Speech by The Hon Mal Brough MP

Social Security And Other Legislation Amendment (Welfare Payment Reform) Bill 2007 – Second reading speech

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The Social Security and Other Legislation Amendment (Welfare Payment Reform) Bill 2007 is another important step in the government’s reform of the national welfare system.

Australians are rightly proud of the strong safety net provided by our income support system.

The fact is that the vast majority of people receiving welfare use this support wisely, in the interests of themselves, their partners and, very importantly, their children.

Sadly, however, this is not true of everyone.

The government believes that the right to welfare comes with obligations.

It is only reasonable to expect those who receive this support to meet some basic obligations to society in return.

Over the last decade, the Howard government has moved to tackle the scourge of passive welfare and to reinforce responsible behaviour through the establishment of our mutual obligation framework.

We have strengthened the important principle that those on welfare who can work should seek work, and asked those receiving welfare for longer periods to re-engage through work for the dole.

This bill builds on these important directions by extending the mutual obligation framework and reinforcing an appropriate balance between entitlements and responsibilities in our society.

One of the most important obligations a person can have is responsibility for the care, education and development of children.

Welfare is not for alcohol, drugs, pornography or gambling – it is for priority expenditures such as secure housing, food, education and clothing – things that are considered a child’s basic rights.

This bill outlines five welfare reform measures to promote socially responsible behaviour aimed at protecting and nurturing the children in our society and offering them the opportunities that a supportive family, a solid education and a healthy and safe environment can provide.

In developing this approach, it has become clear we are facing two very different situations in Australia.

For most of the country, the parental behaviour the government is concerned about occurs relatively infrequently and is limited to a relatively small number of families.

The behaviour of these parents is clearly against normal community standards and is a focus of child protection and other State authorities.

To address this circumstance, the government will introduce three nation-wide measures that link the receipt of income support to school attendance and enrolment, and which assist State and Territory child welfare authorities in the prevention of child neglect.

Parents who fail to provide for their children will have their payments income managed, to ensure that priority needs are met and to encourage better parenting behaviours.

These measures are a step forward in Commonwealth/State relations and offer an additional tool that will be of assistance to States and Territories in meeting their responsibilities for child welfare and schooling.

The second situation involves some remote Indigenous communities where normal community standards and parenting behaviours have broken down.

In these communities, there is little economic activity and welfare is by far the most common form of income.

The combination of free money (in relatively large sums), free time and ready access to drugs and alcohol has created appalling conditions for community members, particularly children.

Our emergency response in the Northern Territory, including the welfare reform and the Community Development Employment Projects (CDEP) program changes included in this bill, is targeted at this second context.

The bill also provides for the implementation of our recently announced Cape York Welfare Reform trial, which is based on a comprehensive plan developed in partnership with Mr Noel Pearson’s Cape York Institute.

As with the national measures, income management will be applied in both cases to ensure that priority needs are met and to encourage better social and parenting behaviors.

Income management model

While there are differences in the approaches to each of the measures outlined in this bill, there are common elements to the way we will apply income management.

The bill outlines the broad framework under which the management of a person’s welfare payments is to occur.

While the government is ensuring welfare payments are spent on the priority needs of a person and his or her family, its objective is for the person to take responsibility for their own welfare and for the welfare of their family.

This bill makes it quite clear individuals will not lose any of their entitlements.

All managed income will initially be placed into an individual’s income management account, and will be for use by the relevant person only.

To ensure this, it will be special public money under section 16 of the Financial Management and Accountability Act 1997.

This arrangement ensures the money is regarded as having been paid to the person, so that there is no unintended change to taxation or child support liabilities.

People will be fully aware of what funds are available to them.

Individuals will receive statements of the credits and debits to their account and of the balance of their account.

The government wants individuals to take control over their lives.

It wants individuals to work with Centrelink to identify their expenses and manage their priority needs.

This bill establishes as priority needs things such as food, clothing, housing, health, child care and development, education and training, employment and transport.

It enables a person to receive an amount of discretionary cash and there are no restrictions placed on how that amount can be spent.

However, Centrelink must ensure the remaining managed income is used to meet the current and reasonably foreseeable priority needs of the person and their family.

If Centrelink becomes aware of unmet priority needs, it must take action to address those needs.

Once Centrelink is satisfied current and reasonably foreseeable priority needs are met, it cannot unreasonably refuse a person access to their entitlements for another purpose, provided the funds will not be used to purchase excluded items – alcohol, tobacco, gambling and pornography.

The bill provides flexibility in the methods available to meet people’s priority needs.

The mechanisms include vouchers, stored value cards, the payment of expenses, payments to various accounts (including stores, debit cards and bank accounts).

The government will be working to establish appropriate mechanisms in Northern Territory communities in the short term and then more generally throughout Australia to support the national income management measures contained in this bill.

Child abuse and neglect

The abuse and neglect of children is not new and occurs in all societies, but that does not mean as a society we have to accept it.

Every child has the right to health and wellbeing and a life free from violence.

Preventing child abuse and neglect is everyone’s responsibility.

Neglect includes failure to provide adequate food, shelter, suitable clothes, medical attention or education.

The Australian Government is greatly concerned about the continuing increase in the number of children being reported as neglected or abused.

The main data available on child abuse and neglect in Australia is for children who have come to the attention of child protection authorities in each State or Territory.1

These figures are likely to represent only a proportion of the true prevalence of abuse and neglect.

Over the last five years, the number of child protection notifications in Australia has almost doubled from 137,938 in 2001-02 to 266,745 in 2005 06.

Some of this increase reflects changes in child protection policies and practices in different jurisdictions.

It could also reflect a better awareness of child protection concerns in the wider community and more willingness to report problems to State and Territory child protection services.

Aboriginal and Torres Strait Islander children are clearly over-represented in the child protection system, being almost five times more likely to be the subject of a substantiated case than other children.

Australia wide, 29.4 out of 1,000 Indigenous children have been the victims of substantiated abuse or neglect compared to 6.5 out of 1,000 non-Indigenous children.

The rate of Aboriginal and Torres Strait Islander children in out-of-home care is over seven times the rate of other children.

We know that young children who are exposed to violence, abuse or neglect, are among the most vulnerable of children and likely to experience problems later in life.

Their developing ability to trust and enter into mature, healthy relationships is damaged.

Stressful events during the early years, such as abuse and neglect, have also been shown to adversely influence nervous system responses to stress for the rest of a child’s life.

Abuse and neglect can leave children with lasting physical damage, health issues, and developmental and emotional delays and problems.

Responsibility for child protection services rest primarily with each State and Territory government.

Notwithstanding this, there is no doubt the best outcomes for children will be achieved if the Australian Government and the State and Territory governments work together.

The measures being introduced in this bill will provide another tool to be used by the child protection authorities in States and Territories.

State and Territory governments will be given the option of notifying the Commonwealth that a person be placed on income management where a child is found to be at risk of neglect.

Under income management, up to 100 per cent of a person’s welfare support payments can be set aside and directed to appropriate expenditure.

This approach will help ensure income support is used to provide shelter, food and clothing for children at risk of neglect.

Income management will remain in place for the family until the child protection authority withdraws or revokes the notice requesting income management.

We will work with each of the States and Territories to establish agreements guiding the operation of this tool, with the aim of commencement from 1 July 2008.

School attendance and enrolment

There is a clear and unequivocal link between educational outcomes and other important life outcomes such as employment, income and community participation.

Education greatly increases a child’s chances of future success and helps them develop important skills and attitudes.

Helping to ensure children reach their full potential at school will also help reduce the risk of longer-term welfare dependence.

The arguments for adopting an early intervention approach in cases where children are not enrolled at or attending school are irrefutable.

Children and young people who are chronically absent or excluded from school are severely educationally disadvantaged.

Research commissioned by the Dusseldorp Skills Forum shows a correlation between school non-attendance and under-achievement at school, criminal activity, poverty, unemployment and homelessness.

Strong literacy and numeracy skills are critical foundations for school completion and longer-term success.

The importance of literacy and numeracy achievement has been highlighted in a Longitudinal Survey of Australian Youth (LSAY) research report that looked at the relationships between literacy and numeracy achievement in junior secondary school and a range of education, training and labour market outcomes at age 19.

Job seekers with weak numeracy and literacy skills are also more likely to experience long-term unemployment.

More generally, poor literacy skills impact on a person’s capacity to be a productive worker in today’s workforce.

The government will tackle the social risks of poor education via two measures, which target school enrolment and school attendance.

Income management of up to 100 per cent of payments will be used as a tool to assist State and Territory governments to meet their responsibilities in relation to these two areas.

In relation to school enrolment, if a parent is receiving income support, has care of a compulsory school-aged child and the child is not enrolled at a school, then both parents could be subject to income management.

If children are not enrolled at school, Centrelink will notify parents and carers that they need to take action to enrol their children and provide proof of enrolment within a specified period with a warning of the consequences of a failure to do so.

Centrelink will consider any ‘reasonable excuse’ for a failure of a parent to provide the documentation (such as events beyond the person’s control, changes in the level of care which might relate to particular children and foster care arrangements) and, where no reasonable excuse exists, a period of income management could be immediately applied.

Both parents can also be subject to income management if their child does not attend school sufficiently and there is no reasonable excuse as to why the child is not attending school.

The government is proposing a national benchmark for attendance of not more than five unexplained absences each school term.

Before parents are subject to the income management regime due to exceeding the national benchmark, parents will be given a formal warning.

Parents and carers who do the right thing – consistent with community expectations – by enrolling their children and getting them to school will not be affected by income management.

For those who do not, this measure will serve to encourage them to take more responsibility for, and be more involved in, their children’s education.

These measures will come into affect in the following phases:

  • The school enrolment and attendance measure will commence as soon as possible in the Northern Territory to support the government’s emergency response.
  • From the start of the 2009 school year, the school enrolment and attendance measure will be implemented nationally for parents of primary school-aged children.
  • From the start of the 2010 school year, the school enrolment and attendance measure will be implemented nationally for parents of high school-aged children.

For this to occur, the support of the States and Territories and the non government school sector is needed, to assist in providing the necessary information, and the government will be undertaking consultations to achieve this.

These measures will provide an additional support to States and Territories to help them meet their responsibilities for, and our common goal of, improving the educational outcomes of Australian children.

Northern Territory

In the Northern Territory, as the recent Little Children are Sacred report made clear, there is a national emergency confronting the welfare of Aboriginal children.

In these cases, the provision of welfare has not had the desired outcome; it has become a trap instead of a pathway.

Normal community standards, social norms and parenting behaviours have broken down and too many are trapped in an intergenerational cycle of dependency.

The government’s emergency response aims to protect children and make communities safe in the first instance, and then to lay the basis for a sustainable future for Indigenous Australians in the Northern Territory.

The welfare reforms outlined in this bill will help to stem the flow of cash going toward substance abuse and gambling and ensure that funds meant to be for children’s welfare are used for that purpose.

Fifty percent of the welfare payments of all individuals in the affected communities will be income managed for an initial period of 12 months during the stabilisation phase

This broad-based approach is needed to address a break down in social norms that characterise many of our remote Northern Territory communities.

In particular, this approach is essential to minimise the practice known as ‘humbugging’ in the Northern Territory, where people are intimidated into handing over their money to others.

If certain groups, such as the young and old, are excluded from this measure, it could leave them potentially even more vulnerable.

Income management will be introduced in the Northern Territory on a progressive basis across communities as part of the Australian Government’s emergency response to the crisis confronting the welfare of Aboriginal children.

Several factors will be taken into account before commencing income management, including stability and security in the area, and opportunities for individuals to discuss the operation of income management with Centrelink, including their expenditure needs.

The availability of suitable payment mechanisms for people to buy food and groceries will also be taken into account.

With some very limited exceptions, all individual residents in a community who receive income support payments will be subject to income management at the same time.

Any individuals who move into the community will become subject to income management when they move there.

Income management will generally apply in the community for an initial period of 12 months.

The amount to be set aside for income management will be 50 per cent of income support and family tax benefit instalment payments.

Advances, lump sums and baby bonus instalments will all be subject to 100 per cent income management.

The new arrangements may follow an individual even if they move out of the prescribed community to ensure they cannot easily avoid the income management regime.

Income management will continue until the initial declaration of 12 months expires or until it is revoked.

The government’s intention is to transition communities to the national welfare reform measures over time, as communities are stabilised and normalised, so a consistent approach exists across the country.

It is important to acknowledge that this bill will not take one cent of welfare from individuals or families in these Indigenous communities, but simply limits the discretion that individuals exercise over a portion of their welfare and prevents them from using welfare in socially irresponsible ways.

It should also be noted that we have developed a comprehensive and integrated plan in the Northern Territory.

The welfare reforms just outlined are supported by the legislative reforms that will provide improvements to community stores for people living in affected communities.

This will assist in ensuring payments can be used to buy quality goods from reputable stores.

Changes to the CDEP program which will be implemented in the Northern Territory are included in this bill.

The Little Children are Sacred report found that lack of employment opportunities has had a significant negative impact on self esteem and personal relationships and created an environment of boredom and hopelessness.

While CDEP has been a major source of funding for many Northern Territory communities, it has not provided a pathway to real employment, and has become another form of welfare dependency for many people.

Instead of creating new opportunities for employment, it has become a destination in itself.

It has also in too many cases been used as a substitute for services that would otherwise be the responsibilities of governments – services that should be provided through full-paid employment.

To support the Australian Government’s Northern Territory emergency response, the CDEP program in the Northern Territory will progressively be replaced with real jobs, training and mainstream employment services.

CDEP participants will be assisted to move into real jobs, to training or onto income support, through work for the dole or other appropriate benefits instead of CDEP payments.

In the coming months, the Australian Government will work with CDEP providers across the Northern Territory to develop a comprehensive plan for each CDEP organisation to implement these changes.

Participants will progressively transition to the new arrangement. The transition will be completed across the Northern Territory by 30 June 2008.

These changes will support the current emergency intervention in the Northern Territory and support the improvement of services and the creation of new jobs within Northern Territory communities.

The Australian Government will work with all government agencies to turn CDEP positions, which are substituting for government services, into real jobs.

In addition, an audit of job opportunities in 52 Indigenous communities in the Northern Territory conducted by the Local Government Association of the Northern Territory (LGANT) identified 2,955 current real jobs, only 44 per cent of which are occupied by Aboriginal people.

Training will be provided to capture these jobs for local people.

The phasing out of CDEP participant payments will happen on a community by community basis.

To ensure that there is no financial loss for some individuals moving from CDEP to income support, existing CDEP participants in the Northern Territory may be eligible to receive a Northern Territory CDEP Transition Payment.

Centrelink will calculate the payment on an individual basis.

This payment will make up the difference between the average earnings on CDEP and the payments made under income support arrangements and will be available till 30 June 2008.

The payment will assist participants to manage any changes in income and will be capped at the maximum allowable CDEP earnings.

The payment is directed at current participants. New participants who join CDEP after 23 July 2007 will not be eligible for this transition payment.

Changes to the taxation law will allow for the Northern Territory CDEP Transition Payment to be subject to the Beneficiary Tax Rebate, as is the case with current CDEP participant payments.

Where income support payments are to be subject to income management, so will the Northern Territory CDEP Transition Payment.

Moving CDEP participants on to income support will allow a single system of income management to apply to welfare payments.

The level of funding currently provided to the Northern Territory through CDEP will not diminish under the new arrangements.

The appropriation bills also introduced in this package provide the funding required for these initiatives in 2007-08 for the stabilisation phase of the Response, and the government will be developing a longer-term approach with costs in the next budget process.

Cape York

The Australian Government has committed to support and fund a proposal by the Cape York Institute to trial a new approach to welfare in four Cape York Indigenous communities: Hope Vale, Aurukun, Coen and Mossman Gorge.

This bill provides the platform for this to occur.

The government’s decision is a response to the recommendations of the report by the Institute From Hand Out to Hand Up, provided to the government on 19 June 2007.

This report contained a comprehensive plan to tackle welfare dependency in the Cape York region.

It is backed by strong on-the-ground leadership from the Cape York Institute, particularly Noel Pearson.

A major feature of the trial to be introduced in Cape York is the introduction of a set of obligations which welfare recipients would be expected to meet.

As for the other national welfare measures, these obligations include requirements that parents send their children to school and protect them from harm and neglect.

There will also be reforms to tenancy arrangements, and obligations on tenants to comply with lease conditions.

The bill provides for the recognition of a new body to be established under Queensland law.

This body will have authority in relation to the income management of welfare payments to encourage compliance with the obligations.

Subject to State legislation, the body will have the authority to obtain information from State child protection authorities, courts and schools to assist it to determine whether there has been a breach of one of the obligations.

This new body may issue a notice to Centrelink, requiring that some or all of a person’s welfare payments be subject to income management.

The body will work with families and communities to deal with issues such as drug and alcohol dependency, violence, child neglect and truancy, gambling, and poor money management.

The body will also work with the communities participating in the trial to rebuild social norms and ensure welfare money is not misused to fund alcohol, drugs or gambling.

Subject to the support of the communities and the passage of legislation by the Queensland Government, it is intended that the trials will commence at the beginning of the 2008 school year and continue until the end of 2011.

The trials aim to promote engagement in the real economy, reduce passive welfare and rebuild social norms, particularly as they affect the wellbeing of children.

This initiative is an expression of the desire of people in Cape York to ensure their children grow up in a safe home, attend school and enjoy the same opportunities as any other Australian child.

The Australian Government will be providing funding of $48 million for the trials.

The Australian Government’s commitment includes significant funding for complementary initiatives to support the trials and assist people to meet their obligations.

In addition, the Australian Government will contribute $5 million towards the cost of employing case managers who will support people referred to the Commission and provide a fund from which they will be able to purchase specialist services for families, for example, relationship or violence counselling.

The trials will provide a vehicle to assess the effectiveness of such an approach, which may offer lessons for the future and inform our approach to tackling Indigenous welfare dependency.

The Australian Government will work together with the Cape York Institute and the selected communities throughout the duration of the trials.

The leaders of Cape York should be commended for their determination and commitment to improve their lives and provide a safe and prosperous future for their children.


These changes are designed to benefit Australia’s children.

They are practical and targeted responses to real issues within our society.

The government’s aim is to extend the principle of mutual obligation beyond participation in the workforce to a range of behaviours that address, either directly or indirectly, the welfare and development of children.

None of the measures outlined in this bill will result in a reduction in entitlements, and they will only apply to the minority of people who are behaving inappropriately.

The vast majority will remain unaffected by these changes. But a better future will be provided for those children who will now have their basic rights to things like food, shelter and an education met.


1. Australian Institute of Health and Welfare, Child Protection, Australia, 2005-06, cat. no. CWS26, AIHW, Canberra, 2007.