Social Security Legislation Amendment (Stronger Penalties for Serious Failures) Bill 2014

17 July 2014

Dr CHALMERS (Rankin) (11:47):  I follow my neighbour from South-East Queensland and rise today to speak on the Social Security Legislation Amendment (Stronger Penalties for Serious Failures) Bill 2014. As the House now knows from earlier speakers, the bill does legislate some of the harsher measures designed to attack job seekers that were introduced in the government's budget of broken promises and twisted priorities. I think it does show that the government are more interested in ideological hits on vulnerable people than they are in helping people to get jobs. They are so quick—and we heard it from the previous speaker—to demonise people; they are so quick to tear them down; they are so quick to think the least of them. We heard the member for Bowman refer to welfare recipients as criminals, that all welfare recipients are people who do the wrong thing, rather than think about them as job seekers—the people who we need to tool up, the people who we need to get the skills to succeed in the modern market economy. We get from those opposite this sort of sneering and snobby dismissal of people who are doing it tough in this community, which encapsulates their whole budget and their whole inability to put themselves in the shoes of other people who are doing it tough.

By contrast, of course, the Labor Party believes in giving people the skills to maintain their own prosperity through the right training, work experience and incentives, as well as with the appropriate support from the government. That is why Labor cannot support the ideological attacks on job seekers that were introduced during the budget, and that is why we are opposing the bill before the House today.

It is an important time to be discussing our social safety net, given the state of the Australian labour market today and the substantial uncertainty that is central to that labour market. We had some unemployment figures released last week, which showed that the unemployment rate had ticked up again to six per cent—that is the equal highest, I think, at any point in the last decade and higher indeed than during the global financial crisis. Youth unemployment—as I hope people on both sides of the House would recognise—has hit a 12-year high of 13.1 per cent. In my own electorate of Rankin, it is even higher than that—probably something like 16.5 per cent in some areas. That figure is a 12-year figure; so the member opposite probably does not have a good grasp of what he is talking about. These headline numbers conceal some of the even more concerning aspects of the current labour market. We have a whole range of job losses that have been announced and not yet factored into the figures. So there is a bit of uncertainty in the workforce. The reality is that some of the full-time jobs that have been lost from some of our industries will not be coming back in a hurry, and that means supporting displaced workers into new jobs and supporting young people into careers in modern growth industries will be crucial in the years ahead.

One of the key differences between the members on this side of the House and the members on that side of the House is that we believe that a strong and fair social safety net is part of the solution and not always part of the problem. We believe in a social security system which can help build people up, while this government chooses to operate a social security system which will tear people down. I think the Minister for Social Services is a repeat offender when it comes to demonising people who need government support. We hear all this stuff about the blowing out of the welfare rolls and all that sort of stuff, when, in reality—and the people at the Melbourne institute have shown it—the welfare rolls are not blowing out. We do not have a substantial problem in terms of growth in payments outside, of course, the age pension, which is a function of our ageing society. So I think that sort of data and that sort of analysis really shines a light on the political strategy that is being operated by those opposite in terms of demonising people who are looking for work or doing it tough. The legislation before the House today is a clear example of that philosophy from the government when it comes to social security.

Currently, under the act, job seekers in receipt of a participation payment may incur an eight-week non-payment period penalty for serious failures, consisting either of refusal of suitable work or of persistent noncompliance with their participation obligations. Labor introduced that non-compliance measure, but we did it with an important additional consideration, which is that the job seeker could apply for the non-payment period to be waived if they agreed to participate in intensive job seeking activities and if the job seeker would be in serious financial hardship if the non-payment period were not ended. The result was that job seekers were incentivised to accept suitable offers of employment, with penalties if they refused such work but still allowing discretion to waive the non-payment period in certain circumstances.

The bill before the House today removes many of these important considerations from the legislation. Job seekers  who turn down suitable work will in no circumstance be able to have that eight-week penalty waived, while job seekers who fail to abide by participation obligations will be able to have the penalty waived only once. There will be two effects of this. The first one is that job seekers will lose any incentive to go back into serious job-seeking activities if they make a mistake and are penalised with that eight-week no-payment period. The original Labor non-compliance measures were designed to encourage people to get serious about job seeking after a serious failure. This government is seeking to remove that encouragement and will in fact be effectively prohibiting job seekers from re-engaging with their participation obligations during that non-payment period. That shows again, as I was saying before, that this is really about punishing people rather than helping people back to work. Secondly, job seekers who turn down suitable work will entirely lose access to their means of subsistence, even in cases of severe financial hardship, which seems to me to be counterproductive. Labor believes in encouraging people back into work after serious failures, but forcing people into eight weeks of possible starvation, homelessness or even petty theft to get by is not going to help in this endeavour.

These are draconian measures. They will do nothing to encourage people back into job-seeking activities. They will serve only to punish the most vulnerable job seekers in our community. For example, of the almost 27,000 'serious non-compliance' penalties applied last year, almost one in five were applied to unemployed people with a 'vulnerability indicator' on their file. That includes something like 1,500 people with mental illnesses, almost 1,200 people with homelessness flagged on their file and others who had been released from prison or had experienced a recent traumatic breakdown. That gives you a sense of the types of people we are talking about. And almost 19 per cent of the eight-week non-payment penalties were levied on Indigenous job seekers. This legislation will remove any capacity for social workers to waive the non-payment period in these cases, even if the job seekers realise their errors and seek to re-engage in intensive job search activities. These measures will hurt real people and make it almost impossible for some of them to survive day-to-day. No failure is serious enough to warrant that kind of punishment.

It is worth reflecting on why we have a social safety net in the first place, why we have unemployment benefits, why we have the Newstart allowance in Australia. First of all, it goes to the very principles of justice that we value as a society. As humans, we naturally feel uncomfortable and unhappy when we see others in society doing it tough—at least, most of us do—living below the poverty line, without a job or without a place to live. It is part of a natural altruistic urge that we have—or should have—as members of the human race. The philosopher John Rawls describes this phenomenon with reference to a 'veil of ignorance': that if we were judging the world without knowledge of our own personal circumstances—our place in society, our class position or our social status—it would be possible for any one of us to fall into a situation of poverty or joblessness. In simpler terms, as humans we know 'There but for the grace of God, go I.' The result is that our natural sense of justice should urge us to fight for a minimum safety net for all people.

The second reason we support a social safety net in Australia is that it is good economic thinking. Supporting people through periods of unemployment and back into the workforce has many important benefits for the economy at large. First of all, international evidence has shown definitively the association between long-term unemployment and heightened levels of crime, homelessness and health problems. The evidence is indisputable that countries like Australia, with targeted and effective social security spending—what the experts in this field say is the most targeted welfare system in the developed world—are less likely to suffer from these problems that have effects for everyone in our society.

The other substantial impact of long-term unemployment is what economists call the hysteresis effect of unemployment. In essence, unemployment today causes heightened levels of unemployment tomorrow. The intuition behind this is simple: the longer people spend out of the workforce, not developing their skills or work experiences, the less likely they are to be able to re-enter the workforce in the future. It is one of the key reasons Labor's record of job creation during the global financial crisis is so remarkable. It is something I am personally proud of, having played a small part in some of those policies during the GFC, because we helped keep people in jobs, working with business, for a whole range of reasons, including government policy—working with people to keep them in jobs during the peak of the GFC and still keeping people in jobs today. Avoiding unemployment hysteresis is also a key reason a social security system, with a strong employment services program, is so vital for our economic success today and into the future.

The legislation before the House today will lessen the effectiveness of our social security system to achieve these two goals of welfare—the social one and the economic one. It will deprive people of any means of subsistence for eight-week periods after serious failures, even if they commit to re-engaging in intensive job-seeking activities. It also degrades the economic power of the welfare safety net itself, removing an important incentive for people to engage in those intensive job-seeking activities. So, Labor cannot support this measure that will lessen the effectiveness of the social safety net in Australia, one of the most effective social safety nets in the developed world. Nor will we be supporting some of the other cuts to the safety net that the Abbott government has discussed and implemented since coming into office. The changes in this bill come on top of the $1.2 billion cut to Newstart that was proposed in the recent budget, where young people under 30 who do not have a job and cannot find a job will have their Newstart payments cut off for six months. If we think about that for a moment—no income, no support for half a year—it is not only a bad idea; it is a bad idea based on cruel and mean-spirited ideology. How does the government think young people will be able to support themselves and survive after six months without any income or without any support at all? I think that when one of my colleagues the other day called out that he considered this policy to be 'earn, learn or starve', and a couple of the Liberal backbenchers nodded and said, 'Too right', it really did shine a light on the alternative approaches—this side of the House and that side of the House.

All these attacks to unemployment benefits come at the same time as this government will make it harder for young people to get the skills they need to get jobs. In less than a year they have cut $128 million from Youth Connections, Partnership Brokers and the National Career Development Strategy. They have cut $1 billion from apprenticeships. They have cut $1 billion from trade training centres, which were doing such a good job to prepare our young people for a career in the trades. They have cut $800,000 from local employment coordinators. The cumulative effect of these cuts will be fewer avenues to work for our young people.

And the punitive measures introduced in this legislation, alongside the cuts to young people that I have just outlined, are entirely indicative of the government's philosophy when it comes to jobs: their lack of a long-term plans; their willingness to blame job seekers for their inability to find employment; the way that they demonise people, the way they run them down, the way they think the least of people in our community. Our side of the House, the Labor opposition, is more interested in supporting people to support themselves, to give them the tools of success that they need to prosper in a modern market economy. It is for this reason that Labor will not be supporting this bill: because these attacks on our social safety net are not only cruel and cold-hearted, they will also hurt our economic prosperity in the long term.