Thursday, 28 June 2012
Social Security Legislation Amendment (Fair Incentives to Work) Bill 2012; Second Reading
As I was saying yesterday, these allowances include access to the pensioner concession card, the pharmaceutical allowance and the telephone allowance. In the last budget, the taper rate for Newstart was amended to allow single parents to earn $62 a week before they lose a reduced taper of 40c in the dollar from their allowance. Additionally to the removal of the grandfathering clause for parents, this bill raises the limits for permissible liquid assets from $2,500 to a maximum of $5,000 for singles, and from $5,000 to $10,000 for people with dependants. Effectively, this translates to potentially a shorter waiting time before Newstart payments commence.
The Social Security Legislation Amendment (Fair Incentives to Work) Bill 2012 also seeks to define which payments should be categorised as 'termination payments' with a view to ensuring consistency across the board when considering an income maintenance period, therefore bringing the definition of 'termination payments' in line with the policy intent of the Guide to social security law. Nonetheless, whilst the Welfare to Work reforms penned by the coalition were aimed at assisting Australians off welfare and into the workplace, the main aim of this bill is to grasp much-needed savings for the government. The expected savings to be derived from this bill are in the order of $691.9 million over four years.
My beliefs are pretty simple in that it is a hand up, not a handout, and I am sure that this view is shared by many Australians. From my perspective, it is the core responsibility of government to have mechanisms which extend the hand of assistance to members of our society when they are down, not to carry them. As a working parent, I understand the difficulties associated with raising children and maintaining a career, particularly in that both of my sisters have at some stage in their lives been single mothers.
I note with disappointment that the government has failed to address the effects of this bill in terms of incentives or initiatives to get those people affected back in to the workforce. Based on figures from 2011, within the Northern Territory there are around 2,800 partnered parenting payment recipients, along with nearly 4,000 single parenting payment recipients. Combined, that is almost 7,000 people, out of a population of around 230,000, receiving these payments. That equates to roughly three per cent of Territorians. Echoing the words of my colleagues, I reinforce the adage: the age of entitlement is at an end. It is not feasible and it is not fair on hardworking Australians. This bill, derived from a government bleeding in debt, comes at a time when belt-tightening is a must. It is a sad irony that the government will cut money here but will be squandering and splashing cash payments around at the same time.
Promoting a strong workforce of parents is not a new concept; it follows on from the Howard government's Welfare to Work agenda and is an issue many previous governments have progressed. In the case of the Howard government, $3.6 billion was invested to support and assist people to transition from welfare to work. In brief review, the reforms included that, post 1 July 2006, all new unpartnered applicants were no longer eligible for parenting payment single when their youngest child turned eight. Generally this meant transferring to the Newstart allowance. However, existing recipients of a parenting payment could be grandfathered on this payment until their youngest child turned 16. At the time, the Howard government's Welfare to Work reforms introduced a range of complementary services to assist parents in their transition into employment once their youngest child had reached school age. A new employment participation service was offered to parents with school-age children, designed to ensure they had the skills they needed to gain a job. The coalition's policy also included flexibility and provisions whereby parents could refuse a job if they were not more than $50 a fortnight better off once the costs of, for example, child care were factored in, or if they had to travel for more than 60 minutes each way to work. Research undertaken by DEEWR derived from the Welfare to Work reforms demonstrate that there was a 23 per cent increase in the number of single principal carer parents leaving income support after six months, in comparison to the previous three years, with 38 per cent moving off payments during the 2006-07 financial year. The report also showed that over 70 per cent of principal carer parents left income support for employment. The situation was similar for partnered principal carer parents on Newstart allowance, where 45 per cent were no longer in receipt of income support payments after six months, compared to 32 per cent in the 2005-06 financial year.
Whilst I will not oppose this bill, there are some concerns that I wish to voice to the House. Unlike the coalition's Welfare to Work agenda introduced in 2006, within the bill currently under debate there is no additional funding to support parents into work. If this government were truly committed to assisting parents back to work, it would provide the additional assistance necessary to drive this initiative. The Gillard Labor government has slashed $162.2 million in assistance for job seekers from Job Services Australia. Additionally, it has cut a further $44.3 million from outcome payments for Job Services Australia providers. Parents who are working or seeking work could be worse off financially due to work participation requirements, which may force them into accepting a job where they are worse off financially.
Conversely, the Howard government reforms promised parents that they could refuse a suitable job offer if they were not better off by $25 a week. Welfare to Work for job seekers was introduced by the coalition government at a time of strong surpluses and low unemployment, unlike the environment which the Gillard Labor government has created. We now experience massive debt and deficit, rising unemployment and a business sector reluctant to hire. This will make the unsupported transition from welfare to work that much harder for the parents captured by this legislation. This government should be ashamed of itself.
To add to these concerns, the Gillard Labor government espouses all kinds of hypocrisy surrounding the issue. Labor voted against the Welfare to Work reforms of the Howard government in 2005. Additionally, recently Labor moved to decrease the parenting payment cut-off age of the youngest child from 16 to 12. This further decrease now demonstrates that this bill is more about achieving a budgetary saving than about policy that is genuinely committed to assisting people from welfare to work, particularly given the tough economic times now facing Australian families.
In April 2005, the member for Sydney attacked the then Howard government for allocating additional childcare places in support of mothers with school aged children returning to work by accusing the coalition of introducing the change as a means to ensure single parents had no excuse not to work. She is recorded as saying on ABC radio at the time:
It is part of the government's plan to punish people who are out of the workforce to take away any excuse for them not working.
Shame! Senator Evans, in comments he made on 11 May 2005 when discussing the Welfare to Work agenda in general, claimed:
You're going to have people with severe mental health issues now forced to comply with one of the harshest regimes seen in the Western world and I think it's a recipe for disaster.
To add one further example of hypocrisy from Labor:
Welfare to Work—
has nothing to do with moving people from welfare to work and everything to do with extreme cuts to the household budgets of Australian families who can least afford it.
This was stated by Senator Wong in September 2005 when talking about a policy similar to that which the Labor party is now trying to introduce. Despite Labor's hypocrisy, this bill reflects beliefs of 'a hand up not a handout', even though it lacks a clear plan for specific initiatives to help the people this will affect.
As I have said, the Northern Territory has a reasonably high number of recipients of these payments. Initiatives which encourage people to work and get people back to work go a long way to repairing and rebuilding the underpinning foundations necessary in society and our local communities. I wish that this government would do more to get help people get back into the workplace, ensuring that the right measures are in place to support these people, particularly since on Sunday the carbon tax will be introduced, which is going to put more pressure on all Australian families.
I would not have thought the opposition would be negative on this one. I am quite astonished by that. We have been accused of hypocrisy by people who introduced this policy themselves in 2006. They now obviously do not think it was a good idea, even though it was their policy. I am quite astonished. I will try and ignore it, I think, and talk about the bill. The bill does three things. Firstly, it makes amendments to the Social Security Act 1991 to bring all parents under the same treatment in terms of when they move from parenting payment to Newstart allowance. At the moment, we have a situation where, depending on when your child is born, you are treated differently for taxpayer payments. This bill brings all parents into line with each other—and I will come back to that. It also amends the liquid assets waiting period.
The third amendment is quite technical, but I am going to talk about it first. It makes adjustments to the income maintenance period. The income maintenance period amendment applies when a person finds themselves out of work. In determining whether and when a person can start to receive income support payments, the Department of Human Services, which we all know as Centrelink, considers the liquid assets that a person has available to them, but it also considers any termination payment that a person has received. This bill makes really quite a simple amendment by extending the definition. The income maintenance period is the period for which the termination payment is treated as income under the act. It is designed to ensure that when people receive a lump-sum termination payment and use that payment to support themselves for a time, they are not eligible for support from Centrelink for a period of time. But currently the definition of a termination payment for the purposes of the income maintenance period only includes leave payment or redundancy payment, when in reality these days payments that are made at the end of a period of employment can be across a whole range of types of payments. So this amendment changes the definition so that those types of payments can be taken into account. It is quite a technical amendment, but an important one given the different ways that people are compensated at the end of an employment period.
Returning to the parenting payment reform which the member for Solomon predominantly concentrated on, back in 2006 when the Howard government introduced the Welfare to Work reforms—and the member for Solomon is right, we were very critical of them at the time—
The member interjects. It is the nature of government, and if you guys ever get back into government you will find it yourselves. When a previous government does something—it gets elected, it comes to the parliament, it passes bills and it is able to do that and it does it—changes flow through the community. When you become a government again, you have to start with what you are left from the previously democratically elected government. We all do it. We all take things that we had from the previous government that are woven into the budgets of the government and the budgets of state departments and contracts that you have with people and agreements that people have made and decisions that people have made, and you live with them. That is what you do when you move from opposition to government. That is what we have done here, and it is quite right that we do. It is quite right in a country like Australia where governments are democratically elected that one government, to the extent that it can, respects the decisions and the laws that are made by the previous governments, and most governments have done that in Australia's history. I take the interjection from the member just to make that point. This is one of those cases.
Back in 2006 the government of the day decided that when a parent's youngest child turned six, if they were a couple, or eight if they were a single parent, they would move from parenting payment into the employment system. They would move from Centrelink onto what we used to call back in those days 'the dole'. But when Howard introduced that bill, he grandfathered any parent that had a child prior to 2006. I would have said at the time—and I would probably say it now—that that decision was for political reasons. If he had made the change for everyone, there would have been hundreds of thousands of parents on a single day that moved from parenting payment to Welfare to Work. By grandfathering anyone who was already a parent, he made sure that parents would go to the new system literally one by one. There would not be an avalanche of parents so the change would not be seen in quite the negative way that it would have been had it suddenly applied to every parent. So it only applied to new parents where a child was born after 1 July 2006.
That means that now there are two sets of parents in Australia. There are parents whose children are born after 1 July 2006, who move from parenting payment to Newstart when their youngest child turns six, if they are in couples, or eight, if they are a single parent, and parents whose children were born prior to that period who keep their parenting payment under the Howard regime, which was up until the youngest child turns 16 years of age. That is quite a difference in the way that parents are treated.
This amendment brings all those grandfathered parents into line with parents whose children were born after 1 July 2006. It is very much an equity issue. We have heard a lot from the other side of politics about how terribly unfair it is that a parent would have to go from parenting payment to Newstart when their youngest child turns eight, if they are a single parent, and how difficult this would be. For a lot of parents it is difficult. It is difficult for the parents for whom this change was made in 2006. So again, I would ask the opposition to just be a little bit honest about this and recognise that this is a change that they made, a change that they expected of parents in 2006. They have not come into this place and argued that it be changed back, and I would ask them to seriously explain to me why now in 2012 parents should be treated differently depending on when their child was born. I am not sure that it was a sensible thing in 2006, although I could understand the politics of it. It did delay the issue of large numbers of parents suddenly having to move off parenting payment onto Newstart—and I can understand the politics of it—but in terms of policy and government and equity and fairness, it was a strange one then and this bill actually removes that inequity.
The member for Solomon also said that we have not made any attempts to assist parents back into work. She has made quite a lengthy statement about the changes that the Howard government made at the time, trying to help parents get back into work, and she said that there is nothing in this bill that does that. She is wrong about that and I am assuming that she has not read it. If she had made any effort at all, she would know that that is not the case. We have done a number of things in this bill that make a difference.
We have already made amendments to the Social Security Act to reform the income test that applies to single carer parents on Newstart allowance and we are allowing a much more generous income test. Again, the member for Solomon talked about one of the changes that the Howard government made, which concerned a $50 change. That was a good thing at the time. This change allows parents to earn over $400 more per fortnight before they lose eligibility for a payment. That is a significant improvement. It is an improvement that applies to all parents, not just the ones that will come off the Howard government grandfathering because of this amendment. It applies across the board to all parents. A parent can earn $400 more per fortnight before they lose eligibility for payments. That provides a much stronger incentive for parents to undertake paid work by allowing them to retain more of their income as the work that they are doing rises.
We are aware that parents who are moving off parenting payment and onto New Start allowance may have spent significant periods out of the workforce. A lot of parents return to the workforce part-time or full-time quite a few years before their youngest child turns six or eight, but some of them will have been out of the workforce for quite some time. So we have made additional support for them, as well as the hundreds of thousands of additional training places that we have made for the community generally. There are also training places for single parents announced under the Building Australia's Future Workforce package. The government has provided additional funding in the 2012-13 budget for professional career advisory services for single parents through the employment service providers. So there is assistance for parents who have been out of the workforce for some time to get career advice and move back into training. Single parents who are studying an approved course already and receiving the pensioner education supplement will keep that supplement when they transfer from parenting payment to Newstart allowance.
We are providing additional funding to support increased demand and better targeting in the Jobs, Education and Training Child Care Fee Assistance program, a program that I am very proud of. I know that a number of single parents in my electorate who are going back to training use that. It is quite an effective program. So there is considerable support in this bill and in other actions taken by this government for parents who are returning to work.
The member for Solomon was quite scathing about the cash splashes, as she called them, that this government is handing out. But I want to draw the attention of the member for Solomon to where the assistance is being given because it is being given very much to people in most need. The schoolkids bonus that has reached the pockets of parents in the last week or so is specifically targeted to families at the lower end of the income scale. The tripling of the threshold which comes into play on 1 July is also something that will greatly benefit parents as they return to work. The people who are most likely to be on the lower incomes working part-time will benefit significantly from that reform. The household package assistance that has been rolling out over the last month and will continue to roll out over the next couple of weeks is also highly targeted towards households where there is likely to be one person working or a second parent working part-time or returning to the workforce. That is significant assistance for people who find themselves in this kind of position.
We have also made some changes that I am very pleased about in the liquid assets waiting period amendment. Back in the global financial crisis, we made some quite significant changes to the liquid assets waiting period because we recognised that people who suddenly found themselves unemployed needed some rather generous treatment at that time. Essentially, we doubled the liquid assets waiting period threshold in 2009 and we are now in a position where we can afford to reinstate those thresholds permanently. Importantly, from 1 July 2013 the maximum reserve amount for a person who is single will be doubled from $2,500 to $5,000 and, for a person who is partnered or has a dependent child, from $5,000 to $10,000. These new reserves reduce the waiting time by up to five weeks for an unemployed Australian and student with modest savings or liquid assets before they are eligible for Centrelink assistance. It was something we did in 2009—we thought for a short period of time—and which we are now able to extend on a permanent basis.
This is a pretty good bill. It deals with equity; it quite substantially improves the circumstances of people who find themselves unemployed. I commend the bill to the House. (Time expired)
The Social Security Legislation Amendment (Fair Incentives to Work) Bill 2012 seeks to inflict an 18.5 per cent cut in payments to over 100,000 single parents at a time when the cost of living is skyrocketing and power bills alone have increased by over 60 per cent. This bill is an extension of the Welfare to Work reforms passed in 2006 and it removes the grandfather clauses which allowed single parents to claim the parenting payment until their youngest child turned 16. Under this bill, once the youngest child turns eight, sole parents will be abruptly moved to Newstart allowance.
It is commonly known that that the Organisation for Economic Cooperation and Development—the OECD—recently found that more than two-thirds of children in families relying solely on Newstart live in poverty. Newstart equates to $38 a day to feed a parent and child, buy school clothes, pay the rent and pay the utility bills. What a pitiful amount! This legislation, according to the government, will result in more people moving from welfare to work. I say we are moving them from welfare to worse. Let me make it clear: I am supportive of measures that are genuinely designed to assist people into the workforce. I have no difficulty with that concept at all. Paid work leads to financial independence and it provides superannuation and the prospect of engagement with the community. There is no doubt that the best way out of the poverty trap is to have access to a full-time job in the paid workforce. But this bill does nothing to achieve that objective; there is nothing in it that suggests it will achieve that objective. It is simply a cynical exercise to generate budget savings, attacking some of the most vulnerable people in this nation.
It is a fact that the number of single women under 20 years of age claiming the sole parent payment has actually dropped by about 20 per cent over the last decade. That scotches some of the myths around sole parent payments. Undoubtedly, the government will contend that a combination of new payments will alleviate the impact of this bill—we have just heard a member talk about that. However, modelling by the Australian Council of Social Service shows that this is not the case. ACOSS estimates that 50 per cent of sole parents have no earnings and they rely fully on social security payments. This group is already living below the poverty line. Even when one factors in recent increases to the family tax benefits and the new schoolkids bonus, a sole parent with no earnings, studying to acquire skills to be employable, will be $73 a week worse off if the child is in primary school or $65 a week worse off if the child is in high school. This is just disgraceful.
To most of us, $65 a week is a fair amount of money. To these people it is devastating to lose that much of their pension. We are talking about parents trying to do one of the toughest jobs in the nation—that is, raise children alone without support. For single parents who are working, the effects will be even more severe. On a parenting payment, a person can earn up to $88 a week plus $12 a week extra per child before losing a portion of their income support. On Newstart, parents will lose 40c in the dollar when they earn above $31 a week. This bill is entitled 'Fair incentives to work'. Where is the incentive in that? Some of the modelling that has been done on these policies shows that people on the Newstart allowance who are working and earning will be paying an effective marginal tax rate of up to 70c in the dollar. So where is the incentive in that? Not only will parents have money taken from them by being corralled into Newstart; they will be penalised more if they happen to find work. Some incentive!
Shifting parents to Newstart also exposes them to harsh noncompliance measures. For instance, if a child suddenly falls sick and the parent misses a job interview or training session, he or she will lose one day's pay for each interview missed. If the person had a number of interviews on that day it could easily mean losing a whole week's Centrelink benefit. While Centrelink may repay that money if there is a valid excuse, such as sickness, it can mean no food on the table that week whilst waiting for the back pay. That is an appalling possibility. In the Treasurer's recent budget speech to the Press Club he reflected sententiously on the challenges of raising children. His concerns would seem to ring hollow in the context of consigning single parents and their children to ever deepening poverty. Beware a government when it takes to espousing 'motherhood' statements—it invariably gets it wrong.
The extraordinary hypocrisy of this policy is underlined by the fact that members of this parliament participated in the annual CEO Sleepout last week to raise awareness about homelessness. There are already nearly 7,500 families sleeping on the streets in our country. I am talking about families; this does not include all the single people. Data from the Australian Institute of Health and Welfare shows that the principal cause of families ending up on the streets is that they are evicted, mostly because they cannot afford rent. And the annual Rental Affordability Snapshot by Anglicare Australia found that there are no affordable housing options for people on Newstart allowance. Despite claiming to be concerned about the homeless, the government will, by a deliberate policy decision, push single-parent families onto a payment that makes putting a roof over their heads almost impossible and certainly unaffordable. It is a decision that will push these people out onto the streets. Again, some incentive to work! How difficult it would be to get work if you do not have a stable place to live in.
If the government were really intent on helping people to get off welfare and into work, it would pay attention to the systemic problems that make it difficult for people to access the job market, particularly these people who are also raising children. These systemic problems were thoroughly canvassed in 1999 in the McClure report and have been largely ignored, obviously, in the development of this policy. Funding for job service providers, for example, is already inadequate. They are already having difficulties in managing the long-term unemployed and Commonwealth agencies are struggling to assist those they are currently dealing with. Despite this, the federal government has intemperately sliced $50 million per annum from the Job Services Australia budget.
When the Howard government introduced the Welfare to Work provisions, I was not particularly happy with that piece of legislation and I did not actually vote for it. But at least we did negotiate some changes to that to make it a little better than it otherwise might have been. It increased access to child care and childcare assistance as well as paying a training supplement to assist in reskilling. Under Labor, a parent transferring to Newstart allowance becomes ineligible to receive the pensioner education supplement. This previously provided up to $62.50 a fortnight for single parents studying part time. In its place the government will pay a $400 per annum lump sum in two instalments. This represents less than a quarter of the former pensioner education supplement. How can a parent find work if he or she cannot afford the education needed? This is particularly so for this particular group of people because nearly 57 per cent of the parents—most of them mothers—on the parenting payment have, at most, a high school certificate and are therefore inevitably consigned to low-paid employment. It will also mean that they have little or no superannuation in their old age, so they will become solely reliant on the age pension in future, and we know that there are a disproportionate number of women on the age pension and that people living on the age pension are, for the most part, really struggling, and that they also live pretty close to the poverty line.
The government has recently changed the JET—or Jobs, Education and Training—supplement, which covers the gap between the childcare payment and out-of pocket expenses for child care. To be eligible for JET, a person must be studying at least a Certificate II qualification. The Certificate I, which sits between a high school qualification and Certificate II, is ineligible for JET, and so are many short courses that are not officially recognised at certificate level but provide practical training. These types of courses include office administration and barista work, and improving English skills. To study these, the parent must personally pay the gap between the parenting payment and the actual childcare cost, and this can easily be more than the $38 a day the parent receives on Newstart allowance. The government chooses to ignore such systemic anomalies and chooses to imply that single parents are somehow at fault. The electorate deserves better than this.
I remain deeply concerned about the erosion of support for some of the most vulnerable people in our community. I am deeply concerned about how these changes will impact on children of single parents; the lack of attention by government to the systemic problems that prevent people from accessing work; the lack of attention to housing affordability; and the rising costs of living, including power.
Professor Fiona Stanley, a few years ago, produced a book which talked about children from disadvantaged families, and it is a very sorry saga. These parents are not single, for the most part, by their choosing. In this day and age we have no-fault divorce. We have domestic violence, which continues to be a significant problem in this country. And many women who are on sole-parent pensions are victims of domestic violence; they have had no choice but to remove themselves and their children from the family home in order to escape domestic violence and brutality. These are the children in our communities that are gravely disadvantaged.
I listened to the debate with interest in the other place when we had the address in reply to the budget, and I heard them talking about the new family payment and how the children in some schools were pooling this money so that they could go on fantastic trips abroad. Well, I can tell you, Madam Deputy Speaker, that the children of many single parents in this country will not be going abroad. They will not get out of their own backyard to have a holiday. Their parents are struggling just to put a roof over their heads, to put food on the table, and to put clothes on their backs, and I think this is truly a disgraceful piece of legislation.
I applaud the work of Patricia Karvelas, who has written so often on these issues. I would like to quote from a recent article by Patricia, quoting Maree O'Halloran of the Welfare Rights Network, who writes:
"It is logical to assume that the harsher earnings thresholds for Newstart are responsible for this significant difference in employment and earnings levels."
She cites research by the National Association of Community Legal Centres that found "44 of the 50 local government areas in Australia with the highest rates of lone-parent households are also some of the most disadvantaged areas".
I have them in my electorate. There are sole-parent families and people on disability support pensions that have to move out of the city and closer city areas to rural and semi-rural areas in order to afford a roof over their heads. Then there are transport problems. Then there are problems finding work and problems finding child care. These all mount up. It is the layering effect of these measures that I find very difficult to support in any way.
In the end, inadequate support for the poor makes us all poorer. We will reap what we sow in the high cost of social upheaval, dislocation, increased crime and a continuing upward trajectory of reliance on welfare. The policy to cut social security payments to single parents in this bill before the House is not worthy of support, and I will not support it.
I rise to support the Social Security Legislation Amendment (Fair Incentives to Work) Bill 2012 but, in doing so, I congratulate the member for Pearce on her contribution to this debate. I do not think there is very much that she said that I disagree with. I know that she was a single parent herself. She understands the struggle that single parents confront each and every day. She understands the level of resilience needed and the impact that being a single parent has upon a person, and she knows that a single person needs and deserves support. Her contribution to this debate was outstanding, and I would like to associate myself with practically every comment that she made.
As I mentioned, I am rising to support this legislation but, in doing so, I must say that I have some serious concerns about it. I would like to thank Minister Shorten and Minister Ellis for the work that they have put into trying to allay some of my concerns and improving the legislation that we have before us today. But, for me, the bottom line is that single parents deserve every bit of support that they can get. Whilst this legislation is only removing a grandfathering clause and putting those people who are currently grandfathered under the Social Security Act in line with other single parents, to me it is putting another group of parents at risk, making it harder for them.
When this legislation was first mooted a number of single parents contacted me in my office. One stands out in my mind. She is not the type of woman who people like to stereotypically identify as a single parent; rather, she is a mum, with three children, who is working really hard part time to look after those children. Under this legislation, she will not be able to design her workload and caring responsibilities around her children. She will suffer a significant loss of income and, as such, she will be extremely disadvantaged. I do understand why this legislation has been introduced. I compliment the ministers involved, as I have already said, on the work that they are doing in making it easier for single parents to find work. But at the bottom of all this is the fact that Newstart allowance is inadequate. It makes it really hard for unemployed people to survive.
I would like to refer to an ACOSS report which identifies that $35 a day is not enough to live on. I would challenge a person to try to live on $35 a day. This report points out that unemployment can happen to anyone, just the same as becoming a single parent can happen to anyone. When somebody is having a child they do not immediately think, 'I'm going to be a single parent.' Very few people approach parenthood in that way but, when it happens, it is a struggle. The fact is that a person can be employed one day, earning a really good income, and the next day they can be unemployed. When they are unemployed they have to live on $35 a day.
I will refer again to this ACOSS report. It refers to budgeting on Newstart. I will run through this budget for the sake of the House. The budget for a week is: food and drink, $78; clothing and footwear, $10; rent, $105—I think that finding rent at $105 a week would be nearly impossible; electricity, $10; household contents and other services, $15; health, $14, with no health insurance; transport, $18—that is, three trips on a bus and train; phone or internet, $12; recreation and entertainment, $23; holidays, $6; education and training fees, zero dollars; and fees, charges and insurance, zero dollars. That takes you through to a total of $291 a week. That means someone on Newstart is out of pocket by $7 a week and confronting a minus income.
This particular legislation we have before us today will impact on single parents. You might note that the amount that ACOSS has identified for education and training is zero dollars. Once again, I compliment the minister on including in the legislation extra assistance for training. I note that negotiations are taking place to try to approve access for people who have difficulty obtaining transport, because in my electorate a number of communities are quite isolated and if you do not have a car you have to rely on a bus out in the morning and a bus in at night, which will probably take two or three hours to get to where you need to go. Single parents and other, unemployed people will have extreme difficulty in meeting the compliance requirements.
I thought the member for Pearce made a particularly good point about the fact that if a person does not meet those compliance requirements then their Centrelink benefit can be stopped but reinstated once they can prove there was a significant reason for them having their Centrelink payments stopped, such as a sickness of the child. Currently, my daughter and son both have very sick children. They would not be able to go to an interview at Centrelink. When a child is seriously ill, the last thing you think of is: 'I need to go to an interview at Centrelink.' You will be thinking about getting your child to a doctor or the hospital, depending on the level of illness. When you ring the next day or a couple of days later you are told: 'You missed an appointment; therefore your payment has been stopped. It will be reinstated and we will pay you.' Meanwhile, as the member for Pearce said, you cannot put food on the table.
My real concern about this legislation is not the grandfathering of it but the fact that Newstart itself is an inadequate payment. I refer once again to the ACOSS report. What does $35 buy you?
It says half a tank of petrol—or maybe not even half a tank—one pair of school or work shoes, family groceries for one day or one weekly bus-and-train ticket. I really think this is an issue that needs to be looked at. There is quite a disparity between the level of pension and Newstart, and this is where the problem lies.
An aspect of this legislation that I welcome is the liquid asset waiting period amendment. In this bill it is proposed to double the amount of cash or other assets an unemployed person or student may hold without having to wait up to 13 weeks. I think that is a good aspect of the legislation. Currently the maximum reserve amount for liquid assets for many claimants of Newstart sickness benefits is $2,500 for people who are single and $5,000 for those with younger children. Single claimants are required to serve a liquid asset waiting period of one week, up to a maximum of 13 weeks for every $500 of liquid assets above the maximum amount. It is similar with a person who is partnered or has a dependent person.
Beginning 1 July 2013 maximum reserve amounts will be introduced which will reduce the waiting time by up to five weeks for unemployed Australians and students with modest savings and liquid assets. I think that is a really positive aspect of this legislation. For a person who is single and does not have a dependent child it will be doubled from $2,500 to $5,000. They will be required to serve a liquid asset waiting period of at least one week if the liquid asset is of $5,500 or more, up to a maximum of 13 weeks if they have liquid assets of $11,500 or more.
Unemployment leads to a decline in your savings. As I have already identified, the rate of Newstart is quite low. We would all know from constituents who come to see us that any period of unemployment leads to a massive decline in the person's assets. People have trouble meeting their housing loan repayments and draw upon their savings to meet those repayments. It does not take long before they run out of cash and their savings are totally gone. If a person has to live off those assets as well as meet their current financial obligations which they entered into at a time when they were employed and did expect to receive long term the income that they were receiving at that time, it has a very detrimental effect on their savings.
Whilst I do have some problems with this legislation, I will be supporting it. I congratulate the minister on the provision in the legislation for the support that single parents will get with being able to access professional career advice as well as extra money and extra assistance with child care. I think those are very important and very positive aspects of this legislation. I thank both ministers concerned for the work they have put into trying to make this legislation a little fairer, but in the long term I would like to see the Newstart allowance increased. Then I would not have any problem with this legislation whatsoever.
I rise to speak on the Social Security Legislation Amendment (Fair Incentives to Work) Bill 2012. This bill represents another of this government's cash grabs as it desperately tries to struggle its way to a surplus. I can find no other way of explaining it. This bill affects those on parenting payments by removing the current grandfathering transition agreements. This will result in parents being moved from these payments over to an income support payment such as Newstart. For couples this will occur when the youngest child turns six; for single parents, when the youngest child turns eight. The goal of this measure is to encourage parents back into the workforce once their kids are old enough to attend school.
This bill also changes the liquid asset waiting period, which requires anyone claiming Newstart, sickness, Austudy or youth allowances to wait a period of time before being able to access income if they have liquid assets above a certain threshold. With this legislation these thresholds will be doubled to $5,000 for singles and $10,000 for those with dependants. The liquid asset waiting period will be up to five weeks for some applicants, and these changes should remove this waiting period for many more students and applicants.
Lastly, this will clarify the definition of the termination payment with regard to the income maintenance period. Under the definition proposed by this bill the termination payments will include redundancy payments, leave and other payments that are related to an individual's termination of employment.
The coalition has a history of reform in this area. It was the Howard government that introduced the welfare-to-work changes in 2005 to move people off Centrelink into jobs. Those changes proved to be successful, with a 23 per cent increase in the number of single parents leaving income support after six months. Then, the Labor opposition steadfastly opposed these changes. Now, they have realised the importance of encouraging welfare recipients back into the workplace. But where the Howard government sought to increase workplace participation and decrease welfare dependency, this government is just after savings to make up for this profligate spending elsewhere. Where is the support for parents as they try to return to work, in some cases after years out of the workplace? Where is the guarantee that parents will not find themselves, perversely, financially worse off for taking a job? As the member for Pearce pointed out, we are looking at an effective tax rate of 70 per cent on the money they earn. We are looking at ripping benefits off them so there is no incentive to work. This is my problem, and I will also go to this in the conclusion of this speech—the complete and utter lack of narrative from this government in relation to everything they do at the moment. They cannot get their message across on what they are trying to achieve. That is what I really struggle with here. The Howard reforms ensured that parents could refuse a job that would not leave them better off. This bill does not leave them with that choice.
Of course we support the sentiment of getting parents back to work. The member for Parramatta spoke very well about the message of getting people back to work. You are a better person when you work; you are more productive when you work, obviously. We want people to kick the welfare habit and not create a cycle of welfare dependence—children too easily follow the model set by their parents. But this government is only interested in the savings that this measure presents. The government is not interested in undertaking true welfare reform, for the sake of not just their bottom line but workers as well.
If this was about doing the right thing by parents affected by these changes, there would be assistance to accompany these new rules, to help parents acquire the skills needed to find long-term work. Instead, we see $162 million slashed from Job Services Australia that would have been spent helping people find work. That this government can splash around $10 billion for the Clean Energy Finance Corporation to fund renewable energy schemes that have failed to attract private sector financing but cannot find any money to help parents transition to the workplace speaks volumes about this government's priorities. It is one thing to want to encourage welfare recipients back in the workplace—simply cutting welfare payments only addresses one-half of the equation.
What does this government say to a 24-year-old woman at the centre of these reforms who has a child turning six, who for six years has not worked or undergone training or further education and who has not had the chance to develop workplace skills? She now faces her welfare being cut as she is sent on her way to find a job, with the government who is cutting her off providing her no assistance in acquiring the skills she needs to find a job. That is not welfare reform.
In my electorate of Herbert is Palm Island. Palm Island has unemployment of around 95 per cent. Its population are welfare dependent, with little to no opportunity to work. Its population have not had the opportunities or the encouragement to develop skills or pursue education beyond school, if they even attended school. There was a story in the TownsvilleBulletin this week about there being only one child on Palm Island who has attended school every day this year so far—one child, at the Bwgcolman Community School, is the only child on Palm Island who has attended school every day this year. And we are going to talk about people transitioning back to the workplace at 24 years old. What are the prospects for the young mother on Palm when her child reaches school age? She will be punished for having no alternatives to welfare. These are people we need to be helping, not hurting. This legislation is not about transitioning people to work; it is about dumping people on cheaper welfare.
It should come as no surprise that this Labor government is ignorant to the concerns of the Indigenous population of Herbert. Over the weekend, the Townsville Bulletin shed some light on the scandal that has engulfed this government and the Townsville Aboriginal and Islander Health Services, or TAIHS, over the past few years. A freedom of information request has shown that this government was concerned about the running of this service as far back as 2008, but it took until last year for any action to be taken against the organisation, and that was driven by the paper—not by the government, not by the previous member for Herbert coming in here and speaking about it and not by me approaching the minister and raising it. Once it got into the press they actually did something about it. It was the Queensland government, through the CMC, that had to do it. We have the situation where there should be people charged, and they are not being charged because this government will not do the work. This government stands condemned for its handling of this issue. It sat back and allowed another three years of corruption of funds intended to provide health care to the Indigenous community. For three years, Labor misled the Indigenous population of Townsville that they had investigated TAIHS and cleared them of wrongdoing. Now we find out that there was no investigation.
It is with no thanks to the Labor party that TAIHS has turned itself around—and I commend it—and is at last getting back on track to help Townsville's Indigenous population. Under the guidance of chair Donald Whaleboat, TAIHS is under administration and has been given the organisational shake-up that has been needed for so long. It took far too long, but Townsville's Indigenous community at last have their health service back.
I would like to once again mention the member for Pearce and her plea on this. We are trying to get people back to work. We are trying to do the right thing here. But, as my wife always says, you catch more flies with honey than you ever will with vinegar. You cannot just take things away from people. We heard the member for Shortland spend 13 of her 15 minutes berating this bill—but she is going to support it. She spent 13 of her 15 minutes telling us what bad legislation this was and how it would hurt absolutely everyone, and then, in winding up, she said, 'But I'm going to support it anyway.' She made her speech so she could do a press release in her electorate and it would look good on her website. She is going to vote with the parliament here and hope no-one notices.
The member for Pearce said it right from the word go. She said this is bad legislation. It goes to the consistent lack of narrative or plan from this government. We see this money being ripped out of the social security system, from single mothers who often do not have the literacy skills, the workforce skills, the interview skills or the transport to get work. It seems to be for people who live in the big cities, where public transport is there. If you miss your bus from the Upper Ross you cannot get to your job interview. If you miss your job interview you get sacked from this organisation—you will get your funds cut straight away, with no questions asked, until you can justify why you missed it. It is a punitive approach to this which is just killing everyone. I do not understand how you can do this.
There is a lack of narrative or a consistent approach. We have seen hundreds of millions of dollars flow out the window to organisations such as American car companies, $42 million just the other day to an aluminium refinery, $300 million to the steel industry and yet we are going to take the benefits away from a single parent. I just do not see it. Perception is neither right nor wrong; it just is. If you are perceived out there as not caring about these people then you are not caring about these people.
On this thing last night, I have age pensioners who send me emails all the time telling me what they are going to do. They say they are going to hop on a boat and sail to Christmas Island and get the benefits that comes from landing there. We know that is how tough it is. That is the perception out there: that people from elsewhere or other people are getting it better. That is the reality. If people in Australia are thinking that, what are people in Afghanistan thinking? People and single pensioners here are thinking that they are being shafted at every turn—that they are the ones copping it in the neck at every turn—and yet we see all this money being thrown out to industry; we see all this money being thrown out at boat people. That is their perception, that is their reality. That is what is wrong with this legislation: it is punitive.
Member for Shortland, I was a single parent, albeit for the blink of an eye. My two daughters and I spent the best part of two years as a single unit. When you are a single parent you do the washing at two o'clock in the morning, because that is when you do it. You are ironing school uniforms and making lunches at four o'clock in the morning, because that is when you do it. I was very, very lucky. I had a boss that had been through it himself—he was on his third marriage—and he understood. I also had a job that allowed me the flexibility to get around it. But it is not easy and we are making it hard for people and harder for people all the time to get this sort of support.
We are talking about people in regional centres like Townsville where if you miss the bus from the Upper Ross at eight o'clock in the morning there will not be another one until 10. So if you have an appointment at 9.30, it is a $45 taxi fare to wherever it is and you do not have that money. It is all right to sit there in the heart of Sydney and catch the next train which comes in three minutes, or to catch the bus from Upper Mount Gravatt from Garden City that comes every three minutes. That is all right because you can do that. But we have single parents, too, in regional areas and in country areas where you cannot get the jobs, where you do not have access to these things. That is what is wrong with this organisation; that is what is wrong with this government.
You blokes would not have put a bet on Black Caviar on Saturday night, because you cannot pick a winner! You guys cannot pick a winner and you should hang your heads in shame over this thing. It is bad legislation and you should walk away from it, because this is wrong. I thank you for the opportunity.
I have absolutely no hesitation in supporting the Social Security Legislation Amendment (Fair Incentives to Work) Bill 2012 at all. Like many in this place I lived in a single parent family and grew up in grinding poverty. The Labor Party is the party of work, not of welfare. The opposition should hang their heads in shame at some of the speeches we have heard from them today. Look at the record of the Howard coalition government. No-one could have been more vicious and demeaning to single parents in this country than the Howard coalition government. They stripped them of their unemployment benefits when they would not turn up, with reasonable excuses, to job application interviews. The way they treated single parents! Don't listen to what they say; look at what they did.
Here today on this legislation we hear the sanctimony and the unction from those opposite in relation to this. If they do not support this legislation, they are adding to their $70 billion black hole by about $684 million. Where were those opposite in terms of our assistance we have given to single parents? Where were they on so much of the legislation being passed by this side of the House to help single parents, jobseekers, families, pensioners, low-income earners and nil-income earners in this country? There is a plethora of it. But those opposite come in here and criticise us about this.
Those members opposite who have come into this place and have criticised us about this particular legislation should hang their heads in shame. Where were they on the Paid Parental Leave scheme that helps so many parents? For 11½ years they did nothing. Where were they when we lifted the tax-free threshold from $6,000 to $18,200? Where were they in relation to so many other pieces of legislation—to the 23,500 pensioners in my electorate who got increased assistance recently? Where were they when we increased the family tax benefit A and family tax benefit B? Where were they when we increased the childcare rebate from $4,354 under them to $7,500—and we made it payable periodically? Where were they in terms of the $3 billion jobs and skills package that we put in? Where were they in relation to all of this?
Those people opposite that now criticise us in relation to getting rid of the grandfather provision were the ones that brought it in the first place when they were in power and sitting on the side of the chamber. So don't give us lectures about us being mean and heartless and not caring. I am sick of it. I am sick and tired of those opposite doing one thing in government and saying another thing when they are in opposition—saying one thing here and getting back in their electorates and claiming credit for all these things when in fact they vote against them here. We are providing a mountain of assistance to those people seeking jobs around the country. I will get onto that in a minute.
There are three aspects to this particular legislation. The first aspect deals with the issue of grandfathering, removing the grandfathering provisions that apply to parenting payment recipients who have been receiving payments since before July 2006. People should be treated the same, whenever their children are born. The change will take effect from 1 January 2013. By way of background, it was the Howard coalition government that introduced these new income support arrangements for parents with dependent children as part of their Welfare to Work reforms. Let us remember that when they criticise us about what we are doing. From 1 July 2006, new recipients of the parenting payment could only claim the payment when their youngest child turned six, if they were partnered parents, or eight, if they were single parents. Prior to that, of course, it was until their youngest child turned 16 years of age. So there was a grandfather provision in the payment, and with this bill we are getting rid of the provision. With this bill, we will save $685.8 million over four years. If those opposite now criticise us and vote against the bill, which services to education and which roads do they want to get rid of, and what cutbacks do they want to make for families? Mr Shorten, the Minister for Employment and Workplace Relations and Minister for Financial Services and Superannuation, in his second reading speech on this bill said that the changes to parenting payments will encourage parents with school-aged children to re-enter the workforce sooner and ensure a fairer and more consistent set of parenting payment eligibility rules. I think he is absolutely correct.
The OECD economies of the Americans, the Brits, the Canadians and the New Zealanders are the economies we usually compare ourselves to, since we like them have an advanced Western economy. Across the OECD, more than 60 per cent of single parents are in work, but in Australia about 50 per cent are in work. In January 2012 in Australia, there were more than 630,000 families which had dependent children and which were on income support. About 41 per cent of them—that is, 258,000—were jobless families with no reported income in the previous 12 months. Of these jobless families, 85 per cent—that is, 218,000—were single-parent families. We know that, where there is joblessness and poverty, there are also poorer health outcomes for children, intergenerational poverty, low aspiration, low self-esteem, crime, dysfunction, impairment of social inclusion and no participation in civic life.
We believe that we need to lift the rate of job participation in single-parent families to give kids a chance and a start. We think that that is really important. When someone in the home is participating in society—working as an administration officer, attending P&C meetings, coaching soccer, attending the local church or whatever—they are a good role model for their children. In addition to having role models and getting rid of poverty and disadvantage, it is important to increase the economic development and prosperity of our country. If we can get more people participating not just in civic life but also in economic life in this country, we can do better—and it is important that we do better. My comments here are backed up by an OECD report of 2007 called Intergenerational transmission of disadvantage: mobility or immobility across generations? A review of the evidence for OECD countriesand by another OECD report of 2011, Doing better for families. The latter report says, 'Non-employment is the single biggest risk factor for poverty.' If we condemn a generation of young people in this country to disadvantage, we will keep them in a position where they have no aspirations—no desire to do better.
I grew up in a working-class home in Ipswich in poverty and disadvantage. But I saw the benefit of education and the benefit of what my parents offered me as role models and hard workers, and I thank them for it. Too often parents do not act as role models and do not work hard, and it is important that we foster positive behaviours and attitudes to work. I have no compunction about supporting this bill, which fosters just these things, even though those opposite have criticised us. We are putting enormous resources into eliminating disadvantage, and to do so we are working with the states through the COAG process. In the 2011-12 budget we announced the Building Australia's Future Workforce Package, which is tied in many ways to the bill we are talking about today and to government policy in general. We passed the legislation that brought in the Building Australia's Future Workforce Package, and through that package we are assisting people. No government has put more money or more resources into assisting people to overcome disadvantage—across the forward estimates we have put $3 billion into doing so. Also, we are increasing the amount that a single parent who transitions to Newstart allowance can earn before losing the benefit. We are increasing the taper from between 50c and 60c in the dollar to 40c in the dollar so that they can keep more money. We will also allow them to earn more than $400 a fortnight extra before losing income support, and this will be effective from 1 January 2013. So much for heartlessness and not caring! We are allowing people to earn more money before they start losing the welfare which is important to them as they transition into employment.
The $1.75 billion national partnership agreement which we achieved with the states in April this year introduces the entitlement of all working age Australians to access a government-subsidised training place to gain qualifications for their first Certificate III, including foundational skills or lower qualifications within the Certificate III. This will allow the person to gain skills which will put them in a better position in the marketplace to gain employment. This is what this government has been doing. The assistance we are providing is very considerable. The unemployment rate around Australia is just over five per cent. It has been at 4.9 per cent; now it is about 5.1 per cent. In my region it is about 4.6 per cent, and that is directly as a result of the very strong investment that this federal Labor government has put into the Ipswich and West Moreton region and the Somerset region. It is assistance that we have provided—which has been opposed in large part—for infrastructure projects across my region. There are many, many projects, including BER projects and the Ipswich Motorway upgrade, where people in single households have got jobs as a result of the infrastructure this government has put in place and funding which has been opposed steadfastly by those opposite, just as they opposed the schoolkids bonus of $410 for each child in primary school and $820 a year for each child in secondary school for thousands and thousands of single parents across the country. So it is a bit rich and a bit galling for those opposite to criticise us about these issues.
The other aspects of this legislation, the liquid assets waiting period amendments, amend the social security legislation, doubling the current maximum reserve amounts for the liquid assets waiting period from 1 July 2013. The member for Shortland outlined something in relation to that. Currently the maximum reserve amounts for liquid assets for new claimants of Newstart allowance, sickness allowance, youth allowance or Austudy are $2,500 for single people and $5,000 for partnered people or parents of young children.
The final aspect of this legislation deals with measures announced in this budget. The measures redefine termination payments, making sure that payments to employees in respect of termination of their employment, representing an amount that would otherwise have been received as wages if employment had continued, are included for the determination of the income maintenance period.
This is legislation in the best interests of the budget, the economy, society and the families we urge to seek employment for the benefit of themselves and their children.
This is an interesting debate about social security reform, coming in the context of nearly a decade of changes initiated by the Howard government. What we are effectively debating today is an extension of John Howard's ideas and the reviews that Patrick McClure contributed to. It surprises me more than anything that a number of people on my side of the chamber have a problem with the Social Security Legislation Amendment (Fair Incentives to Work) Bill 2012, because I do not have a problem with a single word of it.
In debates around something as important as welfare reform, Australians need to know that there is some level of intellectual and moral consistency in the way we approach protecting the most vulnerable in this country. On this side of the House we have worked since the mid-nineties on bringing the words 'work for the dole' back into common parlance—where they could be uttered at a barbecue without the speaker being shown to the door—to a point where there is now an expectation that, as a working-age adult who is not incapacitated or a primary caregiver to a large number of children, one contributes as well as one possibly can. The job of the welfare system is to engage every Australian with an opportunity to contribute as best they can. Let us not forget the words of Noel Pearson, who said that the more you raise the payments for inactivity, the more it becomes a 'welfare pedestal' from which you are reluctant to descend.
Ten years ago these thoughts could not have been uttered in groups of more than two or outside a right-wing think tank, but the world has changed. Now we acknowledge—and Prime Minister Cameron in the UK pointed this out just two days ago—that we may well be moving towards a superior system where there is a single payment for those in need, adjusted simply for the needs of those who are dependent on you or those who may have a disability. We need to move to a social security system that pays a lot more to a severely disabled Australian than just a standard pension. The simple notion that when you obtain a disability-support pension you are paid the same as an old-age pension and, if you are more disabled than others, it is just bad luck—it is a single payment—will have to change. There will be a time when we have to tailor these payments directly to the needs of individuals.
One thing that right-of-centre governments around the world have worked on is the proposition not only that everyone should be able to give but that the state should assist them to give as well as they possibly can. As long as you are paid $529 on a Newstart allowance and $648 on a disability support pension or parenting pension, there is very little drive to go out and do anything other than make a series of excuses for why you cannot work. We are in an economy with high capital-to-labour ratios. There is too much capital in this country to not be utilising our labour as well as we can. We have a participation rate lower than many nations in the Northern Hemisphere. Our job, on this side of the chamber, is to raise that proportion—to hold the hand of every Australian and say, 'There is no reason why you cannot be in the workforce.'
I have been privileged to employ two disabled people in my office. I have learnt that a simple piece of software can open up an entire world to people who could never have dreamed of working in the office of a politician. I have two mums working in my office and they never come in until their kids are looked after. If there is a problem, they leave to look after their kids. This is a cultural shift we need to be thinking about. There are plenty of opportunities for the people we are debating about today, who may well be saying back in my electorate, 'I'm $112 worse off a week after these changes.' I say: not if you get a job. We are paying through publicly funded assets to take your kids to school, to keep them there and give them a great start in life. Why cannot a parent whose children are in publicly funded facilities find time to work in those intervening hours? But, as long as we persist with a $529 payment and grandfather everyone since 2006, it simply will not change until they are forced off the payment by the age of their youngest child. All we are doing today is unravelling the grandfathering that Prime Minister Howard put in place to ensure that the transition from welfare to work was smoother. It is an old, important and valuable political tool to grandfather those who are potentially affected by change and to implement the change immediately. All we are doing in this legislation is removing the grandfathering—removing that little political flourish that John Howard employed in 2005 to ensure that we did not have a mass protest on 1 July 2006 when Welfare to Work was introduced, because we grandfathered parents. I think that in 2012 we are mature enough to say that the rules that apply to parents today should also apply to the parents who in 2006 had children older than the age of six in the case of single parents or eight in the case of those who were partnered parenting payment recipients. There is nothing inconsistent about that.
Frankly, I am a little disappointed that my side of the chamber is not firmly behind the government in doing all of this to the letter. You cannot deny that this is an important move that we would have made if we were in government. You cannot deny that the government has made changes to the thresholds to make it easier to earn some more money as a parent and still be able to get payments, by relaxing some of the requirements around work earnings so that the taper at $62 and $250 a fortnight moves from 60c and 50c down to 40c—a uniform, simple taper. Everybody understands that you can earn $62 a fortnight and, once you tick over that amount, it is tapered by 40c in the dollar. That is not hard for anyone to understand.
This is the basic proposition: if you are a working-age adult in this country—and I do not care if you live in an Aboriginal community or in the centre of Sydney—if you are not incapacitated and you have children who attend state funded education, it is a reasonable proposition to ask you to fulfil a work obligation, an activity requirement or a work-study-training test. Let's not pick on the 16-year-old and 17-year-old mums; let's have every Australian doing that, and then it is up to the employment sector to find the flexibility to enable those people to engage in the economy.
I hear excuses—and I am disappointed that they come from my side of the chamber today—about not being able to catch a bus or having a hole in your shoe or not having the right shirt to go to a job interview. They are the problems that I want to have as a government, because I can fix those, but the problem I cannot fix is having the welfare pedestal of $529 a fortnight as a blind entitlement and having the people who fund the welfare system so separated from those who receive it that it simply becomes an entitlement—a line in a Centrelink brochure: 'That's the money I'm entitled to, and don't take it off me.' That is not a sustainable welfare system. That is not what Beveridge conceived over a century ago.
What we need is a tailored, individualised, case-managed welfare system that can identify a person's need. As I said, there are people who need more money than they currently get. I have 1,500 single parents in my electorate who probably will not be happy with what I am saying, but I am saying to them that these rules apply to everyone from this day onwards. All we have done in this legislation is extend Welfare to Work 2005 and the Gillard government's 2011 changes that sought to accelerate the taper. They simply said that, if you have children aged 13 or 14, you can keep the payments until they are 15; if they are aged 12, you can have the payments for another two years. These were thoroughly reasonable tapers and all we are doing now is exercising them in a more rapid way.
We can analyse whether this is fiscal rectitude, whether it is fiscal irresponsibility or whether it is trying to fulfil a grubby political promise about a surplus next year, but in reality it is what this side of the parliament would have done, so how can we possibly have a debate about what the Right of politics right around the world has been working on over the last two decades? People on my side of the chamber should be patting themselves on the back and saying, 'We've reached a point where a government can hold its head high, left of centre, and suggests these changes.' Doesn't that suggest a real paradigm shift? That is something that the Right can be proud of and that John Howard played a major role in.
If you talk to the 30 per cent of people who are no longer on parenting payments, either they have moved across to another form of payment that has a higher activity requirement or they are in the workforce. Suddenly there are households in this country where at least one adult is engaged in the work system—at least one adult who gets out of bed, has a shower, has some breakfast, makes sure the kids are fed and says, 'You know what: I've got to take you to school because I have to go to work.' I am not going to apply any value judgments around the image I have just created, but the evidence speaks for itself. Everything from the Whitehall studies in the UK through to all of the work in the world indicates, through any meta-analysis, that connection to work and connection to capability—Amartya Sen's description of these very issues—means that health improves, welfare reliance reduces and abuse of children falls. Everything is centred around capability. Only with capability can come opportunity.
I do not mean to sound like Noel Pearson but, the moment we pay flat rates of welfare and we have so many people receiving it that we are unable to individually case-manage, we will find a system that is too large and actually controls us. We must take back control and make our welfare system something that is truly tailored to those who need it most. They are cheap words, but in this legislation they are fairly simple, modest changes. They are not changes that leave people destitute; they are changes that leave people with choices. All a Western economy can aspire to is to provide people with reasonable choices, let the state run the economy so that jobs are available, have money to move people if work is in other parts of the country and, finally, have a system whereby we constantly review people who need it, and for those who are seriously and permanently disabled we stop molesting them and asking them to chase work. That is not appropriate either for someone who is seriously disabled for the long term.
In this debate around the national disability scheme, I hope we can weave in the elements of Welfare to Work, identify people who have a bad back at the age of 50 and have a meaningful conversation with them about what they can do for the next 15 years. At the moment that is not happening sufficiently. Too often we rely on the medical certificates of selected numbers of providers who write certificates for the disability support pension; other doctors do not do them at all. We need a more standardised arrangement so that there is some form of national consistency.
I think that all of the elements are here, including modifications to termination payments to be fairer and more clear about how we identify end-of-work payments, as far as Centrelink goes. The effort is here now to allow people to earn more money before they have this minimum waiting period for Centrelink access to be available. It is more generous. It allows more people to work and be comfortable that, by working, they do not undermine their payments. Lastly, and most importantly, we need to be able to look in the eyes of primary care givers in this country, male and female, and say to them, 'You know what? This concept that you do one or the other has come to an end.' We have reached a time when, in a nation so reliant on using every part of its very small labour force, we must reach out and have every one of them engaged in the workforce. This bill goes a small but important way towards achieving that.
I rise to speak to the Social Security Legislation Amendment (Fair Incentives to Work) Bill 2012. This bill demonstrates the Gillard Labor government's commitment to deliver for working families, particularly for those parents looking to re-enter the workforce or, as previous speakers have said, for those parents this nation needs to re-enter the workforce. This bill includes amendments that will give effect to the following measures as announced in the 2012-13 budget: parenting payment reforms, liquid assets waiting period amendments and income maintenance period amendments. Today I will focus on the first two reforms.
The parenting payment reform brings forward the gradual alignment of parenting payment rules that was announced as part of the Building Australia's Future Workforce package in the 2011-12 budget, which reduced the maximum age for a youngest child to 12 years from 1 January 2013. Through this amendment to the bill, from 1 January 2013, grandfathered parenting payment recipients will be treated for income support the same as non-grandfathered recipients. This will further align all types of parents and is a fairer treatment of all parents, who will all now be eligible for parenting payment until their youngest child is six years for partnered parents or eight years for single parents—instead of the current 16 years.
The amendments will remove the grandfathering provisions that apply to parenting payment recipients who have been receiving payment since before July 2006. Currently, these recipients are able to receive payment until their youngest child turns 16; while parents who claimed parenting payment after 1 July 2006 are only eligible until their youngest child turns six if partnered or eight if single. The more generous income test provisions for single principal carers on Newstart allowance will apply to eligible single parents affected by the earlier cessation of grandfathering. This change was introduced as part of the Building Australia's Future Workforce measures and will remain, giving greater incentives to parents to find work and be rewarded for their efforts. We have heard from all the previous speakers to this debate on both sides of the chamber about the benefits, the dignity and the change that come with employment.
The changes to parenting payment grandfathering will ultimately reduce the average duration on income support by providing greater incentives for these parents with school aged children, primarily single mothers, to engage in the workforce. This will provide good working family role models for children, which is important as having a working parent can contribute to developing positive attitudes and behaviours, not to mention the economic benefits for the nation. The changes will encourage parents to get back into the workforce, providing longer term benefits for families, children and, obviously, our economy overall.
Regarding the liquid assets waiting period amendments, from time to time some Australians find themselves in a position where they have to rely on government income support. We are fortunate that we are a nation that can afford to do this. Unfortunately, there are many parts of the world where this is not the case, where poverty is endemic. The Gillard Labor government believes these people deserve to be supported, if they need government support, while getting back to work or studying. These amendments would allow newly unemployed Australians and new students to hold onto more of their savings and better adjust their household budgets to reflect their new circumstances. A liquid asset waiting period is from one to 13 weeks, depending on the amount of liquid assets a person has. The amount of money above the relevant threshold determines the waiting period, up to the maximum 13 weeks. A previous temporary doubling of the liquid assets waiting period threshold, which was included as an element of the April 2009 Jobs and Training Compact response to the global recession, ceased on 31 March 2011. The government is now in a position where it can afford to reinstate these thresholds permanently.
The new LAWP maximum reserve amounts, doubled from the current levels, represent an appropriate balance between requiring people to rely on their own resources before seeking income support and, on the other hand, providing fair and reasonable access to support, without overly reducing a person's modest savings while they look for work. The changes will allow many people to access income support more quickly and reduce the extent to which they must expend or draw down their liquid assets, such as savings, before getting income support. The LAWP may be waived in full or in part where a person is in severe financial hardship.
Unemployment is not something that Australia's workers plan for, but, unfortunately, it does occur. Reducing a student or unemployed person's modest savings before they can access income support means it is harder for them to restructure their budget and handle the bills they have already accrued. This added security will also allow them to focus on the most important issue, which, obviously, is finding new employment. The government expects that around 21,000 people, 14,000 singles and 7,000 partnered people or people with dependent children, each year will begin receiving income support up to five weeks earlier as a result of this measure. These new thresholds will commence on 1 July 2013.
This bill is about delivering on key Labor fundamentals by helping those people who need income support the most—those looking for work or those raising a young family. When I talk to people in my electorate, I hear about the mining boom. Some people are taking advantage of that. I have had builders say that the only renovations they are doing at the moment are for properties of people who are connected with the mining industry. The other thing to consider is people who are not able to tap into this boom. The reality is that we have a patchwork economy. As an MP from Queensland and being married to a North Queenslander, I know that in Cairns and Port Douglas unemployment is peaking at around 14 per cent. Occupancy in places like Port Douglas is down to rates that are almost unsustainable. That proud tourism industry definitely needs a helping hand, especially when the exchange rate is as high as it currently is. The legislation before the House goes some way towards helping people get back into employment. I am proud to be on this side of the House supporting this bill. I commend it to the House.
I rise to speak on the Social Security Legislation Amendment (Fair Incentives to Work) Bill 2012 which seeks to amend the Social Security Act to remove the grandfathering provisions for parenting payment receipts from 1 January 2013. It will see parents in receipt of parenting payment partnered-support transition to an income support payment such as Newstart when their youngest child turns six, and those single parents on parenting payment transition when their youngest child turns eight. In addition to removing the grandfathering provisions, this bill seeks to double the permissible liquid assets, raising the maximum limit from $2,500 to $5,000 for singles, and from $5000 to $10,000 for those with dependants. The bill also seeks to define which payments should be categorised as termination payments to ensure consistency across the board when considering the income maintenance period, and this will bring the definition of 'termination payments' in line with the policy intent of the Guide to Social Security Law.
It is very important that these grandfathering provisions for parenting payment receipts from New Year's Day next year are removed. Expected savings from this bill are $691.9 million over four years and, whilst the coalition's Welfare to Work sought to assist Australians off welfare and into work, this bill's aim is to make these savings, and in this particular parliament in this particular economic climate a saving of close to $700 million over four years will, I am sure, be welcomed by the Treasury coffers which are getting emptier by the day.
This bill builds on the reforms brought in by the Howard government in 2006 when $3.6 billion was invested to help people transition from welfare to work. That is so important. The word 'transition' is bandied around so often in this parliament, and certainly in this case transitioning from welfare to work is vital because there are too many people getting a social security payment in this country and we need more people working particularly as we are an ageing population. The more people working and in meaningful employment, who are paying tax to help pay for aged care the better. People in their twilight years ought not be expected to keep putting their hands in their pockets to pay for the higher and higher costs of living. It is so important that people who are able-bodied and willing to work—and even in some cases, who are unwilling to do so—be afforded the opportunity to work. The work does not necessarily have to be in a mine, but work which is going to help the Treasury pay for all the things that are going to be such an impost on the governments into the future, and certainly aged care is going to be one of those. Mental health care, particularly in regional areas, is also something which is going to be an even greater burden on government coffers and Commonwealth expenses in years to come.
From 1 July 2006, new applicants were eligible for parenting payment when their youngest child was younger than eight and they moved to Newstart or another payment when their youngest child turned eight years of age. Under this legislation, recipients of the parenting payment could be grandfathered on this payment until their youngest child turned 16 years of age providing that child was in their care before 2011. I know how often the minister for families talks about the cost of raising children, and the Prime Minister too as well as the opposition leader talk a lot in this place about the costs of raising children. It is a very great cost. I know: I have three children of my own, two of whom are still teenagers and both attend high school. The costs of getting those children to school, getting them uniforms and paying for excursions, is a great cost.
Single principal carer parents in receipt of Newstart allowance were also given access to the pensioner concession card, the pharmaceutical allowance and the telephone allowance, and for pensioners that is very important. My mother and mother-in-law are both pensioners and I know how much they rely on any assistance that they can possibly get to help them meet their daily cost of living.
This bill will bring the definition of 'termination payments' in line with the policy intent of the Guide to Social Security Law. However, whilst the coalition's Welfare to Work reforms were aimed at assisting Australians off welfare and into work—something that, as I said, was vital—the main aim of this bill is to realise much-needed savings for the government, and certainly this government can do with all the savings it can get. Expected savings from this bill, as I said, are going to be almost $700 million over four years.
A new employment participation service was offered to parents with school-age children, ensuring they had the skills they needed to gain a job. We know how important it is to get schoolchildren skilled up and ready to go into employment, certainly in this day and age when vocational trades are so important. We went through a period when it seemed that every school leaver was urged and encouraged to seek a university place. But we all know that university is not for everybody. We all know that some adolescents are not equipped with the academic qualifications or, in some cases, the desire to go to years 11 and 12 to complete their higher school certificate. They want a vocation—plumbing, electricity, all those sorts of occupations. For a period, children were more or less going to university because they felt that was the right thing to do and that was being encouraged. But these vocational trades are so important and things have changed. I am pleased to say that throughout the Riverina, and other places in Australia, young people are now encouraged to seek those vocations because we all know that we need the trades. We need plumbers and electricians to fix things when they go wrong.
As part of the coalition's policy, parents could refuse a job if they were not more than $50 a fortnight better off once the costs of employment were factored in, such as child care or if they had to travel for more than 60 minutes each way to work. I know how important child care is to the shadow minister at the table, the member for Farrer, who has campaigned tirelessly on behalf of people in her electorate. I know she is coming into the Riverina electorate during the winter recess to talk to people about how important child care and tertiary education are to regional students. They are so often disadvantaged when it comes to child care and gaining independent youth allowance and those other things which enable them to get a university degree and to get a vocational trade. It often seems that regional students are unfairly disadvantaged and not just because of the tyranny of distance that they have to put up with but also in many ways through bad policy. Governments need to recognise the value of regional areas and the value of regional students. I am constantly amazed by the great work that university students from my electorate and other regions do in all sorts of areas, whether that be achieving wonderful inventions, access to better jobs that are making a difference to this nation and making this nation a better place in which to live for all of us.
Research undertaken by DEEWR from the Welfare to Work reforms shows that there was a 23 per cent increase in the number of single principal carers leaving income support after six months in comparison to the previous years with 38 per cent moving off payment during 2006-07. The report also showed that more than 70 per cent of principal carers left income support for employment. Similarly, for partnered carers on Newstart allowance, 45 per cent were no longer in receipt of income support payments after six months compared to 32 per cent in 2005-06. At the time of the Welfare to Work reforms, the Howard government introduced a range of complementary services to assist parents in their transition into employment once their youngest child had reached the school age.
There are concerns with this bill. Unlike the Welfare to Work agenda the coalition introduced in 2006, there is no additional funding to support parents into work. Another concern is that, if this Labor government was truly committed to assisting parents back into work, it would provide extra assistance. This government has slashed $162.2 million from Job Services Australia assistance for jobseekers. We so often hear the Treasurer talk about the great employment figures of around 5.4 to 5.5 per cent unemployment. Compared to other countries that seems pretty good, but those figures mask the real unemployment figures. There are many people who are underemployed in this country. There are also those who are not covered by those statistics. If the true measure of our real unemployment figures were made public, I think that figure would be far higher and certainly to a level which I do not think the Treasurer, who so often espouses these figures, would be willing to come into this place and take too much credit for.
This Labor government has also cut a further $44.3 million from outcome payments for Job Services Australia providers. Those providers do a wonderful job. So to have that amount of money taken away from their programs and provisions is considered by many to be penny-pinching and a hard cut. Parents who are working could be worse off financially as their participation requirements may force them into accepting a job where they are worse off financially. We do not want that. People, particularly with the carbon tax coming in on Sunday, do not need to be worse off in their employment. In fact, the household assistance package will not go far enough to cover the sorts of cost-of-living increases that they are going to have. These people do not need to be any worse off. The Treasurer has described the past two budgets he has brought down as being truly Labor budgets. Labor often says it is the government and the party for the underprivileged and that it certainly has a social conscience. But as we have seen so often, particularly yesterday, that does come into question.
This is in contrast to the Howard government reforms where parents were promised that they could refuse a suitable job offer if they were not better off by $25 a week. That $25 a week back when the Howard government was in government between 1996 and 2007 was a lot greater in real terms than $25 a week is going to be into the future and from Sunday when the economy wide world's greatest carbon tax comes into effect. The environment for jobseekers when a coalition government introduced this legislation was vastly different from that under the Labor government today. Instead of strong surpluses and low unemployment, we are now experiencing massive deficit and debt, the interest rate of which is going to take a lot of servicing with rising unemployment and a business sector reluctant to hire. I know from when I speak to small businesses in the Riverina how reluctant they are in the current economic climate, and certainly in the current political climate, to hire more people to help them to grow their businesses. There is not much incentive to grow business in the political climate that we are currently in. This will make the unsupported transition from welfare to work that much harder for job seekers. Thank you, Mr Deputy Speaker, for allowing me to speak on this bill.
This measure was announced as part of the 2012-13 budget. Our government is building on the initial reforms passed by this parliament on 9 May 2012 to make the system fairer for all recipients of the parenting payment. The Social Security Legislation Amendment (Fair Incentives to Work) Bill 2012 will amend the Social Security Act 1991 to give effect to these reforms and recognise that nearly two-thirds of parents are already subject to the requirements that are being introduced for the remainder. Equity and consistency of treatment are part of this legislation.
To make eligibility more consistent for all parents, regardless of when they first claimed the parenting payment, the government is removing the grandfathering arrangements for parenting payment recipients introduced as part of the Welfare to Work reforms in 2006. The government recognises that parents may have spent considerable time outside the workforce and is ensuring that affected recipients will have access to a range of additional assistance to ensure they have the support they need to build their skills, re-engage in the workforce and provide their families with greater financial security and a positive future.
As announced under the Building Australia's Future Workforce package in 2011, the government has provided $80 million for the national partnership on training places for single and teenage parents. It is now providing additional funding in the 2012-13 budget for professional career advisory services for single parents already established through employment service providers. The government also recognises the increased demand for the Jobs, Education and Training Child Care Fee Assistance Program as a result of more parents working. Additional funding to this program will assist parents on eligible income support payments, predominantly sole parents, to undertake work, study or job search activities without the cost of child care being a barrier. To enable those single principal carer parents who may qualify for Newstart allowance to see greater benefits from their participation and earn up to $400 more per fortnight before losing their eligibility for payment, the government has already introduced a more generous income test commencing on 1 January 2013.
The government believes that, together, these changes provide parents with the right balance of support and incentives to make the most of employment opportunities available, to find meaningful work and to provide themselves and their families with a better future. Under this government there have been better participation outcomes for individuals who have not been grandfathered under the Howard government's parenting payment single policy of 2006. In practical terms the evidence has shown us that, while grandfathered parenting payment recipients do better than most job seekers, principal carer parents on Newstart do even better. Government research shows that 65 per cent of principal carer parents on Newstart allowance are able to find paid employment, compared to 55 per cent of all job seekers. If we look 13 weeks later, these parents on Newstart are nearly 10 per cent more likely still to be in work—and after 26 weeks they are still more likely to be in paid work—than all job seekers.
The amendments align participation requirements for all parenting payment recipients. These requirements will start when their youngest child turns six, noting that parents will continue to have access to more flexible arrangements and exemptions to balance part-time work, study or training, or caring for a child with a disability. Let me be clear: the exemptions that apply to parenting payment will continue to apply to Newstart.
Unemployment is not something that Australians plan for, and reducing a person's modest savings before they can access income support often means it is hard for them to restructure their budget and the bills they have already accrued when unemployment strikes. This bill amends the liquid assets waiting period to allow newly unemployed Australians and new students to hold on to more of their savings and better adjust to their new circumstances. The eminently sensible change will provide unemployed Australians with modest savings access to income support up to five weeks earlier than under the current arrangements. The liquid assets waiting period thresholds were previously doubled in response to the global recession. The government is now in a position where it can afford to reinstate these thresholds permanently. The bill also introduces a technical amendment to the definition of termination payment for the purposes of the income maintenance period. This will clarify that any payments made to an employee in respect of the termination of their employment are included in determining the income maintenance period.
The changes in this bill form an important part of the income support reforms announced in the most recent budget. These reforms will result in fairer and more consistent treatment of income support recipients. The government understands that Australian families who rely on income support do it tough. We know the reality that many Australians do struggle to make ends meet. We understand that parents do sit around the kitchen table at night wondering how they are going to pay the next utilities bill or the next necessary school item for their children. We are acutely aware that cost-of-living pressures do impact upon income support recipients most significantly. While our income support system is targeted on the basis of need, paid at a basic level and affordable in the current economic climate, we understand that being on Newstart is no easy ride. That is why the Gillard government announced in the 2012-13 budget that it will also provide more than $1.1 billion over the next four years to help people who receive income support payments to manage unexpected cost-of-living pressures. The allowance will be paid in two instalments, in March and September each year, and linked to the consumer price index to keep up with inflation.
I know that there are strongly and sincerely held views by many, particularly in the community sector, about the measures contained in this bill. I believe that, at the core, the concerns are not about the inconsistent treatment of one sole parent compared to another but, rather, the adequacy of the Newstart rate of payment absolutely. I note that the Senate has initiated an inquiry into the adequacy of Newstart and the impacts of the changing nature of the labour market. This inquiry and the inevitable and appropriate public debate that follows will no doubt help the government to continue to implement sensible incentives that better enable individuals to reap the rewards of work. This principle remains at the core of our philosophy and will continue to guide our policy platform through time. I thank the members for their contributions to this debate. I commend the bill to the House.
Question agreed to.
Bill read a second time.
Message from the Governor-General recommending appropriation announced.