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.
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.
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