Address to Not For Profit leadership conference
Well thank you for the welcome and Uncle Chicka thank you for your welcome this morning. We bump into each other all around Sydney and it is wonderful to be here with you today.
I also want to acknowledge the traditional owners and elders past and present.
My electorate is a bit south of here – Dharawal Country and the Gweagal people originally who were out there on the day that Captain Cook, or Lieutenant James Cook as he was at the time, arrived there on April 29 1770 and every April as Uncle Chicka knows we have a meeting of two cultures ceremony there on the 29th of April. That really has become a place of reconciliation over the years and it is a wonderful ceremony where young people from right across the Shire schools perform there indigenous presentations and performances and it really is a wonderful scene each year. I would encourage anyone who is around Sydney on the 29th April to make their way out to Kurnell.
But I am here today to talk about other matters and it is tremendous to have the opportunity to come and share with you as the leaders in the not-for-profit sector. Not for profit organisations play a significant role in the Australian community and the Commonwealth Government – the Abbott Government but I know the Governments right across the country – local, state and federal very much appreciate the contribution that is made from the not-for-profit sector into addressing the many challenges that we share as a community. The involvement of the not-for-profit sector over time I think has demonstrated that there is an important partnership that exists between the government and community – and the community represented through the not-for-profit organisations which have become the innovators and service delivery. The innovators in understanding the various social challenges that we have and today and tomorrow is an important opportunity for that dialogue and for that reflection on your experience and what is working and what is not working and to work through your own processes. So it is a good opportunity for me to come and share with you some of the things that the Commonwealth Government is doing in order to support the work you are doing but also to more broadly address the challenges that we have.
So it is important that we recognise the not-for-profit organisations for the tremendous work they do. But also we must honour the volunteers, which I know you do on a regular basis, who make up the ranks of your tremendous organisations.
I am pleased that there are many tremendous not-for-profit organisations who have offered great service in my local community in the Sutherland Shire just south of here and there are many represented here in this conference over the next couple of days – the Kingsway Community Care, Sutherland Home Modification and Maintenance Service, and Sutherland Community Transport organisation. Sutherland Community Transport provides a vital service in my electorate and has been doing that for many, many years. Sutherland Home Modification and Maintenance Services help the aged and frail to remain in their own homes for longer. We know that that is something that is being achieved more and more by more Australians. Both of these organisations are supported by a very large volunteer workforce. In my electorate of the Sutherland Shire we are proud to boast of our level of volunteering that happens in our community. It is a community that looks after each other and sees that not just as a service but as a responsibility in the culture of our local community and something which I know is reflected more broadly across the country. Kingsway Community Care is in the process of commencing services and has links to Kingsway Community Church, who also provide an incredibly strong role within our local community.
I was very pleased to be able to continue an initiative of my predecessor who was the Member for Cook, the Hon. Bruce Baird – who has a fairly famous son these days, the Premier. He started a thing called the Cook Awards which many of my colleagues do all around the country. Each year we recognise the contribution and selfless service of volunteers in our community. Not just the leaders, not those who you would normally see around the community but those who are out there in less prominent roles and recognising their service. We do that every year and it is a tremendous opportunity to meet with them and for them to be acknowledged not only amongst their families because we know it is the families who enable the volunteers to do what they do so selflessly. So to enable that to happen each year I think has been a great opportunity and I continue to encourage all of your organisations to engage with your local Federal and State Members of Parliament where they are seeking to add that acknowledgment. Because we know that volunteers so often will serve not seeking anything for themselves and not even seeking that recognition but to be able to provide it I think is a very important thing for us to do.
We are engaged in a series of reforms to our welfare system as a government. Those reforms will always see a bigger and bigger role for the not-for-profit sector – for the non-government sector. The Government will not be walking away or retreating from any of our responsibilities in fact our responsibilities will only increase as the need increases and our country increases in size and as our demographics change. This has obvious implications for the Government’s involvement and the Government’s support services. But the non-government sector will have to get bigger as well; the non-government sector will have to increase both in terms of private capital as well as private involvement, in terms of the profit sector and the not for profit sector. I expect many not-for-profit organisations will take a lead in implementing new and innovative ways of delivering services to their communities. Innovation will be essential to how we deal with the challenges over the next ten and twenty years, over the next generation. Just simply doing things the way we have always done them – that won’t work, we know that, businesses know that, not-for-profit organisations know that. We know that we need to be in a constant process of change and innovation, of greater accountability, of greater efficiencies because that is the only way we can make the dollars that we have go further and help more people – which is our goal.
We need to get back, in our view, to the original goals in our welfare system of it being a true safety net providing people who have long term needs and supporting others to get back on their feet wherever possible and understanding that someone’s incapacity at various stages in their life doesn’t have to be permanent condition and nor should be treat it as one but rather – preferably it is a transitory phase of their life and one of the great weaknesses I think of our welfare system is that it tends to write people off. It tends to see what is a temporary problem as a permanent problem and not really understand that the capability of people to emerge from what can be very distressing periods in their lives often through circumstances well beyond their control, sometimes as a result of poor choices that they have made as well. These things we all know to be true but we also know of the great capacity of the human spirit particularly when people are encouraged and supported and enabled for them to turn things around and so it is very important that we look at our welfare system as one that it does address those long term needs that will always be there but also to have a system that provides transitory support recognising the capability of people to turn things around for themselves and for their communities.
Sustainability as well as innovation will be a critical objective for us as we go forward because we want to make sure the safety net is there for tomorrow not just today. If we need any better example of failing to have a sustainable system of a welfare safety net then we need look no further than Greece currently. I mean these things don’t happen by accident – they happen when entitlements run rampant, they happen when systems aren’t sustainable, they happen where the appetite for payments are greater than the capacity to deliver them in a sustainable way. While that may seem a remote prospect for a country like Australia 20 – 30 years ago I suspect people in Greece felt the same way. So it is important – these sorts of changes and things we have seen overseas although they may be a distant warning for us they are a warning none the less.
Our system costs $150 billion – more than $150 billion in the Budget year we have just entered to run. That is twice the size of the NSW state budget and that is just the welfare system – the social services system at the Commonwealth level. It is more than a third of the Federal Budget. It takes some eight out of ten income taxpayers every year to turn up to work just to pay the social services bill in this country. So this is an enormous investment that the country makes and we owe it to the people who pay for it, the taxpayers the true clients of the system – because in my experience clients are those who actually pay the bills when you send them. We have many beneficiaries of the work that is all done in this room but the clients are ones who are making the system possible. The clients are generous and the clients want the system to be there that is why they are happy to pay the taxes but they are not going to be happy to pay taxes for things that are ineffective or things that are not well managed. They want to have confidence that the investment that they are making in a strong welfare safety net is being well targeted and well delivered. Despite this incredible investment of over $150 billion a year, dependence continues on the system trapping millions of Australians, long term youth unemployment is unacceptably high and the services as we all know are very stretched.
So, what are we going to do about it? Well fundamental to our reforms is what is called the Investment Approach. Some of you may be familiar with what has been occurring in New Zealand and the work of Bill English the Deputy Prime Minister who wrote an excellent piece in The Australian which talked about their country’s Investment Approach to tackling the challenges of welfare dependence and having a sustainable welfare system.
Now I am a keen rugby fan and I am quite accustomed to having to learn many things from the Kiwis in that field. But they have shown us I think some very innovative ways to deal with the challenges in the welfare sector. And we know it is different, we know that New Zealand is the size of a state, we know that they are a unicameral Parliament, we know that they don’t have the issues of federation that we have and the splits in service delivery and the scale that we have to contend with but that doesn’t mean that their aren’t lessons in that community, in that country that can’t be applied here.
When outlining how New Zealand went about their reform process, Minister English spoke of his Government’s aim that was to reduce misery rather than service it – to reduce misery rather than service it. The Minister recounted how a couple of years ago the New Zealanders got an Australian firm to calculate the lifetime welfare costs of people on benefits. The liability turned out to be $NZ78 billion, or just under 40 per cent of their GDP.
The New Zealand Investment Approach involves using actuarial valuations to assess which risk factors drive long term welfare dependency and which groups will be most responsive to early intervention. Now this is how to identify the groups on whom you can then concentrate and support out of welfare. Which goes to this challenge I was talking about of the transitory nature of some people’s circumstances and it speaks of the enormous return that can come on early intervention investments. There are some who regrettably we know their circumstances are very difficult to shift and they will be dependent but there are other groups that we need to identity and acknowledge and take action where we can change those circumstances. We need to take them for their benefit, from a social policy perspective but equally – and it is interesting that it is the Finance Minister in New Zealand that has been driving this approach. He understands that when you do that then the lifetime dependency and liability that can occur on the country’s balance sheet is significantly reduced. In many ways Bill English has sought to act as an insurance executive, in terms of how he is managing the Governments liabilities when it comes to that sector and applying those same disciples about mitigating that liability.
So it does use these actuarial valuations and it has come to these conclusions and their response to this information is already producing positive results. In 2013-14 the future liability of beneficiaries reduced by $NZ7.5 billion, of which $NZ2.2 billion had been attributed to welfare reform. Importantly, people’s lives have been turned around. Minister English noted for example that there are already 43,000 fewer children living in a benefit dependent household than there were three years ago. We all know how debilitating it can be for children growing up in welfare dependent households so this is excellent news. Outcomes such as these in New Zealand have been encouraging in the development of Australia’s Investment Approach model. This was recommended to the Government by Patrick McClure and the review of the welfare system he conducted – initiated by my predecessor Minister Andrews. He recommended that we adopt this approach and so in the Budget the Government committed $20.7 million for the implementation of an Australian Investment Approach. The procurement process for an actuarial service provider is already underway now by my Department.
Another innovative concept that came and I am very keen to pursue, which come out of the McClure Report and it deeply involves the not-for-profit sector and that is the issue of exploring the possibility of the application of Social Impact Bonds at a federal level. They recommended these too and here in NSW some very interesting work is already being done with SIBs and they involve partnerships between Government, civil society and the corporate sector. They involve intermediaries raising money from private investors to fund solutions to a social problem. If an agreed social outcome is achieved, the Government pays the investor a share of what is saved. The NSW Government is currently running pilots across the state. They include the Benevolent Society, Westpac, and the Commonwealth Bank partnering to strengthen families and reduce the need for foster care and UnitingCare Children, Young People and Families being supported by Social Ventures Australia to expand their New Parent and Infant Networking or Newpin programme. Newpin was the first of the pilots and Social Ventures Australia raised $7 million from investors which funded four additional Newpin centres. The encouraging first results saw 28 children restored to their families and 10 families supported to prevent their children entering out of home care. Because of the Government’s programmes 60 per cent restoration rate, investors have received an initial interest rate of 7.5 per cent for the first year of the bond. SIBs of course aren’t suitable for all circumstances or all social issues that you may be involved in addressing but they do offer the chance to inspire innovation and I would also say accountability in many challenging policy areas.
Another initiative of interest to not-for-profits I’m sure is the Prime Minister’s Community Business Partnership of which I am the Deputy Chair. The Prime Minister has established the Partnership of business and community leaders to promote philanthropic giving and investment in Australia and I am honoured to serve in the role that I do with that body. The Partnership is focussing on how we can get rid of barriers to philanthropic giving, like red tape, and simplifying donation rules.
We are a giving nation. We are a very generous nation and you all know that through the support that you get directly from the community and I know that those Shire organisations who are here today know of the generosity of our own community. This has been proved time and again through natural disasters and things of that nature. But we all know that the challenge in philanthropic giving is to make this a habit not just the spur of the moment response – that this is something that you are seeking your donors to partner with you over a long time, not just at critical points in time. That does require a change of thinking and different avenues and different methods and tools for being able to gain that support in a very seamless way.
We don’t have the well-established philanthropic traditions of nations like the United States and we would like to encourage these traditions. We though have a very different welfare safety net to the United States as well. The Government has to be very careful and cautious about whether it is on occasions crowding out philanthropic support and what I mean by that is there can be a culture in this country which says well I pay my taxes, that is what my taxes are for and so I don’t need to support organisation x, y, z or whoever they might be. What we are talking about though is yes we all do pay our taxes but our responsibility as citizens doesn’t end there it goes beyond that and we have a system of welfare support in this country which goes beyond the state and it extends to all the organisations in this room and well beyond this room as well. So our responsibility as citizens doesn’t end with our taxes. Personally I’d like to see our taxes a lot lower – a lot lower. I am sure many may feel the same. But that doesn’t mean I would like to see donations lower and support on a regular basis being lower, I’d like to see that a lot higher. That would inspire and underpin and support the development of the non-government sector in meeting the many challenges that we have.
So in supporting philanthropic approaches and culture changes in the country we recently announced funding of $650,000 over three years to Philanthropy Australia to deliver Philanthropy Partnerships Week with the Foundation for Regional and Rural Renewal. During the week – the second week of December – we will celebrate and promote philanthropy with a particular focus on collaborative partnerships across the business, not-for-profit and community sectors.
The Government is also engaging the not-for-profit sector in the employment space. Just as we have come in to this new financial year jobactive has come into being and this will establish new ways to offer work experience opportunities to job seekers. Over the last couple of months since the 1st of May Work for the Dole Coordinators have been sourcing suitable Work for the Dole activities in not-for-profit organisations such as local councils, community organisations and state and federal agencies. These activities will help prepare job seekers for the work environment. During the programme’s pilot stage some terrific activities and projects were conducted. These included food distribution for families in need, the refurbishment of historic buildings, the development of community market gardens, wildlife rescue and care, and archiving and library services. I encourage any not-for-profit organisation that may be interested in helping local job seekers to contact their Work for the Dole Coordinator.
In relation to the Government’s grants programme, many of you will be aware that I was appointed Minister following the Department of Social Services’ finalisation of that scheme at the end of last year. Known as ‘A New Way of Working’ it was aimed at streamlining and simplifying grants administration. The Department manages some $13 billion worth of grants over four years. At the heart of the changes was the broadbanding of discretionary grants programmes and the former 18 programmes were streamlined into eight. In many cases these were grants that hadn’t had a competitive grants process for 30 years, in fact some grants recipients had never been involved in a competitive grant process and there had been no review of any of their programmes for a very long period of time. Where appropriate, grants are long term and reporting requirements have been improved and reduced.
On becoming Minister I made it a priority to ensure there were no unintended consequences or frontline service gaps as the new grant arrangements came on line. When you adopt an administrative process which has quite strict rules around it and you’re doing that in a fairly quick timeframe around a fiscal objective which was set out for the previous Minister I think it is inevitable that there were going to be some gaps that emerged. That was very clear to me on coming into the role and that is why we were pleased to extend the existing funding for existing funded organisations out to the end of March for those involved in emergency relief and out to just concluded the end of June for those involved in other frontline service roles. We have worked through a process over the last three to six months to ensure that we have been able to fill those gaps wherever possible. We are still engaged in a process where others may have emerged and seeking to address them. As a result of a comprehensive analysis by the Department, last month I announced a total of $40 million over two years would be offered in addition to the earlier grants to more than 100 frontline community organisations to address identified service gaps. The Government and my Department will continue to monitor the coverage of our grant activities and we will continue to consult widely with the sector as we go forward.
This too is a partnership and Australia has been blessed with a great community spirit and an outstanding not-for-profit sector. We want to see that capability, both institutional and otherwise, continue to grow. I look forward to increasingly effective partnerships with the sector, between the Government and also with the corporate sector as we all work together to secure the future of our most vulnerable people in this country.
I wish you well with your deliberations and I thank you for having me with you today.