The financial hardship caused by the social security penalty system has become more extensive with a rise in breaches for the 8 month period July 2000 to Feb 2001 up to 232,400 penalties. This translates to an estimated total of 349,100 penalties imposed on unemployed people for the 2000-01 year — a 33% rise on the penalties imposed in the previous year and a 189% increase in the number of penalties over the past three years from June 1998.
At the same time, the impact of the penalties on unemployed people has worsened. An increase in the requirements placed on unemployed people (4) has caused a substantial shift in the composition of breaches towards the higher penalties of between $678 to $1431 for Activity Test breaches from the lower penalties of between $301 to $372 for Administrative breaches. In the first eight months of the 2000-01 financial year (July 2000 – Feb 2001) there was a total of 166,485 Activity Test breach penalties compared with 177,759 for the whole of the 1999 – 2000 year. This translates into an annual Activity Test breach rate of 250,100 — a 33% increase on the previous 12 months and a 310% increase over the last three years.
Major gaps in the social security safety net have been created by this intensification of the breaching system. Over a six month period from September 2000 to February 2001, there were 17,703 third Activity Test breaches that result in an eight week non-payment period. This is already 4,056 more than the total for all of 1999-2000 and translates to an estimate of 35,406 for the full 2000-01 year — a 159% increase on the previous 12 months alone. These third breach penalties result in a person being without income for a period of eight weeks and are equivalent to a fine of $1,431. They create tremendous personal hardship and put additional pressure on families and community welfare agencies that are called on for support during the period of non-payment.
The research presented in this report shows that the most disadvantaged jobseekers — those who need high levels of support and assistance to enter the workforce — are being trapped in a "maze" of bureaucratic requirements and are suffering tremendous financial hardship as a result of the penalties they receive. Of great concern is that a significant number of the penalties are being imposed on the most vulnerable people in our society including:
homeless people,
people with mental illness;
jobseekers with drug and alcohol related problems;
people with literacy and numeracy problems;
people who have acquired brain injuries; (5)
young people; and
Indigenous Australians.
This paper estimates that a total of $258.8 million in penalties will have been imposed on unemployed people during 2000-01. This amount represents a cost to the individuals penalised, their families and also the broader community that is called on to provide additional support during periods of reduced or no payment. While this amount is also a "saving" to the Government, it comes at the cost of tremendous hardship and increased poverty among unemployed people, as well as the extra cost that is passed on to charities and community welfare agencies.
The penalties applied to unemployed people are not imposed as a result of fraud, yet they exceed some penalties in the criminal system. They are disproportionate and unjustifiably harsh compared to those applied by Magistrate Courts for criminal convictions. For example, Daryl Somers recently received a fine of $600 for drink driving while double the legal limit — yet unemployed adults face penalties imposed by administrative officials of between $837 and $1,431 for such breaches as "failure to attend an appointment".
Centrelink staff who impose penalties do not have to meet the same legal safeguards and standards as those that exist for criminal matters. For instance, the onus of proof is much lower to impose a breach penalty. Our research has found that penalties are often imposed without even seeking a "reasonable excuse" from the unemployed person. To have a penalty overturned and their payment reinstated, social security recipients must prove their innocence at the same time as facing a period of tremendous financial hardship that sometimes results in their inability to continue to pay rent and in becoming homeless. If the person is then successful in their appeal, the restoration of payments may not be enough to return that person to the same situation — financial, housing and otherwise — they were in before the penalty was applied.
That between February 2000 and February 2001, there has been a 66% increase in the number of breaches recommended by the Job Network. Whilst not all of these are applied by Centrelink, there has nevertheless been a 45% increase in the number of Job Network recommended breaches that are applied by Centrelink. Overall, there has been a significant increase — from 21% in 98-99 to 39% in 00-01 — in the number of Job Network recommended breaches as a proportion of all breaches.
That, the introduction of automatic referral systems by Centrelink for referring unemployed people to both "Work for the Dole" programs and Job Search Training courses with Job Network providers, has resulted in a significant increase in the number of breaches related to these programs.
