Noel Pearson and other Indigenous leaders in remote Indigenous ... It is why we have generous payments for people to rel
The Hon Alan Tudge MP Minister for Human Services STRENGTHENING AUSTRALIA’S SOCIAL SECURITY SAFETY NET SPEECH TO THE COMMITTEE FOR ECONOMIC DEVELOPMENT OF AUSTRALIA (CEDA) HILTON HOTEL, SYDNEY 26 MAY 2017 Check against delivery Australia is fortunate to have a strong social security safety net to assist those in need. It is one of the hallmarks of a modern, prosperous and egalitarian society; and our system has prevented thousands of people over the decades from going hungry or without clothing or shelter. But while our welfare system achieves the fundamental objective of ensuring people are not without the basics, it has also created problems that were never intended. Many know the financial challenges of it. It represents a third of the budget - $160 billion per year - and is growing by 6 percent per annum, which is faster than inflation or GDP growth. But the most pressing problem is that our welfare system is failing too many of the individuals it was set up to serve. Too many people are led into lives of dependence and passivity, with insufficient incentive to make the most of their innate potential. For them, welfare has become a destination, not a safety net. While welfare, for a short period, can be a blessing for a capable person temporarily out of work, long term welfare dependence can become a poison. Over time, welfare dependence sucks the life out of people and can diminish their capability. It can impact on confidence and mental and physical health. The purpose, the structure and the dignity which comes from work is lost and sometimes dependency crosses over to the next generation.
1
A system which encourages such dependence must be reformed. This is an area of strong personal conviction for me, largely because of my work with Noel Pearson and other Indigenous leaders in remote Indigenous communities, prior to becoming a Member of Parliament. Noel Pearson, along with other Indigenous leaders, such as Warren Mundine and Galarrwuy Yunupingu, have been the most persistent critics of passive welfare dependence, perhaps because they see welfare's problems so acutely in their communities. Pearson says that welfare dependence explains the social crisis of many of his people: "It explains the phenomenon that even as our material conditions improved over recent decades, our social conditions deteriorated...Passive welfare kills initiative...and pacifies recipients rather than invigorating them into social, political and economic action to secure a better deal for themselves and their children." Today we are seeing multi-generational welfare dependence, where children are being raised in contexts where they have never seen parents or guardians in ongoing employment. One in eight kids under the age of 14 is growing up in a jobless family. Too many welfare-rights advocates, including many in the Labor Party, say the only way you can assist people is to provide them with more cash payments, preferably without conditions. But the experience in remote communities show that this does not always put people on better pathways. Over the years, we have significantly increased the size of cash payments, particularly through the introduction of family benefits. An unemployed couple with three kids will receive about $48,000 in cash payments. A single person with four kids on a parenting payment about $49,000. In a remote community, free or close-to-free houses have also been provided. On top of this, dozens of free services are also offered. But if anything, the social conditions have deteriorated, not improved. The key thing that is lost on such advocates is that the method of how income is obtained is as important as the amount. Forty-eight thousand in welfare payments is not the same as $48,000 earned from working. As Arthur Brookes, the head of the American Enterprise Institute, plainly states: "The deep truth [is] that work, not money, is the fundamental source of dignity. Work is where we build character...Properly understood, [it] is the sacred practice of offering up our talents for the service of others." 2
Our view is that the best form of welfare is a job, and everything should be geared towards supporting capable people into work wherever possible. This is the fundamental principle that our policies are built upon. This is why we believe in Work-for-the-Dole. It is why we want to have fewer school leavers going straight from school to the dole, because never being on welfare is easier than trying to get off welfare. It is why we are asking people receiving the Disability Support Pension, whose Centrelink file suggests that they may now be able to work, to be independently re-assessed as to whether they still need this payment. It is why we have generous payments for people to relocate for a job when they are on Newstart. It is why we have introduced a priority investment approach, learning from New Zealand, to harness the brightest ideas from the private and social services sector to the task. Our objective is to put people on better pathways: to encourage re-skilling if required; to help people off addictions if they are present, and to gear all the incentives towards looking for work and taking jobs when they are available. We must make our system more financially sustainable. But the great moral objective of our welfare reforms is to support able people to enjoy the dignity, the self-empowerment and economic independence which comes from work. In this year's budget, the Government has announced the next significant wave of welfare reform to meet this objective. Let me touch on them in three areas: reducing complexity; strengthening incentives; and reducing harm from welfare-fuelled alcohol abuse. Reducing the extraordinary complexity of the welfare system This Government has made it a priority to reduce the extraordinary complexity of the welfare system. When people struggle to understand the payments or their obligations, then clearly, we have a problem. If the incentives are unclear, then behaviours will not change. Currently, we have 20 different primary income support payments and around 50 different supplements. They have different eligibility criteria, taper rates, income test free areas, asset tests, differing mutual obligations, in many cases various grandfathering arrangements, and different combinations of supplements can be 3
held by an individual person at the one time. We even have multiple different income tests. Some do not understand their mutual obligations. Little wonder when there are 17 different compliance requirements with six different types of penalties! The antiquated Centrelink IT systems and 35,000 staff then have to process all of this. The McClure Report provided a blueprint for how the system could be simplified and the budget contained the first wave of this simplification. Most substantially, we will combine seven different working age payments into one. A new, single Jobseeker Payment will be available for people of working age. Activity requirements will be harmonised across the age brackets. Further, the compliance system is being completely simplified, which I will touch on a bit later. Simplification is important in its own right but of course it helps people understand their rights and obligations. Australians of working-age who need the support of taxpayers through the welfare system will no longer have to navigate a confusing and complex system which has multiple categories of payments and that treats people who are in similar circumstances differently. For the first time ever, we are establishing one set of rules for able working age people on welfare. Strengthening incentives to work Most importantly, the budget measures strengthen the incentives to work, and provide better interventions to address problems that might be impeding getting a job. Significantly, we are reforming the participation requirements for capable people of working age so that there are now many more people who will be required to look for work, and will be properly supported to do so. People are required to do two major things if they are unemployed and on welfare: they have to engage in a certain number of hours of activity each fortnight; and complete a certain number of job applications per month. 4
Currently what we ask of people receiving unemployment benefits is not based on capability, but on their age. For example, a 29 year old Newstart recipient is required to undertake up to 50 hours of activities, such as Work for the Dole, every fortnight. However, at 30 the same Newstart recipient will only be required to participate in 30 hours of these activities each fortnight. Mature age Australians in the Newstart system are often not asked to look for work at all, despite evidence showing the benefits. Under the new changes, this will be made more consistent and coherent with higher expectations built in. These changes have been welcomed by peak bodies including Council of the Ageing, because they know that if people are searching for work, they are 13 times more likely to get work. Working hand in glove with the new participation requirements is a completely reformed job seeker compliance framework. The compliance framework is there to provide every encouragement for people to fulfil their job search requirements and other obligations. The current system has three fundamental problems: it is too complex, too weak in places, and doesn't pick up earlier enough those who need additional support. When you examine the pool of job seekers, there are distinct groups. Two thirds of people almost never miss an appointment or job search requirement. They are hungry for work and probably need little encouragement to do so. But there is a group of about 100,000 who consistently do the wrong thing. About half of this group have issues in their life and we need to pick up earlier. The other half, however, are taking the taxpayer for a ride and presently getting away with it. And it is not in their interest, nor the community's, for this to occur. Last year, barely a single person lost a cent for failure to job search. Only 10 percent of people who had serious, repeated failures faced any financial loss. We have consequently redesigned the system from scratch to be simpler, more robust on those who need it and pick up earlier those who need extra support. The new system will be a demerit point system (much like your car licence) whereby demerit points are accumulated for each failure of an activity. Miss an appointment 5
without reasonable excuse, and accrue a point; don't do job search, gain a point etcetera. After four points, you have a detailed interview to make sure that nothing is going on in your life that we are not aware of, and that the job plan is right. If there is domestic violence, or homelessness or other significant issues causing repeated failures, then we want to provide assistance. This detailed assessment at this stage is aimed at identifying these things. But if there are no such problems, then the person is put on notice. For the next failure to turn up to turn up to an appointment, you will lose a week’s payment. For the next failure after that, you will lose two weeks payment. The third failure and your payment will be cancelled. The only exception to this if a person turns down a suitable job. On those occasions, payment is cancelled immediately. This is a simpler, transparent and fairer system. It will provide stronger, transparent incentives to actively search for work, take the interviews, and accept the jobs, while also providing support for those who genuinely need it. We believe it gets this balance right. In addition to this, we are helping parents with young children prepare themselves to get back into the workforce with our $263 million Parent’s Next programme which provides interview practice, refresher courses and advice to parents who have been out of the workforce for some time. Finally, as a way of helping people to get off drugs and therefore increase their chance of working, we are introducing a random drug testing trial for new recipients of Newstart and Youth Allowance. Based on the National Drug Strategy Household Survey, we estimate that a quarter of all welfare recipients took drugs last year. About 1 in 12 took drugs last week. The facts are that if you use drugs, you diminish your chances of working and increase your chances of dependency. Consider which jobs you would likely be ineligible for: construction jobs, transport jobs, defence jobs, emergency services, and mining. In all of those industries, drug testing is common. Under our model, participants who fail a first drug test will be placed onto a system of cashless welfare.
6
They will then be asked to take a second test within 25 days. If they test positive again, they are likely to have a dependency that should be addressed, and we will work with them to get the treatment they need to get off drugs. In fact, getting treatment will form part of the mutual obligation requirement. Drug testing on welfare recipients is used in New Zealand and many states in the US. Our trials are aimed at determining whether it can work in Australia. Reducing welfare-fuelled drug and alcohol abuse There are some locations where drug and alcohol use, paid for by welfare payments, not just prevents a person from getting work, but causes catastrophic harm to the entire community. One study suggested that as much as fifty percent of all welfare payments in one community was spent on alcohol. This then underpins extraordinary rates of violence against women, child neglect and crime. In the Northern Territory, the most recent available data showed the assault rate against Indigenous women was 1 in 10 per annum. This is a staggering figure. The majority of assaults are related to alcohol, most of which is paid for by the welfare dollar. This cannot go on. Last year, to combat some of this welfare-fuelled alcohol abuse, we trialled a Cashless Welfare Card in two locations where the regional leaders had supported its introduction. In the budget, we announced we would be extending this to two additional locations. The fact is that if we don't get control of the alcohol and drugs in some of these locations, we will never improve the social conditions. The card is not a panacea, but the trials showed that it worked to reduce the consumption of alcohol, drugs and gambling. Incredibly, the poker machine revenue was down by 30% in one of the locations (when only one fifth of the population was on the card). The initial evaluation showed that 25% of surveyed participants are drinking alcohol less frequently, and 25% are also binge drinking less, 32% of participants are gambling less, and of those participants who reported using illegal drugs, 24% 7
reported using illegal drugs less often We are taking the rollout of this card incrementally, and designing the parameters of any rollout in concert with local leaders. Over time it is hoped the card will assist people to break the cycle of welfare dependency by stabilising communities, and provide added incentives for young people to get work. Better service delivery Let me finally touch briefly on service delivery. This was a big theme of the Treasurer's budget night speech. And while better Centrelink service delivery has a less direct impact on welfare-dependency, it is important for millions of Australians. We know that the Government has fallen behind the private sector in terms of how we deliver services. People who need assistance sometimes have to wait too long to get through on the telephones. Time is spent waiting in queues or filling out paper work, when better digital options should be available. We have a huge transformation program to improve this situation. The most important of these is the billion dollar WPIT (the Welfare Payment Infrastructure Program) transformation which will completely reshape how people interact with Centrelink and how we administer payments. This is one of the biggest digital transformations in Australian history. We are already seeing dividends from the early work, which is focusing on student payments. Claims are now processed in half the time; students can monitor their claims through an online claim-tracker, saving the need for tens of thousands of calls. Soon, students will no longer have to manually tell us their income from their part-time job or alert us to a change in course load, because we will get that information directly from the tax office or their university and seamlessly incorporate it to calculate their new payment rates. After student payments have been transformed, other payments will be transformed. These large system transformations take several years. In the meantime, we are getting moving with tactical, agile projects that deliver benefits on a monthly basis, and drive down call wait times and processing times.
8
This includes user-focussed enhancements to myGov, Channel Optimisation efforts including overhauling each section of the website piece by piece, reforming urgent payments to reduce customer aggression and free up staff time, driving uptake of biometric (voice) authentication on our phone lines so we can increase use of selfservice options, and investing in behavioural insights-driven engagement with recipients to reduce the need for them to contact us, such as sending SMSs at critical moments to keep people complying with their obligations, therefore reducing the consequential payment suspensions. On top of this, we are adding a further 250 call centre operators and improving telephony management to achieve better utilisation. We are overhauling one major process after another, to deliver faster turnaround times for recipients. Re-engineering the Farm Household Allowance process drove processing times down from an average of 4 months, to 28 days. We are doing the same with Urgent Payment Claims, Disability Support Pension claims and will continue to move right through the list of payments that the Department delivers. We are drawing on the best thinking and expertise we can find to support these endeavours, in Government, in the Australian private sector, among NGOs and peak bodies, and from overseas. There is great momentum in the digital transformation of Centrelink and Medicare. Of the approximately 200 million interactions with my Department each year, around 130 million are now done digitally. Ninety seven percent of all Medicare transactions are digitally done. MyGov has more than 10 million active user accounts. But there is a lot more work to do. Conclusion Let me finish by addressing one of the persistent critiques of those who question our efforts to help people off welfare and into work: where are the jobs? The view is that there are no jobs, so why bother. Just increase welfare. It is true that in some locations and some industries, there are few opportunities. However, it is also true that there are industries that cannot find workers and others where the expected job growth rates are significant. According to the Australian Tourism Labour Force Report, for example, there are presently around 38,000 tourism jobs unable to be filled. They expect that a further 120,000 new jobs will be required by 2020 with half unskilled. There are projected to be over 130,000 new jobs in the aged, disability and child care sectors. 9
I cannot tell you the number of times that business owners have told me that they cannot find staff for entry level positions. I was in Bundaberg a few weeks ago where I was told that there were about 5,000 people on unemployment benefits. At the same time, the local council estimated there were probably a similar number of backpackers working in the region, picking the fruit and working on the farms. Irrespective of these facts, the evidence is that jobseekers who generally comply with their obligations are far more likely to exit unemployment benefits than those who are consistently non-compliant. Everything the Government is doing is geared towards jobs growth and for those without work presently, we are not giving up on them. Our welfare reforms are aimed at assisting people getting onto better pathways, because a life on welfare for an able individual is not much life at all.
10
