Welfare that's not working

The Community Development Employment Projects program was introduced to replace unemployment benefits for Indigenous Australians, and to provide a transition to real work. But despite the good intentions behind it, CDEP has become an obstacle to real employment.

The Rudd Government has admitted that CDEP has failings, yet it has recently reinstated the scheme in the Northern Territory because there were no adequate programs to put in its place. The government plans to reform CDEP, but changes will not be introduced until July next year. Indigenous people refer to CDEP disparagingly as “sit down” money - participants are paid for doing housework, mowing their own lawns, attending funerals and for doing nothing at all. Although classified as employment by the Australian Bureau of Statistics, CDEP programs usually just masquerade as jobs. Participants pay no tax, and they don't have to turn up to work to get paid.

That pay on top of welfare payments isn't negligible either. Recent reports about mothers in Canberra and Adelaide accused of neglecting their children have highlighted the fact that women on welfare can receive incomes in excess of $40,000 a year. Add CDEP to the mix and you have annual income levels of about $52,000.

On that level of income for hardly any work, there is very little incentive for a person to become educated and move off CDEP into employment. A typical “working” week for most CDEP participants is only 15 hours. This translates into an hourly rate of $16.39 - more than the minimum wage and more than pay for apprentices.

Work should always be seen as a genuine step up from any welfare payment, and a first step to reform CDEP to this end should be to have CDEP wages paid through Centrelink. Participants should have to meet the same obligations as other income support participants. This would help prevent double dipping and enforce “no work, no pay” rules.

But to achieve this, Centrelink would have to overcome its confusion about whether to treat CDEP participants as on welfare or in work. People who receive CDEP participation supplements are counted as unemployed. At the same time, CDEP payments are treated like other employment income, and are defined by Centrelink as “wages”. This means that participants in the program can receive income support from Centrelink in addition to their CDEP payments.

To take a real job, many CDEP participants would lose money and have to work five days a week as well. Understandably, Indigenous people with access to CDEP are loath to take up fruit-picking or cleaning jobs, even when they are located within a stone's throw of where they live.

The result? The National Farmers Federation has mounted a campaign to bring in guest workers from the Pacific Islands and East Timor because farmers can't get the local unemployed Indigenous people to pick fruit and vegetables. In one Top End community, serious thought was given to flying in contract cleaners for the school because no one from the community was prepared to take the job.

Even in remote areas, most Indigenous people are within commuting distance of work in retail, tourism, agriculture and mining. The pastoral and mining industries have programs in place to employ local workers rather than bringing in labour from the south and abroad. Rio Tinto has implemented education and workplace preparatory programs that include transitional literacy and numeracy, as well as vocational education and training, for local Indigenous recruits.

These programs provide participants with the skills needed to lead to ongoing employment. But still, what's the point if you can get paid for doing nothing?

It is the intersection of generous welfare and lack of education that keeps Indigenous people in remote communities from taking up jobs. Many are functionally illiterate because of a lack of education. CDEP has hidden this crisis in education, because “work” in most projects does not require participants to know how to read and write, and the training component is almost non-existent.

Few participants have been taught the skills to take over from non-Indigenous administrators, leaving their communities perpetually reliant on outside expertise. While CDEP has been used to fund teachers’ aides and other positions in local government, many of these positions are only notional. Many teachers’ aides are not fully literate.

One damning statistic tells almost the whole story about how effective CDEP has been at getting Indigenous Australians into work: only about 5 per cent of CDEP participants ever move to mainstream jobs. More than 40 per cent of participants have been on CDEP for five years or more. To break the cycle of joblessness, welfare dependence and associated family and community dysfunction in Indigenous communities, the government should end the perverse incentives that have allowed people to languish on CDEP.