I rise today to speak on the Social Services and Other Legislation Amendment (Simplifying Income Reporting and Other Measures) Bill 2020, and I want to echo the words of my Labor colleagues—our shadow minister, the member for Barton; the member for Maribyrnong; and the member for Dunkley—in the great speeches they've given on this bill this morning.
Labor supports this bill, as we support any measures that will make the social security system easier and more accurate for those who interact with it. This bill will change the way income is reported to Centrelink so that it is reported when a person is paid, not when the income is earned, which will make reporting more accurate. The bill will also enable Centrelink to use Single Touch Payroll information from the ATO to prefill income for Centrelink reporting. The bill will not automate the reporting. Individuals will still be required to check and certify income that is prefilled using the Single Touch Payroll system. These are good changes that, for the majority of payment recipients, should make life easier and avoid under- and overpayments.
But, while we support this, we do have questions. This government has an appalling track record on these sorts of digitisation projects. It has run down Centrelink to the bone, which makes it incredibly difficult for them to administer their services in the way they should be administered. We have seen people waiting for hours on the phone, people hanging up, people giving up on trying to get answers to their questions and people waiting months and months just to receive the payments they are eligible for. The worst example is the disgusting robodebt scheme, where hundreds of thousands of Australians who had done the right thing and reported their income correctly were issued debts that were generated simply by an algorithm and, probably most appalling, the onus was put on those recipients to prove that they didn't have that debt. This has of course caused immense harm to people. Some of these amounts related to debts that were supposedly years old. We've all seen in our electorates people who have had shocking experiences. The member for Dunkley was just talking about some of those. So it's really hard to trust this government to get this right. I also want to second what the member for Maribyrnong called for yesterday: that any debts based solely on that algorithm be refunded.
What is at the root of these problems is government's inherent lack of respect for anyone who receives social security and, in fact, for the system itself and the vital role it has played and should play in this country in alleviating poverty and inequality. It in fact goes further than that. They want to attack, at every opportunity, people who receive these payments and downgrade the role of that system as it's seen by the Australian people. It is a system that is majorly failing people who rely on it. Newstart allowance is woefully inadequate, and the only people who won't accept that is this government. We've even had a minister say that if we increase Newstart the money will go into the hands of drug dealers. I think that just shows the incredibly out-of-touch, disrespectful and disgraceful attitudes within this government. The rates of Newstart speak for themselves, and I just want to get them on the record, yet again, because the message doesn't seem to be getting through. Newstart allowance for a single person is $559 per fortnight. That's $280 a week, or around $40 a day. Anyone who pays rent, buys groceries or tries to run a car or even buy bus tickets knows that that is not enough to live on in this country, with rising prices. It's just not. The number speaks for itself.
The other point I want to talk about is the income test on Newstart Allowance, which is also woefully out of touch with the current job market and current prices in Australia. This bill deals with income reporting, but it's not addressing the real problem, which is that when you're on Newstart and you have earned $104 in a fortnight your payment begins to be reduced by 50 cents in the dollar—$104! That's barely one shift. That is not in touch with our current job market. It's not enabling people to live. Their payments are cut as soon as they earn the most meagre amount of money. When you have earnt $254 in a fortnight, your payment begins to be reduced by 60 cents in the dollar, until it's gone. This is just inadequate. These are the issues that government needs to be looking at right now. We welcome the changes in this bill, but they are tweaking at the edges of a system that is inherently failing Australians.
I want to use this opportunity to talk about someone from Canberra I met recently. Their situation illustrates how these payments are impossible to live on. I recently spent a day with Financial Counselling Australia's A Day in the Life program, which enabled me to spend a day with financial counsellors who provide a not-for-profit service to people dealing with problems of debt and are getting themselves out of those issues. It is an incredible service they provide. They are at the coalface of dealing with the impacts of this inadequate system and the structural imbalance in our society that is just stacked up against the poor in every way. It is hard to see how people can get through life without a decent safety net to rely on, given some of the challenges that are inherent in the way our economy and our society work.
I spent the day with Care Inc here in Canberra. I want to thank their director, Carmel Franklin, and all the counsellors I spent time with that day. I got to meet one of their clients, whose name I won't use. It was great to actually go step by step through what his experience had been. This was a man who had worked hard all his life and he was battling some serious mental health issues and also a physical injury of an ongoing nature. When he lost someone very close to him, this came to a head. He found he was unable to work anymore and went onto Newstart Allowance. He was doing his best to manage his bills—just normal bills.
One in particular that had become a problem for him was his internet and phone bill—just basic things. The first thing the counsellor worked on with him was budgeting, but this was not an issue, because he was already budgeting so carefully. Another thing that this government doesn't realise is that people trying to live on Newstart have to be incredibly resourceful and disciplined just to get by on that. They are not enjoying life. They are not buying drugs. They are skimping to get the bare minimum, which he was doing. He had some bills come up and he took on a payday loan, which is another thing that, frankly, should not be legal in this country, in my view. These are the loans where you can get some money quickly but you face absolutely exorbitant and unfair interest rates that just drive people into absolute financial crisis.
His debt was growing and growing and they were trying to help him with that. Eventually, two things meant he was able to get back on his feet, as he put it. First, as a long-term unemployed person he was allowed early access to his superannuation, when he got to six months on unemployment. That is a double-edged sword really. He needed that money, but it is basically robbing his future self of something that he had built up. You are allowed to access up to $10,000. But what many don't realise is that it has a tax rate of 22 per cent. So, he lost almost $2,000 of his superannuation to tax.
To solve his problems, he took out this meagre amount of money, which he really should have been continuing to invest for his future, and was able to settle his debts. But the thing that really made a difference for him was that, after many months of proving the injury and the mental illness issues that I mentioned, he became eligible for the disability support pension, which, of course, is a higher rate than Newstart. That meant that, as he said, after meeting all the bare essentials he had $30 a fortnight to enjoy. I think those numbers speak for themselves.
As the counsellor said, the problem is not people's ability to budget. It is not always people getting into payday loans or any of these other disgraceful things that go on. It is the fact that people cannot live on these payments. I don't know how much longer we need to keep saying that to this government. So many people are saying it, and those opposite are just deaf to the fact that people are struggling so hard in this country.
We are a rich country. We should treat people better than that. One in six Australian children are living in poverty. That's not good enough. The government needs to acknowledge that these payments are too low. It could do so much for so many people by reviewing and increasing them, by looking at the interactions of Newstart with the job market and by looking at those income tests that I mentioned, which are absolutely ridiculous by today's standards. I again call on the government to please listen to the struggling people in your electorates and increase Newstart.