A shaft of sunlight: the Economic Inclusion Advisory Committee 2024 Report

                                                 Men judge by the complexion of the sky

The state and inclination of the day…

King Richard II, Act 3, Scene 2.

 

The 2024 Report of the Economic Inclusion Advisory Committee (link here) chaired by Jenny Macklin was released on 26 April 2024, some two weeks before the 2024 Budget is due to be delivered. In my view, this is an excellent report, extremely well argued, quite technical at times (reflecting a bias towards identifying the evidence for its recommendations), and as one might expect, encompassing an admirable mix of ambition and pragmatism.

 

The report makes 22 broad recommendations across the span of the social security policy domain, and identifies five policy priorities for 2024:

1. Substantially increase JobSeeker and related working age payments and improve the indexation arrangements for those payments.
2. Increase the rate of Commonwealth Rent Assistance.
3. Create a new employment services system to underpin the goal of full employment and ensure a more positive focus on supporting Australians seeking work.
4. Implement a national early childhood development system that is available to every child, beginning with abolishing the Activity Test for the Child Care Subsidy to guarantee all children access to a minimum three days of high quality early childhood education and care (ECEC).
5. Renewing the culture and practice of the social security system to support economic inclusion and wellbeing.

 

In this post I propose to point to the areas of the report, and the specific recommendations, that have salience for First Nations policy outcomes.

 

Of course, while the reports overarching focus is on mainstream policy, it must be remembered that First Nations citizens will be impacted by mainstream policies as much as indigenous specific policies, and perhaps more so.

 

There are I think three elements of the Committee’s report with particular significance for Indigenous interests.

 

The first element relates to the Committee’s discussion of the Remote Area Allowance and recommendation 4. They base their analysis on work undertaken by Francis Markham from the ANU, and which I published a post about in February (link here). In that post, I extended the argument to argue for an overhaul of the Community Development Program, an issue that the Inclusion Committee has not addressed directly but see the second element below. The Committee recommendation states:

Recommendation 4. The Australian Bureau of Statistics (ABS) or an appropriate researcher or research centre in partnership with remote communities should be funded to undertake analysis of the additional costs of living in remote areas, but the case for an immediate increase in the Remote Area Allowance (RAA) seems particularly strong.

 

This recommendation, if adopted and implemented, would lay out in detail the case for much more targeted cost of living support for remote communities, including in relation to food security, energy costs, transport costs, and rent costs. At a strategic level, it begins the process of developing an evidence base for a more comprehensive policy approach to remote Australia, an issue I have been advocating for over 25 years.

 

The second element relates to employment services reform and is perhaps the most significant of the Economic Inclusion Committee’s recommendations for First Nations interests. The recommendation states:

Recommendation 6. The Government commit to a full-scale redesign of Australia’s employment services system by adopting the recommendations in the report from the Select Committee on Workforce Australia Employment Services. As a priority the Government should: a. Finalise an implementation plan and enact necessary legislative changes in 2024. b. Commit to a full redesign of the mutual obligations and compliance settings in the Workforce Australia system that focus on building capability and confidence to support people into work, consistent with the directions outlined in the Select Committee’s report. c. Build and refine a new practice model that genuinely meets the needs of people furthest from the labour market, including through: [details omitted; refer to page 10 of the report].

 

I published a post on the Select Committee’s report last December (link here) where I spelt out the specific elements that were of relevance to First Nations interests. I recommend readers look at that post. While the Economic Inclusion Committee has not framed its discussion and recommendation on these issues as mainstream, there are enormous, embedded implications for remote Indigenous interests, particularly in the Inclusion Committee’s comment about the needs of people furthest from the labour market. The elephant in the room here is the issue of direct employment creation by the Commonwealth. The Prime Minister in his comments upon the release of the most recent Commonwealth Closing the Gap Implementation Plan described the Community Development Program (CDP) as a failure, announced (link here) the creation of the Remote Jobs and Economic Development Program, and funding for the employment of 3000 CDP participants by organisations working in remote regions. Yet the result was to leave around 27,000 CDP participants in a ‘failed program’.

 

The third element relates to First Nations Housing, and in particular building a better evidence base for assessing both need and ongoing management of housing stock. Again, this is a hugely significant policy issue for Indigenous interests, with implications for disability policy, educational outcomes, the social determinants of health, child welfare outcomes, the prevalence of domestic violence, and not least, economic inclusion. Again, while not limited to remote Australia, it has long been clear that housing need for Indigenous interests is most acute in remote regions, not least because there is a limited private market in housing provision. The Committee’s recommendation (edited) is as follows:

Recommendation 10. The Government urgently commit substantial investment to address need in public housing and homelessness for Aboriginal and Torres Strait Islander peoples, including maintenance and upgrades, community infrastructure and the Aboriginal and Torres Strait Islander housing sector.

To improve the economic efficiency of investments, the Government should fund a National Aboriginal and Torres Strait Islander Housing Data Register to improve data availability, quality and sharing… To better target existing investment, including from the Housing Australia Future Fund and Social Housing Accelerator Fund, the Government should: a. Negotiate improved performance reporting and data sharing within intergovernmental agreements and arrangements. b. Undertake rapid needs assessments of homelessness and overcrowding, maintenance, repair and community infrastructure requirements in remote hotspot areas. c. Commission a redesigned Community Housing Infrastructure Needs (CHINS)- like survey, which considers limitations of earlier iterations and subsequent advancements in data collection…

 

The import of this recommendation is that it explicitly focusses on establishing a much better and transparent evidence base for this most crucial area of policy. It will mean that Indigenous advocates such as the Coalition of Peaks and the National Aboriginal and Torres Strait Islander Housing Association will have the means to make a much more persuasive argument for needs based assistance into the future.

 

The Economic Inclusion Committee report appends an excellent detailed consultancy report addressing First Nations Housing issues. That report is too detailed for me to summarise here, but I commend it to readers as an excellent summary of the state of play in relation to First Nations housing policy in Australia today.

 

Conclusion

The Economic Inclusion Committee has made an excellent contribution towards sharpening the policy agenda for First Nations interests. Clearly there are a swathe of other issues of relevance to Indigenous interests that deserve attention by the Commonwealth Government. But there are limits to what governments, and their advisers, are prepared to take on and prioritise. From my perspective, I consider that the Inclusion Committee has done an excellent job in highlighting key areas that deserve prioritisation and continuing attention. Of course, the real issue will turn on what the Commonwealth Governments response will be, and whether they allocate the intellectual and financial resources to deliver on whatever commitments they do make.

 

In any case, the publication of this report provides a shaft of bright sunlight that bodes well for the days ahead.

 

26 April 2024

The Remote Area Allowance: the case for wider reform

 

Our doubts are traitors, and make us lose the good we oft might win, by fearing to attempt."

Measure for Measure, Act I, Scene 4.

 

Francis Markham, one of the most insightful and competent data and policy analysts in the Indigenous policy domain has just published a short blog post on the case for reforming the remote area allowance (RAA). His post (link here) is titled: The Poor Pay More: Why the Remote Area Allowance Needs Urgent Reform, and is highly recommended.

The post links to a 2020 Productivity Commission (PC) study (link here). The Executive Summary of that report is also worth reading.

I don’t propose to summarise Markham’s arguments which are succinct, persuasive and data driven.

What struck me as I read his post however is that it raises broader issues regarding remote employment, and in particular the need for radical reform of the Community Development Program (CDP).

In 2019, in response to the PC’s Issues Paper, I published a short post (link here) identifying a number of issues that would also come into play. Unfortunately, I failed to review the PC report when it was finally published in 2020….I must have been asleep at the wheel.

Below is an extract from that earlier post which in my view is still relevant, notwithstanding that the punitive tone of the CDP program appears to have moderated under the current Government:

A further potential issue relates to the impact of conditional welfare in remote Australia (ie the CDP program: link here) and the increasing evidence that as a result of punitive penalties, significant numbers of remote Indigenous residents are not accessing their welfare entitlements and thus not accessing RAA.

One of the challenges is assessing the utility of these policy measures, is that they were primarily devised to assist and benefit mainstream interests, particularly mainstream taxpayers and businesses. Consequently, it can be easy to overlook Indigenous perspectives in assessing the changes in underlying rationales over time. As the Commission notes:

A range of justifications have been advanced for special assistance for people living and/or working in remote areas (box 3), although many of these are contentious. For those justifications drawing on the isolation and arduousness of life in the outback, the changes in transport, communications and living conditions over the past seventy years mean that their strength has diminished (at least in many parts of the country). Such arguments have also been challenged on the basis that ‘individuals have a free choice whether or not to live or work in remote areas and to compensate them, if they so choose, would lead to resource misallocation and reduced growth for the country as a whole’ (see Cox et al. 1981, p. 15).

While there have been improvements in the circumstances of remote citizens, the circumstances of remote Indigenous citizens are still highly disadvantaged. Moreover, they may not have the same level of flexibility in their choice of residence as mainstream citizens. 

Markham’s arguments on reforming the RAA and the comments I made in 2019 together strengthen the argument for a radical reconsideration of the Community Development Program (CDP). In December last year, I published a post on employment issues where I endorsed what in effect amounted to a recommendation for a pilot employment creation program to be established (link here). Upon reflection however, the case for moving decisively to reform CDP is overwhelming: lives are not just at risk but will be drastically shortened unless action is taken.

It is time Governments looked seriously at shifting the totality of the 30,000 CDP participants across remote Australia into real Government funded jobs focussed on working on country, housing maintenance, NDIS support roles, construction, language and cultural advice within the education system, climate change readiness, disaster readiness, and community health. I mentioned some of these options when my views were sought for a recent article by Michelle Grattan in The Conversation (link here).

The rationale for such a radical reconceptualisation of the CDP is an amalgam of a number of factors: the existence of market failure in job creation in remote regions; the opportunity costs of not providing opportunities for real employment, the reduction in social security payments that would go some way to offsetting the costs of job creation; and the very real benefits to individuals, families and communities that would flow not just over the short term, but the long term.

I think of this as a macro-economic intervention across remote Australia in response to what is an ongoing economic, social and environmental disaster across remote Australia. It would be aimed at creating the foundations for a viable remote Australian economy. It would require vision, and sustained commitment from Government, as the present crisis (link here) is rooted in deep-seated market failure. In effect, it would be akin to an Australian version of Roosevelt’s New Deal.

Of course, the meta-issue worth considering is how is it that Governments have done nothing following the PC’s 2020 report on RAA, and more concerningly, have been incapable over at least four decades in ensuring that real employment opportunities are available for remote residents.

My own view is that Indigenous interests just do not have a sustained and powerful advocacy capability that governments find it impossible to ignore. Moreover, the Indigenous advocacy capabilities that do exist are both overwhelmed by competing mainstream interests whose claims on government effectively limit the funds available for investment in indigenous priorities. This is the fundamental reason that Government do not listen to Indigenous interests; they are just too busy listening to other interests.   

Finding the solution to that challenge is the real constraint on closing the gap, even for just 30,000 unemployed citizens across remote Australia, a cohort that totals less than 0.3 percent of AUstralias employment base, and which Francis Markham describes as ‘the most economically disadvantaged groups within Australia’.

 

 

12 February 2024

Remote area tax concessions and payments: a new review is underway

The Productivity Commission has released an Issues Paper on remote area tax concessions and payments (link here) as part of a review into these issues commissioned by the Treasurer.

The APO web site (link here) summarises the review in the following terms:

This study focuses on three long-standing measures that provide support to individuals and businesses in remote areas, namely the:

·         zone tax offset (ZTO)

·         fringe benefits tax (FBT) remote area concessions

·         Remote Area Allowance (RAA).

There have been concerns within the community that these measures have failed to keep pace with demographic, cost of living and infrastructure changes in Australia. In response to these concerns, the Australian Government has asked the Productivity Commission to evaluate these measures’ objectives, design, operation and effects, and to consider alternatives to them.

The issues paper is an early step in the review and identifies a range of potential issues requiring consideration. One of the obvious issues that will require detailed research is the absence of data relating to both the demographic makeup of recipients of each measure, and the costs to the budget of each measure. Other issues at the core of the review will be policy rationale, policy design, and alternative options for meeting existing or new policy objectives.

The three measures under study are each mainstream measures, and are available to any residents of the relevant geographic areas (which span most of remote Australia) who meet the relevant criteria.

One of the potential issues embedded within the Productivity Commissions remit is the impact of the measures in meeting broader Indigenous policy objectives, noting that remote Indigenous citizens remain amongst the most disadvantaged citizens in Australia.

Commendably, the Productivity Commission has acknowledged this, stating in the issues paper at page 7:

Due to this study’s focus on remote areas, we will evaluate the effects of remote area tax concessions and payments on remote Indigenous communities, as well as any interaction with other government policies designed to assist those communities.

I don’t propose to undertake a detailed analysis of the Issues Paper and the issues it raises for Indigenous policy, but note that there is a substantial overlap insofar as remote Indigenous citizens are affected (for better or worse) by each of the three measures. Indigenous employees / taxpayers are recipients of the zone tax offset, Indigenous businesses take advantage of the FBT concessions, and Indigenous citizens make up a substantial proportion of income recipients who are entitled to the RAA.  

There are however a number of obvious issues which will need consideration and attention.

The RAA was originally introduced to provide an equivalent payment to welfare recipients to extend the benefits of the ZTO to non-tax payers in remote Australia. Given the over-representation of Indigenous citizens in the income support cohort, and the under-representation of Indigenous citizens in employment, the disparity in rates between ZTO and RAA impacts disproportionately on Indigenous citizens, and deserves to be reconsidered.

A further potential issue relates to the impact of conditional welfare in remote Australia (ie the CDP program: link here) and the increasing evidence that as a result of punitive penalties (link here), significant numbers of remote Indigenous residents are not accessing their welfare entitlements and thus not accessing RAA.

One of the challenges is assessing the utility of these policy measures, is that they were primarily devised to assist and benefit mainstream interests, particularly mainstream taxpayers and businesses. Consequently, it can be easy to overlook Indigenous perspectives in assessing the changes in underlying rationales over time. As the Commission notes:

A range of justifications have been advanced for special assistance for people living and/or working in remote areas (box 3), although many of these are contentious. For those justifications drawing on the isolation and arduousness of life in the outback, the changes in transport, communications and living conditions over the past seventy years mean that their strength has diminished (at least in many parts of the country). Such arguments have also been challenged on the basis that ‘individuals have a free choice whether or not to live or work in remote areas and to compensate them, if they so choose, would lead to resource misallocation and reduced growth for the country as a whole’ (see Cox et al. 1981, p. 15).

While there have been improvements in the circumstances of remote citizens, the circumstances of remote Indigenous citizens are still highly disadvantaged. Moreover, they may not have the same level of flexibility in their choice of residence as mainstream citizens. These are less obvious factors that the Productivity Commission will need to grapple with as it progresses its review.

I am sure that as the review progresses, a range of new issues of relevance to Indigenous interests will arise. Hopefully the various Indigenous peak bodies will step up and lodge submissions to the review.

Perhaps the substantive take out from the release of this issue paper is to reinforce once again how mainstream programs and policies are increasingly important for any assessment of Indigenous wellbeing and opportunity.