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Judi Moylan says no on welfare to work
UPDATE Dec 5 by Margo: The Government has just announced a crunched, derisory Senate debate on the Welfare to Work package. Speeches will be allowed from 8.30 to 11.30pm tonight. Amendments must be debated, questions asked and votes taken between 7.30 and 11pm tomorrow. You can hear and/or watch the debate here.
DECEMBER 1 POST
G'day. The House of Reps passed the Welfare to Work legislation at 1 pm. Judi Moylan abstained after advising the Government Whip and the PM's office of her intention not to attend the vote. The first and last time Judi abstained was the vote on Howard's first Tampa bill in 2003. She did so on the basis that Howard had not given her, or any other Coalition MP or Senator, any time at all to read it, let alone consider its terms. The Senate blocked that bill, which would have authorised government officials to kill boat people with immunity from prosecution in Australian Courts. Parliament later passed an amended version of the Tampa bill with Labor support. Howard punched Beazley for Labor's refusal to support the first Tampa bill throughout the 2001 election campaign, claiming he was soft on border protection.
I asked Judi this evening why she abstained, a decision she did not make until this morning.
"I really found it very difficult to make up my mind on what I would do. It's always very difficult to cross the floor. I supported a substantial part of the package, and part of it I did not support. So I thought the best thing to do was to abstain. And Labor hasn't come with a policy to improve the lot of people on benefits - they're just being reactive."
"If I was in the House and voted for the bill, I'd be saying I supported the whole package. If I crossed the floor I would be saying it was all bad, yet there are good things in it which give attention to giving people positive help to move from welfare to work. I wrestled with my consicence on this because I don't agree with increasing the spiral of poverty among the most disadvantaged people in our community. I argued we should do this in a better way, get people off welfare without driving them into a sprial of poverty.We've missed a golden opportunity here to making good policy."
"If I'd crossed the floor it would not have changed the outcome - the bill would still have passed. If I'd crossed the floor wihtout achieving a change of policy it would have become a media circus and a pointscoring exercise for the Labor Party without achieving an outcome for people with disabilities and sole parents."
She said she had received some support for colleagues after her abstention, and a few suspected she was right. "However it's not a sexy issue because business and money aren't involved. So few people are prepared to speak out for the underprivileged, and the few groups in Australia who do tend to be put into the 'bleeding heart' category."
"Also the issue is very complicated because it involves people in all sorts of cirmstances, and when you get down to the detail and the numbers people's eyes glaze."
"To be fair, we have a lot of bills to deal with now, and it's hard to get down to the detail in the circumstances in which we operate."
Ms Moylan, a former minister for family services, said she'd spent six months getting her head around the Government's policy and speaking to people on disability benefits and groups including the Catholic Welfare Agency, which analysed the effects of Bill Clinton's Welfare to Work policy in the US, and the National Council of Single Mothers and their Chidren. She'd also read the NATSEM research commissioned by the Natonal Foundation of Women. "The women's groups made a serious contribution to the public debate," she said. "The government should be taking more notice of people at the coalface."
Ms Moylan is scheduled to pappear on Lateline tonight.
For more information on 'crossing the floor' see the Parliamentary Library's brief Crossing the floor in the federal Parliament 1950 to August 2004:
NOVEMBER 30 POST
G'day. Liberal MP Judi Moylan told Parliament this morning during the Welfare to Work legislation debate that she could not accept that people would be moved to Newstart Allowance on a lower benefit under her Government's Welfare to Work package. Although she has not yet decided if she will take the lonely walk, which would be a first for her, Ms Moylan was disapponted that she received no reply from the PM to a letter she wrote him asking why this was so. I understand no-one else in the Libs is prepared to take a stand on the matter. Judi last took a stand when she was part of the successful Rebel 4 attempt to reform mandatory detention (see Webdiary's May 2005 archive). Webdiary's Welfare to Work archive is here. See Marie Coleman on getting traction in the Welfare to Work debate, Julie Perry details the Government's Welfare to Work plan, Rural communities at risk over Welfare to Work policies, Our Prime Minister's next exciting adventure and Welfare to Work: creating the economically disabled? Thank you to Marie Coleman for her great work for Webdiary on this issue.
Mrs MOYLAN (Pearce) (9.49 am) - The intent of this legislation is without question supportable. A place in the paid work force has the potential to provide an income stream that leads to financial independence. Other benefits flow from being employed and financially independent. Being engaged in the work force is for most people a source of social contact and ensures engagement with the community. The government's efforts to build a strong economy and to provide jobs, education and training opportunities have had a positive effect on the lives of many Australians. We are now in a situation where many jobs cannot be filled, yet we still have 2.6 million people of working age on some form of income support. According to Workforce tomorrow: adapting to a more diverse Australian labour market, by the Centre for Policy Studies, Monash University, Australia faces an estimated potential work force shortfall over the next five years of 195,000 workers. It is also evident that the best way out of the poverty trap is to have access to a job in the paid work force. But these propositions are not in dispute, and the additional support to assist people into work is very welcome. I commend the minister and those who have worked on that aspect of this policy.
However, I would like to highlight a few problems. The Smith Family's 2001 report, by Ann Harding of the National Centre for Social and Economic Modelling, found that only three per cent of households with a wage earner were in poverty, compared to 31 per cent those relying on welfare. In Australia today there are 700,000 children growing up in a household where no adult of working age has a job. Two-thirds of these households are headed up by single parents. A recent book published by Professor Stanley et al, Children of the Lucky Country? How Australian Society has Turned its Back on Children and Why Children Matter, states:
It further elaborates that there are a large number of factors that put children at risk of abuse and neglect, but many of the risk factors occur more frequently in those families who are the most disadvantaged, including those with low education, social isolation, low income, poor housing, poor neighbourhoods and a lack of community resources, amongst others. This concerns me deeply because, although the central feature of this Welfare to Work policy is about helping people access employment, reducing reliance on welfare and supplying the labour market with an additional pool of workers, one question remains unanswered: why are we including in this policy disincentives to work and cuts in income support which can only drive some of the more vulnerable people and families in our community deeper into poverty?
Let us take the case study outlined by Catholic Welfare Australia which clearly illustrates the lack of incentive for people to move from welfare to work under aspects of this policy. Let us take a single parent with one child and call her Jenny. Under the current system if Jenny takes up work of 15 hours a week at $13.30 an hour and is a recipient of a parenting payment single her disposable income will increase by $146. If she takes up the same work for the same wage under the proposed system, this system, and is a Newstart recipient her disposable income will increase by only $83. She earns less not more. That question has not been answered.
The argument that there needs to be incentives and disincentives in policy so as to encourage people back to work is accepted. However, there is already one major incentive for people to comply with the new system. That is they will lose their entire income support for a period of eight weeks if they fail to comply. That is a very large disincentive, particularly for a family with children. It is therefore difficult to understand why we would want to shift people onto Newstart and a lower base support payment, plus all the additional losses that come from the stacking effect produced by shifting people assessed of being capable of 15 to 30 hours of work a week onto Newstart.
It has been argued that shifting people onto Newstart is equitable because unemployed people will then all be on the same payment. Well, Newstart was never intended as medium to long-term income support for unemployed people with a disability and/or parents with the sole responsibility for raising children. The impact of the changes produces some extremely adverse results for some of the most vulnerable groups in our community. These groups include those with a disability and sole parents. The first group includes people with a variety of disabilities who, although are technically capable of work-and most want to work-are too often faced with difficult or insurmountable systemic problems that prevent them from finding part-time, let alone full-time, jobs.
The most vulnerable of these groups, in my opinion, are people with a mental disability or mental impairment. Over 36 per cent of those currently claiming the disability support pension have psychiatric problems and intellectual and learning disabilities. There has been a great deal of public discussion about the plight of people with mental disorders in our community which has highlighted the failure of all governments to adequately support people in our community with a mental illness or mental impairment. Many of these people are living on the street or in squats. Many are to be found in jails around the country. Most go without appropriate treatment or community support.
Further, a recent study by Professor Vaughan Carr into mental illness and employment surveyed businesses and found that around 77 per cent of employers were reluctant to employ people with a mental disorder. We are also informed of similar disadvantages experienced by people who have epileptic seizures. The government has attempted to provide incentives to employers to employ people with a disability and that is commendable. As part of this policy-part of the policy that I can support-it has established an employer roundtable to advise the government on ways to increase the work force participation of people with a disability. In part, this roundtable though has been established because, despite generous government funding and incentives in the past, the take-up rate of assistance by business has been extremely disappointing.
Under this legislation many people with episodic illnesses will be placed onto the lower Newstart payment while they look for work, prepare for work or work 15 to 30 hours a week, and failure to comply may result in the withdrawal of income support for eight weeks. This legislation will add to the considerable hardship already faced by many people with a disability. The legislation offers reduced income support to people with a disability and individuals with the sole responsibility for rearing children. When these individuals do find a job they will be able to earn half of what they could under the current arrangements before the taper begins to diminish the income support. That is, they can currently earn $64 a week before they begin to lose their government income support at a rate of 40c in the dollar. Under the new proposal, under this legislation, an individual can earn less than half of that, or $31 per week, before the taper cuts in and they lose 50c in the dollar of income support. Once an individual has earnings of over $125 per week the taper clawback is 60c in the dollar.
These figures and others that are quoted in this paper today are the result of the work of Professor Ann Harding et al from the National Centre for Social and Economic Modelling in a report prepared for the National Foundation for Australian Women. I want people to understand that the National Foundation for Australian Women represents more than 60 national women's organisations representing some three million women from all walks of life. They had this report commissioned from their own funding-raised their own money-because they were concerned about the impact of aspects of this legislation on the lives of women in particular, around this country, and their children.
Take the example of Jason who currently earns $150 a week in the present system and is on a disability support pension. His disposable income, with income support, is currently $369 a week but under the new system his friend Donna, earning the same private income plus the support income will have a disposable income of $91 per week less than Jason due to shift to Newstart. Jason's effective marginal rate of tax under the current system is 55c in the dollar while Donna's, under the new system, is 75c in the dollar. The combined effect of moving people onto Newstart is that they will pay effective marginal rates of tax of between 65 and 75c in the dollar when they achieve relatively modest earnings. This is, in part, due to the less favourable tax offset under the new arrangements. This needs to be considered in the light of the typical two-parent family with an income of $125,000 per annum who would typically pay an effective marginal rate of tax of about 48.5c in the dollar for this next tax year, 2006-07.
There are further layering or stacking effects as a result of moving to Newstart that impair the disposable income of both categories of recipients. Depending on the level of earned income, those include the possible loss of housing rent rebates of 25c for each dollar earned, the loss of the pensioner education supplement of $31.20 per week and a lower threshold before people lose access to the health care card and the pensioner concession card with a whole lot of flow-on ramifications from that.
The overall effect of this legislation is reduced income support for people with a disability and for sole parents while they are looking for work, preparing for work, or working the 15 or 20 hours per week. In fact, Catholic Welfare's paper make the point that, under this legislation, a sole parent with one child will lose 43 per cent of their net disposable income and a single person with a disability will lose 40 per cent of their net disposable income. The overall effect is reduced income.
In the sole parent group, women are disproportionately affected as 83 per cent of sole parents are women. My major concern in relation to this group is the dependent children. It is already well documented that some of the poorest, most disadvantaged people in our community are sole parent families. The task of raising children in these circumstances is often exacerbated by affordable accommodation being only available in outlying neighbourhoods or country towns and the concomitant loss of support by other significant adults. Sole parents are often both time and income poor. Many sole parents want to work, but the reality is that, even if they get part-time work, under this new legislation they will be exposed to similar disadvantages as outlined above for people with a disability-that is, the combined impact of the lower threshold of earned income before the taper claws back 50 to 60 per cent of that earned income and the increased taper rates under Newstart. Then there is the higher effective marginal rate of tax and the loss of other benefits available under the parenting payment and the disability support payment.
Unlike the disability support payment and the parenting payment, Newstart allowances are indexed to CPI instead of average male weekly earnings. So, by 2009-10, NATSEM estimate that a further erosion of income support will amount to around a $22 per week additional cut in income, with the gap between pension and Newstart allowance continuing to grow apace. Additional concerns include restrictions under Newstart for those who wish to undertake full-time education and training while receiving income support as provided for now. This will seriously limit the option for many talented and capable people, especially women, whom, as I have said, represent 83 per cent of sole parent carers, to improve their income potential and job satisfaction. These people may well be able to totally support their dependent children, provide for their own retirement and make a greater contribution to the workplace, if they were given the opportunity of two- to-three years of full-time education and training.
Take the case of Maria who presented herself in this place as an example. She has seven children. Her husband left when the last child was born. She has taken herself off to university and is six months off getting a teaching degree. She can, then, fully support her children and superannuate herself for her retirement. Mutual obligation in any welfare program is not unreasonable, and the additional assistance the government is offering to help people prepare for work and get access to paid employment are exceptionally good aspects of this policy, and they are totally supportable.
Since the policy was first announced, a number of exemptions have been provided for sole parents with children, and some parents with children who have a disability will now qualify for the carer pension. I especially welcome the government changes in that regard. In general, I do not have a particular concern about requiring parents to participate in the work force when their youngest child turns eight or even six or four, or about the mutual obligation placed on welfare recipients in general. However, I am deeply concerned about the cut in income support. As I said, Catholic Welfare have indicated a 43 per cent reduction in net disposable income for a sole parent with one child and a 40 per cent cut for a single person with a disability. I am deeply concerned about the effects this change might have on children. I am very concerned about the systemic problems, which were outlined very clearly in the McClure report, that are preventing people from accessing jobs. I do not see any indication that the majority of these systemic problems are being addressed.
I am concerned about the lack of mental health services because, in a full employment environment, many people who cannot get jobs currently are those who do have significant mental health problems, and there is a lack of services available to these people to support them. I am concerned about the lack of housing affordability, which often drives sole parent families and people with a disability out into the outer suburbs and rural areas where, again, there is a lack of support services available to them. And I am concerned generally about a lack of support services, particularly care services, for people who have a physical disability and who need assistance to become ready in the morning for a job.
Furthermore, I represent an electorate that is suburban, regional and rural based, and I understand the difficulties of many families and those with a disability when it comes to the links between transport, job opportunity and affordable housing. This policy would have been improved if the mutual obligation test were applied without removing access to sole parent payment and the disability support payment-that is, do not move people onto Newstart but apply the mutual obligation. I have no problem with that. I have no problem with assessing people as being capable of contributing to the work force and earning an income in the paid work force. I have no trouble with that at all. I do not understand why this policy has been damaged, in my view, by moving these categories of people onto Newstart.
The minister recently highlighted the government's success in getting more welfare recipients into the workplace-prior to this legislation-as a result of greater support and incentives to employers. Undoubtedly, with further attention to some of the systemic problems, as outlined in McClure, that keep people from the workplace and with the package of programs under this new legislation, the aim of getting people from welfare into work could have been achieved without cutting income support.
In my view, we have lost a golden opportunity to reform welfare in a meaningful way and put in place a package of measures that would strongly support not just the incentives for employers but true and real incentives for employees with additional caring responsibilities and disabilities to be supported in their efforts to access the workplace. I find this cut in income support really very disturbing the eve of the delivery of tax cuts for families earning more than $1,200 a week. We will all be the poorer if this legislation goes through. In my view, that part of the legislation which cuts income support and imposes disincentives and high effective or marginal rates of tax on some of the most vulnerable groups in our community does not deserve the support of this parliament. As I said, we have missed a golden opportunity.
I am disappointed by the short time the government has allowed for the Senate inquiry into this Welfare to Work policy. It has such wide and deep ramifications that it deserved a very thorough examination. I am disappointed that the recommendations of the Senate inquiry have not gone far enough. I hope that the few recommendations that have been made - I think there are six - are reasonably sensible; and I hope that, at the very least, the ministers involved will encourage a thorough review to be conducted within 12 months of the implementation of the legislation so that unintended consequences of this bill can be identified and managed early.