Second Reading Speech – SOCIAL SECURITY AMENDMENT (2007 MEASURES NO. 1 and 2) BILL 2007

Senator BARTLETT (Queensland) (5.44 p.m.)—The Senate is debating two pieces of social security amendment legislation together. There is an amendment to the legislation, to be moved by the Democrats, regarding the removal of discrimination against same-sex couples, which I have circulated. I will speak to that in the committee stage of the debate.

There are a range of measures in the Social Security Amendment (2007 Measures No. 1) Bill 2007 and the Social Security Amendment (2007 Measures No. 2) Bill 2007. The previous two speakers have gone through them in a fair bit of detail. I do not want to revisit them all extensively. I think that, particularly at this juncture, as we are moving into an election, it is important to emphasise some of the areas where flaws remain in our social security safety net and areas where I believe the safety net has been weakened and things have got worse in recent times.

The Democrats remain of the view that a core component of the so-called Welfare to Work changes was flawed and unfair and remains so. Of course we support shifting people from welfare into work and we support extra resources going into making people more work-ready. Indeed, I do not believe the government does enough of that. There is too much of the punitive approach, and the aspect of the so-called Welfare to Work package that has ended up in a range of people receiving lower income support payments than they otherwise would is not a way of assisting them into work. It has shifted some of them from one form of welfare onto a more harsh form of welfare. It highlights one of the continuing and more and more retrenched problems in our social security system.

It really is disappointing that, to date, there has been no real sign of a commitment on the part of the Labor Party to address this entrenched problem—that is, the growing gap between the pension type payments and the allowances. Basically, the motivation behind a key part of the government’s so-called Welfare to Work package was to shift a whole group of people onto that lower payment. Part of the issue with that is not just the payment level but also the effective marginal tax rate that is attached to it, or the withdrawal rate—the low free-income areas that are contained in those payments that have inbuilt disincentives for people to shift into the workforce. So changes have been made that have increased the disincentives for people to try to start moving into the workforce. For many people, particularly those who have been on welfare for a prolonged period of time, it is not just a matter of one day waking up and having a full-time, well-paid job that you can shoot straight into. In many cases, part of making people work-ready is adjusting to the nature of the labour market and a steady job. That means temporary work, casual work and part-time work. When you have withdrawal rates and high effective marginal tax rates, they are a real disincentive.

There have been improvements in that area in some respects, and I do not dispute that. But the core problem remains. Even with the so-called Welfare to Work provisions, that was meant to be one of the positive components, but the payment rates and income test provisions for sole parents and people with a partial capacity to work were changed and a new income test was introduced for allowance-level payments which retained the old initial free area but increased the next threshold. So, while the withdrawal rate was reduced from 70c in the dollar to 60c in the dollar, which is an improvement, because their basic free area was reduced by being shifted onto the lower payment, many people, depending on total amounts worked and total income earned, ended up with a bigger disincentive.

The whole area really needs an overhaul. It is a real shame that we have moved too far away from some of the core principles that were outlined in the McClure report, when the term ‘welfare reform’ actually did have some meaning. That is many years ago now. Some of those key issues with regard to the built-in inequalities in the welfare system and the gaps between different types of payment have now become so entrenched—and they are getting worse with each indexation—that I am not sure they can ever be reversed without a very comprehensive overhaul. Currently, I do not see any political will in that area.

The Democrats support many of the measures contained in these two pieces of legislation, but it is an opportune time to point to some of the areas where there need to be some significant shifts. That is a message we send to both the major parties. As I said, there is no particular sign of monumental differences here. As I understand it, despite Labor’s appropriate position of opposing some key aspects of the so-called Welfare to Work changes, they are now going to keep them. It is a bit hard to get too enthused about their opposition if they are now going to keep the things they were opposed to.

That is a reminder of one of the core lessons that can be seen when you look at the reality of how the legislative process works. Once something is put into law, it is quite hard to reverse. It gets built into the system; it gets built into the finances; it gets built into the budgetary process; it gets built into the administrative process; it gets built into people’s expectations and operations. It is pretty hard to wind back. That has been part of the problem with some of the things that have been done over a prolonged period of time but particularly in the last few years.

The Social Security Amendment (2007 Measures No. 1) Bill 2007 includes some amendments that are positive. They are amendments that really do go to fixing up some of the problems that were brought in with the initial so-called Welfare to Work changes. I note that in the second reading speech the minister, in introducing this bill, said that these reforms will ensure ‘even greater fairness’. In some respects, it would not be terribly hard to get greater fairness because the situation is not very fair to start with. So even greater fairness, I would suggest, is a bit of hyperbole from the government. But anything that moves things forward and makes things fairer is welcome. The government has also described these changes as ensuring greater equity between groups with similar needs. Again, that is welcome, but I would suggest that there is still an enormous amount of inequity entrenched in our social security laws.

The Social Security Amendment (2007 Measures No. 1) Bill 2007 also includes changes to the youth allowance, ensuring fast connection with employment assistance and greater engagement with the labour market. I would suggest that reducing some of the disincentives for people to undertake work in the first place, whether younger people or others, would be a desirable action. That gives me cause to mention some of the issues of debt and payment problems that exist specifically for young people. Firstly, there is a ‘youth allowance student’ and a ‘youth allowance other’, a Job Search type payment. Because they are just called ‘youth allowance’ there is a lot of confusion amongst younger people who do not realise they have to shift from youth allowance study to youth allowance other when they change study, particularly if they shift between part-time study and full-time study or between different levels of work and those sorts of things. That is something that happens more and more these days. It happened back in my day. Indeed, in the 1980s I shifted between full-time work and part-time work. A payment with a single name of youth allowance could lead to a greater probability of confusion. It is a problem that has been identified by the National Welfare Rights Network, who I would suggest have a better idea than any of us here about the real consequences of all these social security laws that we pass. They deal with all the problems that occur when people fall through the cracks or hit the hurdles.

There remains a continuing problem with the ridiculously high age of independence for youth allowance and the unrealistically low parental income test free area and taper rate. I welcome the separate measure that was passed, I think, earlier today, from memory, which finally introduces rent assistance for people on Austudy. That is a campaign the Democrats have pushed for many years and we welcome the measure. But there is still very unfair treatment of many young people in regard to youth allowance. The Democrats have pushed for many years for the age of independence to be reduced from the current high age of 25 years. The parental income test is also far too low. There is widespread evidence of very high levels of poverty and financial stress amongst students. If we are trying to encourage people to increase their skills to undertake study or further training then we need to be removing some of the barriers and impediments—and some of them are still in place. Of course, doing things like lowering the age of independence or making the parental income test fairer would appear as a cost in the budget in the short term. I suggest it would pay off in the longer term—and the parliament and the Treasury do not always think longer term—because there would be wider benefits to the community by more people being able to afford to study and expand and develop their skills.

There are also real continuing problems with the indexation of payments like youth allowance, Austudy and Abstudy. They are only indexed once a year and they are only indexed to the consumer price index. The income-free areas for these payments have not been indexed for almost 30 years. Their value has obviously declined dramatically. This compares to pension payments, which increase twice a year in real terms according to movements in average weekly earnings or in the CPI, if it is higher. That, I might say, is an indexation measure that the Democrats are responsible for implementing. So I am certainly not criticising that. I point that out because we were not able to get it tied to all income support payments, so it means the gap gets greater and greater, and the real value of payments such as youth allowance and the like becomes less and less. That compounds some of the other problems I have mentioned with regard to the cuts and the age of independence.

The Social Security Amendment (2007 Measures No. 1) Bill 2007 also addresses issues to do with partner parenting payment recipients and people who share the care of a child. The Social Security Amendment (2007 Measures No. 2) Bill 2007 also relates to issues to do with the care of a child. Senator Siewert outlined a lot of those issues in great detail. I commend her efforts in raising those issues. They will be raised in the committee stage, and the amendments in that regard have been circulated. A clear example I would note is that, under the changes in the second bill, single principal carers receiving Newstart or youth allowance who are eligible for this new exemption will access a higher rate of payment for the duration of the exemption. That higher rate is equivalent to the parenting payment single. That is a clear example of the benefit of having access to that higher rate—the parenting payment single rate as opposed to the Newstart rate. Again, I think that that gap between those two rates is a problem.

The Social Security Amendment (2007 Measures No. 2) Bill 2007 also deals with trying to improve the efficiency of people transferring between one income support payment and another. If that works in such a fashion then it is welcome. The new guidelines regarding assessments of partial capacity to work, as with the development of any of these sorts of guidelines, need to be monitored very closely. There is an inbuilt incentive for guidelines to be developed and finalised, and also administered and implemented, in a way that minimises expenditure, to put it politely. We should not forget that, whilst budgetary expenditure is important and effective, fair and efficient use of public resources is also important; we are dealing with human beings, not dollars and cents, and withdrawals of payments or cuts in payments can have very dramatic impacts on people, particularly those who are already amongst the poorest in our society.

The Social Security Amendment (2007 Measures No. 2) Bill 2007 also makes a technical amendment to clarify that the waiver of a social security debt recovery due to special circumstances is not available to a person who knowingly fails or omits to comply with social security law. To me, this raises another issue. I am not opposing that part of the legislation per se, but it does highlight another continuing trend: despite all of the talk about mutual obligation—a great catchphrase that is almost impossible to argue against on face value—the reality does not match the talk. It implies an equal partnership, equal levels of responsibility, and the simple fact is that the balance is right out of kilter. The level of obligation and responsibility on income support recipients is enormous. The level of responsibility on Centrelink and the government is minimal. So there is a continual tightening, time after time after time, on the recipients and very little accountability when Centrelink makes mistakes. This is a key area that the Welfare Rights Network have identified, including in the area of waivers of debts.

In the matter of social security debts, Centrelink can be 99 per cent responsible for the cause of a debt but will not waive it because of a one per cent contributory error of the customer. This encourages a no care, no responsibility attitude. That is not only unfair; it facilitates against good public administration. I think there is the need to make Centrelink at least partially responsible for some of their own errors. The Welfare Rights Network have produced any number of case studies of people in terrible hardship where clearly the predominant fault has been on the part of Centrelink and yet there has been a refusal to waive any debts. Even with this amendment, the Social Security Amendment (2007 Measures No. 2) Bill 2007, we have a further tightening there with regard to any prospect of waiving a debt. With regard to the continuing problem of family tax benefits debts, even when Centrelink’s sole administrative error is proven, that is still not enough to have the debt waived. There must also be severe financial hardship demonstrated. I suggest that is simply unfair.

There is also concern about the so-called good faith debt waiver provision. For a debt to be waived, it is also necessary, among other things, for any overpayment to have been ‘received in good faith’. The way that is being interpreted is such that it is being unnecessarily harsh on people who have basically not done anything wrong and who are basically the victim of Centrelink stuff-ups. Given the complexity of the legislation, it is inevitable that there will be Centrelink stuff-ups. As I have mentioned a number of times in this place, I was previously employed by Centrelink’s predecessor, the Department of Social Security. I was a social worker in that department, and you tended to get a lot of the cases where people did not fit into the boxes neatly or where there had been stuff-ups—the hard cases that get pushed aside to the social worker. That is still the role that social workers play to some extent. Not just that, but that is part of their role today in that income support arena.

I would suggest that the law since then has become even more complex and the scope for people to ensure that their rights are fulfilled in this area is even more diminished. I certainly support calls for much greater support for independent advice services, such as Welfare Rights Network, and through community legal centres, because even when people have been wronged it is very hard for them to get access to the support they need to get a fair go to get recompense. And when you are dealing with people who are on income support payments, even small amounts of money can make a massive difference. Let us not forget that we are talking in the context of the biggest housing affordability crisis in Australia in modern history. We have many people who are really, really on the edge with regard to being able to maintain a roof over their heads with rent payments and the like. Even a small amount of money can make a difference between making that rent payment or not. If they fall behind, get into that spiral, get the eviction notice, it can be the start of a very big fall. Apart from anything else, that can be catastrophic for that person and their family—particularly when there are children involved—and it creates more public cost.

There is also a need for additional funding for authorised review officers within Centrelink to deal with appeals there properly. My understanding is that concerns have regularly been raised not just by the Welfare Rights Network, but by the Ombudsman and the National Audit Office. A model of ensuring decisions or reviews by authorised review officers was agreed to but still has not been properly implemented because of financial problems. Those are things that also need to be addressed. So there are some measures in these bills that go some way forward. Some of them are just fixing up problems or excessive harshness that were introduced in the past, but, as I have outlined in this contribution, there are many more gaps to be plugged. I hope both major parties give serious consideration to doing so in their policy announcements in the election period.

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