Posted 20/11/2018 by Don Arthur
The Social Security Commission Bill 2018 is a private member’s bill introduced by Cathy McGowan, the Member for Indi, on 20 August 2018. The Bill’s purpose is to create an independent commission to review the adequacy of social security payments. While it would make recommendations, it would not be responsible for setting payment rates.
In her Second Reading Speech, Ms McGowan said: ‘I believe social security recipients should be able to have a standard of living that allows them to live with dignity.’
The Bill is supported by Rebekha Sharkie, the Centre Alliance member for Mayo. It is opposed by the Government. The then Minister for Social Services, Dan Tehan rejected the proposal saying that the Government ‘is not going to outsource our welfare system’. Labor Governments have not indicated support for similar proposals in the past.
The Bill was referred to the House Standing Committee on Social Policy and Legal Affairs on 19 September 2018.
Addressing the problem of payment adequacy
According to the Bill’s Explanatory Memorandum: ‘The current system of setting payment rates has fallen behind community expectations.’ The Explanatory Memorandum argues that payments should be increased in line with wage increases as well as cost of living increases.
Social security payment reviews
The Social Security Commission’s main responsibility would be to conduct social security payment reviews. These reviews would be public. The Commission could accept submissions, consult with individuals and organisations and conduct or commission research. It would then provide a report to the Minister for Social Services with recommendations on changes to payment rates or to indexation. The Government would then be required to respond to the report.
Proposed section 15 sets out requirements relating to submissions. Proposed section 45 allows the General Manager to engage consultants. Proposed section 18 requires the Government to respond to recommendations.
Which payments would be reviewed?
The Commission’s reviews would be restricted to social security payments. These include:
- pensions such as the age and disability pensions
- social security benefits such as Youth Allowance, Newstart Allowance, Austudy and Parenting Payment, and
- a number of other payments such as Crisis Payment and the Education Entry Payment.
The Commission would not review the adequacy of non-social security payments such as Family Tax Benefit, the Farm Household Support Allowance, or payments to veterans.
The Bill relies on the definition of social security payment in Section 23 of the Social Security Act 1991.
When would reviews be undertaken?
The Commission would be able to conduct a social security review on its own initiative or in response to a request from ‘an organisation that represents persons in receipt of one or more social security payments’ (proposed subsection 11(6)).
The Commission would also be required to conduct a review if requested by the Minister or either House of Parliament (proposed subsection 12(1)).
The Commission would be required to ensure that each social security payment is reviewed at least every four years (proposed subsection 11(8)).
Members of the Commission
The Social Security Commission would be made up of a President and four commissioners. The Commission would have a General Manager and staff.
The Bill requires that members of the Commission have ‘a high level of skills and experience relevant to providing advice on social security payments’. This must include skills and experience in academic research, business or economics, or social and community organisations (proposed subsection 22(3)).
Previous proposals for an independent tribunal or commission
In the past there have been a number of proposals to set up an independent tribunal or commission that would review the rate of social security payments. Some of these proposals have been restricted to pensions while others have included all income support payments.
Some proposals for a commission or tribunal have compared it to existing bodies that set minimum wages or pay for Members of Parliament. For example, in 2016 Marcelle Mogg of Catholic Social Services Australia (CSSA) referred to the Fair Work Commission and the Remuneration Tribunal.
Some of the early proposals were by members and senators. These include proposals by the Country Party’s Thomas Marwick in 1941, the Liberal Party’s Bruce Graham in 1950 and the Democratic Labor Party’s Vince Gair in 1966.
More recently, in 2008, CSSA proposed an ‘entitlements commission’ that would review the adequacy of income support payments arguing that an ad hoc approach to setting payment rates ‘has contributed to the lack of fairness, complexity and inconsistency of the income support system and has tended to overlook the needs of vulnerable groups who lack the ability to lobby effectively.’
A number of other groups have put forward similar proposals. These include the Australian Council of Social Service (ACOSS), the Benevolent Society, and the Australian Greens.
Arguments for and against an independent commission
The Bill’s Explanatory Memorandum argues that regular reviews of payment adequacy ‘would ensure recipients have a standard of living that allows them to live with frugal dignity, as they look for work, or study, and/or support children.’ The proposal appears to assume that Government and Parliament would be likely to increase income support payment rates if the Commission judged them to be inadequate.
The major argument against this proposal is that responsibility for decisions about payment rates should lie with Government and the Parliament. This was the view of the Rudd Government’s Pension Review Report (the Harmer Review):
The Review considers that decisions on the level of support the nation is willing to provide to those with limited or no means, including pensioners, are most appropriately made by the Australian Government and Parliament as the elected representatives of the Australian people, rather than being a function that can, or should, be delegated.
Former Social Services Minister Dan Tehan has expressed a similar view in response to the Bill’s proposal for a Social Security Commission.
Another argument against the proposal is that raising income support payments is not the only way to improve the wellbeing of people receiving income support and that Governments should be free to weigh up all the alternatives. In a joint submission to a 2012 Senate Inquiry on the adequacy of the allowance payment system for job seekers and others, a number of Government agencies argued that investments in employment services and other measures could also improve the position of people who were out of work.
Some supporters of an independent commission such as CSSA have acknowledged that Governments must make trade-offs between objectives and weigh up alternative responses. However, in its 2008 proposal for an ‘Entitlements Commission’, CSSA argued that having clear standards of adequacy would make the decision making process more transparent and government more accountable.
Concluding comment
Neither Labor nor the Coalition have expressed support for this proposal. Labor has acknowledged concerns about the adequacy of Newstart Allowance and has proposed a one-off independent review rather than an ongoing commission.