Additional Comments by
Coalition Senators
Background
The Social Security Legislation Amendment (Employment
Services Reform) Bill 2008 aims to amend the Social Security Act 1991
and the Social Security (Administration) Act 1999 to bring into effect
measures announced by the Government in the 2008-09 Budget, regarding a new
compliance system for job seekers and employment services that will run from 1 July 2009 to 1 July 2012.
The Job Network was an initiative of the former Coalition
Government, introduced in 1998 to combat a jobless rate of 7.7%, that
recognised the need for a firm but fair compliance system which committed job
seekers to actively seek employment and to engage in activities to assist in
the attainment of skills that would enhance employment prospects.
Coalition Senators recognise that it was the success of the
previous Government’s program that contributed to record unemployment of 3.97%
and a near 30% decrease in the number of long-term unemployed people between
June 2006 and August 2008.
Any system designed effectively to move those on
unemployment benefits into work must be a judicious balance of carrots and
sticks. Such a system must avoid penalising marginalised members of society
for a failure to comply with job seeking requirements where that failure is
beyond their control, for example through mental illness. Equally the system
must send a clear signal that a genuine willingness to seek employment is a
condition of the benefits paid until that employment is attained. Any system
which does not convey this clear obligation to job seekers is at serious risk
of failure, or at least of losing community confidence in its integrity.
Coalition Senators fear that features of the Social Security
Legislation Amendment (Employment Services Reform) Bill 2008 may send a signal
that the mutual obligation to actively and diligently seek employment is being
relaxed, with the concomitant danger that jobless numbers may rise as some
beneficiaries believe they can exploit the new regime and not seek work.
The importance of meaningful compliance measures cannot be
overstated. Professor Peter Saunders refers
to the positive impact mutual obligation has had in bringing people from
welfare to work, but says that
...the main impact has been through compliance
effects (for example, imposition of activity requirements strengthens people’s
commitment to finding and accepting work).[1]
There is however another, greater concern with the direction
of this Bill.
It is clear that the economic climate of 2008 is vastly
different to that in which the Job Network program was formulated in 1998. Australia now
faces, after a period of almost unprecedented jobs growth, the prospect of
falling job opportunities and rising unemployment. The recently published
MYEFO projections predict a 5.75% jobless rate by June 2010. Other forecasters
are expecting unemployment to rise to 6% as early as June 2009, putting another
200,000 people out of work. Such estimates, made since the new universal
employment services model was designed in February 2008, may render the model’s
original policy assumptions redundant.
These assumptions postulated a target population of job
seekers with a high proportion of long-term unemployed, where intensive
intervention and an element of case management are required to find suitable
placements. The scenario now in prospect would see more recently-employed
jobseekers entering the market, with the result that the long-term unemployed
will fall to the back of an extending jobless queue.
Coalition Senators share the reported concerns of Jobs
Australia chief executive David Thompson that
the new model “only worked when unemployment was low and there were lots of
jobs available.”[2]
Coalition Senators support certain elements of the
Government’s proposed new system such as the Employer Broker concept and
Innovation Fund. However given MYEFO’s predictions for the jobless rate,
Coalition Senators do not support the new ‘no show, no pay’ system proposed
under the Government’s Amendment Bill.
Coalition Senators support the intent of certain provisions
of the Amendment Bill. In addition, Coalition Senators support the Amendments
to the Bill moved
in the House of Representatives by the Shadow Minister for Employment
Participation, Dr Andrew Southcott
MP,
and urge their adoption by the Senate.
Compliance
The Bill proposes substantial changes
to the job seeker compliance system that would apply to NewStart Allowance,
Youth Allowance, Parenting Payment and special benefit paid to nominated Visa
Holders.
A key feature of the proposed new compliance system is the ‘no
show, no pay’ concept which aims to deter non-compliance and encourage
re-engagement.
Coalition Senators believe this proposal may undermine the
inroads made into long-term unemployment and welfare dependency achieved under
the existing policy. Under the existing policy failure to attend an interviews
with an employment services provider, failure to comply with an activity
agreement or failure to attend Work for the Dole are the most common reasons
for incurring an eight-week non-payment period.
The Government’s Amendment would weaken this compliance
measure.
A job seeker who fails to attend an appointment or meet a
requirement, without reasonable excuse, would commit a connection failure.
The job seeker would then be required to comply with a reconnection
requirement. Failure to do so, without reasonable excuse would incur a reconnection
failure period involving the loss of their basic rate of payment until
compliance with a further reconnection requirement was met.
A job seeker who intentionally, recklessly or negligently
fails to meet the above obligations, and persistently fails to comply with
those obligations or who persistently fails to accept, without reasonable
excuse, an offer of suitable employment would incur a serious failure.
Only then would an eight-week period of non-payment be invoked.
In a further weakening of compliance measures, the
eight-week non-payment period may be ceased through participation in a serious
failure requirement, or if it is judged that a job seeker does not have the
capacity to meet a serious failure requirement.
A job seeker who becomes unemployed due to a voluntary act
or due to misconduct can avoid an eight-week payment suspension if severe
hardship is demonstrable. However Coalition Senators are concerned at the
power vested in the Departmental Secretary to determine who is eligible for
such hardship claims.
Mutual Obligation
Coalition Senators recognise the mutual obligation concept
is imperative to breaking the cycle of welfare dependency. The previous
Coalition Government’s Welfare to Work policy established a patent link between
receiving income support and actively seeking employment or, at least,
contributing to society, the ultimate provider of income support.
The eight-week non-payment period acted as a deterrent for
those who failed to meet their end of the bargain, while maintaining fair and
humane safeguards for those with legitimate reason for non-compliance.
Mutual obligation activities such as Work for the Dole
assist job seekers to obtain training and skills necessary to re-enter the
workforce. The program helped all job seekers to re-engage in employment
activities: indigenous unemployed, people with a disability, those in remote
and rural regions and those with limited education.
Currently the eight-week non-payment period is incurred
after three inexcusable breaches within a 12-month period. The Social Security
Legislation Amendment (Employment Services Reform) Bill 2008 will move to a
six-month time frame, allowing six absences from work experience or Work for
the Dole in that period. It will effectively permit one day of absence per
month without reasonable excuse.
It is inevitable that some of those receiving benefits will
interpret the abandonment of an automatic suspension period as a indication
that mutual obligation itself is being relaxed.
Coalition Senators have particular concerns over the Bill’s
seemingly lenient approach regarding job seekers who miss a job interview. We
share the view of National Employment Services Association (NESA) that, where
preparation and arrangements have been made and a person does not show up for
an interview, this should be considered a serious breach and there should be
the discretion to treat it equally with a 'serious failure' where there is no
reasonable excuse. [3]
There is also some basis for a policy position that missing
a job interview (deliberately) should result in an automatic referral to a
Comprehensive Compliance Assessment.
Recommendation
Coalition
Senators recommend that the Bill be
amended so that a deliberate failure to appear at a job interview
-
should
be treated as a ‘serious failure’, and
-
should
result in an automatic referral to a Comprehensive Compliance Assessment.
Two comments on the Majority
Report
Coalition Senators wish to respond to 2 issues in the
Government Senators’ Report.
In paragraph 1.11 of the report, Government Senators state
The government has
recognised that over the last ten years many thousands of job seekers have
become increasingly detached from the labour force. While the unemployment rate
has fallen to 4.2 per cent, it is clear that a significantly higher proportion
of job seekers are highly disadvantaged and have experienced long-term
unemployment.
These comments can be interpreted as suggesting that the
position of the long-term unemployed worsened under the policies of the
previous government. Coalition Senators reject this assertion, which is
inconsistent with the available evidence. For example, the reason that “a
significantly higher proportion of job seekers ... have experienced long-term
unemployment” is because unemployment levels over the life of the previous
government halved, so that the long-term unemployed became a more concentrated
proportion of those who remained jobless.
Coalition Senators also emphatically reject the unreferenced
assertion in paragraph 2.53 of the Majority Report that “[t]he Opposition ...
describes people on welfare as 'dole bludgers'.” We regard this comment as
gratuitous and unsubstantiated, detracting from the mature reflection which all
senators have devoted to this inquiry. It reflects poorly on Government
Senators if they feel their position is strengthened by such falsehoods.
Conclusion
Coalition Senators recognise the mutual obligation concept
is imperative to breaking the cycle of welfare dependency. We feel that
elements of this legislation undermine that principle. We adopt the sentiment
of Professor Saunders who
described these changes, together with those to Work for the Dole, in these
terms:
The result of all
these proposed changes will be that government spending on moving people from
welfare into jobs will increase but outcomes will worsen. The government
should think again.[4]
Senator
Gary Humphries
Deputy
Chair
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