Employment

Centrelink has been fraudulently issuing debt notices to people who owe no money.  Persons so identified are then harassed and threatened to the point that they pay this un-owed debt rather than being penalised by a system, which they already know actively disparages them.

Labor’s Anthony Albanese, while being concerned about this government’s debt collection said, “No one would argue [against] that if someone has a debt from Centrelink, had payments to which they were not entitled, then it should be repaid“.  I would argue to the contrary.

The Poverty of Welfare.

Centrelink’s services exist to ensure the disbursement of social security payments whether that be for unemployment, or aid for families, carers, the disabled or indigenous. That financial aid in many cases has rarely increased, and in some has decreased in terms of CPI value. In the case of the baseline unemployment benefits, though indexed to the CPI, “there have been no legislated changes to real Newstart rates in over 20 years”, in fact since 1996.

This has raised legitimate concerns that the Newstart allowance is well below the poverty line,  which is an issue championed by:

• the Unemployed Workers Union,
• the Australian Council of Social Services,
• Anglicare,
• and the ABC (although that was prior to it’s current management).

Rorters! from Welfare or Multinationals?

These inadequate payments entrench poverty, inhibiting rather then aiding workforce participation. Mobility, presentation, education, literacy, and skill acquisition all cost money.  Financial stress adds to social marginalisation. Bullying by the job networks and policy victimisation generates social ostracisation in the community, and also limits possibilities for the unemployed and disabled.  So sorry  Anthony, but I am very much inclined to believe that if anyone got a little more money out of this dysfunctional system than the government was prepaired to provide, then they deserve to keep it.  Any extra money would only increase their chances of improving their lot, including their ability to contribute to the economy and to finding work.  Instead of attempting to recoup $3.5 billion in alleged “welfare debts”, why is the government not energetically recouping $6 billion from the tax dodging multinationals? 

What about getting a Job?

Numbers don’t lie but as the ABS knows, how they get presented matters.  Apart from the financial constraints, there is the statistical improbability of finding work in any way. Roy Morgan demonstrates unemployment figures in December 2016 were 9.2%, which involves 1.186 million people. In fact, when you take into account underemployment, which has risen another 10.8%, the pool of potential job seekers rises to 2,584 million.  All of these job seekers are competing for approximately just 163,100 jobs Australia wide.  (Nov 2016 Dept. of Employment IVI stats.) In the worst-case scenario, there are at close to an average of 16 people for every single job in the market and that doesn’t take into account the following:

• the new year’s rush of young school leavers,
• foreign workers with reciprocal work rights,
• current workers seeking to change jobs or
• the new entrants to the unemployment lines as car manufacturing in this country vanishes.

And now, just to add to the psychological and financial pressures inherent in looking for work, the government has come up with a new strategy to inhibit your search, by occupying your time with digging up old payroll records. The news of this new tactic is ever-present.   20,000 people a week receive notices of debts – allegedly to recoup incorrect welfare payments. All of which are triggered by an automated debt recovery system, which is under intense criticism because of what is essentially, the (intentionally?) flawed logic of a computer algorithm.

Erroneous mathematics.

Centerlink’s computers (IBM machines in case you were wondering) are attempting to match tax office data with Centrelink records to determine if there are discrepancies between Centerlink financial information and Tax office records.

But an inherent incompatibility exists between these two data sources, and it is a matter of timing. Centerlink has information about its payments made fortnightly, and possibly data relevant to jobs which clients were offered and accepted.  Centerlink is unlikely to be aware of the continuing circumstances of that job or subsequent ones found independently in the course of any given financial year. The tax office has only an annual summary of income. There is no breakdown into weeks, fortnights or months.  There is no breakdown of pay rates, when it was specifically known they earned it, or what changes to income streams occurred in the course of the year.  The tax office data is therefore incompatible with Centerlink’s data.  The government is comparing apples with oranges.

Despite this, Centrelink’s algorithm takes your yearly income as reported to the ATO, and averages it over each fortnight of the year. As any primary school age statistician would recognise, an annual “average” apportionment cannot measure individual fluctuations and is a flawed measure in any given fortnight. To assumes absolute consistency for all fortnights is absurd on a number of levels. The only group that may get close to this pattern are the fully employed and even then, there are allowances, overtime, uneven hours, holidays, sick leave, RDOs, wage rises, wage falls, changes of roles, and any manner of occurrences that will alter the payroll for any individual over any given week/fortnight. Certainly, the most unstable employment group and the most likely to have variants are the unemployed. It is common sense that if you are dealing with people who move in and out of employment in any given year where they may move from poverty one fortnight to sufficiency (or if lucky, excess) the next. It is common sense that averaging their yearly income will produce inaccurate results by which to measure any given actual fortnight.

Guilty before proven Innocent!

So what does Centerlink do? They take the ACTUAL fortnightly records held by Centerlink along with any limited volunteered data and try to cross-reference it against a fortnightly averaging of annual taxation income data.  The normal presumption of statistical probability would tell you the likelihood of such figures matching for this demographic, is extremely unlikely. You would have to presume the mismatches will be the most common occurrence. Any programmer (and I worked as one for most of my career) would tell you such a matching is deeply flawed. Therefore clients should be approached with the assumption of innocence. In the absence of specific information in Centerlink’s internal records for discrepancies, inquires should be made tentatively as to why there might be a prima facie case for a mismatch in numbers. The onus of proof should also be on Centerlink (and not the client), as the process is so obviously flawed.  Something fully recognised internally within Centerlink, if not by the political policy makers. In the face of the inherently flawed logic of this approach, innocence till proven guilty would be the legally prudent course of action.

So what does the government decide is the best course of action? To implement a process that presumes people to be guilty (of debt) till proven innocent. 20,000 Welfare recipients a week have been receiving notices that they have 21 days to prove their “innocence”, or be hit with penalties. These include a 10 per cent debt recovery fee, jail time, a restriction on travel. The event for which they are being investigated may be anywhere up to six years in the past. Some recipients are paying up, not because they accept that they actually owe the debt, but simply because they can’t locate evidence from past years, or because they fear the repercussions of a punishing government bureaucracy. If you have ever had to deal with Centerlink or any of its private job network partners you will be well aware of how punitive they are.  Surprisingly to the government – apparently – this is producing a backlash.

Flaws and error rates.

Human Services Minister, Alan Tudge, insists the automated process is not flawed and despite protests to discontinue the letters he is forging ahead with gusto.  For Trudge to declare, “he wasn’t aware of anyone who was completely convinced they don’t owe money but have been given a debt notice” is either grotesque wilful ignorance or a lie in the face of a growing body of evidence otherwise.  When even “Liberal Senator Eric Abetz acknowledged there seemed to be problems with the system“, then you know it has to be disastrous.

The one aspect of this (that nobody appears to be talking about) is the sheer workload this must be creating for Centerlink. Let’s assume Alan Tudge is correct that the error rate is only 20%, which is contrary to what centerlink whistle-blowers reveal is the case.  Giving him the full benefit of the doubt, 20K letters a week represents 4K fraudulent claims a week. Which is 16K a month and 192K a year. After 1.04 million data matching discrepancy letters in a year, they will not even cover all the numbers of unemployed in this country (1.186 million – see above), let alone all the other welfare recipients for other reasons. Alan Trudge expects the system to “generate 1.7 million compliance notices”, which by his own estimates means at least 340,000 letters in error. Of course, the Centrelink compliance officer whistle-blower that spoke to the Guardian suggests the percentages of errors are vastly larger.  Given that all of this was not only easily identifiable but unavoidably self-evident prior to the system being switched on, how is any of this not fraudulent?

Voters & workers affected.

At the current letter-writing rate (if they can maintain it) this will take over a year and a half to complete, although Mr Trudge thinks it will take 3 years. By then Australian Lawyers will be in a feeding frenzy of class action suits with minimally 340,000 clients with legitimate grievances with the government. This will presumably still be an ongoing issue by the next election.  According to 2014 Centerlink data there were 14.459 million Social Services payments made in the March 2014 Quarter to 50% of the population – interestingly, a reduction from previous numbers.  There are only 13.5 million voters – according to AEC – who voted in the last election. This is not a vote winner.  But presuming you are not expecting to win the next election, leaving this mess on another party’s door to cleanup provides a damaging handicap.  The amazingly short-term memory of the public, gives the coalition an advantageous opportunity to disparage what the next government will have to do to rectify the situation.

Putting aside the legal costs, consider then the other real cost in man-hours for Centerlink to resolve each erroneous issue when there are minimally 4000 cases a week. To keep on top of the “erroneous” case load – if Mr Trudge is correct – requires the equivalent of 105 Centerlink officers processing each claim within an hour in a 38 hour week.  This presumes the ability for each officer to address, research, confirm and redress an error on each letter in one hour and do no other administrative work. There appears to be mounting evidence it takes much more time. Plus that does not factor in the equivalent of the 421 Centerlink officers devoting a single hour in a 38 hour week, that you’d need to process the claims – and not fall behind – which Mr Trudge believes are valid. But these figures are conservative. As I previously explained, the error rate is far larger according to the Guardian’s Centerlink whistle-blower.  The backlog of work is just going to be extraordinary, if it isn’t already. No wonder it is so difficult to get through to Centerlink on the phone. It was nearly impossible to get Centerlink on the phone when there was only 20,000 debt recovery letters sent in a year but now that they are doing it every week …. ? As for other means of communication, even compliance officers are complaining they cannot access the Centerlink online system efficiently, let alone customers.

Opportunities or Overload?

In truth, even if Alan Trudge did put an end to it; Centrelink will probably still be spending thousands of man-hours dealing with the consequences of this flawed and fraudulent system. The same would be true if the Commonwealth Ombudsman began investigating Centrelink’s debt recovery system and put a stop to it – disregarding the costs in legal redress, which are sure to follow.  Nothing about this course of action makes any logical sense, except to see this as class warfare against our vulnerable and easily disparaged citizens.

Well at least, it will probably increase employment opportunities in the community at Centerlink that will giving a few folk some extra, well sought after work. But wait, isn’t there a public service full time employment freeze?

——//——

P.S. 03/03/2017

I add this postscript because I wish to cover one of the points of mystery I’d not been able to discern.  How the government (Alan Tudge in particular) could repeatedly claim Centrelink’s average wait time on a call was 12 minutes.  Despite:

1.  when repeated anecdotal evidence said it was much longer.  Statistical evidence being more credible (if collected accurately) than anecdotal.
2. the government’s claims were not in accordance with the aforementioned backlog , as logically it should have been longer.

As you may be aware the Senate on the 8th of February confirmed an inquiry into the automated debt system would be launched.  A Senate question raised by Labor senator Louise Pratt finally got to the bottom of this mystery on Thursday 2nd of March.

“A transfer to a new line becomes a new inquiry, and the clock would start again,” Human Services staffer Barry Jackson said during a Senate estimates hearing.

Basically by Centrelink staff transferring your call to another phone on a regular basis and only measuring time between two specific phones, then the “wait-time” is kept low.  Centrelink does not measure the total time any client spends on the phone but how long you are connected to a specific phone within Centrelink.

It is a contrived and deliberate deception so Alan Tudge can make a claim that call waiting times are short.

Winter is coming!

This winter was cold apparently, and Australia slipped on the ice.  No limbs were broken in the fall, but the economic dilatometer for Australia’s GDP has demonstrated contraction. Not a surprise when you consider a full range of economic indicators for the Abbott/Turnbull Government.  The September quarter revealed a .5% shrinkage in our GDP, not seen since the Queensland flood affected the March 2011 quarter. The time before that was during the Global Financial Crisis.    It has not been an unexpected fall given the low growth figures each of the last year’s quarters.  In June 2015 quarter it was our accounting standards that defer payment recordings that recognised a 41.5% jump in government defence spending that secured a tiny growth rate.  There was no defence spending finalised to save us in September 2016.

Will the Wall hold?

The Coalition team were quick to allay fears of recession, as was the media.  The Treasurer blamed the deterioration on the lack of opportunity to provide tax cuts for corporations.  The same corporations that by in large provide little to no tax revenue to our bounty and often relocate locally generated profits overseas.  On the radio, Christopher Pyne blamed poor performance on the distraction of Australian and American elections but commented that now these were over, things would be better.  What?

Build your walls higher!

The largest contributor to the fall in GDP growth according to the Australian National Accounts was the reduced output of the construction industry. Construction work had continued to tumble for the 3rd consecutive quarter taking its biggest fall of 4.9% in September’s quarter.  Some are blaming poor weather (i.e. rainfall ) for a fall in building activity.   Aside from the fact that we are now in the wet monsoon season meaning things will get worse, is the industry suggesting “construction” doesn’t make allowances for rain?  To be fair, the Bureau of Meteorology had been reporting higher rainfalls than normal for July thru September, but it has also reported a long term decline in rainfall of around 11 per cent since the mid-1990s in April–October in the continental southeast and 19% in the southwest of Australia.  Forgive me the pun, but does rainfall as an excuse, hold water? Might there be other factors in the construction downfall?

Letting “investments” through the gates.

An August News article showed foreign investment approvals had shown a sharp increase in Chinese nationals particularly in the last few years.  Now the previous linked News article suggested the tightening of bank lending was unlikely to affect Chinese enthusiasm for Australian real estate adversely.  But is this true?  Concerns about Chinese investors laundering money in the Australian housing market was exposed by the Four Corners program “The Great Wall of Money” in late 2015.  Three significant events occurred in the period after this program went to air.

1. Despite much procrastination because of the economic risks to the banking system, the prudential regulator of banks, APRA began to enforce some of their own rules on high-risk lending.
2. Australian Banks uncovered evidence of numerous and sophisticated fraudulent income statements made by Chinese borrowers. To mitigate risks they have begun to restrict lending to offshore investors.
3. The Chinese Government began cracking down on Money laundering corruption.

Three consequences have been reported in the media.

1. Robert Gottliebsen reported in August that “The mass of Chinese property buyers who snapped up Australian apartments “off the plan” on the basis of a 10 per cent deposit have started to walk away from their agreements in Sydney”.  Melbourne has larger volumes of Chinese buyers.
2. To secure sufficient financial collateral and because banks consider development projects high-risk ventures, developers depend on being able to provide evidence to banks of “off-the-plan” purchases of apartments.
3. Risk avoidance by the banks is resulting in restricting or pulling finance on the Chinese markets. This risk means construction became nonviable and added to buyer pull out; it may likely be the greater cause of any given developer may ceasing or stalling development.

While not wanting to “rain” on anyone’s parade,  a more likely reason for a drop in construction might be the exit – of what was last year a massive influx of Chinese Buyers.  In fact, given the huge influx of Chinese buyers in the market in 2015, it could be hypothesised that Chinese consumers were keeping our economy afloat.

Closing the gates on the wall.

So what hope is there left in the final month of this quarter for us not to discover some time in February that we are in a recession?  Because two depressed GDP terms is an official recession and we have less than one month to go of the 2nd term.

• Manufacturing? – Ford is gone, Holden
 fired-up the final V6 motor at its Port
Melbourne plant on the 29th of November and Toyota is in palliative care expecting to pass away next year.
• Renewable energy market? – The government is slashing support for that industry
• Mining? – Mining investment fell for the twelfth consecutive quarter & the seasonally adjusted estimate fell 0.8%
• Exports? – Exports of goods fell 0.3% which is a bit surprising given how cheap our dollar is.
• Retail? – This is the first decline in over three years as the seasonally adjusted estimate fell 0.8%, so perhaps that is just a glitch.
• Real estate industry services? – which fell by 2.4% which is no surprise – given the continued unaffordability of the housing market.

Industries such as Education, health, power, hospitality, transport, professional & scientific services,  etc. contributed virtually nothing.  So where are our economic booms?

• Information Media & Telecommunications? – rose 1.6% driven by rises in telecommunications and internet services, so be thankful for Youtube, iView, Netflix and Facebook but it’s a pity we don’t have an innovative & internationally competitive NBN.
• Farming & fishing?  – driven by rises in grains, cotton and livestock production it had a 7.5% increase, so the social well-dressed participants at a BBQ with beef burgers may yet save the day.
• Finance & Insurance services? – Up by .1%, so insurance salesmen are still the best sellers around and we are still buying their spiel.

It’s either Jon Snow to the rescue or …

Unless the government can quickly pay off a huge defence “lay-by” as they did last year, it’s in your hands people. Our consistently strong industries have been Retail and Services Industries driven by household expenditures which have been traditionally strong areas of our economy.  It’s Christmas, the retail and services industry awaits your patronage if you still have a job that pays a decent wage. You have one month left to buy us out of a recession. Buy up big for your kids, travel and stay in a nice motel. God help Australia, but is our last hope to avoid recession, “Santa Claus“?

Jobs and Growth – Part Two

As already outlined in part one of examining the mantra of the Coalition’s claim to be creating “jobs and growth”,  jobs in the economy are in inadequate supply. Indeed when you consider the vast numbers of under and unemployed on record, as well as the numbers of foreigners eligible to look for and consume jobs in the market, jobs are relatively non-existent. But if there is potential for economic growth in the Australian market, albeit little hope for millions of Australians to find suitable work in the short term, then perhaps there is hope for the long term holds. Perhaps, given enough time, the Coalition – who want you to believe they pride themselves on being “THE economic managers” – can pull a “rabbit out of the hat” and grow the economy to generate more job vacancies for the unemployed to fill than the rate of expansion of the workforce. For now, they are struggling to do this.

Growth?

So, with the Coalition supposedly focusing on “Jobs and Growth”, exactly what infrastructure is the government committing to, to creating growth in our economy? There is a big focus to one of the large contributors to the LNP, of the Mining Industry. Mining reaps the benefit by our largess in revoking emissions trading and mining taxes and billions in subsidisation of fuel, exploration costs, grants and cheap loans. All of which results in profit margins well in excess than these subsidies, most of which goes overseas, as mining is 83% foreign owned. Despite the big sell of the benefits of mining by the government – which the public largely buys – the reality is quite different. Mining investments are a diminishing industry with declining jobs – now down to 2% and a negligible contribution to GDP. In fact nothing at all in the Dec 2014 quarter. As jobs were disappeared from mining, the expected pickup in Construction did not occur and had in fact begun failing us as well – as it fell 3.6% in the last December Quarter with every expectation of it continuing to weaken. Any new mines – despite exaggerated claims to the contrary by the coalition about the Adani Mine – will take up tiny numbers of our unemployed as Rod Campbell demonstrates in “The Australian”. So no growth in these industries, unless you are talking about increasing workplace deaths in which case the reintroduction of the ABCC in construction is useful. The previous regime of the ABCC saw dramatic rises in construction industry deaths under the Howard Government because of a lack of the union’s ability to enforce safety standards.  There was a rapid drop off of deaths once it was abolished. This would be a small boon for employment as more workers die quickly then vacancies in the construction industry will arise more often. The uptake of the unemployed into construction will help reduce unemployment’s numbers. So while mining and construction are not growing, and is shedding employee numbers, the rollover of employees through the implementation of ABCC style legislation may be of benefit to the unemployed – should they survive the experience. It certainly has no powers to combat corruption so there must be other reasons for its existence. The government’s desire to expand this style of legislation into other industries such as the Registered Organisations Bill, would potentially expand businesses capacity to roll through the unemployed as they “dropped” off, while not necessarily contributing to the real growth of the businesses in question or addressing any union corruption issues.

Exploring other industries, we might note the government have undercut our manufacturing sector as car manufacturers will bleed 200,000 jobs and as much as $29 billion in lost economic output. The steelmaking company Arrium, which employs one in ten people in the South Australian town of Whyalla, just went into administration in April this year (2016). SPC fruit canning industry only needed a tiny fraction of the money we hand out to mining to protect the industry and jobs.  The Manufacturing Worker’s Union had no success at convincing Abbott to adopt a less hard-line approach to our canneries.

RET and renewable energy changes from both Abbott and Turnbull have devastated a growing industry that had a vibrant future. This is evidenced by the progress established in multiple European countries who despite many having less sunshine & wind access than Australia, are contributing significantly to their energy needs and in Norway’s example exceeding their energy requirements from renewables.

The change from public transport initiatives to road building means people are more dependent on vehicles at a greater cost to the consumer and the environment. (Perhaps Joe Hockey will be right after all, and poor people won’t be able to afford cars) Other OECD countries have developed public transport that keeps travel costs low by the clever development of properties around the transport hubs (school, hospitals, shopping centres, etc.transport). The lack of investment in public housing in city CBDs means that disenfranchised people are more remote than ever from employment opportunities, health and education services. So no growth in transport or city building infrastructure except for the most etransportation options for the public.

Health follows wealth and employment follows education, so the inadequate or lack of infrastructure development in these areas will equate to the failure to invest in human capital. This represents appalling short-sightedness at a time when China’s tertiary sector, Singapore, South Korea and Japan (and in time, Indonesia) are making dramatic consolidations around trade and education. They are gearing their workforce up to be able to participate effectively in 21st-century technology economies while Australia’s professional full-time occupations are declining according to the Graduate Careers Survey from the CGA.  As degree qualifications become more expensive, the long-term outlook is not optimistic. Integral to this is that Australia is creating an NBN system that has us ranked down from 30th in the world to 60th in internet speeds. The educational advantages of online learning specifically for a country like Australia where distance education is a pertinent need is undercut by our pathetic internet offerings. Cutting the Gonski funding for our children reduces the future level of education for our nation. It’s simply short-sighted. From education to health, the prognosis is also heart stopping. Given the reduction in funding by removing previous indexing arrangements for hospital funding to “save” $80 Billion, the Government’s commitment to health in the midst of a population with an increasing proportion of aged care needs is counter-productive. If you want your population’s retirement age to be delayed as Howard, Abbott and Hockey suggested, then you need to cater for rising health costs, not diminish them. So no growth in health and education.

Under the coalition, Australia has dismantled active market labour programs creating the ineffective “work for the dole” scheme, where people are forced to paint community halls and rake garden paths. This semi skilled meaningless busy work is not dissimilar to the enforced programs that you see in North Korea. It is, after all, a means by which people are forcibly employed at below minimum wage rates with penalties extracted for failures to comply. Perhaps a North Korean labour camp is not that big of a jump, conceptually?  Neither scheme in Australia or North Korea results in fulfilling full-time work.

Tourism and Agriculture although are key growth areas for Australia. Given there are 267,000 tourism businesses in Australia 95% of which are micro businesses which outside of the casino industry and hotel and hospitality association are not broad enough to afford to donate to the Liberal Party to attract favourable considerations. Given Mining can do so; it is no surprise that it is given priority over tourism and agriculture. As the Australian Institute has pointed out: “The expansion of mining causes a contraction in non-mining industries, particularly manufacturing, tourism, agriculture and education. This results in business closures and job losses”. Recent government decisions in regards tailings dumping on the Great Barrier Reef and the Shenhua mine’s resumption of farming land in NSW bear these assumptions credit. Support for these industries by the government is certainly not a priority.

Given the history of ongoing falls in consumer and business confidence, apart from a temporary boost at the change of Coalition leadership, there has been too little evidence of worthwhile growth in Australia. In fact, if it were not for the way we account for defence spending, by only accounting for all previous payments as one lump sum presumed to be paid in total on the final instalment for an “item”, Australia’s economic outlook would be dire. Change the accounting convention to recognise the defence payments when they were made, and Australia would be officially in recession.

Unemployment is an pernicious problem not being dealt with by a government that is busy dismissing public servants and growth industries and their support mechanisms (Renewable Energy projects) and undermining manufacturing in this country and reducing funding for numerous Not-for-Profits (i.e ABC, SBS, CSIRO, the Climate Commission and dozens of expert advisory bodies). All of these resulting in massive retrenchments, increasing the stress levels of employees in these and related industries leading to the aforementioned reduction in economic growth that this country is experiencing.

So, given the coalition’s reluctance to tax the wealthy or large businesses which contribute significantly to the Liberal Party but next to nothing in taxes to the Australian people’s health, wealth, infrastructure and even employment, where will we find the revenue to support Australians? The continued reluctance to pull back the massive welfare subsidisation of such companies which contribute so little to our GDP – such as mining & construction, is deeply inegalitarian when one considers how little welfare we supply to Australians who have real financial needs.  The service sector contributes 68.7% of our GDP, but where the government’s policies do either so little for or are inhibiting the non-finance segments of it, from what do we then build national revenue? An economy where it is no longer possible to raise sufficient revenue from income tax because people don’t have jobs, explains the coalitions desperate bids to reduce services to the community. “JOBS AND GROWTH” have been the mantra of the Government for the last three years, worryingly resulting in such a poor performance that we risk further economic collapse. And, in the next financial year, we may not have fully paid off the next defence purchase in time to hide the reality, that Australia, will be in a recession.