Bills Digest 136 1996-97 Social Security Legislation Amendment (Work for the Dole) Bill 1997


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This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History

Social Security Legislation Amendment (Work for the Dole) Bill 1997

Date Introduced: 19 March 1997
House: House of Representatives
Portfolio: Social Security
Commencement: Royal Assent

Purpose

To allow the Employment Secretary to approve work programs that people in receipt of unemployment benefits may be required to participate in to continue to be eligible to receive benefits in respect of unemployment. The maximum time such a person may be required to participate in a program is 24 hours a fortnight for those under 21 and 30 hours for those over 21, who receive higher benefits.

Background

The Prime Minister announced on a television program on 9 February 1997 that the government was planning to introduce a series of pilot programs for young, long term unemployed people who would work for a period equivalent, at award wage rates,to their Newstart allowance. The Prime Minister stated that the pilot programs are aimed at approximately 30 000 young people who have been unemployed for six months or more. If the pilot programs are successful, it is intended to extend the scheme.

According to the Australian Bureau of Statistics, there were 109 900 unemployed people aged between 15 and 19 who were not attending either school or a tertiary education institution full time in January 1997.(1)For those aged 20 to 24 and not attending an education institution full time, the number of unemployed in January 1997 was 137 900.(2) For both age groups, a substantial majority of the unemployed were seeking full time work. The total number of unemployed for 15 to 19 year olds in January 1997, including those attending an education institution full time, was 186 000, and for 20–24 year olds the figure was 158 000. Of the total figure, the number unemployed for over 26 weeks in January 1997 was 32 000 for 15 to 19 year olds and 67 900 for those aged between 20 and 24, a total for the two groups of 99 900.(3) When announcing the proposal on television, the Prime Minister is quoted as stating:

You're looking at particularly a hard core of about 30 000 or more young people .... who have been out of work for six months.(4)

The Prime Minister may have been referring to the figures for those aged between 15 and 20, which relates to the above figure for those who have been unemployed for 26 weeks or more and fall with the 15 to 20 year old age bracket. If the pilot schemes were to be extended to those aged between 15 and 24, as noted above, the proposal could affect a significantly higher number of people. (Under the Bill there is no age limit on those who may be required to participate.)

The need for people to perform work to be eligible for benefits when they are unemployed has a long history. During the Depression in the 1930s, before the Commonwealth had power to provide social security benefits, State and local governments often provided schemes to provide unemployed men with sustenance benefits for which they were required to work. The proposal was also raised by the Hawke Labor government but was not implemented.(5) The document Fightback!, released by the Liberal and National Partiesin 1991, proposed that unemployed people would be eligible for benefits for 9 months and that after the end of this period there would be a Work for Benefit program, that would require an unemployed person to work for 2 days per week to qualify for benefits and that for the remainder of the week they would be required to actively seek employment.(6)

The Community Development Employment project was introduced in 1977 and enables Aborigines and Torres Strait Islander's to engage in community projects instead of receiving unemployment benefits. The scheme is funded by grants from the Aboriginal and Torres Strait Islander Commission which pays the community an amount approximately equal to the benefits the participants would otherwise receive plus an amount for on-costs and capital support.

Schemes similar to that proposed in the Bill have also been implemented internationally. An example is in the U.S. and it's Workfare program, which was introduced in 1981. In a comment on the scheme, a member of the Centre for Law and Social Policy in Washington is reported as stating:

The basic finding on Workfare programs that have been evaluated is that they appear to have resulted in little or no improvement in increasing the employment or earning prospects of the participants.(7)

The arguments in favour of the proposed scheme are based on the effect that a need to perform a 'normal job' will have on the attitude of the long term unemployed and the apparent need for those on the Newstart allowance to contribute more to the taxpayers who fund such benefits. The Prime Ministerstated that:

We're simply saying that in 1997 it is reasonable for the community to say of people that are guaranteed a safety net that they should at award rates be prepared to do something in return for that guaranteed safety net.(8)

The Prime Minister, in response to a question without notice, reinforced this position, stating:

What I proposed yesterday [the day the proposal was announced on television] recognises a very simple principle: that in a civilised democratic society, provided the rates of pay are fair and just.. which ours will be.. it is not unreasonable to ask people to do something in return for a social welfare benefit if they are able to do so.(9)

The government has also expressed the view that the scheme would raise theposition of the young unemployed. In the second reading speech to the Bill, the Minister stated:

The value of the work for the dole initiative lies in bringing young unemployed people back into a work culture to help rebuild a work ethic. It will give young people a chance to engage with the community rather than being alienated from it.

The second reading speech later acknowledged that the proposed scheme was not a solution to youth unemployment but should be considered in the context of other programs and policies.(10)

It is envisaged in the second reading speech that there will be approximately 50 pilot projects in regional areas with high rates of youth unemployment, with another 20 pilot projects available for other 'quality' projects. There will be a compulsory element to the projects and recipients of benefits relating to unemployment may be required to work at award rates for a period equal to the value of their benefits. This is estimated in the second reading speech to be approximately 2 to 2.5 six hour days per week. The different length of the possible requirement is based on the level of benefits received. People in such schemes will continue to be required to satisfy the employment activity test which requires them to actively seek employment. The effect of the pilot programs will be evaluated to determine if the scheme should be extended.

The work people will be performing will relate to community projects. The Chief Executive of the Victorian Chamber of Commerce and Industry is reported as stating: 'If the work competes with products and services provided by the private sector it certainly wouldn't have our support'.(11)

There has been considerable opposition to the proposed scheme. A major criticism of the proposal is that it does not necessarily provide training to an unemployed person and will therefore not give participants a greater chance of obtaining long term employment. This raises the issue of whether the long term unemployed would be better assisted by training programs that also involve a working period or by part time employment that does not necessarily involve training, either on or off the job. The government's reduction of training and employment programs initiated under the former government's One Nation program contained in the 1996–97 Budget illustrates that the government is not of the opinion that such schemes are the best way to assist the long term unemployed.

Much of the criticism of the scheme has centred on the potential compulsory nature of the work. The President of the Australian Council of Social Service is reported as saying that compulsory schemes fail because they were costly to administer and were generally not linked to recognised training. The executive officer of the Australian Youth Policy and Action Coalition is reported as criticising the scheme as it will take young people away from the mainstream labour market and would not tell an employer about a person's enthusiasm to work.(12)

The compulsory element of the scheme has also been criticised by representatives of religious and social welfare groups. It has been reported that representatives of Anglicare Australia; the Australian Catholic Social Welfare Commission; the Uniting Church and the Salvation Army wrote to the Minister, Dr Kemp, stating:

The compulsion threatens to undermind voluntary work; it risks deploying youth as cheap labour and it has the debilitating image of 'earning hand-outs'

We the community also have an obligation to provide training for them, jobs as soon as possible and a level of minimum payment...(13).

The argument has also been made that not only will the proposed scheme provide no or little training, but that it may lead to the substitution of currently employed workers for those performing work under the proposed scheme. While the amount of time a person may be required to work for will be related to their benefit and an award rate of pay (according to the second reading speech this will be the national training wage award level C rate), there will be no requirement for the organiser of a program to actually pay the person on the scheme. While it is envisaged that the scheme will only apply to community service projects, it should be recognised that not all community service projects run on a fully voluntary basis and that employment in the sector may be effected by the proposed scheme. Regarding the possibility of the scheme being extended to the private sector, the chief executive of the Victorian Chamber of Commerce and Industry is reported as stating that the scheme would encourage job sheddingand that firms would be tempted to seek an unfair advantage over others by sacking some of their paid staff and replacing them with unemployed youth.(14)

The Premier of Victoria has suggested a different scheme which would involve 4 days work and 1 day training per week. It is reported that the Premier will establish a pilot program for approximately 100 participants who would be paid at award rates and that training would be paid for by the Federal government. It is reported that while Mr Kennett supports the general proposition of people working for benefits when they are unemployed, he considers that more training and more working time in training positions would be a more appropriate scheme.(15) It is also reported that Mr Kennett's proposed scheme would provide an initial 9 week training period and that he stated:

The first nine weeks they will go to a training course where they will be trained to a level that means when they arrive at the door of the employer, they have actually got some basic skills.(16)

On the question of the value of manual labour on community projects, Mr Kennett is reported as stating that:

I don't think that is going to give them experience that will lead to qualifications for long term employment.(17)

A further matter is the cost of the scheme both to those involved and those providing the community employment. The cost to the individual involved in a compulsory scheme will principally centre on their transport costs, assuming that the relevant community group organising the scheme will provide such items as appropriate clothing and tools.

In relation to transport costs, unemployed people without their own transport may face considerable difficulties and costs in regional areas, to which the pilot programs will be aimed. In regional areas public transport is not as generally available, or as regular, as in metropolitan areas. It is not clear in the various announcements regarding the scheme how the issue of transportation in regional areas will be resolved. It was stated in the second reading speech for the Bill that participants would receive an additional $20 per fortnight. As noted above and in the explanatory memorandum to the Bill, participants will work for 2 days per week for those 18 to 20 years old and 2.5 days per week for those aged 21 or older. Assuming a person is working for 2.5 days per week, this will amount to 12 trips to and from the program per fortnight, and the $20 supplement will amount to $1.67 per trip, a fare that is unlikely to be available in metropolitan or regional areas. It is also unlikely that such an amount would cover costs even when a person has their own transport.

It has been reported that the government estimates that the cost per participant will be between $2 000 and $3 000 on top of their benefit payments.(18) The explanatory memorandum to the Bill estimates the cost of the proposal to be $13 million in 1997–98.

A further issue relating to the scheme is that it appears participants will not be covered by workers compensation insurance as there will be no employment relationship with the organisation providing the program. Commonwealth workers' compensation is specifically excluded by the Bill. If a person is injured while participating in a program, their ability to recover compensation is likely to be restricted to common law damages based on negligence, which requires a stricter standard and allows a wider range of defences than workers' compensation schemes.

Main Provisions

The object of the Bill is contained in clause 4 of the Bill. Principal parts of the object relate to 'the principal of mutual obligation' for those in receipt of payments relating to unemployment to participate in approved programs to receive such payments and that recipients of such payments may be required to participate in such programs.

Schedule 1 of the Bill will amend the Social Security Act 1991 (the Principal Act). Item 4 deals with approved programs for unemployment payment. The Employment Secretary will be able to declare a program to be an approved program. A program is not to be declared to be an approved program if it would require a person under 21 to work for more than 24 hours each fortnight, or more than 30 hours for those over 21. (The Bill does not contain a requirement that guidelines for such a declaration be made or, if made, be disallowable by Parliament.)

Section 601 of the Principal Act contains details of the activity test that must be satisfied for unemployment benefits to be payable. Item 5 will allow the Secretary to require a person to participate in an approved program of work to satisfy the activity test. However, they will not be exempt from the requirement to actively seek work. Item 6 provides that the Secretary is not to notify a person that they are required to participate in a program if:

  • they are receiving reduced benefits due to the application of the income test;
  • in the Secretary's opinion it has been established by medical evidence that the person has an illness, disability or injury that would be aggravated by participation in a program; or
  • in the Secretary's opinion the conditions of the work would constitute a risk to health or safety or would breach a law relating to occupational health and safety.

If a person has been notified that they are required to participate in a program and any of the above three points arises after notification, the Secretary may (not must) notify the person that their participation in the program is no longer required.

If a person fails to participate in a program after notification of their requirement to do so and does not have a reasonable excuse not to commence or complete the program, or comply with the conditions of the program, they will be taken to have failed the activity test (Item 7). Section 624 of the Principal Act provides that a failure to comply with the activity test will result in benefits not being payable for the 'activity test deferment period'. This will be a period of between 2 and 6 weeks, with the period increasing as the person's period of unemployment increases, for an initial breach plus additional periods if there have been other, prior, breaches within certain periods (section 630A of the Principal Act).

Currently, a Newstart Activity Agreement cannot compel a person to work. This will be repealed by Item 8.

Item 10 will insert a new Subdivision G into Division 1 of Part 2.12 of the Principal Act. It deals with when a person is subject to an activity test penalty period, which is imposed for such actions as failure of the activity test, refusing to enter into an activity agreement or voluntary unemployment, or an administrative penalty period, which is imposed for actions such a failure to attend a Departmental interview when requested to do so. Proposed section 631B provides that a penalty period will cease to apply when a person enters an approved work program, whether the person completes the program or not (However, failure to complete the program without reasonable excuse will result in a failure of the activity test so that benefits will not be payable.)

Proposed section 631C provides that work in an approved program will not be taken to be in employment for the purposes of:

  • Commonwealth workers' compensation legislation;
  • the Superannuation Guarantee scheme; and
  • the Workplace Relations Act 1996.

The $20 per fortnight supplement for participants is contained in proposed section 644AAA and will be payable for each fortnight during which the person participates. If a person ceases to participate in circumstances that would amount to a breach of the activity test or a failure to comply with an activity agreement, the supplement will not be payable in respect of that fortnight.

A number of sections of the Principal Act provide for the internal review of certain decisions and for appeal to the Social Security Appeals Tribunal for subsequent review of certain decisions. Items 15 to 17 will exclude decisions to approve programs under this Bill from such review.

Concluding Comments

As originally announced, the scheme was to apply to young, long-term unemployed. As the Bill stands, there is no age limit on who may be required to participate in a program, nor is there a requirement that a participant has been on benefits for longer than a certain period. In an interview on A.M. on 19 March 1997, the Minister is reported as having stated:

At the end of these pilots, we'll look at extending the scheme and the legislation will be in such a form that we won't be then required to go back to the Parliament to do that.

As noted in the Background, a major reason behind the proposed scheme is that it is not unreasonable for people receiving benefits to do something in return for those benefits if they are able to do so. Logically, it can be argued that this reasoning should apply to all those in receipt of government benefits and not just the unemployed. For example, the U.S. Workfare program extends to single mothers in receipt of benefits in an attempt to reintroduce them into the workforce. Childcare is provided. Similarly, the logic could be extended to married non-working mothers with school age children who would be able to perform work in return for benefits such as family allowance.

A further matter of interest is the title to the Bill. There is no social security payment titled as 'the dole', with benefits to the unemployed mostly being provided under the Newstart scheme. While the term 'dole' is defined in dictionaries to include payments relating to unemployment, the term is also often used in a negative sense, such as the term 'dole bludger'. It may be interesting to see whether the use of such terms that are not defined in legislation will become a more common practice in legislative drafting.

Endnotes

  1. A.B.S., Labour Force, January 1997, Table: 11.
  2. Ibid., Table: 12.
  3. Ibid., Table: 27.
  4. The Australian, 10 February 1997.
  5. The Weekend Australian, 15–16 February 1997.
  6. Fightback!, 21 November 1991: 216–217.
  7. The Australian, 11 February 1997.
  8. Doorstop Interview, 26 March 1997 as released by the Prime Ministers Office.
  9. House of Representatives Hansard, 10 February 1997: 337.
  10. House of Representatives, Hansard, 19 March 1997: 2398.
  11. The Australian, 10 February 1997.
  12. Ibid.
  13. The Canberra Times, 1 April 1997.
  14. The Age, 11 February 1997.
  15. The Australian Financial Review, 7 April 1997.
  16. The Australian, 21 March 1997.
  17. Ibid.
  18. The Age, 10 February 1997 and The Weekend Australian, 15–16 February 1997.

Contact Officer and Copyright Details

Chris Field
7 May 1997
Bills Digest Service
Information and Research Services

This Digest does not have any official legal status. Other sources should be consulted to determine whether the Bill has been enacted and, if so, whether the subsequent Act reflects further amendments.

IRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

ISSN 1328-8091
Commonwealth of Australia 1997

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Published by the Department of the Parliamentary Library, 1997.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 8 May 1997



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