The Worsening Crisis in Remote Employment Programs

Last week I attended a very insightful seminar at the Centre for Aboriginal Economic Policy Research at the ANU (where I happen to be a Visiting Fellow).

The seminar reported the results of recent research on penalties imposed on remote welfare recipients undertaken by ANU researchers Lisa Fowkes and Will Sanders. I understand that a research paper is in preparation and will be published in the near future. I have linked to the slide presentation at the seminar, so wont attempt to summarise the seminar in detail, but rather will cut to the bottom line.

The data available shows that since the introduction of the RJCP program in 2013, which has now been replaced by the Community Development Program  (generally known as CDP),  penalties for breaches of job search requirements have increased substantially while in non-remote Australia, the quantum of penalties is steadily reducing. Moreover, these trends are much sharper when one focusses on the most serious breaches which lead to cessation of benefits and complete disengagement from any potential employment.

So for example, serious breaches in mainstream JSAs (with a total caseload of 760,000) dropped from 8000 to around 2000 in the two years up to June 2015, whereas in remote Australia, where RJCP has a case load of 37,000 or around five percent of mainstream JSAs, serious breaches rose from close to zero to over 1000 – refer to the graphs presented in the slide presentation. In other words, the rate of serious breaches imposed in remote Australia is about 20 times the rate imposed in non-remote Australia.

The researchers went on to ask the obvious question: why is this happening?

Their answers boil down to three key reasons: the requirements being imposed on remote job seekers (to use the terminology favoured by these schemes) are more onerous than those applicable to non-remote jobseekers; the protections built into the system to tailor responses to individual needs are weaker in remote Australia than elsewhere; and the responses of local people/job seekers to the incentives established by the penalty regime are counter-intuitive (at least to those administering the schemes).

The arguments for applying different requirements on remote jobseekers are not well articulated by governments, but one can assume that they are based on a rationale that the circumstances of remote communities are different both economically and socially and thus different approaches are required. Indeed presumably this is the rationale for having a separate scheme to JSAs at all.

While the CDP scheme is non-discriminatory in nature, applying to all jobseekers in remote Australia, the vast majority of its caseload – over 80 percent - is Indigenous. It is no coincidence that the Minister for Indigenous Affairs has administrative responsibility for the scheme. There is thus an ongoing potential vulnerability for the scheme related to compliance with the Racial Discrimination Act, although to the extent that it is based on subsequent legislation to the RDA, a court may hold that the subsequent legislation overrides the RDA. This potential vulnerability suggests that the Government would have been wise to have ensured that the second reason identified, the poor protections offered to remote residents by the scheme to ensure that individual needs are properly assessed in taking decisions about access to basic income, would not be an issue.

The third key reason, the counter-intuitive local responses, is in my view potentially the most significant driver of the increase in serious breaches (though it seems likely that all three drivers synergistically reinforce the outcomes we are seeing).

In effect, young community residents are making an assessment that they are prepared to be breached, and lose their benefits for an extended period, rather than comply with the requirements to work twenty five hours every week of the year in order to receive a welfare payment. The trade-off decisions involved are based on a range of factors: innate attitudes to income and cash; attitudes to saving and consumption; availability of alternative sources of income; lack of any normal market infrastructure in communities, availability of access to food and drink from family and kin; and preparedness and capacity to live without an income.

I suspect that it is this third key reason which is of most significance in driving the increase in RJCP / CDP breach rates, and points to the inter-cultural complexity of designing effective programs in remote Australia. Nevertheless, it is not the case that policymakers (or at least those with experience in Indigenous affairs policy domain) have not had an appreciation of these realities. Indeed, the capacity of remote citizens to make these trade-offs have been  an issue in a range of contexts for at least two decades, notwithstanding that they only occasionally surface in public policy debate and discussion.

So for example, much of the justification offered by the Howard Government when introducing income management as part of the NT Emergency Response was to address what they termed ‘humbugging’, a negative inflection on the widespread cultural practice in remote indigenous communities of kin-based sharing. These behaviours can have both positive and negative elements, and can be particularly negative when alcohol or drugs are involved. The existence of culturally embedded kin based sharing obligations is likely a significant element in the trade-off calculus facing remote jobseekers.

Returning to RJCP and its successor the CDP, there seems to be little point in having a stand-alone employment services / welfare program for remote Australia, justified on the basis that circumstances are different in the regions, to then not take account of local realities in designing the program.

The Community Development Program came into operation in July 2015 after Minister Scullion formed the view within months of coming to office that the RJCP program was ineffective, and announced a series of immediate changes. He noted in the media release:

“RJCP is a disaster. People aren’t turning up for work and are returning to alcohol. That’s why I’m acting quickly to re-engage people before it is too late,” Minister Scullion said.

“The design and implementation of RJCP was bungled by Labor, with the late announcement of providers, confusion over the funding model, and a ‘one-size-fits-all’ approach that did not consider the differences between regions.

The Minister has now announced that a revised version of CDP (let’s call it CDP2) will come into operation as of July 2016. PMC has published a fact sheet on the proposed changes. The legislation was introduced in December 2015, and has recently been considered by the Senate Finance and Public Administration Legislation Committee. Perhaps unsurprisingly, the report  splits along party lines, with Government members recommending passage and the Greens and Labor recommending against.

I won’t attempt to summarise the report in its entirety (though it deals with a range of salient issues), but merely point to the major substantive concern of many of the submissions which is the degree of discretion proposed to be granted to the Minister, who will be able to determine areas to which CDP2 will apply and the details of compliance requirements in regulations rather than legislation.

I share this particular concern especially in an environment where government actively minimises the amount of transparency involved in administering the program. For example, the contracts with job service providers administering the program on the ground apparently require PMC to approve any contact with media and researchers and information on the levels of resourcing to the program are not accessible to citizens.

The Minister’s approach appears to be to ‘toughen up’ the incentives for non-compliance with the CDP rules, and as a consequence, we are likely to see continued growth in the levels of breaching applied to remote job seekers, leading to increasing numbers of remote citizens being denied welfare on the misguided assumption that denial of welfare will incentivise compliance.

The consequence will be that levels of income flowing into remote communities will be potentially significantly reduced, with consequent flow on effects for economic activity, and potential exacerbation of social issues such as substance abuse and its correlates.

To sum up, we have now had three years of substantial policy flux, with the concomitant confusion and uncertainty on the ground which is an inevitable consequence. By July 2016, there will have been four major changes to remote employment in three years:

RJCP was introduced in July 2013 following a gestation period of a number of years;

·         ‘immediate changes’ were announced by Minister Scullion in late November 2013;

·         the new CDP program was introduced in July 2015; and

·         substantial further changes (CDP2) are scheduled to come into effect in July 2016.

Moreover, the data presented in the ANU seminar last week clearly indicate that the levels of disengagement with RJCP/CDP are increasing, and if the arguments outlined here are accepted, are likely to worsen as CDP2 adopts increasingly tougher penalty regimes on the mistaken assumption that penalties will incentivise engagement. Yet this was exactly the reason Minister Scullion gave for overhauling RJCP in the first place:

“RJCP is a disaster. People aren’t turning up for work and are returning to alcohol. That’s why I’m acting quickly to re-engage people before it is too late,”

It is little wonder that Indigenous leaders consider Indigenous policy to be in a state of deep crisis.

In the light of the analysis above, what are we to make of this recent statement from Minister Scullion:

For too many years under successive governments, the constant change in approach taken in Indigenous Affairs has, itself, become a barrier to improving outcomes for First Australians.

That is why the Coalition is working closely with Indigenous Australians, community by community, to ensure our approaches are implemented with First Australians – not to them – as the Prime Minister outlined in his Closing the Gap statement to Parliament last month.

The most effective way we, as a Parliament, can help to close the gap is ensure we work across party lines in a genuine bipartisan way. I am hoping this will be reflected in the approach taken to the Community Development Programme legislation currently before the Senate.

For my part, I would like to laugh, but can only cry.

Disclosure: As a former official in the Department of Families, Housing, Community Services and Indigenous Affairs, I had an involvement in the work leading up to the establishment of the RJCP program.