Speech by The Hon Jenny Macklin MP

Australian Social Policy – Back in Business

Location: Sydney Institute, Sydney

I would first like to acknowledge the traditional owners of this land, the Cadigal people.

And I would also like to thank the Sydney Institute for inviting me to share the vision I have for the social policy direction of this Government.

Over the last week, we’ve seen the key role that social policy can play in maintaining our nation’s economic security.

Decisive economic leadership in this unprecedented period of financial turmoil is essential – because a strong economy delivers jobs, prosperity and social stability.

Families and pensioners – not your traditional economic levers – have been central to the Government’s early and decisive response to the global financial crisis.

But good social policy is also vital to prepare Australia for future challenges.

An ageing population means we need to build a sustainable retirement income framework.

We need to deliver a modern set of family policies, including paid parental leave, putting the best interests of children first. This requires reform to tax and family payments.

We must develop new social inclusion strategies so that more Australians can work and participate in community life.

And we must continue sound, evidence-based policy interventions that close the gap between Indigenous and non-Indigenous Australians.

Under the Rudd Government social policy is an equal partner with economic policy.

But it hasn’t always been like this. One of the great aspects of my job has been the sense of excitement and expectation about this Government’s social policy.

Recently I was at a conference in Sydney where people spoke openly of their relief at finally having a Government that ‘gets’ social policy.

Of course, supporting people through difficult times is vital. But equally important is anticipating and preparing for the shifts that will drive the social and economic life of the nation.

Building the capacity of all Australians to provide for themselves and care for their families.

Done properly, social policy is about increasing participation and productivity.

Let me assure all of you here tonight, that for this Government social policy is part of the currency of a strong, prosperous country.

Just last week we saw how social policy can intersect with the economy.

The Government’s $10.4 billion Economic Security Strategy uses social policy levers to strengthen our economy. And gives financial support to families, first home buyers, carers, pensioners, veterans and people with disability.

There are complex social policy challenges as we build a modern Australia.

How to provide a secure social safety net which balances adequacy and fairness.

How to deliver services which encourage participation, promote independence and increase people’s ability to provide for themselves.

To achieve this we must have an innovative and flexible system – with the ability to respond to the rapid and complex changes in the lives of individuals and families.

Inherent in this is the interplay between social security payments and services – the two levers that drive our social security system.

Social policy goals need to be achieved through access to payment based support and targeted services to meet the complex needs of individuals.

And the delivery of payments and the services must take into account the different circumstances of the people they’re trying to help. They shouldn’t just fit the institutional frameworks from which they’ve developed.

Pensioners understand that the delivery of payments through the Government’s Economic Security Strategy is part of our commitment to long-term reform of the system. The payments last week are just the first step.

The Government is determined to do the hard work to get the reform process right. We will deliver a new system that is sustainable and underpinned by the principles of fairness and decency. This will be done in the context of the next Budget.

But the review goes beyond those who interact directly with the social security system.

The magnitude of Government spending on social security means all Australians have a stake in this review.

Pensions and related payments being considered in the Pension Review represented expenditure of $41 billion in 2007-08 – nearly 15 per cent of the Government’s total expenses.

The age pension alone is the largest single piece of Government expenditure.

Millions of people and their families rely on income support.

  • Single aged pensioners who rely on the pension entirely and are doing it tough coping with rising cost of living pressures.
  • Carers of sick children or ageing parents who are trying to juggle work and care responsibilities.
  • People with disability who need flexible, practical arrangements so they can get participate in work and community life.

Currently, almost two million income support recipients are living in households reliant on income support payments for more than 90 per cent of their household income.

Almost 60 per cent of income support recipients have private income of less than $20 a week. One-third who have no private income at all and this rises to around half for people on Disability Support Pension and carers.

Households that are heavily reliant on income support also have relatively few assets, for example, most report they have savings of under $1,000.

A new report by the OECD on income distribution and poverty, released just this evening, shows how we compare.

Australia has the fourth highest relative income poverty rate for people aged 65 and over in the OECD – 27 per cent of the population and an increase since the mid-1990s of 4.6 percentage points.

By contrast, in most OECD countries, poverty rates for seniors have declined significantly.

For singles over 65, the income poverty rate in Australia is 50 per cent. This is the third highest in the OECD, compared to the OECD average of 25 per cent.

As a prosperous nation, we must do better.

Our down payment on pension reform recognised the particular plight of singles, and was set at two thirds of the combined couple rate more in keeping with the relativities in other countries and the realities of life for single age pensioners here in Australia.

A Government that dismisses the importance of getting social policy right does so at a great cost.

One need only look to the previous Government’s bungled welfare to work strategy. In 2005 they said their narrow approach would move people from the disability pension and into work.

Yet I am advised by my department that the Budget forecasts for the cost of the disability support pension will rise by almost $3 billion over the forward estimates.

Evidence, if anyone needed it, that getting it right on social policy is not an optional add-on, especially in times of global economic uncertainty.

To put it plainly: get it right and it’s a positive for the economy, get it wrong and the Budget bottom line takes a hit.

The lesson is that taking a simplistic approach to social policy does not work. Our response must be well thought out and responsive.

Getting it right won’t be quick or easy.

But understanding the disability support pension and its complex composition is critical.

It calls for a sophisticated policy approach, with a better understanding of the factors that cause reliance on social support and ways we can support people.

Just six weeks ago the Government took a commonsense approach. We will allow people on the disability support pension to volunteer to look for work without risking their pension in a new capacity assessment.

It’s early days, but my colleague Employment Participation Minister Brendan O’Connor tells me that we are already seeing an modest but promising increase in disability pensioners seeking employment assistance through the Disability Employment Network.

And to encourage increased participation, Brendan O’Connor and my Parliamentary Secretary for Disabilities Bill Shorten are working on new approaches through a national mental health and disability employment strategy.

Encouraging participation means recognising that this is a complex issue.

For example, people who suffer episodes of mental ill-health need the flexibility to move in and out of the workforce.

Carers, too, need a flexible approach which takes into account their caring responsibilities. They need individually structured care packages that help them participate in community life and the paid workforce.

Caring for the people they love, their around the clock duties make an enormous contribution to the economy – frequently at huge personal cost.

Substantial financial hardship, reduced education and employment prospects, lower levels of health and wellbeing, depression, chronic grief or anger are part of life for many carers.

Add to that the challenge of balancing caring responsibilities and work, and it’s no surprise that only 39 per cent of primary carers are in the paid workforce, compared with 68 per cent of people who are not carers.

Yet half of all primary carers provide 40 or more unpaid hours of care per week – the equivalent of a full-time job.

Let me take a minute to put a human face on this.

Helen Johnson is a carer with a severely disabled 15 year old son, Ben. She also cares for her 80 year old father who is deaf and has chronic obstructive airways disease.

Remarkably, she participates in the workforce as much as she can. Her husband works full time.

She would probably work more if she could, but when it comes to support for Ben the system fails her.

Helen is happy about the support her dad receives – a $45,000 Extended Aged Care at Home package which funds a full range of medical and complementary services as well as respite.

But for Ben, who has far more complex medical needs and requires far more care, she gets very little.

Helen doesn’t understand why she gets a comprehensive package for her aged dad but can’t find the same support for her severely disabled son. She worries constantly about his future.

That’s why the Australian Government has embarked on a disability reform agenda, with the States and Territories.

For the first time we will introduce national tools to identify service benchmarks; allow people to plan for their changing needs; identify people at risk; and work towards consistent program and service delivery.

This reform has been a long time coming.

Our disability reform agenda is focused on responding to the individual needs of people with disability, their families and carers.

Reforming how our funded services can better meet their specific needs. At the same time we can also look at how other models of provision can complement government’s efforts.

This approach balances individuals, and their family’s, desires to be independent and have a better standard of living with the support they need.

The challenge is also to look beyond our traditional levers of payments and service.

There are innovative ways of providing for long term care and support of people with profound disability

One idea presented at the 2020 summit was the concept of a National Disability Insurance Scheme for people who experience a catastrophic event during their lifetime.

A recent Senate report on special disability trusts showed that when the program was established in 2006, it was envisaged the trusts would support 5000 people with profound disability over four years. Two years on and there are only 262 beneficiaries of 33 trusts. The concept is there, but it’s not working properly.

These are ideas, innovative models of support, and are worthy of consideration as we think about future provision for people with disability, especially profound disability.

To help in this task, my Parliamentary Secretary has convened a Disability Investment Group, chaired by Ian Silk. The group will provide options for increasing private sector involvement and investment in the funding of disability services and related infrastructure. Their work is progressing well.

These ideas will help complement the reform direction for government services, and facilitate individuals and families in providing extra support where they can.

Reform to make the system more responsive and fairer is long over due.

Which is why we are reforming eligibility requirements for Carer Payment (child), to help the19,000 carers who look after children with severe disabilities or medical conditions.

These reforms overhaul the existing restrictive assessment process for the payment, so that it’s based on the level of care required rather than rigid medical definitions of profound disability.

This new approach puts the needs of the person being cared for at the centre of decision making.

This style of approach, used here for a payment, needs to be replicated across service delivery.

What our carers need is a mix of payments, services, respite and in home support.

And the recognition that carers, most of them women, are limited in their capacity to accumulate superannuation savings. This is a disadvantage shared with many other Australian women whose working lives are often interrupted by raising children and characterised by low wages.

Disability is just one of the social policy challenges facing this Government. We are determined to reform the entrenched policies of the last decade and replace them with support and services tailored to individual needs.

Increasingly, social policy needs to help people cope with change and upheaval in their lives – to support them through different and difficult periods.

So it’s essential that our support structures are smart enough and flexible enough to deal with the modern reality of lives in transition.

For families, many of these transitions are predictable, an inevitable part of the life cycle. Having a baby, going back to work after the birth of a child, raising children and kids leaving home – although these days when they leave isn’t quite so predictable.

Anticipating and planning for these life-cycle events requires modern social policy. Take, for example, our commitment to paid parental leave.

Not only does it reflect our child-centred approach to family policy, it encourages women to maintain their connection with the workforce – essential for our economy as the population ages.

It’s also in the best interests of children because we know that the early months and years are vital to giving kids the best start in life.

Of course other transitions and changes can’t be anticipated. They can be sudden and potentially catastrophic – divorce, illness, the loss of a job, a serious accident.

What’s essential is a flexible, targeted approach which responds effectively to individual need.

When families hit difficult times and their income is suddenly reduced of course they will need income support.

But that’s just the beginning of the story. To get back on track families often need more than financial support. For example, to get their affairs in order, they could benefit from financial counselling.

That’s why we are providing $3.5 million in funding for 41 community and local government organisations to continue delivering Commonwealth Financial Counselling services – part of a $10 million package over the next four years.

And we are expanding financial counselling services into high need areas.

I’ve spoken so far about one side of the social policy equation.

That’s the Government’s responsibility: to make sure support is adequate, that it encourages participation and promotes self-provision.

But social policy is a two-way street. On the other side of the social policy equation there must be personal responsibility. The requirement for personal responsibility figures prominently in the development and delivery of our programs and services.

It’s central to our child-centred approach to family policy.

For the first time the Commonwealth Government is developing a National Child Protection Framework to tackle the shocking levels of child abuse and neglect in this country.

With the States and Territories we are working to build the framework to use every possible measure to protect children.

Importantly, we recognise that parents and families have primary responsibility for caring for and protecting children and our framework is structured to reflect this.

One key element to the framework will give State and Territory child protection authorities the power to recommend that Centrelink quarantines family payments. This will make sure payments are spent in the interests of children, and not on alcohol, drugs and gambling.

Meeting basic parental responsibilities is a reasonable expectation to place on families.

Welfare payments should serve the interests of children. If that’s not happening, the Government will drive reforms to make sure it does.

Measures of this kind are controversial but they are necessary for a very simple reason. Financial levers work.

We need only look at the huge increase in immunisation rates following the introduction of the Maternity Immunisation Allowance and the requirement that parents had their children immunised in order to receive the Child Care Benefit, to see how effective financial incentives are.

Immunisation coverage due at two years of age increased by almost 30 per cent in just under a decade.

In the Northern Territory there have been positive results since the introduction of income management.

Many women in remote communities are telling us that income management means they can buy the essentials, food and clothes, for their children.

Linking personal responsibility to financial reward can change behaviour.

It’s why we have extended income management in Indigenous communities in the Northern Territory and why income management is part of the Cape York welfare trials.

And it’s why the Government is piloting income management and schools attendance measures in a number of sites around Australia. We are preparing trials in Cannington and Kimberley communities in Western Australia and will announce others shortly.

And it’s why payments like the Baby Bonus are being re-structured in the best interests of children. Currently, income managed recipients of the Baby Bonus in prescribed Indigenous communities have 100 per cent of the Baby Bonus income managed and paid in instalments.

These decisions are not always popular but we will continue to make them to protect Australian children.

They are a key element of an ambitious agenda to use social policy to increase personal responsibility and responsible parent behaviour.

We need to challenge long held policy shibboleths and use social security and payment levers as a way to confront high levels of dependency on welfare support and to tackle unacceptable levels of abuse.

It is clear that social policy must adapt and respond to the rapid pace of change.

Change that is increasingly complex and demanding. Change that has implications for all Australians.

Comprehensive structural, social and demographic change demands ongoing agility and responsiveness from policy makers.

What’s needed is a re-think of our social support structures to make sure they are up to the task of supporting people through transition periods, increasing participation in the economy and realising the full potential of all Australians.

This is what we are doing.

Getting our social policy settings is about fairness and the Australian way of life. And it’s about steering a course for future security and prosperity.

Social policy is the currency of Australia’s future, and Australia is back in business.