The Australians Working Together legislation will punish the vulnerable

The stork arrived last month. On Thursday evening, 10 March at 6pm, when all eyes were on the SAS or F-18s in Iraq, Senator Vanstone quietly gave birth to a baby called the Australians Working Together Legislation. The poor Minister was in labour for a while, about two years really, as the bill goes back to the 2001 budget. Eventually, however, its passage was made remarkably easy with the assistance of an obliging obstetrician, Democrat Senator John Cherry.

The law is basically a biggish stick with some littlish carrots hanging off. It was designed to bring Parenting Payment recipients (mostly sole parents) where the youngest child is 13-15, and the mature aged unemployed into the compliance regime that Government labels mutual obligation. This is very good business for the government. Many (try hundreds of thousands) of the agreements that come with mutual obligation have a tendency to get breached. This is a big payday for the Treasurer. Consolidated revenue gets to tax the beneficiary 18-25 per cent of their income for 26 weeks. It is cheaper to get done for DUI.

But it is not just Ken Henry, Secretary of the Treasury, that gets the warm inner glow. Minister Vanstone recently wrote a letter to the editor in The Australian Financial Review that compared Newstart recipients who don't try hard enough to find work to employees who refuse to work at their jobs on the factory floor. She sees beneficiaries as her employees. If they don't do what she tells them then she will dock their pay. Now this is a bizarre and rather farcical viewpoint. Newstart is no substitute for paid employment. The complex reality of persisting unemployment, with the immense personal suffering it causes, is one of the most disturbing phenomena of the modern world. It is far too serious for the sort of crass characterisation just mentioned.

To be fair, the Act will provide significant concessions to families in special circumstances including crisis situations. It directs the Secretary of the Department to have regard to personal factors like travel costs and the state of the labour market. So one hopes not many families will be breached. Moreover, the package of measures in the Act includes a number of real positives. The reduction in the breaching penalty from 26 to 8 weeks for those who quickly comply is a move in the right direction. The Working Credits Scheme, which will help reduce the high effective marginal tax rates faced by those moving from welfare to work. And access of families to personal advisers is also a beneficial measure.

Still, there is a point of principle at stake here. For parents on Parenting Payment the choice about labour-market participation is a choice for the parent to make. They are in a different situation to other jobseekers and the rules should be different. It is the primary obligation of parents to make decisions about the needs and welfare of their families. A core element of the Government's obligations to the community is to provide income support for those genuinely in need of assistance. This principle was well annunciated by Pope John Paul II stated in his Encyclical, On Human Work:

The obligation to provide unemployment benefits, that is to say, the duty to make suitable grants indispensable for the subsistence of unemployed workers and their families, is a fundamental duty springing from the fundamental principle of the moral order … namely the principle of the common use of goods or, to put it another and still simpler way, the right to life and subsistence.

These perspectives do not necessarily mean that an enforcement mechanism should not be applied to safeguard against fraud and abuse of the social security system. Moreover, a just system of income support should also embody incentive structures that encourage the move toward employment when this is practical. The idea of an agreement between a beneficiary and provider of support services which specifies the expected level of participation between these parties can be helpful. However, the right to subsistence should not be made conditional upon demands society may seek to place on individuals as part of compliance regimes. Mutual obligation is inherently unfair and one-sided when it is used as a punishment.

These compliance mechanisms also carry two grave risks. The first is that sanctions for non-compliance become defacto mechanisms of seeking to reduce government expenditure. Decisions that involve attempts to target budget savings for those most marginalised in a community are immoral. Low-income families with children ought not be the target of government razor gangs. The second risk is that enforcement mechanisms play to the prejudices of those who cannot find within themselves the generosity of heart to feel compassion for those less fortunate than themselves. This is not a sound basis for an ethical approach to public policy.

Government emphasis on compliance regimes with tough penalties is an ineffective strategy for managing the difficult task of helping people break into the labour market. The problem with this approach is that it is based on the assumption that a person will respond to the threat of financial sanctions. However, individuals and families dependent on government payments can feel marginalised and emotionally disempowered. The compliance regime is very complex and it is likely that many beneficiaries will simply not understand it. Is it realistic for government to expect people in this situation to be able to effectively respond to the compliance regime? Is it not inevitable that many will breach these agreements? If so, is this measure not effectively a hidden form of taxation, and levy on the poorest in the community?

If the government's aim is really compliance and not saving money then it should hypothecate all reductions in outlays from breaching back into programs like the Personal Support Program or Intensive Support under the Employment Services Contract. This would add more balance to the mutual obligation arrangements. In any event, breaching should never have been extended to families.