Welfare Changes Will Be Counter-Productive, Senate Inquiry Hears


A Bill before the Federal Parliament which would freeze welfare payments for unemployed people who turn down a job offer or miss multiple appointments will punish vulnerable people and fail to incentivise a return to work, a Senate Committee has heard.

The Social Security Legislation Amendment (Stronger Penalties for Serious Failures) Bill 2014, introduced to Parliament in June, will punish any jobseeker who refuses a “suitable” offer of employment or misses three participation requirements in six months by suspending their payments for eight weeks.

While those who refuse work or miss appointments already face the eight week suspension, the legislation will close a series of ‘waivers’ introduced by Labor in 2009, which allow payments to resume if the claimant attends the appointment they had been missing, or enrols in an intensive training scheme, such as Work for the Dole.

Under the new legislation, those who have had payments suspended for eight weeks will not have them restored for the duration of that period.

At yesterday’s Committee hearing examining the Bill, critics said this would withdraw the incentive for those out of work to re-engage with employment services.

“It is unwarranted to punish people once they have complied,” La Trobe academic Kemran Mestan told the Senate Committee.

“Worse than ineffectual, the policy is likely to be counter-productive.”

If passed by the Parliament the legislation will also remove a waiver for those in ‘financial hardship’ – individuals with less than $2,500 of liquid asset – meaning the poorest jobseekers will no longer be exempt from the eight-week welfare freeze.

Welfare groups warned this would have a devastating social impact.

“The majority of recipients of unemployment payments have few savings, little access to credit, and many receive little or no support from family,” a submission from peak social services group ACOSS said.

“A period of eight weeks without income support is very likely to cause hardship in these circumstances, including homelessness in some cases.”

None of the nine submissions received by the Committee expressed outright support for the changes, bar that made by the Department of Employment.

Like ACOSS, the National Welfare Rights Network warned of an increase to homelessness as result of the changes, which it said were unnecessary given how small the number of unemployed people who turn down offers of paid work.

Figures supplied in the explanatory memorandum accompanying the Bill indicate just 0.27 per cent of active jobseekers were found to have declined appropriate work during the 2012-2013 financial year.

A submission made by the Department of Employment argued stopping payments to those who turn down job offers would create a strong deterrent.

“This Bill will not impact job seekers who cannot get work despite their best efforts. Rather, it targets those who have received but nevertheless refused an offer of suitable work without a reasonable excuse,” the submission said.

The Department’s submission argued that after Labor introduced the waivers in 2009, the number of unemployed people turning down work increased from 644 a year to 1,718, over a four year period.

Assistant Minister for Employment Luke Hartsuyker told Parliament in June that waivers had undermined the payment freeze’s deterrent effect.

“The Coalition understands that most job seekers in receipt of income support do the right thing by the taxpayer. Most job seekers want to work and make the effort to find and keep a job. However, there are some job seekers who do not meet their mutual obligation requirements and are abusing the system,” he said.

“The former Labor government encouraged this poor behaviour by weakening the rules regarding the application of penalties for serious failures.”

Welfare advocates have rejected Hartsuyker’s stance, and insisted there is no evidence to indicate the punitive measures will help people return to the workforce.

“It’s not obvious that it would increase transition to employment, which is what this compliance system should be all about,” ACOSS Senior Adviser Peter Davidson told the Committee.

If passed by the Senate, the measures are expected to come into effect on 15 September. It is estimated they will save $20 million by 2018.

The Bill is part of a broad effort by the Coalition to cut down on welfare spending and move people off support payments.

Other legislation before the Parliament would see under 30s barred from receiving welfare for their first six months of unemployment, a massive expansion of involuntary work for the dole programs, and thousands of people being moved from the Disability Support Pension to the lower paying Newstart Allowance.

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