‘A good deal on welfare’ – Address To ACOSS National Conference

Location: Sydney

E&OE

Thank you Cassandra. It is wonderful to be with you today, I’m sorry I couldn’t be with you last night. I was, like most politicians, on the way home from Canberra. So I’m sorry I couldn’t be there but can I add my congratulations to all of those who were successful last night in being acknowledged. I think more broadly though nights like last night are really about acknowledging everybody and the service and the contribution they provide. I certainly want to add my thanks on behalf of the government but more broadly on behalf of the community for the excellent work that is being done right across the sector.

Can I also thank Cassandra for the invitation to be here and ACOSS more generally; not just for being here today but for the incredibly constructive working relationship that I believe we have been able to form since coming into the portfolio last December. It has been a very open, a very transparent and I think a very cooperative approach. We don’t agree on everything but we certainly talk about everything and we do it in a way where both of us are listening and both of us I think have really come to the discussion with a lot of good will and so far so good. I am very optimistic about the continuing dialogue we will be having with ACOSS and the various state based organisations and more broadly with the sector. When I came into the role the first objective I had was to do a lot more listening than talking and there was a parade of people coming through the office over January and February as we really did work to understand the challenges in the sector. As a Member of Parliament the issues are not new, as a Member of Parliament we deal the issues that you deal with on a daily basis as well. But as Minister I have genuinely appreciated the contribution, the investment in time, that people have made to bring the various sector’s issues and more importantly the possible solutions to my attention. In the most recent Budget, which I will talk a little bit about this morning, many of you would have seen a striking resemblance to some of the things that were raised in those discussions and what in fact turned out to be funded in the Budget.

So good morning everyone and I do thank you for having me here. I am pleased to be here representing not only myself obviously but the Prime Minister, who is in Melbourne today and he sends his apologies for not being here today. I would also like to acknowledge the traditional owners and elders past and present.

Many ideas will be analysed as you discuss how best to ‘advance the common good’ here at this conference – the theme. I want to particularly recognize the role of ACOSS as a policy think tank. You all know that ACOSS played an important role in the 2015 Budget, with respect to the rebalancing of the assets test for the Age Pension. This measure was passed into law this week, along with $4 billion of various other measures in the sector. The measure was able to achieve the support of five of the crossbenchers in addition to the Australian Greens. I thank all of those parliamentarians for their engagement in that process. This was an important step in making the pension system fairer and more sustainable for those who need it most while also addressing the significant budget task that the government has over the budget and forward estimates. We listened carefully to the response to the measures that were introduced in the 2014 Budget. And we know that there were many measures there that particularly were not supported by this sector. We did listen carefully to the response and consequently we reframed new measures, in consultation with ACOSS and other stakeholders, as well as other members of parliament to come up with some very different approaches.

The government has also taken other significant measures in the Budget, in addition to the pension measure were 170,000 Australians will receive from 1 January 2017 a higher pension of some $30 per fortnight for those who have their own home – couples with up to just over $451,000 in assets they will receive an increase in their pension and for those single homeowners they will have an increase in their pension if they are up to just under $290,000. As part of that we will see 50,000 part pensioners actually become full pensioners. We are pleased about those outcomes but there are other significant measures that were taken in the Budget that are all about helping people who want to be less reliant on welfare, in fact in many cases to get themselves off welfare and get themselves in to work. If there is one area I think of common agreement in virtually every meeting I have had and engagement in the sector it is that we all understand that the best form of welfare is work. The best form of welfare is giving people the independence of a job and the security of a job and the ability to have more choices in their own lives and that’s what we are all seeking to achieve.

The Growing Jobs and Small Business package will assist employers to grow. That’s a good thing because then they can employ young job seekers, mature workers, parents and the long-term unemployed. We have invested $6.8 billion to establish jobactive to improve the services delivered to job seekers and employers, including a $1.2 billion national wage subsidy pool to support employers and assist job seekers into work. The government will also improve wage subsidies to create more opportunities for job seekers, especially those aged over 50 and parents returning to the workforce.

I was proud to announce measures designed to better target our welfare spending for the benefit of young, vulnerable people. They will especially encourage young people who want to ‘have a go’. That’s what I believe young people do want to do and they are really trying to do that. But it is not just about getting a job it is about getting yourself ready for a job and to overcome some of the barriers you have had to getting yourself in that position and once you are in that position to be in a job to stick in a job and these are significant challenges that many young people have and the Budget seeks to address those matters.

It needs to because the national unemployment rate is at six per cent and youth unemployment is nearly 14 per cent. Around one in five young Australians are not fully engaged either in work or study. Particularly worrying to me are figures that show that young people account for around 30 per cent of the long term unemployed.

Among the young people most at risk include those with disability, those with mental health issues, those from poorer families, Indigenous Australians and those with lower levels of literacy or numeracy. There are also challenges for young people who have newly arrived in Australia, especially as part of our refugee and humanitarian programme who are at risk of becoming marginalised and are very vulnerable.

I was proud to announce the Abbott Government is providing $230 million in the Budget to support the National Partnership Agreement on Homelessness for two years to 2017. This was not funded when we came to government. There was zero in the line items and the forward estimates for the National Partnership Agreement on Homelessness. That $230 million had to be sourced from savings in the Budget and it is important that we did it. The process that now must be followed is a very robust and honest conversation with the states about how we address the challenge of housing and homelessness. I have appealed to the sector to be the honest brokers in that discussion between the States and the Commonwealth because you have to deal with us both in how you are addressing those issues. The barriers of the state and Commonwealth and indeed local boundaries are quite irrelevant at the end of the day. You are focused on the outcome as must we be and so we really do implore you to participate in this federation review process wherever you can to ensure that there is greater seamlessness in how the Commonwealth and the States and indeed local government work together to address the significant issues in relation to housing and homelessness. Now with the National Partnership Agreement, it is a new agreement and it is with the states as we speak. It is important in providing that funding that it has a focus. The focus I demanded this agreement had was support for particularity those who are at risk of homelessness or are indeed homeless as a result of family and domestic violence or those who are young people at risk – that definition being up to the age of 25.

The Budget also includes $33.7 million for a National Carer Gateway and integrated supports for carers, additional support for Australian Disability Enterprises worth $173 million and of course the $3.5 billion Jobs for Families package including importantly the new Child Care Safety Net which includes significant increased resourcing for the Inclusion Support Programme which helps young children with disabilities to be able to access child care, not just at a specialised centre but at the centre around the corner where they can go along and be cared for in the same way as all other young children around the country and be part of the mainstream process.

I have outlined on many occasions in the last six months that Australia’s social services bill – welfare bill currently sits at just over $150 billion. It accounts for one third of the federal budget, indeed more than that, and is around twice the size of the NSW state budget in its entirety. It is a significant portfolio of public money which is dedicated to these important tasks. We do know just as you know in your own organisations the costs keep going up. Social security and welfare payments are still the highest growth areas of government expenditure; some additional $37.8 billion over the forward estimates. One of the key things driving that expenditure, particularly over the back part of the forward estimates is the NDIS, something we all feel passionately about and are supportive of implementing. But we cannot underestimate the significant financial task of being able to accommodate the NDIS in the Budget. Over $5 billion of the NDIS at full operation is not supported by the levy. That over $5 billion, when you are framing the 2019/2020 Budget, over $20 billion over the Budget and forward estimates has to be found to support that investment and it will be found. We will be funding it. It will be a reality. We will continue to work with the states and territories to ensure that the NDIS is delivered and we need to continue to manage expectations around the programme and to provide certainty and stability about its implementation. But it is a partnership with the sector and with the states. I want to commend particularly my Assistant Minister, Minister Fifield, for the outstanding work he has been doing on this, managing, continuing the bipartisanship on this issue but also working with the states to deliver on the programme that we all feel so passionately about.

But if we want a welfare safety net that is sustainable, which we do, and if we want to do more for those who need it most, as we have just done with the pension, then there must be generational structural change to our welfare system. That is necessary. The system must be driven by need not entitlement. The entitlement we have as Australians is to aspiration but need must drive our investment when it comes to the welfare system.

Our future welfare system must be one with greater community capacity to support as Patrick McClure said job seekers and the disadvantaged. If we continue to confine our capability to respond to the social challenges of the future just to the abilities and capacities of the taxpayer and the state then we will not meet these challenges.

Government will get smaller in proportion to the size of the challenge – that’s more a statement about the size of the challenge – the investment of the Government. But the non-government sector, the community, the private sector will have to get bigger when it comes to addressing these challenges. This must extend to private capital. Private capital investment in addressing social needs – not charity; that must continue and I believe it will but real commercial investment in addressing social challenges the country faces – society faces.

Non-government providers are not new to this sector, particularly when it comes to service delivery. You do it better than the government ever can and I think that has been one of the key lessons over the last 20 years. We need to continue to build institutional capability and capacity in the non-government sector in delivery of these services. But the big innovation though that we must see must come through private investment. Partnerships between civil society groups – like so many of you assembled here today – and our business community will become not only more important but critical to expand the service base that is provided. What I am basically saying is that welfare must become a good deal for investors – for private investors. We have to make it a good deal – for the returns to be there, to attract the level of capital that will be necessary in addition to the significant injection of capital and resources that is already provided by States and the Commonwealth.

Now Patrick McClure acknowledged this in his review, that greater community engagement and a more strategic approach to philanthropy are needed so that communities can support each other. But he also acknowledged the need for private investment. Government can and is helping prepare the ground for the first steps in this process – we are cutting red tape and like today, promoting and building these ideas through stakeholders to develop and implement programmes modelled on this approach.

The Prime Minister’s Community Business Partnership brings together leaders from the business and community sectors to promote philanthropic giving and investment in Australia. The Partnership’s role is to advise the government on practical strategies to foster a culture of philanthropy, volunteering and investment in Australia. Priorities include eliminating institutional barriers to philanthropic practice, considering the potential of innovative investment models, and researching trends, education and best practice in the sector. I know that some of the organisations here this morning have been involved in the roundtable discussions of which there have been many on these issues held on the Partnership and I would like to thank all of you for investing your time and ideas in this approach. It is being listened to. It is new ventures, like this partnership, that are charting the way forward on building a future welfare system.
The Investment Approach to welfare offers much promise for a future welfare system.
The Abbott Government has committed $20.7 million in the Budget for the implementation of an Australian Investment Approach, as recommended by Patrick McClure’s review.

The 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.
The procurement process for the actuarial service provider required under this approach is underway.
This provider will be contracted to conduct an initial baseline valuation of Commonwealth social security liabilities and three subsequent annual re-valuations.
The procurement is progressing in line with Commonwealth procurement guidelines.
The concept has already been shown to work in New Zealand where more people are getting into work and staying in work.
Here in Australia we are committed to implementing an Approach that works, does the job it is intended to do and which gives people confidence.
Initial trials of the Approach will have a focus on young people.
For example, in this years’ Budget we have funded, in particular, three youth pilots – $22.1m to assist young humanitarian entrants and other vulnerable young migrants under the age of 25 to make a successful transition to work or education through tailored assistance, giving them the choice of a different future.
There are sadly some who are preyed upon by Daesh and others into making different choices, and making the worst choices of their lives, finding themselves in Syria and Iraq in particular. This measure will specifically address trying to give young people who are living in those communities different choices from those being put to them by some of the most dastardly people you can imagine.
The Partnerships for Employment programme will support over 2,000 young refugees and vulnerable migrants to undertake job readiness courses.
Strong Connections to Education will assist up to 1,500 young refugees and vulnerable migrants to remain engaged with education.
Sports Engagement for Youth will encourage participation for up to 10,000 young people a year in sporting activities to help young people build social connections and confidence.

In addition, up to 300 young people will benefit from an Increased Vocational Opportunities scheme, to build and strengthen vocational skills for young refugees and vulnerable migrants. I have already begun discussions with the Lebanese Muslim Association here in Sydney about these measures and we will be doing that through the Department through a range of other very focused community-based organisations in various parts of the country.

$19.4m will be provided for young people with mental health conditions. I particularly want to thank Headspace and Orygen’s Patrick McGorry for their very strong investment in the development of these initiatives when they brought them to me earlier this year. In this trial we are helping young people enter the work force and treat their conditions at the same time, through an individualized placement and support programme. A job is a prescription for a young person with mental health issues – that’s what was put to me by Pat and we are very pleased to be able to respond in this way and we are very invested in seeing this programme work and understanding its broader implications and applications.

$55m for youth in disadvantage areas – programmes brought to us by the Brotherhood of St Laurence in particular and the outstanding success they have had in their transitions programme – we want to see those replicated. This trial will build on that work already underway, providing wrap around supports from education to the workplace and will assist youth make good decisions about their futures. Good mentoring, we all know, is critical to that.

Funding for these programmes will commence from 1 January.

I am also very keen to explore Social Impact Bonds, which were also a McClure recommendation.
SIBs, as they are called, have great potential for helping improve people’s lives while increasing public sector accountability.
Social Impact Bonds allow us to extend the financial risk of funding and delivering social services from the public sector to include the private sector. Taxpayers’ money is spent only on successful programmes and outcomes, as it should be.
I understand the New Zealand Department of Health is currently developing a pilot for a programme that has attracted strong interest from charities and the philanthropic sector.
It allows private investors, private service providers and an intermediary to partner in order to fund and deliver agreed social outcomes.
If the outcomes are successfully achieved, the investors receive their principal back and a return.

SIBs are being trialled here in Australia.
The New South Wales Government, I want to commend the Baird Government, for conducting three SIB pilots in the areas of family support, child safety and recidivism.
Mission Australia has partnered with Social Finance Australia, to develop a Social Benefit Bond to reduce prisoner reoffending rates.
The Benevolent Society is partnering with Westpac and the Commonwealth Bank to strengthen families and reduce the need for foster care.
UnitingCare Children, Young People and Families is being supported by Social Ventures Australia to expand the existing New Parent and Infant Network programme or Newpin.
Social Ventures Australia raised $7 million from investors for Newpin resulting in funding for four additional Newpin Centres.
The first results for the SIB are encouraging with 28 children restored to their families and 10 families supported to prevent their children entering out of home care.
As a result of the programme’s 60 per cent restoration rate, investors have received an initial interest rate of 7.5 per cent for the first year of the bond. That is a good deal on welfare for investors.

SIBs are being used to help single mothers at risk in Canada, unemployed migrants in Belgium, the homeless in Ireland, unemployed youth in Germany, diabetics in Israel, New Zealanders with mental health challenges.
Social Impact Bonds offer a chance to inspire innovation and transfer some of the risk from Government while developing interventions based on sound research.
Effective implementation will of course be the key. This should be possible. Indeed, we have no choice, it must be possible.

Adopting an Investment Approach to welfare represents a significant social policy reform.
Success will depend not only on government.
This is a partnership. We will need strong stakeholder support. I know ACOSS and kindred organisations will be keen to support and get involved.

As with pension, child care and aged care reforms, we also need to keep social service recipients, service providers and the wider community well informed and consulted as we progress.
The work of the community sector in informing the conversation is incredibly important. Recent major reports on social issues facing us as a nation have served to highlight areas of need.
The recent Wesley Report into financial stress showed that 44 per cent of households in NSW are suffering financial stress and 38 per cent are spending more than they earn.[1] It calls, among other recommendations, for ‘greater awareness, access and education for people to find pathways to simple money management advice and planning’.[2] And we agree.
The Salvation Army’s National Economic and Social Impact Survey 2015 argued that ‘education and employment are a means to exit poverty and have a better life. However, some respondents will require additional support to overcome the challenges they face.’[3] We agree and there are measures in the Budget.
A joint report on affordable housing from ACOSS, National Shelter, Homelessness Australia and others argued for ‘more affordable housing, pathways to home ownership for low and moderate income households’ and ‘stronger tenancy regulation’.[4]
These are all important contributions to the national debate.
In conclusion I want to leave you this morning with a sense of optimism.
I have found in this portfolio that people, despite what they have to address every day, are incredibly optimistic, incredibly passionate and that is one of the great thrills of working in this portfolio area.

There are many challenges but together we do have the ideas and the enthusiasm and capability to meet them. That has been proven over a long period of time.
We have the energy and the commitment. Your help will always continue to be needed to build an enriched social support system that, in Patrick McClure’s words: ‘improves employment and social outcomes for jobseekers and disadvantaged groups.’[5]
We all need to do more to unlock Australians from welfare and welfare dependence, to give them the choices they want to have and they currently don’t have for whatever reason that might be.

We need to find and develop new ways to create innovation in our welfare sector.
Good intentions will not be enough. They are necessary but they are not enough.
Further innovation, further participation, further investment, further players and an expanded network of those who are addressing what is an ever-expanding challenge is what is necessary to do the job.
That has a role for all of us – government, civil society and business – to meet these challenges and work in partnership together.
The common good and the sustainability of our welfare safety net, the very society we all appreciate so much, depends on it.
Thank you for your attention.