Labor Senators would like to thank those stakeholders who engaged constructively in this inquiry process despite the extremely unreasonable time frames imposed by the Government. We note that our concerns about the short time frame are exacerbated by the fact that the employment services sector, employers, job seekers and training organisations have also not been consulted.
The Explanatory Memorandum to this bill states that it 'modernises and streamlines social security law to support the New Employment Services Model [NESM] which will operate from July 2022, clarifies provisions supporting current policy, reduces duplicated and redundant provisions, and ensures that the law is fit for purpose'.
Labor recognises that the current employment services system is in need of reform and is not opposed to legislative changes designed to improve the system and to make the best use of available technology for the benefit of job seekers, provided that the use of technology does not disadvantage participants or undermine their rights.
The key recommendation of the Employment Services Expert Advisory Panel report, I Want to Work: Employment Services 2020 was to leverage the benefits of digital servicing for the most job-ready to increase investment in those job seekers who are long-term unemployed or at risk of becoming so.
The I Want to Work paper outlined the rationale and commitment to the new model of employment assistance stating:
The future employment services system will ensure that funds are invested in smarter, more targeted ways. It is smarter to invest in a digital and data ecosystem which helps all job seekers look for work, with many being able to self-service.
This creates cost efficiencies. It is smarter to invest in automating business processes and administration. This creates time efficiencies. It is smarter to invest in a data ecosystem which analyses what works and what doesn't for job seekers. This creates outcome efficiencies. It is smarter to spend this time and money on job seekers who need the most help. It is the best chance we have to break cycles of welfare. It's the best chance we have to cut entrenched unemployment. This is how we will invest.
COVID-19 has seen large and new cohorts of people rushed urgently into the employment services system, particularly the online system. This has meant that the existing 'online services trial' has been speedily expanded without real consideration or public disclosure and debate of the trial outcomes.
In this context, the Government is seeking retrofit the existing system to the online model in this bill. For example, the Department of Education, Skills and Employment (the department) highlighted that the current digital system requires sign off by people for tasks that could be done inside the digital platform, in order to uphold existing mutual obligation provisions.
Labor notes that these changes do not address concerns around the nature of mutual obligation requirements and whether they are well targeted to the current employment market and the needs of job seekers.
While Labor agrees with the Explanatory Memorandum that social security law provisions relating to mutual obligation requirements are unnecessarily complex, repetitive and lengthy, as are the provisions about when a person will be exempt from these requirements. We assert that the changes being made by the Government do not make clear their intended policy directions.
The bill will reduce the number of provisions in the Social Security Act which relate to mutual obligation requirements and the circumstances in which job seekers will be exempt from them – resulting in a net reduction of approximately 130 pages from the social security law.
In reducing this complexity, which in principle is reasonable, it is important to be mindful that the Government does not exercise powers to make mutual obligations less convoluted, or unreasonable. They thereby rely on delegated legislative instruments which result in the Government having unreviewed power over job seekers.
Labor is concerned that as these new requirements have not been finalised, there is no certainty as to their effect on job seekers. We think it is reasonable that policy analysts, those representing jobs seekers, employment services providers, employers, training organisations, and social services providers are able to give their considered views.
Consultation
The bill was introduced into the House of Representatives on 27 May 2021 and initially the Committee was required to report by 11 June 2021 with a 4 June 2021 deadline for submissions.
The Hon Richard Marles MP, Deputy Leader of the Australian Labor Party, wrote to Minister Robert requesting an extension of time for the consideration of this bill by the Committee. While the Government did allow an extension of three business days for submissions and a further week for the Committee to report, most submitters were of the view that this was still woefully inadequate.
Ms Sally Sinclair, Chief Executive Officer of the National Employment Services Association (NESA), stated the bill is:
A lengthy and very complex document, and the time frame given to review, cross-reference and analyse impacts of the proposed amendments, which, in their entirety are reported to reduce social security legislation by an estimated 130 pages, is for us an insufficient period of time. Importantly, the time frame has not permitted us, as a stakeholder, to gather valuable insights and contributions through consultation with relevant networks and community members.
Anglicare Australia's submission stated:
This bill is, as you know, the first major update to laws on compliance and obligations in decades. The New Employment Services Model was first flagged in 2018, so there's simply no reason for such a rushed process. We echo ACOSS's call for an extension of at least four weeks to hear from job seekers, employers, community groups and experts.
In addition, the below organisations have registered their dissatisfaction with the speed at which this bill was brought out.
The Australian Unemployed Workers' Union has stated its disapproval in relation to the bill:
The committee must provide additional time for in-depth consultation that genuinely considers the needs and rights of underemployed and unemployed Australians. Attempting to rush through legislative amendments without genuine consultation will result in significant harm being done to vulnerable Australians.
People With Disabilities Australia also stated:
We are therefore deeply concerned to ensure that the harshest elements of the system are rectified, not entrenched or extended further.
The evidence of the department at the public hearing was that except for Schedule 8, the bill does not make changes to current policy. Existing rules and protections have been maintained within consolidated provisions. The intention is to improve the clarity of the rules and support existing policy.
However, given the number of pages of social security law deleted it is unclear whether this is in fact the case. Labor is not clear if this is simply a statement that the Government has not yet changed their policy, and that the new provisions of the bill would give them the delegated power to do so. The very short Committee process has not allowed Labor time to review these deleted provisions. We note that the many episodes of the Government justifying the certainty of its legal and moral position on Robodebt, including before Senate Committees, does not instil confidence in the absence of a proper process.
The Government has expressed its intent to rush the bill through Parliament without a proper level of scrutiny, even though the NESM does not commence until 1 July 2022. This haste has limited the capacity for stakeholders to submit their views and for Senators to conduct a thorough investigation.
Schedule 8
The bill achieves a budget saving of $191.6. million by delaying the start day for Jobseeker payment and Youth Allowance for job seekers utilising online services. Job seekers who are referred to an employment services provider are paid income support starting from an earlier date than job seekers who are referred to an online employment services provider.
In practice, under the current arrangements a delay of up to 2 days in the payment start time could occur for a job seeker who elected not to utilise online employment services, given that the payment commences from the date of appointment with their employment services provider.
The department has designed the new participation requirements in the bill to take effect from 1 July 2022, so that on average job seekers who had not completed their job plan by the end of their existing waiting period, would be further delayed in receiving their initial payment by 10.4 days. The department estimates that this would impact 144 000 job seekers utilising online services in relation to their payment commencement date.
Labor notes that stakeholders are concerned that people seeking to access the labour market payments, primarily the Jobseeker payment, will be disadvantaged by the changes to the participation requirements rather than the shift to online services necessarily.
Specifically, that inequity is being created for this cohort of job seekers who opt for online services. This group will be, on average, at least 8.4 days worse off than job seekers utilising face-to-face services. This will act as a disincentive for job seekers to utilise online employment services and appears to be at odds with the objectives the NESM.
Australian Council of Social Service (ACOSS) and People with Disability Australia (PWDA) both agree:
The present system is harsh and unreasonable, and throws many people into financial hardship as well as causing severe mental distress. 'Mutual obligation' requirements are also unreasonable and counterproductive. Further, people cannot reasonably be expected to undertake such requirements on income support payments of $44 a day. People are being set up to fail.
The Government has put in place mutual obligation requirements which often do not meet the local employment demand and landscape, or the needs of local employers.
A good example of this is demonstrated with the data that is being received by the employer hotline, ostensibly set-up so that employers can raise issues with job seeker payment recipients who have not accepted suitable work. However, it is telling that the main reason for employers to call is in fact because they receive redundant and inappropriate job applications from job seekers needing to meet their mutual obligation requirements who are therefore obliged to submit up to 20 job applications a month. This is resulting in employers being overwhelmed with paperwork and a merry-go-round of what in effect can be pointless job active mutual obligation requirements that have no prospect of leading to employment.
Dr Peter Davidson, the Principal Adviser, Australian Council of Social Service said:
We call on the committee to recommend that the requirements in schedule 8 for people to enter into a plan before receiving their first income support payment be rejected, because it would put people under intense pressure to agree with whatever is put to them. Schedule 6 raises the prospect that requirements for people to undertake work-like activities without workplace protections, like minimum wages and work, health and safety provisions, could be extended to a wider range of programs, without parliamentary scrutiny, and we understand that's an issue also raised by the ACTU. People engaged in work should have those protections. Finally, we put forward recommendations to change social security law to improve people's wellbeing and employment prospects by removing harsh and unreasonable requirements.
The Government has argued that they may vary these requirements, including in their proposed point system which is still under development. However, given the Government's history in this regard there is little evidence to show that such changes will be meaningful. In this context, the way this bill rushes people to sign their job plans could easily contribute to this problem. We note that removal of Schedule 8 would remove some of the pressure leading towards inappropriate job plans. Inappropriate plans are a current problem in the system, leading people to have payments suspended, demerit points accumulated and payments missed, resulting in substantial stress and hardship. Many of these job seekers have their job plans found to be inappropriate to their needs.
ACOSS gave evidence to the committee that many job seekers are also suspended from payments because of errors of the employment service not errors of their own making. Dr Davidson said:
The present compliance system is harsh and unconscionable. Between September 2020 and April 2021, there were 1.3 million payment suspensions, many of them automated, for people on unemployment payments who in many cases had actually fulfilled their activity requirements.
Furthermore, NESA submitted that job seekers engaged in face-to-face services have the right to be informed of and accept a period of up to 48 hours 'think time' to consider their Job Plan before accepting it, without impact to their payment start date. Whereas under the bill, ACOSS argued that:
…job seekers in online services would experience a change in their payment start date if they took time to consider the appropriateness of their job plan before accepting it. We think this is a provision that potentially creates inequity. We're also concerned that attaching the start date to the acceptance of the job plan will place pressure on job seekers to accept a job plan that is not suitable to their circumstances in order to receive payment.
In response, the department noted that, in effect, the job plan could be readily changed by the job seeker.
In its response to questions taken on notice at the public hearing, NESA refers the Committee to the provisions of Section 40V of the bill which appear to be at odds with the department's view that job seekers are permitted to vary a job plan at their discretion. Subsection (3) requires the Employment Secretary to either vary or refuse to vary a job plan as requested by a job seeker:
40V Variation, cancellation and review of employment pathway plans
Variation
(a)
The Employment Secretary may vary an employment pathway plan that is in force under Subdivision A in relation to a person after discussion with the person and after taking into account the matters mentioned in paragraphs 40D(5)(a), (b), (c) and (d).
(b)
The Employment Secretary may vary the plan on the Employment Secretary’s own initiative or on request of the person.
(c)
If the person requests a variation of the plan, the Employment Secretary must:
(i)
make a decision under subsection (1) to vary the plan; or
(ii)
make a decision to refuse to vary the plan.
(d)
The Employment Secretary must notify the person of the variation or of the decision to refuse to vary the plan.
(e)
If an employment pathway plan is in force under Subdivision A in relation to a person, the person may vary the plan in accordance with the processes referred to in subsection 40B(1).
NESA makes the comment that:
There is also no guarantee that limitations would not be introduced through operating measures/guidelines. NESA’s experience is that systems/guidelines are often changed as a result of the behaviour of few which then impacts many.
Response to the Committee view
The response of Labor Senators to some of the views expressed in the majority report are as follows:
3.48 – Labor strongly disagrees with the view that additional time is not warranted for consultation on this bill.
3.49 – Labor believe the Government’s responses to date have failed to address the needs of the long term unemployed and note that in relation to comments concerning the Government’s response to the I Want to Work: Employment Services 2020 Report, NESA have submitted that:
A side-by-side comparison of current jobactive funding arrangements for Streams B and C (those most aligned to Enhanced Services target group) with the payment structure announced for the New Employment Services - Enhanced Services would indicate that there has likely been a considerable reduction in investment for this cohort of job seekers. [emphasis added]
3.50 and 3.51 – In relation to the comments concerning to the streamlining of the social security law and the expansion of digital services, Labor acknowledges the concerns of stakeholders but recognises that on balance the employment services system is in need of reform and it is for a future Labor government to ensure job seekers are not left behind.
3.52 – Labor Senators are concerned that the principal amendment in Schedule 8 is a budget cut dressed up as measure to improve the engagement of job seekers with the employment services system. Furthermore, while purporting to address a current perceived inequity as between the payment start times of job seekers in the online and face-to-face systems, it creates new inequities for job seekers using online services. These inequities involve the delayed payment commencement time, the lack of ‘think time’ to create, consider or negotiate their job plan and the potential for coercion into sub-optimal job plans.
Key findings
Schedule 8 of the bill means that social security recipients with digital services mutual obligation requirements will only receive payments from the date of the completion of their job plan is unfair and should be opposed.
This schedule means approximately 144 000 new job seekers will lose on average between $346 and $457 in payments in 2022–2023
Lastly, Labor believes it is reasonable that policy analysts, those representing jobs seekers, employment services providers, employers, training organisations, social service organisations are given time to provide their considered views on the legislation before it proceeds.
Recommendation
Labor Senators recommend Schedule 8 of the bill be opposed, noting it will leave many job seekers financially worse off.
Recommendation
Labor Senators recommend that the Government engage in further consultation with both the Labor Opposition and stakeholders before the other provisions proceed.
Senator Louise Pratt
Deputy Chair