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Dishonoured in the breach: the privatisation of unemployment assistance, and the rise and rise of unfair breaching by centrelink.

Recent questions in the Senate to the Minister for Social Security, Amanda Vanstone, have rought to light a widespread practice of unjust penalisation of social welfare recipients for alleged `breaches' of their conditions for receiving benefits. In fact the practice is endemic, if not standardised through the social welfare system, as Freedom of Information research that I have conducted over the last three years clearly demonstrates.

Centrelink `breaches' a welfare recipient if, in their judgement, the person receiving benefits has failed to comply with the criteria set out by Centrelink. When an unemployed person incurs a breach, they will be financially penalised. First-time activity test breaches result in an 18 per cent reduction of benefits for 26 weeks, second penalties result in a 24 per cent reduction of benefits for 26 weeks, and third and subsequent penalties result in non-payment of benefits for eight weeks. Failure to comply with administrative guidelines results in a 16 per cent reduction of payment for 13 weeks or two weeks non-payment.

Since the introduction of mutual obligation, breaches have increased significantly. In 1997/1998 120,718 breaches were imposed compared to 346,078 in 2000/2001. This is a massive increase of 287 per cent over four years. However, the most recent data suggests that this trend is abating, with 2001/2002 recording a decrease of imposed breaches by 32 per cent. While this reduction is a welcome sign, these figures can be quite deceiving. Full analysis of breach data suggests that breaches have only reduced by 12 per cent because of the continuous increase of breaches that are recommended but found to be inappropriate and are either not applied by Centrelink or overturned on appeal.

Over the past three years, `revoked' breaches have increased sharply. In 1999/2000 172,050 (36 per cent) of all recommended breaches were revoked because they were found to be either incorrectly recommended or were overturned through an appeals process. Data from 2000/2001 shows that revoked breaches skyrocketed to 273,475 (40 per cent of all breaches) and the upwards trend continued for 2001/2002 with more than half of all recommended breaches being revoked 308,120 (57 per cent).

This data demonstrates that when the policy of mutual obligation is implemented, many social security recipients are breached unfairly. This is because there are legitimate reasons why some social security recipients fail to comply with criteria set out in the Howard Government's mutual obligation policy. According to Centrelink, when clients are investigated for failing to comply with mutual obligation criteria, evidence emerges that many people have been unfairly breached. Consequently, a decision is immediately made to overturn the breach decision. Centrelink claims that the majority of recipients unjustly breached fall into this category, and only a small percentage of clients go to tribunals to have their breach penalties overturned.

In the last financial year, lower breach penalties have resulted from Centrelink following up clients who have been recommended for a breach. While this proactive communication between Centrelink and their clients is positive, there is still reason for concern. According to Centrelink, no reliable data exists regarding how many recipients suffer a reduction of payment when incurring an unfair breach. Without reliable and accurate data, it is impossible to assess how many people suffer financial loss because mistakes have been made in the administration and/or recommendation of breaches. This is clearly problematic, as failure to assess how many people are falsely breached and then financially penalised prevents accurate analysis of this policy. If the majority of recipients who are breached are financially penalised then the implementation of mutual obligation has some serious problems. As taxpayers, we should be concerned that 57 per cent of breaches are being unjustly applied and potentially causing significant hardship to some very vulnerable Australians.

As I stated earlier, over half of all recommended breaches are found to be unjust and later overturned. Because of this, questions need to be asked about why so many workers at Centrelink and other allied staff such as third party providers are recommending so many breaches that are later deemed invalid.

Since 1997, the welfare sector has been partially privatised with employment services tendered to nongovernment agencies. The Department of Family and Community Services contracts to agencies to provide services to the unemployed by assisting them in finding work (currently known as Job Network).

With the privatisation of the old CES (Commonwealth Employment Service), employment service providers are required to be competitive in order to win public tenders. The aim of these providers is to place as many social security recipients as possible into paid work. The more clients go through the books, the more money these agencies receive from the government. Long-term unemployed clients who obtain paid work bring the most financial reward to these private agencies. However, problems inevitably arise when some clients (particularly the long-term unemployed) cannot find work even with the assistance of the job network provider. These clients obstruct the flow of income these agencies can potentially receive. One course of action these agencies can legitimately take to remove unwanted clients from their books, is to recommend that the client be breached for failing to comply with mutual obligation criteria. This results in `difficult' clients being removed from the job network provider's books and new clients funded for placement.

Analysis of 2001/2002 data supports the claims that Job Network Providers, Community Work Coordinators and Work for the Dole Providers--which are all third-party privatised agencies--recommend a significant number of breaches that are found to be unjust. Third party agencies have 19 criteria for breaching clients, yet these agencies manage to recommend 52 per cent of all breaches; whereas Centrelink have 49 criteria for breaching recipients, but only constitute 48 per cent of all recommended breaches. FOI data also reveals that these third party agencies have only 28 per cent of their recommended breaches imposed and a staggering 72 per cent are found to be either inappropriately recommended or overturned through appeal. Compared to data from 2000/2001 this figure has risen by 25 per cent. More concerning is that in the six months from January to June 2002, of all recommended third party breaches 81 per cent were found to be inappropriately recommended and Centrelink instantly rejected these alleged breaches before clients were made aware of them. Only 19 per cent of third party breaches that were later overturned through appeal were ever made known to clients. Clearly, third party providers recommending significant numbers of unjust breaches is problematic. The Howard Government's policy and implementation of mutual obligation financially rewards third party job network providers for breaching and creates and unfair and unjust welfare system.

The Senate has been debating the Australians Working Together (AWT) Bill. Through this bill, the Howard Coalition Government will attempt to pass legislation that will expand mutual obligation to sole parents, people receiving parenting payments and older unemployed people. This will expand the breaching and penalty system, which is applied to unemployment welfare recipients. Despite numerous concems being raised across the community relating to the unfairness of Centrelink's breaching and its penalty system this legislation is set to go ahead. As I have indicated, there are some very serious problems with the current policy of mutual obligation that is riddled with unjust and unfair practices. The expansion of this policy would only allow more people to be unjustly penalised.

Susan Lackner is a postgraduate student in the School of Social Science and Planning at RMIT.
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Author:Lackner, Susan
Publication:Arena Magazine
Geographic Code:8AUST
Date:Dec 1, 2002
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