Bills Digest no. 124 2007–08
Social Security and Other Legislation Amendment (Employment
Entry Payment) Bill 2008
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Contact officer & copyright details
Passage history
Social Security
and Other Legislation Amendment (Employment Entry Payment) Bill 2008
Date introduced: 29
May 2008
House: House
of Representatives
Portfolio: Employment
and Workplace Relations
Commencement: 1
July 2008
Links: The relevant
links to the Bill, Explanatory Memorandum and second reading speech
can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/. When Bills
have been passed they can be found at ComLaw, which is at http://www.comlaw.gov.au/.
To abolish the Employment Entry Payment Scheme, which
will require amendments to the Income Tax Assessment Act 1997,
the Social Security Act 1991 and the Social Security (Administration)
Act 1999.
The Employment Entry Payment (the EEP) was introduced by the ALP in 1989,
and is a one–off payment designed to assist those unemployed for a period
of 12 months or more who are meeting ‘the short term costs of moving into
and retaining full time work, such as clothing and transport costs…’.[1] The EEP has been argued to be of
‘great assistance to people re-entering the workforce’[2]
by further removing barriers to employment.[3]
- It is paid after a person starts a full-time job.[4]
- It does not need to be claimed – it is paid automatically.
- It is only payable once every 12 months.
- It is not refundable.
An income support recipient may be entitled to $312.00 if they receive:
- Disability Support Pension or have a partial capacity to work and
receive either Newstart Allowance or Youth Allowance.
An income support recipient may be entitled to $104.00 if they receive:
- Newstart Allowance or Youth Allowance (Jobseeker) as a principal
carer of dependent children, or
- Mature Age Allowance, Partner Allowance, Widow B Pension, Widow Allowance,
Carer Payment, Parenting Payment or Special Benefit.[5]
In 1996 and 1997 the Coalition Government unsuccessfully attempted to
abolish the EEP on the grounds that Departmental evaluations of the EEP
indicated that it did not appear to have been a major factor in influencing
people’s decisions to take up work, that is, that the payment did not
operate as an incentive.[6] However, the payment is more appropriately characterised as a
facilitative payment -- to help with the extra costs of starting work,
eg. new or special work clothes or uniform, travel costs before first
salary/wages payment.
The ALP opposition raised objections to the Coalition Government’s attempts
to abolish the EEP, making the following points in reply:
Jenny Macklin, MP (the then Shadow Minister for Social Security, the
Aged, Family and Community Services and Status of Women) argued that:
The taking away of these payments is going to mean
that people are going to be on unemployment benefits and are not going
to be able to access employment in the same way that they were before.[7]
Martin Ferguson, MP pointed out that:
There is not a huge payment, but a payment that was
very much valued by the unemployed…to assist the unemployed in getting
back to work.[8]
And Leo McLeay, MP served a reminder that:
Often it is little barriers which stop people getting
into the workforce. But the government is going to abolish that now
and make it harder for people to get work.[9]
In 1999, the Coalition Government again unsuccessfully attempted to remove
the EEP by claiming that it was replacing it with something akin to the
EEP - the Special Advanced Payment.[10] Specifically, the proposal at the time was
to replace the $100 EEP with a Special Employment Advance payment of between
$50 and $500. However, ALP Member Craig Emerson, MP, pointed out that:
…this advance would have to be paid back out of future
income. … [And] because of the strict eligibility conditions applying
to the proposed advance and the fact that it is repayable, it will not
come close to making up for the abolition of the employment entry payment.[11]
The then Coalition Government reconsidered its position, retained the
payment and subsequently made policy initiatives and statements that were
more embracing and positive about the value of the EEP. For example, in
2005, Job seekers with a disability and a part-time requirement were made
eligible for a $312 EEP.[12]
Also in 2006, the EEP was further ‘extended to income support recipients
who had breached compliance with activity requirements—that is, people
who are subject to a non-payment period — would still be eligible for
the employment entry payment if they find and commence
employment or increase the number of hours of employment during the non-payment
period’.[13]
According to Stewart McArthur, MP:
This [was] a sign of the Howard government’s commitment
to assisting people to make the transition from welfare to work. It
is a relatively small point, but it does show that some of the changes….do
assist people to make that sometimes difficult move from welfare, where
they collect their money every two weeks, back into a job. That is sometimes
quite difficult to achieve, and we are trying to make that transition
as easy as possible.[14]
In her Second Reading Speech, the Minister
for Employment and Workplace Relations, the Honourable Julia Gillard stated:
Consistent with its theme of responsible economic
management, the government identified a number of programs that were
inefficient or wasteful, or were largely duplicated elsewhere. The
employment entry payment is one such scheme.[15]
In this regard, the Minister pointed to the introduction of what she
considered to be ‘similar or better assistance programs which are more
flexible in their application. These are the special employment advance,
job seeker accounts provided via the job network, and the working credit’.
The Minister also indicated that further improvement to the existing system
would occur through the new employment services model. [16]
Interestingly though, the three programs that the Minister refers to
in her speech do not seem to serve exactly the same function as the EEP.
The Special Employment Advance was introduced by the Coalition Government
in 1999.
- It can be paid from $50 to $500.
- It is refundable.
- It must be claimed.
- Approval and payment is cumbersome – it can often take 7 to 10 days
to get paid.
Job seeker Accounts provided via the job network were introduced by the
Coalition Government in 2003.
Key operation features of this payment include:
- It must be applied for and approved through the Job Network provider.
- It is not reactive – if a job opportunity comes up quickly, the approval
and payment time can often take several days – like the Special Employment
Advance.
The Working Credit was introduced by the Coalition Government in 2001
and is similar to the earnings credit for Newstart and Sickness allowees,
introduced by the Labor Government in 1994. The purpose is ‘to allow those
out of work the right to accumulate up to $1,000 of earnings without losing
income support’.[17] The aim was to ‘remove a disincentive to take intermittent jobs
or short-term work which could open the door for [the unemployed] to get
long-term employment’.[18]
Some key
operational features about working credits include:
- It is accumulated as a person spends time on payment with no employment
income.
- A credit of up to 1,000 points can be accrued.
- These points are used first if the person has any employment income
and is still on income support – so essentially part-time work.
- It cannot be used if the person starts full-time work as they are
then cancelled off payment.[19]
According to the Explanatory Memorandum, the cessation of the scheme
is expected to provide a net savings of $60.8 million over a five year
period.[20]
Items 3, 4, 9 and 10 of the Bill repeal the key provisions relating
to employment entry payment, so abolishing the scheme.
Item 5 repeals paragraph 1061EO(a) of the Social Security Act
1991, which currently provides that a person is not eligible for a
special employment advance if they are eligible for an EEP in respect
of offered employment. Because the EEP scheme is being terminated, this
provision will no longer be required.
Item 11 is a transitional provision designed to ensure that those
who are eligible and qualify for the EEP but do not put in a claim prior
to 1 July 2008, will not be disadvantaged by these amendments. In practice,
this means that where an income support recipient qualifies for an EEP
prior to 1 July 2008, then as long as the claim for the EEP is made in
accordance with the rules that would have applied if the EEP were not
repealed, then that person will still be able to receive an EEP after
1 July 2008.
Juli Tomaras
4 June 2008
Bills Digest Service
Parliamentary Library
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