Bills Digest no. 55 2008–09
Social Security Legislation Amendment (Employment Services
Reform) 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
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Date introduced:
24 September 2008
House: House of Representatives
Portfolio: Education, Employment and Workplace
Relations
Commencement:
Sections 1 to 3 in
Schedule 1 from Royal assent. The residual provisions from
1 July 2009.
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 provide for
changes to social security legislation to provide a new compliance
regime for the application of penalties for persons required to
look for and accept employment. The new compliance regime is timed
to commence from 1 July 2009, being the same time the proposed
reforms to Australian Employment Services are also scheduled to
commence.[1]
The Bill has been referred to Senate
Education, Employment and Workplace Relations Committee for inquiry
and report by 24 November 2008. Details of the inquiry are at the
Committee s webpage.[2]
Unlike virtually all comparable overseas
income support payments for the unemployed, the unemployment
benefit payment in Australia has always had look for and accept
work requirements. Partially, this is a feature of overseas
unemployment payments being unemployment insurance contributed to
by the individual when working, rather than income support provided
out of general revenue, as applies here. The rigour that has been
applied in Australia for the unemployment benefit has been the
threat and actuality of payment being cancelled.
From 1947, the social security legislation did
stipulate the period of non-payment where payment was cancelled
with the initial period being between 2 to 12 weeks. In more recent
years there have been additions made to legislation to set out in
more detail what the activity test and work search requirements are
and also their associated penalties. For example, the Social
Security Legislation Amendment (Work for the Dole) Act 1997[3] set
out in detail that an unemployed jobseeker is required to attend a
Work for the Dole (WftD) program and the penalties that could
apply, where the jobseeker failed to comply with their WftD
requirements.
For a long time, much of the detail we see now
in social security legislation about what is an activity test
failure or an administrative failure was not contained in
legislation. The rigour applied had its basis in the words in
current section 601 of the Social Security Act 1991 (SSA),
that is unemployed jobseekers are required to look for and accept
work - see below.
601 Activity test
601.(1) Subject to
subsections (1A) and
(5), a person satisfies the
activity test in respect of a period if the person satisfies
the Secretary that, throughout the period, the person is:
(a) actively seeking; and
(b) willing to undertake;
paid work in
Australia, other than paid work that is unsuitable to be
undertaken by the person.[4]
Where a jobseeker failed to attended a job
interview, failed to attend a training program, failed to accept a
reasonable job offer, the Secretary could not be satisfied that the
person was actively seeking and willing to undertake suitable paid
work . The person therefore did not qualify for payment and payment
could be cancelled.
Set out below is a chronology of the major
unemployed jobseeker compliance initiatives and changes that have
occurred since 1945, when the then unemployment benefit was
introduced.
The Unemployment and Sickness Benefits Act
1944 introduced the unemployment benefit from July 1945. The
Social Services Consolidation Act 1947 saw the
introduction of the Social Security Act 1947. From 1945,
the unemployment benefit has always maintained an expectation that
the recipient would be required to look for and accept paid work,
that is, the work test . From 1945 to 1979, the imposition
and duration of penalties (that is, cancellation of payment or a
non-payment period) for failure of the work test were at
the discretion of the delegate. Under the Social Security Act
1947, if an unemployed jobseeker:
- left work voluntarily,
- was dismissed from employment for misconduct,
- refused, without sufficient reason, to accept a suitable job
offer,
- ceased to be registered with the Commonwealth Employment
Service, or
- was not taking reasonable steps to obtain employment.
Then the unemployment benefit was not payable
for a period of between 2 and 12 weeks.
The non-payment period was defined as not less
than 6 weeks and not more than 12 weeks.
The 6-week minimum non-payment period was
removed. To not pay a jobseeker for 6 weeks is a very considerable
decision, so to set the minimum non-payment period at 6 weeks
tended to discourage the application of a non-payment penalty,
except in the most extreme cases. This especially applied in the
1980s when the primary jobseeker partner (usually the male) in a
partnered situation received both his unemployment benefit and the
payment amount for the partner (combined partnered rate of
unemployment benefit). It was not until September 1990 that a
partner of an unemployment benefit claimant had to qualify for an
income support payment in their own right and was paid their own
payment (at the partnered rate).
The minimum non-payment period was re-set to 2
weeks. Additional reasons for breaching were added in 1987, 1989
and 1990.
Following on from recommendations made by the
Social Security Review,[5] the work test was replaced with an activity test, which
was to be satisfied by training or part-time work as well as
searching for suitable paid work. This was viewed as a shift from a
social security system designed to maintain the incomes of those
out of work to a system primarily designed to encourage people into
work.
In conjunction with the then Working Nation
Initiative, legislation for the first time made distinctions
between administrative and activity test breaches, with harsher
penalties for the latter.[6] An administrative breach referred to failing to comply
with some procedure or administrative requirement such as a failure
to return a review form or a failure to attend an interview at
Centrelink. An activity test breach referred to failing to accept a
reasonable job offer or attend a job interview with a prospective
employer etc.
From July, non-payment periods due to breaches
of the activity test were changed, so they related to the length of
time that a person had been unemployed. Non-payment periods for
administrative breaches remained unchanged. For those unemployed
for less than 12 months, the penalty for the first activity test
breach was a 2 week non-payment of income support, with subsequent
breaches being 6 weeks each. The initial non-payment period was
raised from 2 weeks to 4 weeks for those unemployed for 12 to 18
months and to 6 weeks for those unemployed for over 18 months. A
non-payment period could not commence until the person had been
notified and had received two instalments of Jobsearch Allowance
(JSA)[7] or Newstart
Allowance (NSA)[8]
after that notification.
The following actions were added to the
category of activity test breaches:
- failing to attend an interview with an employer or job
placement provider,
- failing to declare earnings from employment, and
- failing to complete a labour market program, or being dismissed
from a program for misconduct.
Penalty provisions for administrative breaches
were simplified. Instead of losing payment for 2 weeks, those
incurring a penalty could be given a payment reduced by 16 per cent
for 13 weeks if they preferred.
From July, penalties for the first two
activity test breaches in a two-year period were also imposed
through reduced payment periods. The first breach reduced payment
by 18 per cent for 26 weeks while the second breach reduced payment
by 24 per cent for 26 weeks. Third and subsequent breaches incurred
an 8 week period of non-payment.
Prior to the changes introduced with the
passing of the Social Security Legislation Amendment (Activity
Test Penalty Periods) Act 1997,[9] many actions did not result
in an activity test breach, but rather an overpayment resulting, in
most cases, in debt recovery and perhaps prosecution action
(rarely). This partially explains the reason for the increased
incidence of breaches after these changes as some actions attracted
breach action that did not previously have a breach applied.
Actions that fit into this category were:
- failure to notify of a change in circumstances,
- failure to keep appointment with field assessor,
- failure to reply to contact request, or
- failure to notify of change in study load.
In the past, these actions may have resulted
in a change of rate or even a cancellation of payment but they were
not recorded as a breach.
Where payment was cancelled, the claimant
would be usually asked to re-apply and reprove that they satisfied
the activity test. However, a payment reduction period would not
normally have been applied.
The following table explains how activity test
penalties were applied:
| If |
Then |
| it is the first activity test breach within a 2
year period |
the customer's basic rate of payment is reduced by 18% for a
period of 26 weeks. |
| it is a second activity test breach within a 2
year period |
the customer's basic rate of payment is reduced by 24% for a
period of 26 weeks. |
| it is a third or subsequent activity test breach
within a 2 year period |
a non-payment period will apply for 8 weeks. |
The feature of these breach penalties was the
6 month payment reduction periods. It was felt that a payment
reduction period might be easier and more flexible to apply than
the previous minimum of a 2 week non-payment period.
From May, the then new Job Network employment
assistance arrangements replaced most of the previous government s
Working Nation employment assistance programs. Job Network members
were obliged to advise Centrelink if they are aware of any conduct
that would constitute a breach of a jobseeker s activity test
obligations.
Concerns from welfare groups about the rise in
the number of breaches led to procedural changes such as
consultations with social workers or occupational psychologists
before a third breach was imposed.
Failure to attend an interview with Centrelink
without good reason was reclassified as an administrative breach
rather than an activity test breach. There was also a broadening of
the breach waiver provisions to include starting an approved
rehabilitation or training course.
New compliance and breach rules were
introduced under the Welfare to Work initiatives that commenced
from 1 July 2006.[10]
A jobseeker who commits a first or second
participation failure is contacted and is given an opportunity to
avoid any penalty by meeting the requirement they initially failed
to meet. If they have not done so by their fortnightly lodgement
day they are then interviewed when they lodge their form and
advised that, although they will be paid the next day, their next
payment will be contingent upon their re-engagement. If, after this
warning, they again fail to re-engage, their payment for the coming
pay period will commence only from the day they do re-engage.
Jobseekers not already on fortnightly lodgement for the pay period
are reverted to fortnightly lodgement and issued with an
application for payment form to ensure that they are interviewed
prior to their next fortnightly pay period.
If, after being warned, the jobseeker does
re-engage, they incur no loss of payment. However, even where the
jobseeker incurs no financial penalty following a participation
failure because they re-engage as requested, the failure is noted
on their record for the purpose of counting breaches. For a third
breach in a 12 month period, an 8 week non-payment penalty is
applied.
Table 1: 8 week non-payment period
penalties[11]
| Quarter |
3rd or subsequent participation
failures |
Serious failures |
Total |
| Sept 06 |
551 (28.4%) |
1,391 (71.6%) |
1,942 |
| Dec 06 |
1,849 (46.4%) |
2,135 (53.6%) |
3,984 |
| Mar 07 |
3,081 (51.4%) |
2,908 (48.6%) |
5,989 |
| Jun 07 |
4,218 (57.8%) |
3,084 (42.2%) |
7,302 |
| Sept 07 |
5,823 (58.4%) |
4,114 (41.6%) |
9,937 |
| Dec 07 |
4,799 (53.5%) |
4,179 (46.5%) |
8,978 |
Notes:
3rd or subsequent participation
failures refers to 8 week non-payment period penalties
automatically applied when a jobseeker has had 3 breaches in a 12
month period (3 strikes and you re out).
Serious failures refers to a one-off breach
like refusal of a reasonable job offer, or being voluntarily
unemployed without a reasonable reason.
In the 12 month period from September 2006 to
September 2007 a total of 29 154 8 week non-payment period
penalties applied. Initially, the number of 8 week non-payment
period breaches imposed for the third or subsequent failures (3
strikes and you re out) was far less than those imposed for serious
breaches. Jobseekers who incurred an activity test penalty in the
12 month period up to 1 July 2006 (when the Welfare to Work
initiatives commenced) did have breaches counted towards the count
of 3 breaches in a 12 month period. So, it took some time for
jobseekers to accumulate 3 breaches in a 12 month period, and then
have an 8 week non-payment period penalty automatically
imposed.
The Minister said in the second reading speech
when presenting the Bill that in 2006 07 there were around 16 000 8
week non-payment period penalties applied and in 2007 08 around 32
000 applied.[12]
Given there were about 550 650 unemployed jobseekers on Newstart
Allowance (NSA)[13]
and Youth Allowance Other (YA Other)[14] in July 2006, ranging down to 497 753
jobseekers on the same payments in September 2007, this number of 8
week non-payment penalties is about 5.5 per cent of all jobseekers
on NSA and YA Other (at one point in time) in the period.[15] While there may be an
average of about 525,000 jobseekers on NSA and YA Other in this
period, there are a lot more grants of NSA and YA Other in the
period, as there are many jobseekers who claim and are paid for
short periods (1 to 3 months) and many jobseekers who claim and are
paid multiple times over a period. So, a point-in-time count of
jobseekers on a payment actually understates the total number of
jobseekers who gained assistance from NSA and YA Other and were
therefore exposed to the breach and penalty regime.
The Minister made the point in his second
reading speech, that the changes presented in this Bill are
necessary as it is the government s view that the current
compliance regime applies 8 week non-payment period penalties when
it should not and some other approach would be more productive.
The key reason that these changes are necessary
is that the current compliance system has resulted in thousands of
counterproductive, non-discretionary and irreversible eight-week
non-payment penalties. For the duration of these eight-week
non-payment penalties there is no requirement for a job seeker to
look for work or to have contact with either their employment
service provider or Centrelink.[16]
Certainly, the number of 8 week non-payment
period penalties for third or subsequent participation failures now
consistently exceeds the number for serious breach failures.
Table 2: Participation failures[17]
| Quarter |
Failed to attend interview with Job Network
provider |
Failed to comply with activity
agreement |
Total participation failures |
|
Sept
06
|
15,984 (40.7%)
|
8,167
(20.1%)
|
39,288
|
|
Dec
06
|
20,978 (44.2%)
|
9,764
(20.6%)
|
47,473
|
|
Mar
07
|
24,573 (46%)
|
11,139 (20.8%)
|
53,454
|
|
Jun
07
|
27,697 (48.3%)
|
12,166 (21.2%)
|
57,403
|
|
Sept
07
|
32,005 (53.9%)
|
11,720 (19.8%)
|
59,365
|
|
Dec
07
|
32,519 (57.2%)
|
11,063 (19.5%)
|
56,835
|
Notes:
The two participation failure reasons in the
table are consistently the two main participation failure reasons.
All the other listed participation failure reasons each
consistently make up less than 10% of all participation
failures.
The % figures refer to the number of that type
of participation failure as a % of total participation
failures.
These participation failure reasons mainly
centre on the jobseeker not complying with a process required of
them. These processes can range across failure to attend an
interview with a Job Network provider, failure to attend a training
course and/or unsatisfactory attendance at a Work for the Dole
(WftD) project. Three participation failures in a 12 month period
can result in an 8 week non-payment period penalty.[18]
Table 3: Serious failures[19]
|
Quarter
|
Voluntarily unemployed left without good
reason
|
Dismissed from employment due to misconduct
|
Total serious failures
|
|
Sept
06
|
833
(59.2%)
|
376
(26.7%)
|
1,407
|
|
Dec
06
|
1,191
(55.2%)
|
551
(25.5%)
|
2,157
|
|
Mar
07
|
1,743
(59.9%)
|
661
(22.7%)
|
2,908
|
|
Jun
07
|
1,676
(54.4%)
|
741
(24%)
|
3,084
|
|
Sept
07
|
2,115
(51.4%)
|
915
(22.2%)
|
4,114
|
|
Dec
07
|
2,347
(56.2%)
|
914
(21.9%)
|
4,179
|
Notes:
These are the serious failures that resulted
in an 8 week non-payment period. They are separate from the
participation failures that can, if there are 3 in a 12 month
period, also result in an 8 week non-payment period.
The two serious failure reasons in the table
are consistently the two main reasons for serious failures. All the
other listed serious failure reasons each consistently make up less
than 10% of all serious failures.
The % figure refers to the number of that type
of serious failure as a % of total serious failures.
The total number of serious participation
failures make up a small part of the total 32 000 8 week
non-payment failures imposed in 2007 08.[20] Most of the 8 week non-payment period
penalties are applied for third or subsequent participation
failures in a 12 month period see Table 1 above.
Will the proposed new breach regime presented
in this Bill see any changes in the number of 8 week non-payment
periods imposed? The short answer to this question is both yes and
no.
The current 3 strikes and you re out regime
that applies an 8 week non-payment period penalty for 3
participation failures in a 12 month period allows no discretion as
to whether the 8 week non-payment penalty is applied. Under the
current provisions in the SSA, for the third breach in 12 months,
the 8 week non-payment period is applied as a matter of
legislation, so delegates have not had to apply any discretion or
decision making as to whether the penalty is applied.[21] The essential change
presented in this Bill is to allow some discretion and flexibility
in the application of the 8 week non-payment period. The discretion
and flexibility is to centre around:
- reasonable excuse,
- financial hardship, and
- compliance with a serious breach requirement.
The actual detail and guidelines as to how and
in what circumstances this discretion is to be exercised is largely
not set out in this Bill, rather it is to be set out in Legislative
Instruments to be written by the Secretary or the Minister.
Legislative Instruments are generally disallowable by the
parliament under the Legislative Instruments Act 2003
(LIA),[22] unless
the Principal Act otherwise provides.
The discretion to not apply an 8 week
non-payment period for a serious participation failure where the
jobseeker has a reasonable excuse currently applies[23] but the financial
hardship and compliance with a serious breach requirement
provisions do not currently apply. Under the proposed provisions,
not only is there to be the discretion to not impose a 8 week
non-payment period, but there will also be the discretion to not
apply the full 8 weeks of non-payment, but a shorter period; also
at the discretion of the delegate.
As can be seen from Table 1 above, the
application of the non-discretionary 3 strikes and you re out
non-payment periods make up the majority of all 8 week non-payment
periods applied. So the net result of all this discretion, that
mostly doesn t apply now, will be less 8 week non-payment periods
imposed and non-payment periods of less than 8 weeks. Some
non-payment periods will be less than the current full 8 weeks, for
example where the jobseeker complies with a serious failure
requirement.
As can be also seen in Table 1 above, serious
breaches make up about 45 per cent of all 8 week non-payment
periods imposed numbering about 3 000 to 4 000 breaches in a
quarter. This is nearly half of all 8 week non-payment periods
applied. Is this a lot of penalties applied for serious breaches or
is this a small number? In the context of the total number of NSA
and YA Other recipients on payment at any one time,[24] it is a relatively
small number.
To impose an 8 week non-payment period is a
very difficult decision for any delegate. Delegates are very aware
that to deny payment to an income support recipient for 8 weeks is
a major decision with serious consequences. Bearing this in mind,
the 8 week non-payment period penalties applied for serious
breaches (Table 1 above) is a reasonable estimate of the number of
breaches that have had to be applied for serious breaches.
Remembering, reasonable excuse provisions apply now.[25]
Decisions of delegates to impose an 8 week
non-payment period are subject to review under the SSA. This in
order can be to the original decision maker, then to the Authorised
Review Officer (ARO), then to Social Security Appeals Tribunal
(SSAT), then to Administrative Appeals Tribunal (AAT) and beyond.
This means that delegates will only impose 8 week non-payment
periods for serious breaches where the facts of the case compel
them to apply the penalty and where they think the decision will
stand up to examination and review.
Bearing all these factors in mind, serious
breaches resulting in an 8 week non-payment period tend to be in
those cases where the breach is evident and the case is clear cut.
In this context, it can be expected that there will not be a
significant reduction in the number of 8 week non-payment periods
applied for serious breaches. There may be a reduction in
non-payment periods applied for cases of severe financial hardship
and also in the length of the non-payment periods, as there will be
the flexibility to stop the non-payment during the 8 week period
where the jobseeker complies with a serious breach requirement.
There are several
provisions in this Bill which empower the Minister or the Secretary
to use Legislative Instruments. For example, what is a reasonable
excuse for a serious breach, how many repeated breaches are to be
considered as a serious breach and also the penalty amounts for no
show no pay and reconnect failures. The detail is not in the Bill
but is to be set out in various different Legislative Instruments
to be made by the Secretary or the Minister.
Historically, the
use of Legislative Instruments made under the SSA, the Family
Assistance Act 1999 (FAA) or the Veterans Entitlements Act
1986 (VEA) has been very minimal. Where there needs to be
qualification or payment requirements spelt out, this has been
placed in the Act, not in a delegated Legislative Instrument. The
culture has been one of; if you are to make payments to a person,
the qualification requirements and the payment conditions should be
spelt out in legislation. More recently this has changed. For
example, the major legislation supporting the previous government s
Welfare to Work initiatives was the Employment and Workplace
Relations Legislation Amendment (Welfare to Work and Other
Measures) Act 2005.[26] This Act did make extensive use of attached Legislative
Instruments to spell out in more detail the conditions of payment
eligibility, activity testing exemptions and other matters.
The use of
Legislative Instruments has persisted and now has become regular.
Some examples are:
- Social Security and Other Legislation Amendment (Welfare
Payment Reform) Bill 2007,[27] and
- Social Security and Veterans' Entitlements Legislation
Amendment (Schooling Requirements) Bill 2008.[28]
Perhaps
Legislative Instruments were a feature in the Welfare Payment
Reform Act because of the very short lead time between when the
Government announced the initiatives on 21 June 2007 and when
legislation was presented to the Parliament on 7 August 2007. It
may be that there was not time to develop and write the detailed
provisions that might apply to trigger the Income Management Regime
(IMR) provisions in specific situations; especially considering the
IMR arrangements presented in that Act were unprecedented and very
new. The short lead time and the use of Legislative Instruments
does not apply in this Bill.
Some administrators prefer
Disallowable Instruments
Disallowable
Legislative Instruments still get some scrutiny by the Parliament,
but a parliamentary debate is not required and unless there is a
motion of disallowance, there is no debate. Legislative Instruments
can be favoured by administrators as they are more easily updated
or changed than provisions in an act, which require amending
legislation to be passed by the Parliament. Notwithstanding a
Legislative Instrument can be subject to a motion of disallowance,
they are subject to less parliamentary scrutiny than a Bill and
some program administrators may prefer that.
Item 1 inserts new
Division 3A into the Social Security (Administration)
Act 1991 (SSAA). Proposed section 42A
provides an outline of what these new provisions contain. A feature
is the discretionary power provided to decision makers to determine
when a person commits a no show no pay failure, a connection
failure, a reconnection failure or a serious failure. Some of the
other features of these proposed provisions are:
- The new term participation payment is used in these new
provisions and refers to NSA,[29] youth allowance,[30] parenting payment[31] and special benefit.[32]
- For no show no pay failures, a penalty amount can be deducted
from the jobseeker s on-going participation payment.
- An 8 week non-payment period penalty can still be imposed for a
serious failure but there is increased flexibility to end the 8
week period early in some circumstances.
- An 8 week non-payment period penalty can be imposed at
grant.
Proposed
section 42C sets out the no show no pay failure types and
they include:
- failure to participate in an activity under an Employment
Pathway Plan,
- committing misconduct, and
- failure to attend a job interview.
Where there is more
than one no show no pay failure on a day, it is to be counted as
only one failure.
Proposed
subsection 42C(4) allows the discretion to decide to not
impose a no show no pay failure where the person has a reasonable
excuse as described in proposed section 42U.
Proposed section 42U (see below) empowers the
Secretary to set out in a legislative instrument what is to be
considered a reasonable excuse . Legislative Instruments are
generally disallowable by the Parliament under the LIA[33] unless the Principal
Act otherwise provides.
The Explanatory
Memorandum details that there is no intent to change policy about
what can be considered a reasonable excuse , the exception to this
is that jobseekers should not be penalised for actions that are
beyond their control.[34] This is in effect what happens now and jobseekers are
not penalised for matters or actions beyond their control or where
they have a reasonable excuse.[35]
Proposed section 42D empowers
the application of a deduction penalty amount for a no show no pay
failure. The deduction penalty amount is set out in
proposed section 42T see below.
Proposed section 42E sets out
connection and reconnection failures. These failures are like those
administrative and activity test failures that currently apply like
not attending an interview, failure to enter into an activity
agreement, failure to complete a requirement in an Employment
Pathway Plan, failure to keep a record of job searches in a job
seeker diary, failure to return a job seeker diary.
Unlike proposed section 42C,
proposed section 42E empowers the Secretary to
determine that a jobseeker has committed 2 or more connection and
reconnection failures on a day.
Like proposed section 42C,
proposed section 42E allows the Secretary the
discretion to not impose a connection and reconnection failure
where the jobseeker has a reasonable excuse. A reasonable excuse
will be set out in a legislative instrument empowered by
proposed section 42U see below.
Proposed section 42F sets out
requirements that a jobseeker apply for job vacancies. As
highlighted in the introductory remarks in this Digest, there is
the general requirement under section 601 of the SSA[36] that the Secretary is
satisfied the person is actively seeking suitable paid work.
Proposed section 42F sets out in
more detail requirements to apply for a job or provide
documentation on job applications and failure can constitute
connection failure and a reconnection requirement.
Proposed section 42G provides
general power to the Secretary to issue a reconnection requirement.
Failure to comply with a reconnection requirement may result in a
reconnection failure as set out in proposed
section 42H.
Proposed section 42H sets out
reconnection failures allowing the setting of a reconnection
failure period, being the start date of the failure, for example
the day the jobseeker did not attend a job interview. The
reconnection failure period ends on the day before the jobseeker
complies with the requirement.
This reconnection failure process is not that
much different to the current participation failure process.
Currently, when jobseekers commit a first or second participation
failure they are contacted and given the opportunity to avoid any
penalty by meeting the requirement they failed to meet. If they
have not complied by their next fortnightly lodgement day,[37] they are interviewed
when they lodge their fortnightly form and advised that, although
they will be paid the next day, their next payment will be
contingent upon their re-engagement. If, after this warning, they
have still not complied, their payment for the coming pay period
will commence only from the day they do re-engage.[38] So there may be a gap between
when they initially did not comply and when they subsequently
comply, for which they are not paid.
Proposed sub-paragraph
42H(4)(b)(ii) sets out that a reconnection failure period
is not to apply where the jobseeker has a reasonable excuse . The
Explanatory Memorandum claims that the reasonable excuse provisions
in proposed sub-paragraph 42H(4)(b)(ii) replicate
the existing regime, and as such, previous judicial interpretations
will remain applicable.[39] Current sub-section 624(2) of the SSA does provide for
the consideration of a reasonable excuse.[40]
Proposed section 42J provides
power to the Secretary to impose further conditions necessary to
meet the reconnection process. The Explanatory Memorandum gives
some examples explaining it could include complying with what was
not originally complied with, like attending an appointment, entry
into an Employment Pathway Plan or completion of a jobseeker diary
where the original non-compliance was insufficient job search
activity.[41]
Proposed section 42L empowers
the deduction of a penalty amount for a reconnection failure and
that amount is to be the equivalent of the daily benefit otherwise
payable to the jobseeker (NSA or YA (Other)). The numbers of days
of the penalty amount is the number of days of non-compliance up to
the day before compliance is subsequently met see proposed
section 42H above. This is open ended so could be one day
or any number of days. So for example, the current maximum basic
rate single of NSA is $449.30 per fortnight.[42] So for 3 days of non-compliance, the
penalty would be 3 tenths of $449.30 or $134.80.
Proposed section 42M sets out
provisions empowering the Secretary to determine that repeated no
show no pay failures, connection failures or reconnection failures
can constitute a serious failure. This proposed section is one of
the main differences in the proposed amendments in this Bill and
the current provisions that provide for 3 strikes and you re out
and the then automatic imposition of an 8 week non-payment period
penalty. There is no detail of how many repeated failures is to be
regarded as a persistent failure. The use of the term persistent
failure in proposed section 42M is new in social
security law. The detail of this is to be set out in a Legislative
Instrument by the Minister as provided for in proposed
subsection 42M(4). Legislative Instruments are generally
disallowable by the Parliament under the LIA,[43] unless the Principal Act
otherwise provides.
Proposed section 42N sets out
provisions for a jobseeker s failure to accept a reasonable job
offer to be regarded as a serious failure. Similar requirements
have been in the SSA and its predecessors since 1944 see the
introductory remarks at the beginning of this Digest. Again a
serious failure is not to apply where the jobseeker has a
reasonable excuse. Proposed section 42U will
provide for the Secretary to set out in a Legislative Instrument
what is a reasonable excuse see below.
Proposed sections 42P, 42Q and
42R set out the non-payment period for a serious breach (8
weeks), the ending of a serious failure period and the payment of a
participation payment during a serious failure period. In short,
these proposed provisions provide the flexibility to have
non-payment periods shorter than 8 weeks and to re-commence payment
inside 8 weeks at the discretion of the Secretary, when the
jobseeker commences to comply with their requirements.
Proposed subsection 42P(3)
provides for the Secretary to require the jobseeker to undertake a
serious failure requirement. Proposed section 42Q
allows for the non-payment period for a serious failure to end
where the jobseeker complies with a serious failure requirement.
One of the criticisms of the current arrangements made by the
Minister in the second reading speech when presenting the Bill
was:
The key reason that these changes are necessary
is that the current compliance system has resulted in thousands of
counterproductive, non-discretionary and irreversible eight-week
non-payment penalties. For the duration of these eight-week
non-payment penalties there is no requirement for a job seeker to
look for work or to have contact with either their employment
service provider or Centrelink. The consequence of this failed
approach to compliance, and an obvious defect in the system, is the
eight-week separation of job seekers from participation
requirements, including looking for work, gaining skills or
undertaking work experience.[44]
Therefore, the power to require a jobseeker to
undertake a serious failure requirement, as presented in
proposed subsection 42P(3), is one of the key
changes to the new jobseeker compliance regime presented in this
Bill. Currently, there is no provision for a jobseeker to undertake
any compliance requirements while serving an 8 week non-payment
period penalty.
Another feature of proposed subsection
42P(3) is that it is not to be a decision that is
appealable by the jobseeker. See comments on item
38 in Schedule 1 of this Bill below.
Currently, a jobseeker can appeal the application of a non-payment
period penalty; payment is continued while the appeal is resolved
and if the penalty is still to be applied, the non-payment period
can commence after the end of the appeal decision.
The Explanatory Memorandum explains that the
application of serious failure requirements should not be
appealable as:
such decisions depend almost entirely on
practical concerns only apparent to a decision maker at the time
the decision is actually made[45]
This probably makes sense. Job Network
providers currently make decisions about processes and requirements
a jobseeker is required to undertake (attend an interview, attend a
training session) and many/most of these decisions are not
appealable. While many of these requests are not appealable, a
jobseeker can approach the Job Network customer service line with
complaints or issues about Job Network provider servicing.
Proposed section 42Q provides
amendments to the ending of a serious failure non-payment period.
Proposed subparagraph 42Q(1)(b)(ii) refers to the
Secretary ending the serious failure non-payment period in cases of
severe financial hardship. See comments below about severe
financial hardship.
Proposed section 42S provides
for a serious failure in cases where a jobseeker is unemployed from
a voluntary act or misconduct. This is like proposed
section 42N (see above) in that it continues the
application of an 8 week non-payment period penalty for existing
and long-standing provisions in the SSA. Proposed section
42S will provide for the Secretary to set out in a
legislative instrument that the 8 week non-payment period may not
be applied in cases of severe financial hardship. This is empowered
by proposed section 42U. See comments below in
Part 2 Consequential amendments about severe financial
hardship.
Proposed section 42T
essentially empowers the Minister to set out in a legislative
instrument the penalty amounts for a no show no pay failure and
also for a reconnection failure. Legislative Instruments are
generally disallowable by the Parliament under the LIA,[46] unless the Principal
Act otherwise provides.
The power provided by proposed section
42T for the Minister to set out the penalty amounts in a
legislative instrument is not unfettered. For no show no pay
failures, the penalty amount cannot exceed 10 per cent of the
fortnightly instalment (or one work day in the 10 working days in a
fortnightly pay period). The amount also cannot include any
additional payment that might be provided on top of the basic rate
of payment like Rent Assistance[47]. So for example, the current maximum basic rate
single of NSA is $449.30 per fortnight.[48] So the maximum penalty would be 10
per cent of this fortnightly rate or $44.93.
The penalty for reconnection failures is
different than no show no pay failures with the penalty being at
the daily rate of the basic maximum rate and for the number of days
of failure. For example, if the days of reconnection failure are
three days, then the penalty amount is three days of payment.
Proposed section 42U empowers
the Secretary to describe in a legislative instrument the matters
to be considered for a person to be considered to have a reasonable
excuse for a:
- no show no pay failure,
- reconnection failure, and
- serious failure.
Proposed section 42V empowers
the deduction of penalty amounts determined under proposed
section 42D ( no show no pay failure) and proposed
section 42L (reconnection failure) from on-going
payments.
Proposed section 42W details
that penalty amounts are not a debt. Put simply this means that if
a jobseeker were to go off a participation payment (because they
found work), and there was some penalty amount outstanding the
amount is not pursued and recovered. Nor is it recovered if the
person returns a participation payment at a latter date.
Proposed subparagraph
42Q(1)(b)(ii) provides for the Secretary to end a serious
failure non-payment period in cases of severe financial hardship.
Items 2 to 4 propose to amend the
definition of severe financial hardship in subsection 14A(2) of the
SSA for the purposes of the compliance and obligations sections for
participation payment[49] presented in this Bill. The definition of severe
financial hardship is proposed to be amended to refer to where the
present value of the person s liquid assets[50] does not exceed the person s maximum
reserve . A person s maximum reserve is defined in section 14A of
the SSA (the social security benefit liquid assets test
definitions) as:
"maximum reserve", in relation
to a person, means:
(a) if the person is not a
member of a couple and does not have a
dependent child $2,500; or
(b) in any other case $5,000.[51]
In most cases, where a serious period failure
is being considered for a jobseeker on a participation
payment,[52]
jobseekers will meet this severe financial hardship test. This
especially applies for those jobseekers who have been in receipt of
a participation payment for a prolonged period and have run down
any financial reserves. In short, the majority of 8 week
non-payment periods will not be applied as jobseekers will be
considered to be in severe financial hardship.
Items 11 to
22 propose to amend the SSA to restrict the new
proposed participation failure provisions in this Bill to YA Other
but not to persons paid YA if they are a full-time student or an
apprentice.
Items 37 and
39 propose to amend the payment pending review
provisions. The compliance and penalty provisions proposed in this
Bill can result in a jobseeker s participation payment not being
paid for up to 8 weeks. So what happens if a jobseeker appeals a
non-payment period penalty decision? Essentially, the amendments as
presented would provide for the continued payment of the jobseeker
s participation payment while they appeal a non-payment period
penalty and this appeal is decided. If the appeal is then not
successful and the penalty is to be applied, the penalty period can
then be applied (or resumed) after the appeal process.
This is essentially the same process that
applies for the application of non-payment periods and appeals now.
Currently, a jobseeker can appeal the application of a non-payment
period penalty; payment is continued while the appeal is resolved
and if the penalty is still to be applied, the non-payment period
can commence after the end of the appeal decision. See comments on
proposed subsection 42P(3) above.
The compliance regime provisions presented in
this Bill are to commence from 1 July 2009. Any non-payment period
penalty being served under the current provisions that cross this
start date would continue to be served under the current
arrangements.
Generally, the provisions presented in
Schedule 2 replace the wording Activity Agreements
with Employment Pathway Plans in the SSA and the Social
Security (Administration) Act 1999 (SSAA). The Explanatory
Memorandum explains that these changes are substantially word
replacement only and there is intended to be no change in the
legislative provisions, that is, the application of Employment
Pathway Plans is to be the same as Activity Agreements.[53]
The Personal Support Programme (PSP) is a
pre-employment program aimed at helping individuals with very
significant non-vocational barriers (homelessness, mental health
issues, drug or gambling problems, or social isolation) that are
preventing them from getting a job or benefiting from employment
assistance programs such as Job Network. The objective of PSP is to
assist participants to overcome their non-vocational barriers so
they can move on to achieve economic and/or social outcomes.
The PSP is delivered by a network of community
based and private organisations that provide individualised support
and assistance to participants for up to 2 years. The participant
and their provider jointly develop an intervention plan to address
participant s non-vocational barriers. PSP providers monitor
participants' progress regularly and formally complete a report
after 8 and 16 months of assistance. As part of their activity
agreement, PSP participants are required to fully participate in
the PSP with their provider and attend all scheduled appointments
as notified.
Under the proposed new Employment Services
arrangements 2009-12, that are to commence from 1 July 2009, the
PSP is to be replaced and integrated into the new Employment
Services 2009-12 arrangements. Largely performing the role that PSP
does now, there is a proposed Stream 4 arrangement. Stream 4 is
described as:
Stream 4 will provide integrated, intensive
assistance to the most disadvantaged job seekers in our community.
This assistance will combine pre-employment and employment
assistance. The pre-employment and employment activities will need
to be tailored to the individual needs of the job seeker and may be
delivered concurrently or sequentially, depending upon the job
seeker s circumstances. Stream 4 job seekers will have complex and
or multiple non-vocational barriers that prevent them from
obtaining and sustaining employment or undertaking further skills
development. Barriers may include, but are not limited to:
- mental illness - including episodic psychological conditions,
anger management issues, mood disorders, severe depression, anxiety
disorders, agoraphobia, panic attacks, stress disorders including
post traumatic stress,
- social problems - including domestic violence, family and
relationship issues, financial management difficulties, social
isolation including alienation and poor communication or language
skills,
- torture or trauma,
- addictions - including gambling, drug and or alcohol, or
- homelessness or unstable accommodation.[54]
The provisions presented in Schedule
3 of the Bill largely remove references to the PSP in the
SSA.
Items 2 to 5
and 8 and 9 propose to makes
changes so that jobseekers can be deemed to be meeting their
activity test requirements. The proposed new provisions will allow
the Secretary to specify, in a legislative instrument, that a class
of jobseeker can be deemed to be complying with their activity test
requirement by meeting their Employment Pathway Plan. No detail is
provided in the Explanatory Memorandum as to what class of
jobseeker is being considered to be requiring this blanket activity
test compliance coverage. Legislative Instruments are generally
disallowable by the Parliament under the LIA,[55] unless the Principal Act
otherwise provides.
Item 11 provides for
new sections 63 and 64 of the
SSAA, which refer to general powers for the Secretary to require a
person to attend an interview, to attend a medical examination or
to complete a questionnaire. Failure to do as required can mean
that the payment they are otherwise entitled to, is not payable
(suspended or cancelled). Similar provisions have been in social
security law for a very long period. The Explanatory Memorandum
explains the main reason for these proposed new replacement
provisions is to reduce overlap in drafting and also
inconsistencies.[56]
Since 1944, governments have legislated for
the cancellation or non-payment of unemployment benefit where a
jobseeker is unemployed for not a good reason, or refuses a
reasonable job offer or does not take adequate steps to look for
work. What has changed over the years has been the detail of how
this rigour should be applied.
For the past two years, the number of
jobseekers on NSA has ranged from 472 448 (August 2006) to 429 459
(August 2008).[57]
Likewise, the number of jobseekers on YA Other has ranged from 72
634 (August 29006) to 63 347 (August 2008).[58] With the Welfare to Work reforms of
July 2006, there are now more persons of working age being provided
with NSA as their form of income support and required to look for
and accept work and Mutual Obligation requirements.[59] With this number of
unemployed jobseekers on a participation payment, required to
comply with look for and accept work requirements, there are going
to be some who do not comply and a penalty will apply.
There are two main drivers instigating the
proposed changes to the compliance regime arrangements in social
security law presented in this Bill. Firstly, the government
considers the current 3 strikes and your out automatic application
of an 8 week non-payment period penalty is too harsh and counter
productive.[60]
Secondly there are the proposed new Employment Services
arrangements to commence from 1 July 2009.[61]
The proposed amendments provide a far greater
degree of discretionary application of penalties. Discretion can be
applied in terms of a reasonable excuse and also where the
jobseeker is in severe financial hardship. At present there is the
discretionary application of the reasonable excuse provisions but
no provision for the consideration of severe financial
hardship.
The other feature of the proposed provisions
is the power to require the jobseeker to undertake a serious
failure requirement , such as undertaking a work experience
placement. Where the jobseeker complies with this serious failure
requirement, the non-payment period ends and payment is
recommenced.
Non-payment period penalties are not to apply
where the jobseeker is in severe financial hardship. In most cases,
jobseekers will meet this severe financial hardship test,
especially jobseekers who have been in receipt of participation
payment for a prolonged period and have run down any financial
reserves.
To deny payment of income support to an
unemployed jobseeker for 8 weeks is a very severe penalty. In the
vast majority of cases (50.1 per cent) income support recipients
rely on welfare payments for 90 per cent of their income.[62]
[10]. Dale
Daniels and Peter Yeend, Employment and Workplace Relations
Legislation Amendment (Welfare to Work and Other Measures) Bill
2005, Bills Digest No. 70 2005-06, Parliamentary Library,
Canberra, 6 December 2005. http://www.aph.gov.au/library/pubs/bd/2005-06/06bd070.htm.
accessed October 2008.
[12]. The Hon.
Brendan O Connor, MP, Minister for Employment Participation, Second
reading speech , Social Security Legislation Amendment (Employment
Services Reform) Bill 2008, House of Representatives,
Debates, 24 September 2008, pp. 8-11.
[14]. Youth Allowance (Other) is provided to unemployed
jobseekers aged 16 to 20.
[15]. Department of
Education, Employment and Workplace Relations, Labour Market
and Related Payments monthly profiles, July 2006 to September
2007,
http://www.workplace.gov.au/workplace/Publications/LabourMarket
Analysis/LabourMarketandRelatedPaymentsMonthlyProfile, accessed
October 2008.
[16]. The Hon. Brendan O Connor, MP, Minister for Employment
Participation, Second reading speech , p. 8, op. cit.
[40]. 624(2) Despite
subsection (1), a failure of a kind referred to, op. cit.
Peter Yeend
7 November 2008
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