Speech to the ACOSS 2019 Budget Breakfast

Introduction

It is a pleasure to speak to this ACOSS conference – for the second time since I have been Minister for Families and Social Services.

ACOSS is a highly respected advocacy and research organisation and I have appreciated your advice and input in my time as Minister.

In an early meeting with your CEO Cassandra Goldie, she recommended that I visit Bourke in the far north-west of NSW to learn about the Maranguka Justice Reinvestment project.

This project was developed by community leaders with the aim of improving outcomes for indigenous families experiencing high levels of social disadvantage.

When I visited Bourke in February this year, I heard from Bourke Tribal Council leader Alistair Ferguson and Police Superintendent Greg Moore about some of the encouraging results from the program.  I sat in on one of the regular daily meetings – where police, community leaders, social workers and others review what is happening in the community and decide on actions to be taken the next day.

According to a review of the Maranguka project published last year by KPMG, the outcomes it has delivered include:

• a 23 per cent reduction in police recorded incidents of domestic violence in Bourke
• a 31 per cent increase in year twelve student retention rates and
• a 42 per cent reduction in days spent by adults in custody. [1]

This is an impressive example of place based social policy in action.  Following my visit I had no hesitation in committing $1.5 million of Commonwealth funding to continue the project – building on the substantial funding and in kind support provided for several years now by the NSW Government and philanthropic sources.

Bourke will be one of the ten communities partnering in our $35 million Stronger Places, Stronger People initiative – designed to stimulate partnering between communities, governments, service providers and investors to deliver on a locally designed plan of action to tackle disadvantage.

In the nearly eight months I have been in this portfolio, I have been struck by the dedication and commitment of so many people and organisations who are working to improve the lives of fellow Australians living with disadvantage, sometimes entrenched disadvantage.

I have also been impressed to the see the fighting spirit of many vulnerable Australians who are working to overcome setbacks and make significant progress in their lives and communities.

Today I want to discuss the support our Liberal National Government is giving to these efforts – and what the budget means for this work.  I would like to speak first about how our government is funding the services that Australians depend on, including in my portfolio of Families and Social Services.

Next I want to talk about a number of specific budget initiatives in my portfolio and related portfolios.  Lastly, I want to discuss jobs – and why creating jobs is so important for vulnerable Australians.

A Strong Budget Funds the Services Australians Rely On

Let me turn first then to how our strong budget allows us to fund the services that Australians rely on.

If we are to continue to support vulnerable Australians and sustain an innovative social services system we need a strong and healthy economy.

We spend an enormous amount each year on social security and welfare. In 2019-20, it will be $180 billion, more than one‑third of the Commonwealth Budget.[2] 

Of this, over $140 billion falls within the Social Services portfolio – which makes up more than 28 per cent of the federal Budget.[3], [4]

Of Australia’s 25 million people, more than 4.9 million currently receive an age pension or working age income support.

Social services touches almost all Australians at some stage in their lives.

The safety net provided for the most vulnerable among us is particularly important - and why it is crucial that the system remains sustainable.

We make a promise to Australians that if they have particular needs and meet the relevant residency, income and assets tests,, they will be supported with a particular benefit – be it the Age Pension for those over sixty five and a half; be it Newstart for those of working age who are unemployed; be it Disability Support Pension for those suffering from permanent disability that stops you from working.

If we make that promise, it is so important that we can keep it. We never want to run the risk that we do not have the money to pay the benefit we promise.

Yet this was the risk the previous Labor Government was running.

Under that government, social security and welfare spending grew at around twice the rate of revenue growth – 6.2 per cent per year compared with total tax receipt growth of 3.3 per cent per year.[5]

Since our Liberal National Government came to power in 2013, we have been able to reverse this trajectory. Social security and welfare has been growing at an average rate of 2.9 per cent per year, lower than growth in total tax receipts at 5.3 per cent per year.

Budget Measures in Social Services

I want to turn then to speak about some of the major budget measures in the social services area.  We have signalled some important reform directions – and I would like to explain what we are doing.

More Accurate Reporting of Income using Technology

The first measure to highlight is our commitment to deliver a better user experience for people on income support payments through better use of information technology.

Welfare recipients are required to report on their income from employment; we are going to make this a simpler and clearer process.  At the moment, the legislation requires that people estimate and report the amount of income they earned during the reporting period; we are going to change that so that people report the gross income paid to them by their employer. 

This legislative change will be complemented by important changes in the way we use information technology.  Under the Single Touch Payroll project being implemented by the Australian Taxation Office, employers automatically transmit data to the ATO about the amounts they have paid to employees in each reporting period.

This information will now go to the Department of Human Services – so that it can be used to determine what income support payment someone on, say, Newstart, is entitled to receive.

So as well as welfare recipients having simpler reporting requirements – they will be much less likely to receive an overpayment of benefits which they are later required to repay.[6]

I do want to make it absolutely clear that this measure does not involve any change to either eligibility criteria or maximum payment rates for Social Security income support recipients.

Reforms to jobactive

Another important measure announced in this budget is significant changes to jobactive – to provide improved service options and more personalised support to help job seekers find a job.

These are some of the most significant reforms to the system in 20 years.

The new employment services model will begin in July in two pilot regions and will be implemented nationally from July 2022.

We expect it to benefit more than a million job seekers each year as well as thousands of businesses.

As well as providing enhanced service options to help job seekers, the new model will have a better digital platform and more flexibility for meeting mutual obligations.

Cashless Debit Card

This budget has also seen us announce $128.8 million of funding to extend the operation of the Cashless Debit Card.

The Cashless Debit Card quarantines a proportion of a person’s welfare onto an EFTPOS card which operates like any other such card, with one important restriction – it cannot be used to buy alcohol, drugs or gambling products.

There is growing evidence of the benefits being delivered in the first three sites in which the Card is being trialled – Ceduna in South Australia and the Goldfields and East Kimberly regions in WA.

The independent evaluation of the first two trial sites states the card has shown “considerable positive impact”, including:

• 41% of participants surveyed who drank alcohol reported drinking less frequently;
• 48% of participants surveyed who used drugs reported using drugs less frequently;
• 48% of those who gambled before the trial reported gambling less often;
• An increased motivation to find employment; and
• Improved parenting outcomes and child wellbeing.

Late last year I visited the third trial site in the Goldfields region – where I heard first hand from community members, leaders, police, health workers and local business owners, from communities such as Laverton, Leonora, Mt Margaret, Coolgardie and Kalgoorlie.

There was a strong and uniform theme: the people I met told me the card is making a real difference, the streets of their town are quieter and it feels safer.

Police spoke about significant decreases in late night callouts for domestic violence.

Health officials told me about significant reductions in mental health and domestic violence presentations.

At one chemist, a staff member – who admitted she was a sceptic prior to the implementation - spoke of the increased sales of nappies and health and hygiene products since the Card commenced, because parents now had the money available to buy these products for their children.

The Baseline report into the Goldfields trial site has confirmed these findings, with its key findings including:

• Decrease in drug and alcohol issues;
• Decrease in crime violence and anti-social behaviour;
• Improvements in child health and wellbeing;
• Improved financial management; and,
• Ongoing, and even strengthened community support. 

So the policy case for the cashless debit card is strong. It helps ensure that welfare payments are used for their intended purpose: so vulnerable Australians can put food on the table, can pay the rent, can buy clothes for their children.  Every time a welfare dollar goes to a drug dealer or grog seller, it is not being used to provide this primary support. 

Very importantly, the cashless debit card helps people stabilise their lives and reduce key risk factors. In turn this helps people deal with key responsibilities in their lives – such as looking after children.  It also helps them deal with drug and alcohol addictions – which in turn helps you to become ready to work. 

The West Australian Coroner has recently recommended the further expansion of the Cashless Debit Card on a voluntary basis across the entire Kimberley region of Western Australia in response to the tragic suicides of 13 young indigenous people. 

This is consistent with a growing community view that the Cashless Debit Card can be an important tool to help reduce the significant harms caused by welfare fuelled drug, alcohol and gambling abuse.

It is because of this evidence that we have committed additional funding in this budget, including funding for an additional 12 months across the existing trial sites to 30 June 2021. Bundaberg and Hervey Bay, Ceduna, Goldfields and East Kimberley regions will all receive funding for support services to continue. 

This funding announcement was complemented by legislation passed by the House and Senate in the last sitting week to extend the trial site operations.

In addition, from January 2020, we will begin to transition nearly 22,500 Northern Territory and Cape York Income Management participants from the BasicsCard onto the Cashless Debit Card.  These participants are mainly in the Northern Territory and Queensland, with smaller numbers in a number of sites in our larger cities.

The cashless debit card offers a better user experience - with the ability to transfer funds between accounts, purchase online and is automatically accepted at almost 1 million eftpos terminals nationally.

By contrast those on the existing Basics Card can only use it at around 16,000 merchants.

The Cashless Debit Card is a more cost effective way to deliver income management - with operational costs now down to well under $1,000 per head in the most recent expansion site.  As it increases in scale, the per head costs will reduce further.

The funding announced in this budget will also allow for the technology underpinning the cashless debit card to be improved – so that it can automatically decline transactions, online or in store, if the purchase includes restricted items such as alcohol or gambling products.

In direct response to feedback from card participants we are also introducing the ability to accrue interest.

I want to make it clear that for existing participants on the Income Management and BasicsCard program, there will be no change to the operating principles, including the percentage of income which is quarantined. This will remain at 50 per cent - unless a community requests a higher percentage during the consultation process.

Women’s Safety

An important theme of the 2019-20 Budget is continuing investment to improve the safety of Australian women – against the scourges of domestic violence and sexual assault. 

An unprecedented $328 million is being allocated to the Fourth Action Plan under the National Plan to Reduce Violence Against Women and Children, the largest funding commitment by any Commonwealth Government to the National Plan.

This is allocated across several major investment areas, including:

• $68.3 million for prevention strategies to help eradicate domestic and family violence in our homes, workplaces, communities and clubs.
• $78.4 million to provide safe places for people impacted by domestic and family violence.
• $82.2 million to improve and build on frontline services to keep women and children safe.
• $64.0 million for 1800RESPECT, the national sexual assault, domestic and family violence counselling service; and
• $35.0 million in support and prevention strategies for Aboriginal and Torres Strait Islander communities.

This brings the total invested by our Government in women’s safety to more than $840 million since 2013.

Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disability

In this budget we have provided substantial funding for the Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disability, which was recently announced by the Prime Minister and me.

We have committed $527.9 million for the Royal Commission, which includes funding to support people with disability to participate in the Royal Commission.

This funding anticipates the Royal Commission will run for three years and includes establishment costs and residual costs after the inquiry has finished.

In finalising the terms of reference, we consulted extensively across Australia - with people with disability, their families and carers, states and territories, and peak bodies representing people with disability and the disability sector - about the shape and breadth of the Royal Commission.

Over 96 per cent of people responding to our online survey tool agreed the Royal Commission should cover all forms of violence, abuse, neglect and exploitation, in all settings where they occur – and that’s just what it will do.

The Hon Ronald Sackville AO QC has been appointed as the Chair of the Royal Commission. Mr Sackville will be supported by five other Royal Commissioners:

• Ms Barbara Bennett PSM
• Dr Rhonda Galbally AC
• Ms Andrea Mason OAM
• Mr Alastair McEwin
• The Hon John Ryan AM.

The newly appointed Commissioners will decide on the next steps in the coming months, including when to hold hearings and how people can participate.

Jobs

In the final part of my speech, I want to turn to talk about our focus on generating jobs.

Why Jobs Matter

Our Liberal National Government believes that the best form of welfare is a job - and this Budget is designed to build a strong economy that will continue to create jobs.

Our policies have created nearly1.3 million jobs since this Government came to power in 2013. 

From September 2013 to February 2019, we have seen the participation rate increase from 64.8 to 65.6 per cent, and the unemployment rate fall from 5.7 to 4.9 per cent.

As more people get jobs, that means fewer people depending on income support.

The share of working age Australians on welfare fell to 14.3 per cent in June 2018 – the lowest rate of welfare dependency in 30 years.

The number of working age recipients on income support payments has fallen by 230,000 since June 2014.

The rate of reduction actually accelerated between June 2017 and June 2018 to a total of 90,000 fewer working age welfare recipients in that year.

Mr Shorten’s Cruel Hoax

The progress we are making on getting people into work is extremely important in helping reduce the number of people who are in poverty.

As is clear from work done by ACOSS and UNSW, most people who work are not in poverty. 

The recent ACOSS and UNSW report, Poverty in Australia 2018, shows that the overall rate of relative income poverty was 13.2 per cent (around 3.05 million people) in 2015–16, down by more than one percentage point from 2007-08 when it was 14.4 per cent.[7]

This report does not measure absolute poverty but rather relative income poverty – defined as the share of individuals whose income is less than 50 per cent of the median disposable household income.

While it is an important measure it has its limitations. An increase in relative poverty could indicate that real incomes at the bottom of the distribution are falling – but it could equally mean they are holding up but there is strong growth in median or upper incomes.  

Importantly, applying this definition of relative poverty, the ACOSS/UNSW report found that 7 per cent of households whose main source of income is wages meet this definition.[8]

So the evidence is pretty clear – most people in work are not in poverty, and getting more people into work is the best way to reduce poverty.

Yet our political opponents are proposing a policy approach – supposedly motivated by addressing poverty - which threatens not to help vulnerable Australians but harm them.

Today when the Fair Work Commission sets the minimum wage, its Act requires that it carefully weigh up the likely impact on jobs.

Labor now says it will direct the Fair Work Commission to grant higher increases in the minimum wage than the Commission would otherwise choose.

That’s a big problem for vulnerable Australians - because it would likely mean fewer jobs for lower skilled workers.  

The idea that government can increase wages by decree, with no effect on employment levels, as Mr Shorten likes to imply, is simply fantasy.  

Nine out of ten jobs are in the private sector - and private sector employers need to cover their costs to stay in business.  

If it costs them too much, private sector employers will simply not be able to hire. 

Mr Shorten’s political rhetoric will not overcome this fundamental economic reality.

With Mr Shorten’s proposed changes, the risk is that lower skilled workers will find it harder to get work.

Those with the most to lose from a Shorten Labor Government are Australians who have recently joined the workforce or who are trying to do so.  

Labor’s policy would put at risk their chances of getting, or staying in, employment.

A policy justified in the name of ‘fairness’ or ‘equality’ is likely to reduce employment and in turn increase poverty - the very opposite of what it is claimed it will do. 

How This Budget Drives Jobs

By contrast, our clear focus in this budget is to drive economic growth and to drive jobs – creating more opportunities for vulnerable Australians.

Our economy is on track to record its 28th consecutive year of annual economic growth.

In turn that economic growth is driving jobs growth.

Strong employment growth in recent years has been accompanied by high participation rates, particularly for women. The unemployment rate has declined to 4.9 per cent. Youth labour market outcomes have also improved recently.

Solid employment growth is expected to continue. As spare capacity in the labour market continues to be reduced and economic growth strengthens, wage growth is expected to pick up.

Australia's economy is forecast to grow by 2¾ per cent in 2019-20 and 2020-21.

Consumer spending, investment by businesses and continued demand for Australian exports are all expected to contribute to economic growth.

The Morrison Government's personal income tax relief measures, ongoing delivery of essential services and our $100 billion transport infrastructure plan over the next decade will also support economic growth.

Helping Vulnerable Australians Get Into the Workforce

Let me finally touch on the work we are doing to help Australians and particularly vulnerable Australians get into the workforce.

We are creating substantial numbers of jobs – but at the same time we need to help those who find it challenging to go for one of those jobs.  

That is why we are spending $96 million on the Try Test Learn fund - which is supporting innovative projects to help people overcome difficulties keeping them out of the workforce. 

Let me mention just a few of the projects being delivered under this fund.

Last week I announced the $3 million Career Skills for New Jobs project. It will give around 250 older job seekers in South Western Sydney access to an online Career Management Tool that enables connected, tailored support and training to improve their confidence and skills in finding and keeping a job.

These older job seekers will receive one to one tailored career support through career practitioners, who will help them access appropriate vocational education and training where required, as well as health and financial services.

A few weeks ago I announced $1.5 million for the UpCycLinc project, which will give unemployed migrants and refugees in Cairns the opportunity to create unique products and gain an income through an ‘upcycling’ social enterprise project.

Through this project, up to 180 migrants and refugees will refurbish household and commercial goods, including soft furnishings and turn them into sustainable furniture pieces, textiles and artwork.

Centacare Far North Queensland (FNQ) will run the UpCycLinc project over 17 months.

And earlier this year we committed funding of $828,000 to help young people on the NSW South Coast find a job, enter education or undertake training, through the Dunn Lewis F3style project.

96 young people aged 16 to 21 in Ulladulla and surrounding areas will be able to gain skills to help them find a job.  As part of the project young people will undertake three hours of paid employment every week through two in-house work experience opportunities that will involve planning and operating a pop-up cafe, working in an on-site garden and developing a local online directory.

Participants will be paired with local retirees who will provide mentoring and valuable life experience and share their skills from working in the region.

Conclusion

Let me conclude where I began – by expressing my recognition of the work ACOSS does in speaking up for the most vulnerable in our community.

We may not agree on everything – but there is much we do agree on, including the importance of every Australian having the opportunity to live their best life.

Our Liberal National Government has a very strong focus on – and a considerable track record of - building a strong economy and generating jobs.

That is important for all Australians – but it is particularly important for vulnerable Australians.  Every time somebody moves from welfare to work, they achieve a personal victory – and when we see Australians making that move in large numbers, we can really move the needle in addressing poverty and disadvantage.

In the last six years we have seen many Australians achieve such a personal victory – and if we are returned to government at this election, I am confident we will see many more.

 

[1] KPMG Maranguka Justice Reinvestment Project Impact Assessment, November 2018, p 6.

[2] 2019-20 Budget Paper No. 1, p 7, Statement 5 (5-7).

[3] Derived figure, from the 2019-20 Social Services Portfolio PBS, DHS PBS, Budget Paper No.1: Social Services Portfolio expenses as compared to Whole-of-Government expenses

[4] Ibid

[5] The Social Security and Welfare figures are published on page 6 of the 2007-08 Final Budget Outcome and pages 12 of the 2013-14 Final Budget Outcome. The taxation figures are published on page 11-9 to 11-10 of Budget Paper Number 1 2018-19.

[6] The measure to change the income assessment will deliver savings of around $2.09 billion over the forward estimates (the Single Touch Payroll measure cost is an additional cost of around $82.4 million over the forward estimates). 

[7] Poverty in Australia 2018, ACOSS and UNSW Sydney

[8] Poverty in Australia 2018, ACOSS and UNSW Sydney.