NEWSTART SURVIVAL IN A SMOKE-SCREEN A submission to the Parliamentary Inquiry into the Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support payments in Australia INTRODUCTION In 1999, the Howard Government embarked on what was promised to be a program of major reform of Australia’s welfare system. Two decades on, what we are left with is a mechanism riddled with contradiction and ambiguity that appears to be driven by a philosophy of secrecy and paternalistic-control. Analysis of this situation is difficult because structures and policies lack clear definition, and successive Government Ministers holding welfare-related-portfolios have exhibited a staunch reluctance to explain the logic behind changes they have overseen. Now we are faced with a dilemma that presents us with economic and moral challenges. The moral case for a raise to the rate of Newstart is undeniable, yet the economic imperative to preserve public-confidence in our economy has complicated the matter. This conflict between morality and economic expediency has been a major factor in the formulation of welfare policy for a very long time, and in my opinion, it explains why much of what passes for “reform” has become corrupted. It seems that even this Inquiry into Newstart is not above ambiguity. Reference to “alternative mechanisms” in the title implies that Newstart is considered a mechanism rather than a payment-structure. Once again, confusion reigns, and that is why the first thing I must do in my submission is attempt to provide a benchmark for my discussion of the issue. Where does Newstart stand within the structure of the welfare system? If it is a mechanism, what elements does it contain? … and if it is not a mechanism, what is the mechanism controlling it and how is it structured? Whatever the case, a far more important question is “What is the philosophy that drives the process, and how has it been formulated?” In this submission, I will attempt to answer these questions and describe some of the evolutionary steps that have led to recent, disturbing, developments in the welfare reform process. The current impasse on Newstart is just the tip of a very ugly iceberg. CONTENTS 1: Definitions of Newstart 2: Is the Newstart Mechanism fit for purpose? 3: Definitions of Unemployment 4: A Dishonest System 5: Tweaking the Lie 6: The Propaganda War 7: Crushed by the Australian Dream 8: Community Expectations 9: The Purgatory of Paternalistic Control 10: Cashless Welfare 11: Conclusions 12: Recommendations 14: APPENDIX 1: My Personal Experiences of Newstart 2: Addressing the Terms of Reference 3: Copy of letter from Alan Tudge 4: My response to Tudge Letter DEFINITIONS OF NEWSTART Before this discussion can go any further, we need to understand what the word “Newstart” refers to. If it is a payment regime, then the only real question we should be asking is “does the payment enable the recipient to pay their bills and function in a meaningful way?” If, however, the word “Newstart” refers to something else, the conversation becomes broader and issues beyond mere income-support must be considered. One likely area of concern will be the conditionality of the payment. Given that eligibility to Newstart is governed by an Activities Test, compliance with instructions, and the performance of designated tasks, it might also be described as a “control-mechanism”. Given that the title of this Inquiry defines Newstart as “a mechanism to determine the level of income support payments in Australia”, observers might be forgiven for thinking that Newstart is a benchmark-payment against which all others are measured. This flies in the face of public information provided by the Department of Human Services, which defines Newstart as “the main income support payment while you’re looking for work”. This definition seems to fit with community expectations. If you were to ask average Australians what Newstart was designed to do, many would probably say it is supposed to provide unemployed people with a subsistence-income until they are able to gain employment, and that payment should be restricted to people able to demonstrate their entitlement to assistance. If you were to ask the same people what Newstart should not do, many would probably say it should not provide jobless people with a free ticket to do nothing. The idea of “having a go” is deeply ingrained in our national psyche, so it stands to reason that individuals should be expected to advance themselves at every opportunity, and that the government should provide them with assistance to do so wherever possible. In this context, it can be argued that the privatised job-search-and-training-industry that exists in association with Centrelink is an adjunct of the Newstart mechanism because individual participation in it is driven by the conditional nature of the payment-structure. At the same time, many service-providers in the sector work so exclusively with Newstart recipients that without them they would not have a client-base. A similar relationship can be said to exist between the Newstart mechanism and the many charities and community groups involved in work-for-the-dole and volunteering-for-the-dole programs. This broader context of the Newstart mechanism opens up a much wider conversation than one about the monetary adequacy of an income-support-payment. From where I stand, it seems quite clear that Australia’s welfare system has mutated into something it was not originally designed to be, and that some of the machinery set up to serve the Newstart mechanism exists within a structure of its own, beyond the understanding and control of the Australian community. From this point on in this submission, I will refer to the Newstart mechanism in this broader context IS THE NEWSTART MECHANISM FIT FOR PURPOSE? In determining if Newstart is fit for purpose, we must first understand what it does. In my view, Newstart has three main functions: 1: To provide income-support-payments to able-bodied jobless people of workforce age who are experiencing demonstrable financial difficulty, and to determine their ongoing eligibility to the payment through the performance of specific tasks; 2: To maintain a level of social cohesion through the provision of income-support and associated services, with a view to reducing abject poverty, crime, public-health- issues, and the negative impacts of social isolation; 3: To insulate the Mainstream economy from the local impacts of global industrial change by reducing the cost of supporting industrially-redundant-people and hiding the true extent of unemployment and disadvantage. Within the context of these three functions, the Newstart mechanism operates with the benefit of sleight-of-hand. It exists in its present form on the strength of a single idea: that a loss of public confidence in the economy at a time of industrial uncertainty would lead to economic collapse, and one of the best ways to avoid that is to lie about unemployment. This has an important bearing on the Newstart mechanism because Newstart has been sold to the public as a pathway to employment at a time of extreme industrial change. DEFINITIONS OF UNEMPLOYMENT In 1975, Australia signed the United Nations Lima Declaration. The intention of this document was for nations with advanced economies to help developing nations rise out of poverty by reducing tariff pressures and investing in their infrastructure. This decision provided a green light for cashed-up-westerners to line their pockets by investing money in nations where wages were low and industrial-standards more relaxed than in their own countries. It didn’t take long for the profits to start rolling in, but this also led to the decline of manufacturing in those western nations. As jobs began to dry up, the leaders of those nations began to worry. They needed to find a way to absorb the impact of the global industrial change that was to follow, and one of the places they looked was in fiscal policy. One of the solutions was to shift the definition of full-employment to exclude 5 per cent of the workforce. Given that public-confidence in the economy was a major component of economic activity, it made sense to move the goal-posts to ease the pressure. In theory, the Federal Reserve now had more wriggle-room to act against inflationary forces by tightening monetary policy to slow down the economy when necessary. This process was given the name “NAIRU”, the non-accelerated-inflation-rate-of-unemployment. With NAIRU, economic managers had a safety-valve; a “get-out-of-jail-free-card”, but it came with a sting in the tail. It only worked when unemployment remained within manageable parameters. When it started to exceed those parameters, it became necessary to tweak the numbers. Tony Abbott once explained this in an oblique way during an interview on Channel Nine’s Sunday program when he said: “The government has two fundamental tasks: First, to try and ensure that the economy is as buoyant as possible, and second, to try to ensure that we have structures in place so that, at any given level, unemployment is lower than it would otherwise be, and that’s where policies like mutual obligation and work for the dole are so important”. That desire to keep unemployment low on paper provides a strong incentive to cook the books, yet direct proof of doctoring is hard to come by. In 1999, Treasurer Peter Costello, conceded that the level of joblessness at the time would not drop below 7.5 per cent in the immediate future. It seemed to me that he was confirming earlier criticism from the Council of Small Business Organizations that: "..