Welfare in Australia
Opinion

Privately owned job agencies can now cut someone off Newstart with no review from Centrelink


Centrelink office
‘Single unemployed Australians receive the second lowest level of income support in the OECD.’ Photograph: Matt King/Getty Images


All across the country unemployed Australians are today bracing themselves for more stress and suffering, as the Coalition unleashes its new needlessly cruel benefit sanctions regime.
Starting 1 July, the Turnbull government is granting job agencies new, unprecedented powers to punish Newstart recipients for failing to comply with gruelling compliance demands.
Under this new “demerit point” system, agencies will now impose payment suspensions if (they believe) jobseekers are behaving inappropriately, or failing to attend appointments and activities like Work for the Dole without a “reasonable excuse”.

Alarmingly, jobseekers currently battling drug or alcohol related illnesses are now no longer (“reasonably”) exempt from activities, nor safe from financial punishment.
Until 1 July 2018, Centrelink has been able to overturn any job agency penalties if it deems that they’re unfair or will lead to “extreme poverty”. It will lose much of this power. Now, job agencies will be able to punish their unemployed clients without government regulation or oversight.
Unemployed workers will also lose significant powers of appeal. They will have to passively accept many of the decisions ordered against them. In short, privately owned job agencies – many of which are for-profit private companies – will wield unlimited, unchecked power over the unemployed.
Under this system, unemployed workers can be completely cut off Newstart if they refuse to attend unsafe work for the dole activities. Even though 64% of sites are failing to meet basic safety standards, jobseekers will be forced to accept any dangerous, hostile conditions they’re met with.
Given that government funding to job agencies is tied to outcomes, such as placing participants into work for the dole, there is little incentive for job agencies to treat unemployed workers fairly. On the contrary – there are significant financial incentives to abuse unemployed workers.
Already this abuse has reached crisis proportions.

In 2015-16, job agencies imposed a record 2m financial penalties on the unemployed. As noted by the National Welfare Rights Network, roughly half of these penalties were found to be unfair and were rejected by Centrelink. This means that in 2015-16, more than 1 million unemployed people had their payments cut off when they did nothing wrong.
This kind of error rate is staggering – in any other sector, it would surely result in a royal commission. Earlier this year, a suspected 5% error rate at the Australian Tax Office resulted in an immediate government investigation.
Clearly, a culture of lawlessness and unaccountability already pervades the employment services sector. Under the new “demerit point’”scheme, this $10bn industry will enjoy even more freedom to run riot. The 800,000 unemployed workers attending job agencies will be left to fend for themselves.


By giving private companies the full authority to make compliance decisions – a power previously the domain of the Department of Human Services – the government continues its simple mission: to strip unemployed Australians of the basic right to a social safety net.
In this, it’s been devastatingly successful. Single unemployed Australians already receive the second lowest level of income support in the OECD. And in order to keep these meagre benefits, they also have to fulfil the most onerous set of requirements in the developed world.
The government estimates that 80,000 unemployed workers will lose payments within 12 months of the demerit point system – all for the greater good of reducing “welfare dependency” and unburdening the budget.
Given everything we now know about the sharp rise of homelessness in this country, it’s staggering that the Coalition continues to implement social policy that’s specifically designed to chuck vulnerable people off benefits. It’s also staggering how well it’s working – according to the ABS, due to the tightening of eligibility requirements, only 36% of unemployed people receive the dole.

Rather than building a robust safety net, it seems that punishment and coercion have become the key guiding principles of welfare reform.
Government rhetoric would have us believe that cutting people off benefits gives them the “motivation” they need to find work (even as all evidence points to the contrary).
Here, government continues to recast unemployment as a failure of individual will: that the only barrier to employment, and a decent life, is idleness and “over-dependence” on meagre hand-outs.
Naturally, we hear nothing of the failure of our economy to provide enough work – and a decent standard of living – for an alarming number of Australians. (According to the latest batch of ABS data, there are currently 16 jobseekers for every position available.)
Instead, by strategically demonising the unemployed, government is easily able to justify ruthless social policy, like the demerit point system, which is explicitly designed to keep the poor completely powerless.
  • Jeremy Poxon is a media officer for the Australian Unemployed Workers Union