ACOSS National Conference 2016

Location: Redfern, Sydney

Good morning to everyone attending this ACOSS National Conference and thank you for the invitation to speak with you today.

It is important audiences such as that assembled here come together to discuss theory and practice designed to improve social policy outcomes for individual Australians.

I do not suppose that there will ever come a time when theory is not a large part of what takes up the time and intellectual energy of those active in the social services space – it is likely that inquiries around some right and proper balance between the rights of those who benefit from receipt of welfare payments and the rights of those people whose endeavors pay for the system will always be with us.

This is because ideas around what is the correct or proper amount of equality of outcome and therefore the perfect level of re-distribution demonstrate a fundamental quality of values – being that equally rational people can disagree about what is the right balance between two competing values or rights.

None of us are immune from advancing theories that we believe to best balance competing values – indeed one point of this short speech will be to advocate one value that the government would argue should be primary in our welfare system.

Without arguing that there should be or ever will be a time when our values don’t inform our decision making inside the public policy of social service provision, it is perhaps sometimes useful to check ourselves to make sure that there remains a consistent and concerted focus on practice as well as theory.

And decisions are guided by close observation of measurable and provable outcomes of policy, as well as, the ideas and emotions that lay behind different policy approaches.

It is always good to be cautious that we do not end up like the group in Monty Pythons Life of Brian. They spend so much time debating esoteric points of ideology, philosophy and nomenclature (including whether they should be called the People’s Front of Judea or The Judean People’s Front) – that after exhaustive theoretical effort they never actually produce anything resembling an outcome.

In the physical sciences the universally accepted approach is to use theory as the starting point not the finishing point of inquiry. In the physical sciences theories exist only to be rigorously tested in practice.

In the social sciences the relative status of theory and practice is more ambiguous.

Walter Heller was a key economic adviser to John F Kennedy and earlier a key figure in the greatest and most successful welfare programme the world has ever seen in the form of the Marshall Plan – he said something very unkind about economists – a profession about which many unkind things have been said.

He said an economist was a person who saw something working in practice and then devoted his life’s endeavours to finding out whether it would work in theory.

This criticism of economists cautions us to be mindful that the primary goal of policy is to actually produce improvements to individual lives – improvements that can be proved by evidence and which do not exist merely in our own opinion.

A first among equals status to the goal of actually producing improvements to individual lives – improvements that can be proved by evidence – is not always easy to achieve.

A recent example is the no jab no pay policy.

This policy was subject to quite vigorous opposition on a range of basis each best described as rights based theory.

That people should not have their right to choose an outcome for their child abridged in any way or have an asserted unfettered right to a welfare payment in any way limited to achieve a broader policy outcome.

Further, arguments of rights theories were raised that the policy would fall disproportionately on indigenous communities and was therefore discriminatory.

Even as a matter of rights theories these arguments are potentially flawed – but in the end the more critical issue should be whether the policy works. In fact it does work in a way which has been astonishingly successful.

There are now 180,000 children immunised this year that were not immunised last year. And overall immunisation rates after one year and tracking up toward the critical point of 95 per cent herd immunisation.

And best of all the rate of immunisation for indigenous kids over the past 12 months has grown fastest of all. Nationally the immunisation rate for Indigenous 5 year olds has increased two times more than the national increase over the past year, while Indigenous one and two year olds have increased 1.5 times. The most significant figure though is that the immunisation rate for Indigenous 5 year olds has reached 95 per cent.

So the policy has had a disproportionate effect, but a disproportionately positive one – this is probably the only health measure where the gap has been closed and now the gap is in favour of indigenous kids.

Precisely the same arguments raised in opposition to the no jab no pay policy have been raised against the Government’s Cashless Debit Card trial.

In fact some of the ideological objections to the cashless welfare card were so strongly held that some senators declined to even meet with indigenous community members who had come to Parliament House to advocate for the passage of the legislation that would allow the trials to commence.

Indeed, some have called for the trial to cease while the Government addresses purported oversights, leaving aside that the trial is strongly supported by the local communities.

Results should outweigh ideological objections and even 6 months in the card is already delivering impressive early results in Kununurra, Wyndham and Ceduna.

So far we have seen:

• Admissions to the Wyndham Sobering-Up Unit reduced by 69 per cent.
• The number of domestic violence incidences reported in Kununurra/Wyndham reduced by 13 per cent.
• A 27 per cent decrease in call-outs by St John Ambulance in Kununurra; and
• Poker machine revenue in the Ceduna region reduced by 15.1 per cent.

If this type of real improvement to individual human lives continues, the question arises whether it is possible to move on from theoretical disagreements and work together to see where else those improvements can be duplicated.

We undoubtedly have, and must sustainably maintain, one of the strongest social safety nets in the world. This is achieved by the significant expenditure on welfare of around $160 billion a year – or a third of all government expenditure. Representing 80 per cent of all individual income tax raised in Australia.

Social Services is, simultaneously the largest area of government spending and the fastest growing, with growth outstripping GDP and CPI.

And so any government must balance the imperatives to maintain our strong social safety net and continue to protect our most vulnerable people and also ensure there is sustainability to the system. So that increases in welfare expenditure today are not paid for with borrowings, coming at the expense of today’s young Australians ability to afford a similarly generous system in decades to come.

Even more critical however, than concerns about future sustainability, is the present need to ensure that our welfare system is appropriately targeted to actually improving lives.

There is a substantial body of evidence that shows that the virtue of work extends well beyond the clear financial benefits to include physical health and intergenerational benefits, where a child growing up with working parents will have better outcomes; socially, emotionally and physically. This relates to the way people feel about being engaged in meaningful work, making a contribution to society, providing for their family and a sense of social connection.

It is for this reason that I was deeply concerned when the data I recently released through the Priority Investment Approach showed there are too many instances where young people enter the welfare system and are at risk of remaining in it for their entire lives, not helped by a system where payments often require no mutual obligation to find and hold even a modest number of working hours.

So the task ahead of us is to engage in an honest, evidence based assessment as to whether existing welfare spending in any given circumstance actually improves an individual’s prospects for a better life.

And it is this goal of achieving actual and measurable improvement to individual lives that should return policy makers to an understanding of the primary value of work.

I noted earlier that all governments will have basic philosophical positions that inform general policy approaches – and this government proceeds from a statement of belief – that failure in the system is demonstrated where welfare receipt becomes a permanent destination for able Australians more than capable of contributing to the community through work.

In this sense we think the same way that President Theodore Roosevelt did when he described ‘Far and away the best prize that life offers is the chance to work hard at work worth doing’.

Like all theoretical propositions – the idea of an absolute primacy in the value of work is not beyond contestability.

An alternative view, which often proceeds from placing a superior value on income redistribution to achieve greater levels of equality, is that there is an essential equivalency between payments received through welfare and the same amount earned through work. And so extra dollars from welfare are as good as those earned through work because they reduce inequality through redistribution.

This idea that the source of income is less important than the amount appears often in academic assessments and indeed it permeates the welfare system itself at many legislative points – it manifests for instance in rules which legitimise the turning down of paid employment – for example if it only pays $50 more than the amount received by the relevant welfare payment being received.

No-one explains why it is, that for a capable Australian, $50 earned from employment is always superior than the same amount received in welfare – than Warren Mundine, chairman of the Prime Minister’s Indigenous Advisory Council.

In a recent article he said:

There is a persistent idea in social services that because work necessarily involves costs associated with travel and preparation – that someone is arguably worse off working for an amount similar to what they might achieve through a combination of welfare payments.

While a persistent theory – this is an idea that misses the point – that many of the most important benefits of work are not economic.

Humans have always worked and they did so well before there was even such a thing as economies.

The reason we worked was to apply our individual capabilities to improve the circumstances of our families and our wider communities.

Before it was ever an economic exchange – work was (and still remains) a sacred form of giving – giving by the application of individual capabilities to greater goods.

This is why work provides depth and breadth to our lives.

Because when we exercise our capabilities the first reward is a sense of dignity, pride and purpose.

And when our capabilities are applied in our communities the second reward is that we are linked into those communities and isolation gives way to connectedness and belonging.

Work is more than money – it is self-worth from self-reliance, it’s friendships, it’s purpose and a meaning in life.

Of course there is ALSO one very strong reason why even a job that pays only the same or somewhat more than welfare still has a very strong economic benefit and that is THAT the best way to get a better paying next job is through the experience and skills gained in the first job.

The quote offered from Warren Mundine was given in the context of commenting on an OECD finding that nearly 600,000 young Australians aged between 15 and 29 were not in education, training or employment, and around two-thirds of them were not actively seeking work.

One of the things that needs to be improved on is that the present operation of the welfare system seems to generate a proliferation of instances where there is simply not enough encouragement to transition from welfare to work.

For example, since June 2010 our recent analysis of data shows that we have seen a very significant increase in the exemptions to the basic mutual obligations to search for and attain work, especially in Newstart Allowance recipients.

In 2010 the percentage of Newstart recipients exempt from mutual obligations was 7.7% (being 42,800 out of 553,893) the percentage of Newstart recipients now exempt from mutual obligations is 13.8% (100,101 out of 727,269). This is close to an 80 per cent increase in the proportion of Newstart recipients exempt from mutual obligations to search for work – this must surely demonstrate something fundamentally wrong with the system.

Maximising the number of capable young Australians who can have their life made more meaningful by employment, community contribution and self-reliance means we have to interrogate the ways in which the present system does not seem to be effective in channeling people into the real opportunities that exist in an economy that is growing jobs as well as anywhere in the world.

We need to change the attitude that simply spending more on more of the same payments inside the same system will improve lives.

We have seen more than 467,000 jobs created since September 2013, more than 102,000 of them in the last 12 months. Jobs growth under the Coalition remains faster than in the final year of the former government.

Worryingly however, the Department of Employment information shows that 39 per cent of employers reported that it was difficult to recruit staff.

That included 34 per cent who reported difficulty recruiting low skilled staff.

It is this type of employer response that has led our government to try a new approach in the PaTH programme designed to prepare young unemployed Australians for an internship and incentivise them into that internship by payments on top of the usual amount of welfare.

And also to provide incentives for employers to transition the recruit from intern to employee.

This is a new approach opposed by the union movement – again on grounds that are ideological and which deny the need in practice to try new approaches.

But as well as incentive programmes we have to be sure we are not making it too easy to choose welfare over work – last year 3000 people on welfare turned down offers of employment and that is a terrible lost opportunity for our community and for those 3000 people who have made a very bad decision for themselves.

If problems in the welfare system are not confronted then we will lose a golden opportunity.

For instance, over the next few years more than 100,000 new jobs in the aged, disability and child care sectors will be created.

This represents an employment opportunity rich environment for anyone transitioning from welfare to work.

And having the right mix of incentive and preparation structures like the PaTH, as well as, the right balance of robust and effective mutual obligations inside the welfare system – will be critical to maximising these opportunities.

More spending in and of itself is no guarantee that key groups have had their lives improved in any material, ongoing or significant way.

And while the welfare system must always be about providing appropriate support for those who are unable to work, real social progress from here will mean an intensity of focus on those programmes and settings and structures that have the proven effect to better prepare people for and transition them to employment.

It is a major shortcoming of today’s welfare system that it does not do enough to maximise the transition to employment opportunities for people often trapped in inside. Three problems combine to produce underwhelming transition to employment outcomes.

• The system is far too complex;
• At critical points for large groups it lacks substantive mutual obligation requirements ; and
• It exhibits a slow, sloppy and low expectation – compliance regime – for those mutual obligations that do exist.

The system is maddeningly complex.

16 different working age payments and 49 supplements all of which have a myriad of different eligibility criteria, different rates, different income free areas, different taper rates and cut outs, and other intricacies making the system a maze.

It is so much of a maze that people in very similar circumstances can be subject to very different payments. This means they also have very different requirements and levels of mutual obligation.

The complexity of the system blurs what could be much straighter line from welfare to work.

Equally, the nature and extent of the current system of mutual obligations do not reflect modern community expectations.

Astonishingly, the present structure of the working age payment system sees more than 400,000 capable people in receipt of working age payments having no mutual obligation to try, search or even prepare for work.

This does not help secure good outcomes for people and risks entrenching disadvantage.

Additionally, all of the evidence suggests that the compliance regime is failing miserably.

Simply put where mutual obligations do exist to prepare, search for and accept employment they exist more in theory than practice.

Recent employment figures show that in the last financial year there were over 2.3 million instances of job seekers failing to attend an appointment without a valid reason.

During that year however, there were only around 24,000 instances elevated to the level of what the system describes as ‘serious failure’ where people refused to accept or commence a suitable job or were persistently non-compliant.

And of those 24,000, only seven per cent – or around 1,660 people – fully served the associated penalty.

We cannot overlook these failures of the system.

The combination of too few mutual obligations which are too poorly complied with is how people fall into the passive receipt of welfare, become reliant and miss out on the opportunities of a job and improved life chances.

Investing $33 million to compile and systemise 15 years of welfare data from across Australia has given us a new data platform and new factual insights into the failures inside the present welfare system and the need to to modernise the system to produce better results for capable Australians who have become stuck in often inter-generational cycles of dependence.

The Priority Investment Approach data will allow us to pursue new directions and three clear objectives in welfare policy:

• Identify those at risk of long term welfare dependency and help them get a job;
• Identify and reduce the risks of intergenerational welfare dependency; and
• Ensure the long term financial sustainability of the welfare system.

The first steps in this process has been to create the $96 million Try, Test and Learn Fund.

Ultimately and by way of conclusion this is not the time to reject new ideas on theoretical grounds, its time to try new ideas to better fulfil the original intent of welfare – that is to improve lives.

In the end we will need to work together, government and non-government institutions alike to come up with new and innovative approaches and reject only the approaches that do not work.

It is often the case that theoretical critiques of new approaches abound for little reason other than the fact that criticism is so much easier and so much less risky than the hard grind and reputational endeavor that is required to actually design and implement a really new approach to a specific group that can be plainly tested for its success or failure in decreasing the welfare dependency of that group.

But with all the experience and talent and knowledge in a room like this it would be a worthy investment of your time as experts to work closely with the coal face service delivery agencies. To form joint ventures and develop and devise and put your name to new practical ideas for the new Try, Test and Learn Fund.

Those who are disadvantaged by being inside the welfare system when they could be reliant on themselves and contributing their work to our community might possibly consider it worth trading one less theoretical critique in a sea of advocacy for one more new practical and measurable approach to increasing advantage through work.