Release type: Speech

Date:

Second Reading Speech Social Security Legislation Amendment (Employment Services Reform) Bill 2008

House of Representatives, Parliament House, Canberra

The main purpose of this Bill is to encourage participation and ensure compliance.

This will be achieved by establishing a framework for a new compliance system that will make job seekers more accountable for their efforts to find and keep a job.

This new compliance system is part of a package of reforms to Australia’s employment services and is intended to replace an ineffective and counter-productive compliance framework that has a number of flaws.

The key reason that these changes are necessary is that the current compliance system has resulted in thousands of counter-productive, non-discretionary and irreversible eight week non-payment penalties.

For the duration of these eight week non-payment penalties there is no requirement for a job seeker to look for work, or to have contact with either their employment service provider or Centrelink.

The consequence of this failed approach to compliance, and an obvious defect in the system, is the eight week separation of job seekers from participation requirements, including looking for work, gaining skills or undertaking work experience.

The indications to date are clear. The former Government’s system has failed to prevent non compliance.

In 2006/07 there were around 16,000 eight week non-payment penalties applied. In 2007/08 this had doubled to around 32,000 eight week non-payment penalties.

An effective system should result in decreasing numbers of penalties because more job seekers would participate, but these figures confirm that the existing arrangements are not working.

The changes to the compliance system set out in this Bill form part of a $3.9 billion package of significant and necessary reforms to Australian Employment Services that commence on 1 July 2009.

These reforms are critical because in the last 10 years employment services have been operating under policy and administrative constraints that have failed disadvantaged job seekers, their families and their communities.

These policies and constraints have also failed employers who desperately need skilled workers to fill vacancies.

The last 17 years of economic growth has indeed improved the job prospects of thousands of Australians, but for many others the employment outlook has grown more and more bleak.

Against this background, Australia is experiencing skill shortages in a number critical areas and is looking at a shortfall of up to 240 000 VET qualified workers by 2016.

So it is vital for our economy and to Australia’s future economic growth, that employment services and the compliance regime that underpins the working age payments system, requires job seekers to participate by searching for a job, undertaking training or connecting to other activities that will equip them to enter and remain in the labour force.

Just over ten years ago, the unemployment rate was 7.7 per cent. Whilst unemployment is now around 4.1 per cent, a significantly higher proportion of job seekers today are highly disadvantaged and long-term unemployed.

The proportion of people on unemployment benefits for more than five years has increased from one in ten in 1999, to almost one in four today – an increase from 74 000 people in 1999 to more than 110 000 ten years later.

These job seekers are some of our community’s most disadvantaged people. Some are suffering from mental illness. Others have significant language and literacy issues and poor educational attainment. Some have a neurological impairment and others are homeless or at risk of homelessness.

Australians in these circumstances are more likely to overcome an extended period of unemployment if the compliance system encourages commitment rather than the current punitive approach.

These job seekers are more likely to find employment by undertaking training or work experience, addressing their non-vocational issues, or actively pursuing work, than they are by disengaging from employment services.

The first goal of the new compliance system is to ensure job seekers meet their participation requirements and make every effort to get themselves off welfare and into a job.

The current system provides little deterrence or early intervention.

Of particular concern is the lack of an immediate consequence for initial failures to complete activities. Under current arrangements, job seekers who have failed to take part in an activity or program can miss at least a fortnight before any action is taken. Then, after three failures, they get an irreversible eight week non-payment penalty.

The current system is viewed by many employment service providers, churches, peak organisations and welfare bodies as a ‘penalise first’ approach because it prevents employment service providers from using their professional judgment.

Submissions to the Employment Services Review indicated that stopping payment for eight consecutive weeks places job seekers, particularly already vulnerable job seekers, at great risk of disconnection and in many cases has resulted in personal crisis and homelessness.

According to Homelessness Australia “up to 20 per cent of people who underwent an eight week “breach” lost their accommodation or were forced to move to less appropriate housing”.

Further, the ‘penalise first’ approach may result in costs to the community in other ways, through imposts on the health, housing and welfare systems, and placing additional pressure on charitable organisations to provide support.

The new compliance arrangements encourage participation and re-engagement as quickly as possible, in stark contrast to the current system. The new arrangements strike the right balance between participation and penalties for those job seekers who do not comply.

A key element of the new system is ano show no pay failure, which aims to instil a ‘work like’ culture to employment services.

If a job seeker, without a reasonable excuse, does not attend an activity that they are required to attend, like Work for the Dole, Centrelink will impose ano show no pay failure.

Centrelink will also impose a no show no pay failure if the job seeker doesn’t attend a job interview, or if they attend the interview, but deliberately behave in a way that would foreseeably result in a job offer not being made.

A no show no pay failure will result in the job seeker losing one-tenth of their fortnightly payment for each day they don’t attend.

This doesn’t affect rent assistance, the pharmaceutical allowance or the youth disability supplement, but it does apply to any supplement the job seeker is receiving for participating in Green Corps or Work for the Dole. As is currently the case, access to Health Care Cards and Family Tax Benefits will not be affected.

Resuming participation will result in a resumption of income support and employment services. Ano show no pay failuremeans that non compliance will have an immediate financial impact, but the extent of the penalty will be in the hands of the job seeker.

If a job seeker, without reasonable excuse, does not attend an appointment that they are required to attend, for example with their employment service provider, Centrelink will impose aconnection failure.

Centrelink will also impose aconnection failureif the job seeker refuses to enter into an Employment Pathway Plan, or doesn’t meet their job search requirements. There is no penalty for aconnection failure.

Instead, the job seeker will have to attend areconnection requirementwhich will involve a further appointment or further job search requirements.

If the job seeker, without reasonable excuse, does not attend thereconnection requirement, Centrelink will impose areconnection failureperiod.

The job seeker will lose one-fourteenth of their fortnightly payment each day that, without reasonable excuse, they do not comply with the reconnection requirement.

Again, this doesn’t affect any rent assistance, pharmaceutical allowance or youth disability supplement the job seeker receives, but it does apply to any supplement the job seeker is receiving for participating in Green Corps or Work for the Dole.

As is currently the case, access to Health Care Cards and Family Tax Benefits will also not be affected.

Eight week non-payment periods have been retained for job seekers who commitserious failures. A job seeker commits aserious failureif they refuse a suitable job offer or if they have been wilfully and persistently non-compliant.

Centrelink will decide whether a job seeker has been wilfully and persistently not compliant after conducting a Comprehensive Compliance Assessment.

The role of the new Comprehensive Compliance Assessment is to ensure that the new system is tough on any job seeker who intentionally does not meet their obligations, but is also able to differentiate when a job seeker is experiencing circumstances beyond his or her control.

Job seekers will no longer automatically incur an eight week non-payment penalty.

A job seeker who incurs three failures for not attending appointments or six days ofno show no pay failuresin a six month period will be referred for a Comprehensive Compliance Assessment conducted by Centrelink.

Employment service providers or Centrelink may also initiate acomprehensive compliance assessmentat any other time if they believe a job seeker’s circumstances indicate serious hardship and warrants such a response.

During this assessment Centrelink will look at why the job seeker has failed to fulfil their requirements and identify any barriers to employment and possible alternative options.

For example, it may be appropriate to refer the job seeker for a Job Capacity Assessment to determine whether or not they have the capacity to meet their current requirements.

A specialised Centrelink officer will consider the job seeker’s compliance history and will talk to the job seeker to find any evidence of personal issues, including those that may not have previously been disclosed.

Such issues might include homelessness, physical or mental health problems or domestic violence that may have impacted on the job seeker’s ability to meet their requirements.

This component of the compliance system also recognises that in a decent society, fair judgments should be exercised when matters are beyond a person’s control, and no bureaucratic process should deliberately leave a vulnerable person without food or shelter, or propel a person into severe hardship, as the current compliance system does.

Another key difference between the current and the new system is that in the current system a job seeker who gets an eight week penalty must serve it, no matter what.

Under the new system, any job seeker subject to an eight week non payment penalty for persistent non compliance or refusal of a job offer can have their payment reinstated if they agree to undertake a Compliance Activity.

This will generally be 25 hours a week of full-time Work for the Dole for eight weeks, but may include other similar activities as appropriate.

No one who is prepared to re-connect with the system by participating in an intense activity will have to go without income support. Those who are not able to undertake any Compliance Activity but who would be in severe hardship as a result of the application of the penalty may also have their payment reinstated.

The current eight week non-payment period for job seekers who become voluntarily unemployed without good reason or unemployed due to misconduct will be retained.

This will no longer be inaccurately described as a penalty but rather it will be described as a preclusion period. Vulnerable job seekers who would be in severe financial hardship as a result of this preclusion period will have their payment reinstated as is the case under financial case management.

Unlike financial case management however, the job seeker will have participation requirements while they are receiving income support payments. They will also have a requirement to access Employment Services to help them find work.

As indicated in the Object Clause for this Bill, it is not intended that anyone who has a reasonable excuse for failing to comply with their obligations should be penalised.

Before applying any eight week penalty, Centrelink will be required to talk to the job seeker and consider whether or not they had a reasonable excuse for their actions and whether or not the job seeker had any barriers to participation that might have prevented compliance.

Further, employment service providers will be able to exercise their professional judgement.

A provider will not be required to report non-compliance to Centrelink if it is reasonable to believe that compliance action is not the best means of securing re-engagement, and is counter-productive to the job seeker obtaining employment. For example, a provider could negotiate for the person to make up an activity on another day, further reinforcing the importance of participation.

This Bill also makes other minor amendments to Social Security Law that are needed to support the new Employment Services.

The Bill replaces the term ‘Activity Agreement’ in the current legislation with the term ‘Employment Pathway Plan’.

It also permits Employment Pathway Plans to include optional terms which are part of the job seeker’s pathway to employment, but which can not be subject to compliance action, for example psychological counselling. It also clarifies the operation of Employment Pathway Plans in relation to the broader activity test.

The Bill also removes references to stand alone programs such as the Personal Support Program, that will be integrated into and delivered by the new Employment Services. Job seekers will retain the benefits currently available.

The Bill also includes minor technical and consequential amendments.

This Government remains committed to mutual obligation. We believe that those who can work should work and that those who are unable to work should be adequately supported.

We believe that this principle is reflected in the fairer and more effective compliance framework proposed by this Bill.