Transcript: Doorstop with Minister for Social Services Christian Porter and Minister for Employment Michaelia Cash

11 May 2017

Senator The Hon Michaelia Cash

Minister for Employment

The Hon Alan Tudge MP

Minister for Human Services

The Hon Christian Porter MP

Minister for Social Services
Cashless Debit Card, Drug Testing, Jobseeker compliance, Welfare Reform

Thank you for being here this morning.

What we presented with respect to welfare reform represented close to two years of work across three portfolios. I'm obviously joined here this morning with Minister Cash and Minister Tudge, both the Human Services and the Employment portfolios are critical to what we are doing.

There's been a lot of interest in specific parts of this welfare reform approach and no doubt you will have questions about those at the end.

I thought I might stress from the outset that this is actually a very broad, three-stage set of reforms. The first part of the reforms is very squarely inside my portfolio of Social Services and that is a quite substantial part of the simplification process.

We are turning seven payments into one. People will transition either onto a new job seeker payment or onto the Aged Pension. What we are removing from the system is the Newstart Allowance, the Sickness Allowance, Wife Pension, Partner Allowance, Widow B Pension, Widow Allowance and Bereavement Allowance.

That suite of seven existing payments, designed for working age Australians, was adding to this intense complexity of the system. So the first part of the welfare reform agenda is that very significant simplification process.

The second part - which again, sits squarely inside my portfolio - is the issue of mutual obligations and the way in which they are drafted and applied to Australians of working age. When we looked into this system we found that there were just inexplicable, inconsistencies.

In fact, the system was nearly incoherent. So it was the case, for instance, that the two major things you are required to do if you're unemployed and accepting a payment, you have to engage in a certain number of hours activity fortnight and a certain number of job searches per month.

What we discovered was that the activities that you are required to engage in every fortnight - 50 hours if you are in your 20s and 30 hours if you're in your 30s - which made absolutely no sense. We are completely redrafting that system of mutual obligation to make it consistent.

Someone in their 30s now will have the same higher expectation as someone in their 20s and they will be required to do 50 hours' worth of activities per fortnight. They might be things like Work for the Dole or other things that are preparatory to you getting a job.

Equally, we found a 55-year-old actually has no mutual obligation under the present system to search for work. If they discharge all of their activities through volunteering, they are exempted from the search for work.

We spoke actually with the Council of the Ageing - who I understand are supportive of us on this issue - hat is a ridiculously low expectation. So that will be tidied up and changed and now a 55 to 59-year-old will actually have to undertake job searches every month.

Equally, for the first time, there'll be a modest activity requirement placed on those over 60 which is 10 hours' worth of volunteering a fortnight.

So seven payments become one. A very substantial redrafting to make coherent, consistent and fair the mutual obligations. And then the third part of the system is a re-drafting and re-design, root and branch redesign of the compliance regime which I will hand over to Michaelia Cash to give you an explanation on.

Thank you very much.

And ladies and gentlemen, the Turnbull Government is firmly of the belief that the best form of welfare is a job. We also know that the majority of those on welfare in Australia comply with their mutual obligations.

However, there is an identifiable cohort - approximately 40,000 - who deliberately shirk the system. The current compliance system does nothing to actively encourage them to change their behaviour.

And so, as Christian has said, as of 1 July 2018, the Turnbull Government is introducing a new and simplified compliance framework. It is very much focused on ensuring personal responsibility in the first instance because, as I said, the data clearly shows the majority of the Australians on welfare are doing the right thing by the Australian taxpayer.

So in the first instance, if you actually fail to comply with one of your mutual obligation requirements and this might be because you have caring responsibilities, your payment will merely be suspended until you reconnect.

When that system was brought in place in 2015, there was a material difference in changing behaviour in the positive. You will have three opportunities to do that.

On the third time that you miss an appointment or you fail to discharge your mutual obligation requirement, we are going to ensure that your job provider sits down with you and identifies any barriers that you may have.

Because we also know as a Government, we need to ensure we are putting in place the appropriate procedures so that you can comply with your mutual obligations. If you again fail to comply, you will then be placed into an intensive compliance phase. You will sit down with the Department of Social Services and you will have a full assessment.

Again, this is all about ensuring that, at every step of the process, the Government is working with you to identify any barriers that you may have as a job seeker and a welfare recipient so that we can address them and you can properly meet your mutual obligation requirements.

It is only after four demerit points that you will move into the intensive compliance phase. At this point in time, you will start to incur financial penalties if you fail to meet your mutual obligation requirements - starting with the loss of one week's payment, then two week's payment and a four-week suspension.

What we are putting in place with our new compliance framework is all about changing behaviour. As we've said, the data clearly shows the majority of those on welfare, they do the right thing by the Australian taxpayer.

And so as a Government, we want to work with those people to ensure that if they do have barriers, they are addressed.

But in relation to that small cohort of people who the evidence clearly shows that they do not have an identifiable barrier but they are deliberately shirking their responsibilities, we say enough is enough and the Australian taxpayer expects the Government to impose a penalty on you.

But we also know, and you will have seen handed down in the Budget, that we need to be putting in place programs that will actively work with people who have barriers to ensure that they can participate in the work force.

I am delighted that the Government is investing, over the forward estimates, $263 million in a national roll-out of the successful ParentsNext program.

There are so many young parents out there who are going to have to participate in the work force but they don't have the skills. This program will give them that opportunity.

There's a huge investment - approximately $55 million - in ensuring our Indigenous Australians have the support they need to get into the work force. We're also investing $100 million in mature Australians. Again, this is all about targeted programs and working with those people who need our assistance so that they can get off welfare and into work because that's what the Turnbull Government is all about.


Thanks, Michaelia. And if I can just add a couple more comments in relation to the compliance system and mention the cashless debit card.

We identified three core problems with our current compliance system: it is too complex, it is too weak, and often doesn't identify early enough the people who actually need additional assistance.

When you look at the complexity there is 17 different compliance activities at the moment attracting six different types of penalties. Almost no-one understands it. You look at the weakness of the system; not a single person last year lost a cent for failure to job search.

Now our system is aimed to be simpler, fairer, and have serious consequences for those who are deliberately shirking the system. It is based on a demerit points system which people are familiar with this because it is similar to what you have with your car licence, where you accumulate a certain number of demerit points.

Then after that, there is starting to be serious consequences. And by the way, when you are on a few demerit points, you start to drive pretty carefully so that you do not hit that limit. That is the same here. You do get a few chances and then after that, there are consequences.

There is one exception though to that and that is that if you fail to take a job which is suitable for you, then you will have your payment cancelled immediately.

And in that way, again it is similar to your driver's licence; that if you do a very serious breach, you will have your licence cancelled immediately. The overall aim is to actually support people into work.

We want people to be job searching. We want people to be taking those job interviews and we want people to be accepting the jobs when they are available because it is in their interests, as much as it is in the community's interests.

We think that our compliance framework, which has been jointly designed by the three of us, would do exactly that.

Let me just briefly touch on the Cashless Debit Card. As you probably know in the Budget, we have got funding to support two additional locations for the Cashless Debit Card. Now we are doing this off the back of a positive first evaluation from our trials.

We have very good results coming out of it. And also, we have a number of communities who are actually calling for the cashless debit card to be introduced into their locations.

So we have got two additional sites we will be discussing with community leaders in the months ahead and then we'll be rolling that out and providing a tailored solution for those particular communities.

At the end of the day, welfare is there for the basics, for your food, for your clothing, for your shelter, for your education. It is not there to support a drug, a gambling, or an alcohol habit.

So just by way of closing before we go to questions, I'll note briefly, how these three things - simplification, the redrafting of mutual obligation and compliance - dovetail and relate to some of the policies we have also announced around drug and alcohol as they pertain to the welfare system.

When we were doing this work, one of the things we saw was that very sadly, the way that the present system is structured, is such that if you are struggling with a drug or alcohol problem and you are receiving a welfare benefit, we generally excuse you out of your mutual obligations and leave you to your own devices.

That is a very, very unwise and unproductive approach. So we noted there is a standing ability to get an exemption simply because of drug and alcohol use. You can use drug and alcohol use at present as an excuse for not turning up to a job interview or any other number of engagements.

We are going to redraft those exemptions and excuses so that they can still be used but only if you are also taking active steps to improve your situation through rehabilitation, through recovery programs, through counselling, through something that we can say is designed to assist you. If you are taking those active steps, you can still avail yourselves of those excuses and exemptions but only if you're taking the active steps.

Equally, we are doing something very important and it is surprising this hasn't happened before. But for the first time in the system, any job seeker will be able to use their efforts and their time devoted towards their own recovery and rehabilitation as counting towards the activity hours that we require of them. Now this is just a common sense change.

All of these things are designed to identify people who are struggling with drug and alcohol conditions inside the system and not exempt or excuse them out of the participation but have them participating in their own recovery so that we can move them from that state of difficulty into employment.

The 5000 person drug testing trial that we've announced is squarely aimed at identifying and assisting people and driving behavioural change.

What we think we can achieve through this is to ensure that people at that absolutely critical point in their life when they're searching for a job, engage in behaviours that assist them in that process and don't destroy that process.

Where people are unable to engage in that behavioural change and test, say, positive to a second test, we want that person to be deeply engaged with us so that we can provide support and a plan for them to engage in the necessary changes to put them back on the right path to employment.

Obviously, we're very happy to take any questions.

Can I just ask about these people who are found to be taking drugs and are put on income management. How would that actually work?

It's not the Cashless Debit Card, is that correct? And if not, will 100 per cent of their payments be quarantined? How will the Department administer that?

So the Cashless Debit Card will be the centre piece of that income management. But we will tailor the income management depending on where the trial sites are eventually placed and located. So the Cashless Debit Card works in a variety of ways and there are ways in which we achieve an outcome with what's known as mixed merchants - so people who sell alcohol as well as groceries.

So much turns on the trial locations, but we'll individualise it to the trial locations and indeed to the people that test positive and go on the income management scheme.

As to how much cash will be available, we've yet to make that final determination. And again, that will depend somewhat on the trial locations we choose.

It's 20 per cent cash on the existing cashless debit card and the locations. It's likely to be comparable to that. But the point being, that we want to limit the available cash that you'll be able to expend on the substance abuse that's causing the problem in the first place.

Just on the activity test and that you've ramped up the requirement in terms of hours - particularly for people, say, in their 30s - some welfare providers say that in regional hours meeting that activity test will be very difficult because the job opportunities simply aren't there.

Even the volunteering opportunities aren't there. Are these new targets realistic in regional areas?

Well the existing system - and nothing will change here - does take into account areas where there is an availability issue. But generally speaking if we're expecting a 29-year-old to undertake 50 hours and a 31-year-old to only undertake 30 in the same region, the first question is: why? And these people might be living next door to each other, literally.

The idea of those activities is that you can do any number of things; it can be volunteering in some instances, it can be Work for the Dole, it can be education, it can be training, it can be study.

So I'm not very- I don't join very heavily with this notion that it is difficult in a whole range of areas to undertake those activities. With effort, you certainly can, but the existing system does cope for those very rare occasions where there might be some availability issues.

What does the Government consider to be a suitable job? Are you taking into account location or educational level or any of that? I mean, if I'm an aeronautical engineer, am I expected to work in a café? Is that a suitable job?

Well I must say that this issue gets raised very often as to what's a suitable job. All jobs are the outcome that we're trying to see here. This notion that there's a perfect or better or worse job is not one that we accept.

In my area, in for instance, in the NDIS, over the next two years, 60,000 jobs will be created in disability care. These are well paid jobs, they are meaningful jobs, they are jobs that help you contribute to your community and do something very substantial and important.

Now, whether you're training at first instance was with that job in mind shouldn't be the determinant as to whether or not that is a good job for you to have. And all jobs are better than being on unemployment benefits.


All jobs are better than being on unemployment benefits.

But what if the job is a casual job where the person's income might be even less than their welfare and not enough to support their family? You're going to use the threat of being cut off from welfare to coerce them into a job like that?

Well, first of all, that is a complete misrepresentation of how the system works. So someone in a casual job can earn up to what is known as the income free area, which varies whether it's Newstart or Austudy.

So the system caters for the fact that individuals can have casual or part time work and still receive some, and in often cases, quite a large amount of the relevant welfare payment. But the purpose of having those income free areas and taper rates is that people who are in casual and part time employment, the encouragement exists to transition from that into full time employment.

Now, that's the way that the system has operated and will continue to operate and it's a very good way in which the system should operate.

Have you thought about the repercussions of the cashless debit card for someone that, for example, has a heavy reliance on drug? Have you thought about the possible, for example, their crime rate increasing or them potentially being a harm to themselves or not getting access to…

Well I'll hand over to Alan but in Ceduna, for instance, the evidence has been completely the opposite. So grocery purchases go up, alcohol and gambling goes down, and families and communities are better off.

That is exactly right, Christian. And it is interesting, someone said to me the other day that actually this has a job impact in Ceduna - the Cashless Debit Card – it has put the drug dealers out of work. That is the impact that it has had and that is the impact that we want.

So that those people who are doing the right thing, of course, on the Cashless Debit Card it has very little impact on them. But it does restrict the amount of cash which is available to be spent on the alcohol, on the drugs, and on the gambling.

And we have seen in Ceduna, one of the main pokies venues - their poker machine revenue is down 30 per cent. And that is when only a fifth of the people are on this welfare card. So the evidence is not there. We are going to take those types of things into account in terms of the design of exactly what the response would be.

Now, of course, there is also the second drug test as well which occurs if they have tested positive the first time. Now the second drug test - and Christian can perhaps elaborate on this - is designed to actually identify those people who do have serious addictions and might need additional assistance.

That is what that's there for. Our aim is to assist people to deal with their drug addiction and then to get back into work if possible rather than to constantly be using welfare dollars to support their addiction.

But, Minister, has there not been an increase in stealing in the East Kimberley?

The data is mixed on that, it has jumped all over the place in the East Kimberley. Now, we have seen some statistics go up and others go down. Overall, the response which you get from the police, from the community leaders both in the East Kimberley and in Ceduna, is immensely positive towards the impact on this.

And the police have been supportive of these measures to crack down, particularly, on the alcohol in the East Kimberley's for a long time because they know that the welfare-fuelled alcohol abuse is the poison that runs through that community.

It underpins so much of the domestic violence, the child neglect, and the other very significant social harms there. That is what we are trying to address with the Cashless Debit Card in the East Kimberley.

But, Minister, the final evaluation has not come back. That is not set to come out until July; why not wait until that, especially given half the participants in the East Kimberley and Ceduna say their lives are worse because of this card?

A couple of reasons. We have had the first evaluation and the first evaluation said that the proof of concept had been proven. We have also had up to a dozen different communities request the Cashless Debit Card to be introduced into their area.

They have often gone to Ceduna or gone to the East Kimberley; seen it themselves, the implications on the ground; spoken with the community leaders in those communities. So that is the reason.

Our additional sites are modest. Just two additional ones which we intend to roll out over the next six to nine months. In the future we may look at further ones, but we are just taking an incremental approach, bedding down the system with the square aim of dealing with that very significant welfare-fuelled alcohol, drug, and gambling abuse.

Bundaberg and Broome, they're two locations that are very high on this list.

As I said, we have had many communities who have approached me or my officials saying that they would like to at least initiate a discussion - if not calling publicly for it to be introduced into their communities.

Some of the ones that you have referred to - everybody knows that unless you get on top of the alcohol problems, it is so much more difficult to address any other problem.

This card is not a panacea to those alcohol problems, but it is a very useful tool and we are seeing that 25 per cent of people are saying that they are binge drinking less; 25 per cent of people are saying that they are taking fewer drugs; 31 per cent of people are saying that they are better able to save and look after their children.

They are the type of results which we see and which we like. We have got to do more of course, but there is no solution to this overnight in places like Broome or the East Kimberley. But it is a very significant step forward and, frankly, there are very few other measures that have been introduced in these communities that have had such an impact.

Minister, can I ask you about the package as a whole; how many elements will require legislation and can you give us an update as to how your negotiations are going with the Senate?

Well they've just started, but some of this can be done administratively and without legislation. There is some legislation that's going to be required. There are aspects of the compliance regime - I think it's true to [indistinct] - that we will introduce without legislation and do so very swiftly.

Obviously, the drug testing trials will require legislation, some of the compliance will require legislation. The condensing of seven payments into one will require legislation and also the re-drafting and making consistent the mutual obligations will require legislation.

I am very much hoping that the Labor Party will stay open-minded to all of these things. And, so far it appears that they are open-minded and they've not ruled anything out here.

Just before I hand over to Michaelia on compliance legislation, I would note that none of this involves cuts. Ninety nine per cent of people who transition from those seven payments to the one new payment are either on the same payment rate, or in a small number of cases, are slightly better off.

Re-drafting the mutual obligation requirements to get people more active actually cost $47 million because the taxpayer, through the Government, funds the job active providers who are helping these people become active in the community.

Michaelia's talked about all that investment - $260 million on the ParentNext program - so this is not about anything that even remotely resembles a cut. This is about actually investing money in the long-term wellbeing of our community and people who have up until this point struggled to get employment.

But Michaelia, compliance and…

I think we've got a question.

This is slightly left of field. Jacqui Lambie wants politicians to be drug tested. Scott Morrison said that he'd be, quote, happy to blow in the bag. Can I get your response from that?

I'm completely relaxed about something like that. I mean, when we were designing the drug testing trials, one thing we noted was that the whole range of very substantial employers in Australia require you to be drug free and drug test you - Qantas, Toll, Linfox - often around transport construction and mining.

Now, if you are using drugs and you are sent off to a job interview with one of those places and are tested and fail, that is a terrible outcome. And what we are trying to do, again, here is drive behavioural change.

One of the things that also was subject of our analysis was the national wastewater testing report that the AFP was involved in, and there are places in my home state of Western Australia where the use of crystal methamphetamine - so ice - is 76 doses per 1000 per day.

So one in 13 people are using ice per day. Now, imagine what that does to the job chances and employment-finding chances of those people.

So by testing just as employers test, what we're trying to do is, at that critical point, which might be a three or six month point where you're trying to get employment, is to drive behavioural change through the system. And what we think is, looking at international examples, you can do that.

Minister, can you please explain how participants in the drug testing trial will be selected? Will they be [indistinct] vulnerable?

So first of all, it is new entrants to the system. So the legislation that we will need to pass will make a condition of payments that if you are in one of the nominated trial areas that you become subject to the trial and you will have to, in effect, consent into the system.

So it's open to anyone to not accept the payments that we envisage and remain outside the system.

So we're looking at new entrants into the system. We'll use a combination of data that we will help develop with Data61 and the CSIRO, our own internal data at DHS and DSS which looks at track records of clusters of people in terms of their compliance.

We'll put all of that together and identify a broad group of people and then randomly select inside that broad group inside each of the three trial sites.

Will you also be testing essentially sewerage? Like, that's what Scott Morrison said earlier this morning. Can you give us a bit more detail about that?

So I think what that is a referral to is the National Wastewater Scientific Assessment, which is the single best scientific evidence of the levels of drug use in Australia.

What it showed was that, of a range of drugs, without question the most dangerous and used drug in Australia is ice, and that in a range of places around Australia the ice usage is remarkable- I mean, astonishingly high.

And this has been part of the motivator for this trial on drug testing, as we want to drive behavioural change in some of those areas at that critical point where people are job searching.

The legal question - I realise that drug testing is commonplace with employers, but nonetheless some civil liberty groups say that if the Government takes this up it could conceivably still be vulnerable to a legal challenge under the common law privilege against self-incrimination.

Now, without getting into the minutiae too much, is that something the Government sought advice on; did you seek advice from the AGs on this; are you confident it would withstand a potential challenge?

Obviously we considered the lawfulness of what it is that we envisage. Without going in, obviously, to waiving my legal professional privilege on those matters, we are absolutely assured that this is completely and utterly lawful.

We are absolutely assured that it represents no significant departure from the fundamental bedrock of the system, which is the system is about mutual obligation.

The Government, through the taxpayer, funds you in your job search and you undertake, through the Government, to the taxpayer to do certain things. This will just be another one of those things - an important thing, but another one of a variety of mutual obligations that exist in the system.

How much money in this trial is going towards drug services for people who do test positive?

Yes, so we'll obviously be looking at the trial locations using a variety of indicia. One of them will be the availability of services.

Keep in mind that this Government, the Turnbull Government, invested hundreds of millions of dollars through the Primary Health Networks and with the Ice Action Strategy to a whole range of treatment programs. So we'll be looking at the availability of those programs in choosing the trial sites.

One thing I would note, though, is that when people think about recovery and rehabilitation from drug abuse they often think of residential rehabilitation, which is probably at the very high end of the spectrum of treatments.

The overwhelming- the largest percentage of treatment is usually counselling, and indeed assessment that leads to counselling. So the treatments we will ensure are available in the relevant areas, and we're very confident that that will be the case.

Thank you very much.

Okay, thank you.

Thanks everybody.