Posted: April 30, 2005

Breaching all standards - Part 1

Anyone who has tuned in to the Australian news media in the last twenty four hours will have been treated to:

1. A new attack on the long-term unemployed from a Government which fails to exercise its duty of care to disadvantaged citizens;

2. More fragile arguments from the Minister for Workplace Participation, Peter Dutton, to build support for ‘tough love’ measures to be announced in the Budget; and

3. A response from the Federal Opposition that uses the unemployed as pawns in a political game while missing the essential policy point.

It would seem the more things change, the more they stay the same.

Today’s media round by the Minister is part of a pre-Budget circus in which major initiatives to be announced by the Treasurer on May 9 are ‘leaked’ in order to generate extended press coverage for the Government. Today’s feeding frenzy focused on measures to increase the penalties imposed on long-term unemployed people found to be not “genuinely” seeking work. In an interview on the AM program this morning, and in comments provided to The Australian newspaper for their front page story Tougher dole for ‘shirkers’, the Minister ‘suggested’ we might see the following measures in the Budget:

1. Job Network (JN) agents will be given the power to identify and punish up to 25,000 unemployed people the Government believes are deliberately avoiding work;

2. Once identified, JN agencies will then be able to force these ‘shirkers’ to complete double the hours in work-for-the-dole programs; and

3. JN providers will also be able to issue on-the-spot suspensions of payments for unemployed people who fail to attend interviews.

So let’s unpack the case made for change and the policy alternatives.

The critical point is that the reason we currently have 92,000 Australians enduring long-term unemployment (in a pool of 572,000 unemployed) is because of the failure of the Government’s macroeconomic policy to ensure that the economy has enough jobs available for those who want to work. This is the point Labor’s Shadow Minister for Workplace Participation, Penny Wong, missed. We now have the ludicrous situation in which the Government is prepared to shovel more dollars into ineffective work-for-the-dole programs, policing and compliance measures, but will not invest in a Job Guarantee. If they invested in minimum wage, public sector jobs for the unemployed then they could call off the dogs and construct a valuable role for JN providers in matching the unemployed to productive paid work that promotes community development and environmental restoration and repair.

The Job Guarantee removes the policing and compliance problem. If a person who is able to work does not meet the conditions (attendance, punctuality etc) specified under the Federal Minimum Award then they don’t get paid and will not be eligible for an unemployment benefit. You need other forms of income support – such as disability pensions, carers allowances and family support payments – in a fully employed economy but you don’t need Newstart Allowance or a Youth Allowance for the young unemployed.

In making his case for the proposed reforms, the Minister’s interview on AM confirmed he has limited understanding of key issues in his portfolio.

First, the Minister argued that despite a “buoyant economy and 28-year low unemployment rate…there is still a small percentage of people who are doing the wrong thing”. The wrong things include knocking back jobs or failing to attend interviews, labour market programs and training courses. His underlying point is that the reason unemployed people can’t get jobs is because they don’t put in the work to get them. But Minister, even in your ‘buoyant economy’ there are 5.6 unemployed people for every job vacancy. Even if they search and train from dawn ‘til dusk, they can’t all get jobs. CofFEE’s Tale of 100 dogs and 94 bones illustrates the essential point.

Third, available data does not back the Minister's claim (in his AM interview)that up to 25 per cent of job seekers are not making serious efforts to get off welfare and would be subject to the new penalty regime. Dutton did acknowledge that his numbers were anecdotal evidence based on “moving around the country talking to Job Network members”. However, his take on matters was immediately refuted by John Dalziel, a spokesperson for the nation’s largest JN provider the Salvation Army, who says the small percentage of people (he estimates around 3 per cent) who don’t meet mutual obligation requirements are “very dispirited and despondent because they've been trying for ages to get jobs, and so they get aggressive and say I'm not going for any more jobs”. Dalziel makes a critical point (one Penny Wong should have made up front):

“Our experience is that we should tackle the reason for why they're doing this, and when we work with them about their feelings of alienation, that they then will be persuaded to go for jobs that have some potential of them getting the job. I mean, the idea of just mindlessly going for jobs where you're going to be refused is not a good way to go…It might make the Government feel better that they’re punishing people more, but it really isn’t going to do the recipient any good in the long term”.

So what does the data on breaching rates for unemployed people failing to meet activity test requirements suggest about the Minister’s ‘anecdotal evidence’? Are up to one-quarter of our unemployed not making a genuine attempt to get work? There are a number of points to make:

The first point is that Centrelink is, at the present time, unable to provide breaching data to the Federal Parliament due to a review of its procedures for the collection and analysis of breach data. So if the Federal Agency responsible for getting the facts together is still to determine the means for collecting reliable data, is it appropriate for the Minister to throw some figures in the air after wandering around the country and having a bit of a chat?

Second, breach data that is in the public domain makes it clear that 25 per cent is not in the ball park. Most breach data is presented as the number of penalties imposed and both the Ombudsman Report on Social Security Breach Penalties (September 2002) and The Report of the Independent Review of Breaches and Penalties in the Social Security System (The Pearce Report, 2002) note that there been a significant rise in the number of individuals occurring multiple breach penalties. However, the Department of Family and Community Services (FaCS) did tell the Ombudsman that between 1998-99 and 2000-01 the percentage of unemployed allowance recipients incurring a breach penalty rose from 11 per cent to 18 per cent. While these figures include both administrative breaches and activity test breaches, the proposed budget measures would seem to relate to activity test breaches only (things like not attending Job Network interviews or work-for-the-dole interviews or projects). It is also the case that there has been a significant downward trend in the number of activity test breaches since June 2001. Data provided by FACS (see Submission 24, Attachment 4) to the Senate Inquiry into Participation and Penalties showed that in the April-June quarter 2001 79,875 activity test penalties were imposed. In the corresponding quarter in 2002, this had fallen by 35.5 per cent to 51,497.

So it is difficult to make a case for the Minister’s ‘anecdotal’ evidence being close. The 18 per cent incidence that held in 2000-01 conflates two breach categories and the number of activity test breaches imposed fell sharply to mid 2002 (the last period for which we have reliable public data). In addition, a number of the penalties imposed will have been imposed on the same job seeker.

Nor is there any case for the paucity of information on breaching. Centrelink have had more than enough time to work out a robust methodology and welfare organisations such as National Welfare Rights should not have to file Freedom of Information claims in order that they can bring breach data into the public domain.

In my next blog I will look at why we shouldn’t shift the power to breach job seekers (including the suspension of payments) to Job Network providers. However, the key point is that the resources spent on policing the unemployed are the product of the Government's failure to run a fully employed economy. Provide a Job Guarantee and there is no need for a compliance caper.

Blog entry posted by Sally