the bill
on Indigenous job seekers given their high levels of disadvantage and the
incidence of breaching. ACOSS responded that discretion will be very important
in relation to Indigenous Australians as 'some of these people lead incredibly
complicated lives'.[56] NESA and CSSA highlighted that the flexibility in the system will be critical
when dealing with Indigenous job seekers.[57] Organisations such as Mission Australia asked for additional opportunities to
discuss how these processes would apply to Indigenous communities in remote
areas.[58]
Recommendation 5
2.47 The committee majority recommends that comprehensive data be
collected to monitor and report on the effectiveness of the new compliance
system for job seekers, including Indigenous Australians.
Consequential and other amendments
2.48
The bill also makes minor amendments to Social Security Law needed to
support the new Employment Services. It will replace all references to
'activity agreements' with to 'Employment Pathway Plans'.
Employment Pathway Plan
2.49
An 'Employment Pathway Plan' (EPP) will perform a similar function to an
activity agreement. It will set out the participation requirements of a job
seeker, negotiated with the job seeker and tailored to their individual needs.
Unlike the activity agreement the EPP, may include optional activities not
subject to the compliance action such as drug, alcohol or psychological
counselling.[59]
2.50
Dr Simons suggested inclusion of 'pre-employability skills' as acceptable
skill provisions:
One of the things that we have learned from providing
opportunities for children and young people who come from these financially
disadvantaged families is that in many circumstances the simple lack of access
to opportunities which would more broadly be termed personal development, as
opposed to simply the development of cognitive and intellectual skills, is
absolutely key to their engaging with the broader learning agenda. What is true
of those kids and young people in the new circumstances is all the more so true
for the parents that we are talking about. [60]
2.51
Senators noted the suggestion from the NWRN that vulnerability
indicators be included in the EPP. DEEWR explained that vulnerability
indicators are flagged on the Centrelink system which is available to providers
when negotiating an EPP.[61] In response to questions about the process for vulnerabilities that have not been
flagged DEEWR explained the following steps could be taken:
In that case, a couple of things could happen. One is that, if
that issue arose and a person did not, for example, have a vulnerability
indicator for mental health on their records, the provider could request that
Centrelink put that indicator on. In that case, Centrelink would investigate
the circumstances and add the indicator at that point, so you do not have to
wait for a CCA; that could happen at any time.[62]
2.52
DEEWR further explained that job seekers will receive individually
tailored service and as their circumstances change, EPPs can be changed without
going through a CCA.[63]
Conclusion
2.53
The committee majority notes that this is a complex area of public
policy. The Opposition has stated that the government has gone 'soft' on
welfare and describes people on welfare as 'dole bludgers'.[64] The committee majority recognises that most job seekers do the right thing but
that sanctions are needed for the small number of people who deliberately
exploit the system.
2.54
The committee majority notes the view from some groups advocating
unconditional welfare rights. However, it does not agree with this view as unconditional
welfare rights would imply opposing activity requirements and penalties for
non-compliance. The committee majority supports the policy of mutual
obligation, to the extent that an individual is able to comply, believing it is
central to addressing welfare dependency through improving skills and self
esteem.
2.55
Others see the new system as weakening the policy of mutual obligation.
The committee does not accept this view. It recognises that withholding
benefits can cause hardship for the most vulnerable and the new system will
include increased flexibility to address individual needs.
2.56
Penalties remain but the system will be sufficiently flexible to be able
to take into account individual circumstances. In particular, the committee
majority supports the additional assistance for those disadvantaged people who
need it.
2.57
The committee majority supports the retention of the eight-week
non-payment penalty to address wilful and persistent non-compliance. The
current regime of an automatic and irreversible penalty is harsh and
counterproductive and resulted in undesirable social policy outcomes including
homelessness. The penalty will be discretionary. A job seeker will now be asked
why they are not complying so that underlying factors, changed circumstances
and their financial situation can be taken into consideration. The committee
majority is sympathetic to efforts made in legislation to take into
consideration matters which are beyond a person's control.
2.58
Where an eight-week penalty is applied the job seeker will be encouraged
to re-engage with employment services, in contrast to the current system where
they are disengaged. The committee majority supports provisions which ensure
penalties do not tip the scales for the most vulnerable into personal crisis
including homelessness and severe financial hardship. This is not being 'soft'.
It is being fair and will ensure that cases of severe disadvantage are not just
shifted to the already overstretched charity sector.
Recommendation 6
2.59 The committee majority recommends that the bill be passed.
Senator Gavin Marshall
Chair
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