Mutual obligation makes difficult lives doubly hard

It is true that "no government can afford to be seen to hurt the most disadvantaged in the community" (Dennis Shanahan, The Australian 20/11/00).

Yet that is precisely what this Government is doing through its unjustifiably harsh social security penalties regime.

Over 300,000 penalties imposed on 200,000 people in the last 12 months constitutes a 250 per cent increase in the last three years.

With penalties of $760 to $1400 for not attending an interview at Centrelink, the Government is achieving annual savings of $170 million at the expense of some of our most disadvantaged and vulnerable unemployed people.

One group badly affected are homeless people who fail to receive Centrelink letters. People with mental illness or episodic psychiatric conditions, young people and Indigenous Australians are also disproportionately caught out by these extremely harsh penalties.

They are not only having a devastating impact on the penalised individuals but also on the charities and community welfare agencies to whom they turn for help.

So much so that 22 such groups (including the Anglican, Catholic and Uniting Church charities and The Salvation Army) united in November to call on the Government to overhaul its 'mutual obligation' penalty regime. In part, the petition states:

"We support an active welfare system in which every effort is made to assist unemployed people into work, and to support students with their studies. We also support a system in which people are required to meet basic rules to maintain their benefit entitlements - but the rules must be fair and comprehensible, they must be fairly applied, and the punishment should fit the infringement.

These three pre-conditions do not exist in the present system. As a result, difficult lives are being made doubly hard by the excessive penalties that are rigorously imposed on those who infringe often complex and unreasonable social security rules."

Fair and balanced obligations

The McClure Report on welfare reform also strongly argued for the Government to adopt a new approach to 'mutual obligation'. The McClure Report said that penalties should only be used as a "last resort". ACOSS argues that they should also be appropriate to those on low incomes.

A properly balanced policy of 'mutual obligation' along the lines that the McClure Report proposed to Government is a long way from the current system of harsh requirements and limited assistance with training and jobs.

A 'mutual obligation' policy that was balanced and fair would see the primary obligation resting with the Government to provide an adequate social security payment as well as opportunities for employment, training and rehabilitation that will help unemployed people, sole parents and disability pensioners overcome their very real barriers to employment.

However, the Government's statement on welfare reform released last week gives little confidence in any of these areas.

There is no funding package, no guarantee of effective employment assistance for all long-term jobless people, and no reduction in the harsh penalties for people who infringe minor rules.

Positive moves

There are, nonetheless, some positive moves announced in Minister Newman's welfare reform statement.

ACOSS welcomes the commitments to a 'transition bank'; improved access to employment assistance for mature-aged retrenched workers, some long-term unemployed people and people with disabilities; extra funds for the JET program for sole parents; and extra financial help for people engaged in literacy and numeracy training.

However there is a serious disparity between the definite new obligations to be imposed on low-income parents and unemployed people over 35, and the still very vague information about the nature and quantum of supports they will get.

Any extension of obligations to more welfare recipients is unacceptable while the present harsh penalty system remains, and while better strategies and supports to generate more jobs and open the doors to work are not in place.

There is also no justification for the Government's failure to reveal the size of the investment it is prepared to make. It was willing to commit an extra $1.6 billion to roads without knowing exactly how and where it will be spent.

ACOSS will work with the Consultative Forum and the Government to make sure welfare reform is fair and effective, and backed by substantial new investment.

Employment support needed

In particular, we will be pressing the Government to commit to an Employment Support Package for unemployed people as well as jobless sole parents and people with a disability.

It is increasingly clear that the decision to reduce the growth of employment assistance as soon as jobs growth strengthened in the mid 1990s was a short-sighted one.

The number of long-term recipients of unemployment benefits has scarcely fallen since 1995, despite large overall reductions in unemployment over the past two years. There are now 385,000 people who have been receiving unemployment benefits for more than 12 months, and the number of people on unemployment benefits for more than 5 years has actually increased in the past year and is now 10 per cent of the total on benefits.

The official evaluation of the Job Network shows that, in its first phase of operation, only 50 per cent of all long-term unemployed people on social security benefits actually received "Intensive Assistance". This is part of the legacy of the $1 billion cut from planned expenditure on employment services in 1996.

Other groups of jobless people being denied the employment assistance they need, include many sole parents on waiting lists for a place in the Jobs Education and Training scheme, and tens of thousands of people with disabilities waiting for a place in an open employment or rehabilitation scheme.

There are also major problems in administration, with hundreds of thousands of unemployed people automatically being referred (by computer) to programs such as Job Search Training, Work for the Dole, and Intensive Assistance - without even an interview to assess their current employment and training needs and options.

We estimate that around $1 billion would be needed to provide an effective package of employment support.

This would guarantee more effective employment assistance for all welfare recipients who have been seeking work for more than a year.

It would also ensure more investment in job generation and services to remove workforce barriers such as lack of affordable housing and child care, and the costs of disability.

The McClure Report also argued for business and local communities to lift their game and contribute their fair share to those who are jobless. For example, business could do much more to overcome the discrimination against and barriers facing people with disabilities who want to work.

It is unfortunate that the Australian Chamber of Commerce and Industry (ACCI) quickly responded to the Government's welfare reform statement by rejecting a part for business in helping jobless people.

We urge ACCI to look again at a role for their members in supporting the long-term jobless back into work by tackling discrimination in the labour market.

Budget commitments

By the time of the May Budget we also hope that the Government will commit to lifting social security payments above the poverty line.

Unemployment benefits are now only $172 a week - $20 below even the modest Age Pension. This amount is so low that unemployed people have trouble meeting basic living costs such as rent and food, let alone covering the added expenses of applying for jobs such as transport, phone, clothing and resume costs.

Further action is also needed to remove the worst poverty traps for welfare recipients with part-time or casual work.

Reinstatement of a "Transition Bank", as announced by Minister Newman last week is a start.

But more needs to be done to fix the problems in the tax and social security systems which see unemployed people losing around 80 per cent or more of their wages when they take on casual or part-time work.

For example, the McClure Report recommended fixing the problem caused by the overlapping of the means tests for Family Tax Benefit (A) and Youth Allowance.

Consulting widely

Another major positive aspect of the Government's welfare reform statement is the establishment of an expert Consultative Forum that has members from the community services sector, academia, the public sector and business.

The Forum should widely canvass views on some of the key unresolved issues such as a better social security payment structure. There is a long way to go in this and many other important areas of outstanding need.

Come Budget time next May, let us hope there's enough fuel in the tank to continue on the journey of welfare reform.