Bills Digest no. 48 2013–14

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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.

Michael Klapdor and Matthew Thomas
Social Policy Section
18 March 2014

Contents

Purpose of the Bill

Background

Statement of Compatibility with Human Rights and Parliamentary Joint Committee on Human Rights

Position of major interest groups

Financial implications

Key issues and provisions

Concluding comments

 

Date introduced:  27 February 2014

House:  House of Representatives

Portfolio:  Employment

Commencement: 1 July 2014

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website at http://www.comlaw.gov.au/. 

 

Purpose of the Bill

The purpose of the Social Security Legislation Amendment (Increased Employment Participation) Bill 2014 (the Bill) is to amend the Social Security Act 1991 (the SS Act), the Social Security (Administration) Act 1999 (the SS Admin Act) and the Income Tax Assessment Act 1997 to:

• create a new payment, the Job Commitment Bonus, which will be paid to long-term unemployed young people who find ongoing gainful work[1] and move off income support and
• replace the existing Move 2 Work program with the ‘Relocation Assistance to Take Up a Job’ program and provide increased payments to long-term unemployed job seekers who relocate to take up ongoing employment.

Background

The introduction of a Job Commitment Bonus and increased Relocation Assistance payments were both Coalition commitments at the 2010 and the 2013 federal elections.[2] The two measures are intended to provide incentives for the long-term unemployed to find and take up ongoing paid employment:

The Coalition believes that every Australian who is capable of working should be in a job, preferably for a wage but if not, for the dole …

… The Coalition will provide incentives to help unemployed Australians enter or re-enter the workforce. We will introduce a Job Commitment Bonus payment to encourage long-term unemployed young Australians to find a job and keep it. Young Australians aged 18 to 30 who have been unemployed for twelve months or more and are on Newstart Allowance or Youth Allowance will receive a $2,500 Job Commitment Bonus if they get a job and remain off welfare for a continuous period of 12 months.

The Coalition will provide a further Job Commitment Bonus of $4,000 to the jobseeker if they remain in a job and off welfare for a continuous period of 24 months …

… We will also introduce new measures to help connect jobseekers with jobs to increase workforce participation and boost productivity. We will provide financial assistance of up to $6,000 for long term unemployed jobseekers if they move to a regional area to take up a job, or, $3,000 if they move to a metropolitan area.[3]

The measures were included in the Coalition Government’s December 2013 Mid-Year Economic and Fiscal Outlook.[4]

The Job Commitment Bonus is a new form of work incentive. Wage subsidy programs, such as Wage Connect, bear some similarity to the proposed payment, but these kinds of programs offer an incentive to employers themselves to hire income support recipients. Wage subsidy programs target a lack of available jobs for the long‑term unemployed, or an unwillingness of employers to hire those who have been out of work for long periods, by providing a financial reward to employers who provide job opportunities and ongoing employment to this group. The Job Commitment Bonus proposes to offer an incentive directly to the income support recipient, signalling that the payment is attempting to dissuade an unwillingness to work.

The Relocation Assistance to Take Up a Job program has a longer history and will essentially be an enhanced version of the Labor Government’s Connecting People with Jobs/Move 2 Work programs.

The background and details of these two measures will be discussed further in the ‘Key issues and provisions’ section of this digest.

Statement of Compatibility with Human Rights and Parliamentary Joint Committee on Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[5]

The Parliamentary Joint Committee on Human Rights (PJCHR) commented on a number of the Bill’s provisions in its Third Report of the 44th Parliament.[6] The PJCHR noted that it was unable to reach a definitive view of the compatibility of key measures relating to the Job Commitment Bonus as the details will be contained in legislative instruments that are yet to be made.[7] The PJCHR did note the use of a modified definition of Australian residence for determining eligibility for the Job Commitment Bonus, one that excludes protected Special Category Visa holders. The committee has sought further information from the Minister (this issue is discussed below in the ‘Key issues and provisions’ section).[8] The PJCHR’s report also discussed the increase of the non-payment period under the Relocation Assistance measure and has sought further information from the Minister in order to establish its compatibility with human rights.[9]

Position of major interest groups

There has been little recent commentary on the Bill’s measures from interest groups and stakeholders. When the Coalition announced its Job Commitment Bonus policy at the 2010 election, the Australian Council of Social Service (ACOSS) and Uniting Care Australia stated that it was unlikely to reduce youth unemployment. The CEO of ACOSS, Cassandra Goldie, stated:

The Coalition's proposed employment bonus offers important financial relief for young people who have been without work, and help them to pay off debts and bills. But the main cause of long term unemployment is not lack of incentive - long-term job seekers get few, if any, offers of work from employers.[10]

The then UnitingCare Australia National Director, Susan Helyar, stated:

While we are encouraged that the Coalition is prepared to move on long-term unemployment I’m afraid they have missed the mark … If you were to examine this policy in any detail what you will find is an assumption that long‑term unemployed people are choosing to remain on welfare.

Long-term unemployment is a complex issue, often linked with homelessness, mental health problems and a lack of access to training and vocational skills … Young people that are struggling to get a foot into the employment door don’t lack the will to work. On the contrary, they want to work, but the impact of a lifetime of exclusion means they lack the skills and supports to compete in the open employment market.[11]

Welfare and community service groups have been broadly supportive of relocation assistance policies though cautioned against preventing access to income support for those who relocate for a job, receive relocation assistance and subsequently leave the job.[12] ACOSS warned that this would discourage people from taking up relocation assistance.

Financial implications

The Job Commitment Bonus is expected to cost $157.1 million over five years.[13] The Relocation Assistance to Take Up a Job program is expected to provide savings of $39.8 million over five years, as a result of decreased expenditure on unemployment benefits and increased tax revenue.[14]

The Parliamentary Budget Office (PBO) costed both policies prior to the 2013 election and estimated that the Job Commitment Bonus would cost $91.9 million over four years while the Relocation Assistance measures were expected to provide savings of $17.4 million over four years.[15] The year-to-year PBO estimates for the Job Commitment Bonus are only slightly different from those provided in the Explanatory Memorandum. The Explanatory Memorandum’s estimates of savings from the Relocation Assistance measures are more than those estimated by the PBO, which used data from the Connecting to Work trial as a basis for its costing, indicating that the Government expects a higher take-up of the assistance than under the trial scheme.

Key issues and provisions

Youth unemployment and long-term unemployment

Both of the Bill’s proposed measures are aimed at addressing long-term unemployment. The Job Commitment Bonus is targeted at young people aged 18–30 who have been unemployed and in receipt of income support for 12 months or more, while the new relocation assistance program will be available to those who have been receiving certain income support payments for at least 12 months who then move for the purpose of taking up ongoing employment.

The Explanatory Memorandum for the Bill states that the Job Commitment Bonus will:

… provide an incentive to encourage young long-term unemployed Australians to remain off income support payments and increase employment participation among a group which is recording significantly higher rates of unemployment compared to the general population.[16]

Generally, youth unemployment rates are higher than unemployment rates for the general population. In January 2014 the unemployment rate was:

• 6.4 per cent for the total population aged 15 years and over
• 17.5 per cent for persons aged 15–19 years
• 10.9 per cent for persons aged 20–24 years and
• 5.8 per cent for persons aged 25–34 years.[17]

Unemployment rates for young people can be misleading as people in this age group undertake a complex range of work and study arrangements and the rates only capture the number of unemployed persons as a proportion of the labour force within the same age group. Those who are studying or training, and who are not actively seeking work, are excluded from the labour force. This means that the unemployment rate for young people is likely to overestimate the problem of youth unemployment. An alternative measure is the youth unemployment ratio, which measures the number of young unemployed people as a proportion of the civilian population in the same age group. However, this ratio may underestimate the level of youth unemployment, suggesting that the best estimate lies somewhere in between the rate and the ratio.[18] As at January 2014 the unemployment rate for those aged 15–24 was 13.4 per cent while the unemployment ratio for those in the same age group was approximately 9.14 per cent.[19]

The statistics indicate that while youth unemployment is higher than the general unemployment rate, this fluctuates between age groups, with those aged in the higher range, aged 25–34 years, recording lower unemployment rates than the general population. This is worth noting given the Job Commitment Bonus is being made available to long-term income support recipients aged up to 30 years of age.

Youth unemployment numbers prior to 2008 were trending downwards.[20] However, since 2008 and the impact of the global financial crisis, youth unemployment, and unemployment rates in general, have been on the rise. In a recent report on youth unemployment, the Brotherhood of St. Laurence stated that ‘the global financial crisis has had a scarring impact on the job prospects of Australia’s young people’.[21] Table 1 traces the recent trend in unemployment rates.

Table 1: Youth unemployment since the global financial crisis using trend estimates

	15–24, total unemployment rate %	Overall 15–64, total unemployment rate %
Jan–2008	9.0	4.3
Jan–2009	10.4	5.1
Jan–2010	11.4	5.5
Jan–2011	11.5	5.1
Jan–2012	11.5	5.3
Jan–2013	11.9	5.6
Jan–2014	12.4	6.0

Source: ABS, Labour force, Australia, Jan 2014, cat. no, 6202.0, ABS, Canberra, 2014 in Brotherhood of St. Laurence (BSL), Australian youth unemployment 2014: snapshot, BSL, Melbourne, 2014, p. 4, accessed 17 March 2014.

The number of long-term unemployed has also been growing steadily with around 147,800 people unemployed for 52 weeks or more as at January 2014, up from 118,900 in January 2013.[22] Figure 1 traces the seasonally adjusted trend:

Figure 1: Long-term unemployed people by sex—seasonally adjusted

 

Source: ABS, Labour force, detailed—electronic delivery, October 2013, cat. no. 6291.00.55.001, ABS, Canberra, 2013 in P Vandenbroek, Labour stats 101: unemployment, Quick guide, Parliamentary Library, Canberra, 2013, accessed 5 March 2014.

The number of long-term unemployed people has also risen as a proportion of all unemployed people, representing, on average, around 20.2 per cent of the total unemployed population in the first six months of the 2013–14 financial year. This is up from an average of 18.6 per cent in 2012–13 and 18.8 per cent in 2011–12.[23]

In terms of income support recipients, young people aged under 25 years represent 25.3 per cent of all Newstart Allowance and Youth Allowance (Other) recipients classified as ‘jobseekers’.[24] Those under the age of 30 represent 39.3 per cent of all jobseekers on these payments. Where it comes to long-term jobseekers—those who have been on income support for 12 months or more—25.5 per cent were aged under 25, and 38.1 per cent were under the age of 30.[25]

The number of long-term income support recipients has been rising rapidly. Between January 2013 and January 2014, the number of long-term jobseekers on Newstart Allowance or Youth Allowance (Other) increased eight per cent from 234,387 to 253,178.[26] The total number of jobseekers on these payments increased by 5.8 per cent over the same period.[27] The average duration on income support for Newstart Allowance recipients increased to 228 weeks in June 2013 from 180 weeks in June 2012.[28] The average income support duration for Youth Allowance (Other) recipients also increased to 94 weeks in June 2013 from 86 weeks in June 2012.[29]

These trends indicate a need for policy measures that can help to reduce the rising rates of youth and long-term unemployment. However, as discussed below, it is unclear whether either of the Bill’s proposals will have the desired impact.

Job Commitment Bonus

The proposed Job Commitment Bonus payments will be made to people aged 18–30 who have been receiving Newstart Allowance or Youth Allowance (Other) for a period of at least 12 months if they remain in gainful work and off income support for set periods of time. Eligible recipients will qualify for a tax-free payment of $2,500 if they remain in gainful work for a period of at least 12 months and $4,000 if they remain in continuous gainful work for an additional 12 months (a continuous period of 24 months in total).

Item 2 of Schedule 1 of the Bill inserts a new Part 2.16A—Job commitment bonus into the SS Act which sets out the amounts of the payment and primary qualification criteria for receipt of the Job Commitment Bonus.[30] To qualify for the first bonus amount of $2,500, a person must, while aged 18 or over and under 31:

• have received for a continuous period of at least 12 months, either of, or a combination of, Newstart Allowance or Youth Allowance (other than as an apprentice or full-time student)
• start gainful work in Australia after that continuous period or within 30 days of the end of that continuous period of receiving Newstart or Youth Allowance (Other)
• complete a 12 month period of gainful work
• be an Australian resident through the gainful work period and
• not receive an income support payment during the period of gainful work.

To be eligible for the second bonus amount of $4,000, a person who has received the first bonus amount must complete a further 12 month period of continuous gainful work as an Australian resident while remaining off income support.

Continuous periods of gainful work

New subsections 861(5) and 861(6) provide for the Employment Secretary to prescribe, via a legislative instrument, a period that should not be considered a break in the period of ‘continuous gainful work’. This will allow for different periods of different kinds of gainful work to be considered as part of a continuous period, or for different periods of the same kind of work depending on whether it is full-time, part-time, casual or shift‑work. The instrument will provide for flexibility in interpreting what is considered a continuous period of gainful work and ensure that periods of leave will not be considered a break in the continuous period. It is not clear whether a minimum number of hours will constitute a period of gainful work or whether some employment relationship combined with no receipt of income support will be sufficient.

Gainful work

Gainful work is defined at new subsection 861(11) as ‘work for financial gain or reward (whether as an employee, a self-employed person or otherwise)’. However, new subsection 861(8) provides for the Employment Secretary to prescribe, via a legislative instrument, circumstances in which the above qualification criteria do not apply, which may relate to the kinds of ‘gainful work’ that will not qualify an individual for the Job Commitment Bonus. The Explanatory Memorandum explains the intention of this provision:

… it is envisaged that the Employment Secretary may prescribe receipt of certain Commonwealth payment, (other than income support payments) during a period of continuous gainful work, as being a circumstance where the first bonus and second bonus will not be payment, for example, ABSTUDY …

It is envisaged that the instrument will prescribe certain kinds of work which will not attract the Job Commitment Bonus, for example work which:

-          does not involve a substantial degree of consistent personal exertion
-          consists of domestic or gardening tasks in relation to the place of residence of the person or a member of their family
-          consists of the management of financial investments in which the person or a member of their family has an interest
-          involves nudity or is in the sex industry, including retail positions
-          contravenes Commonwealth, state or territory legislation
-          is for the purpose of achieving election of the person to public office; or
-          is undertaken as part of certain Commonwealth funded programmes, for example the Green Army programme (in relation to certain participants), Work for the Dole, and the New Enterprise Incentive Scheme.[31]

The terms gainful work or ‘gainful employment’ are rarely used in the SS Act. ‘Gainful work’ is used for the purpose of determining eligibility for the Pension Bonus Scheme and shares the same basic definition (at section 92X of the SS Act) as that given in new subsection 861(11). Section 92Y of the SS Act allows the Secretary to have discretion as to what should be considered gainful work, with the intent being that the work ‘must involve the member being engaged in some form of gainful activity for financial reward rather than contrived situations’.[32] This excludes a person managing their own, or their family’s, financial investments; performing domestic duties at their own, or their partner’s place of residence, or being engaged in voluntary work. The term ‘gainful employment’ is also used for the purposes of establishing eligibility for Mobility Allowance.[33] Here the term is defined in terms of the monetary return from work, with the definition stating that it means paid employment (including sheltered employment) and self-employment that is intended for financial gain.[34]

The existing definitions of gainful work or employment consider ‘gainful’ in the sense of work as an economic activity or one primarily aimed at financial gain. The Explanatory Memorandum indicates that the Government wishes to exclude certain kinds of work from being considered gainful work for the purposes of the new payment, in particular work that, while legal and providing a financial return, might be considered immoral or unsavoury by some parts of the community. The exclusion of work involving nudity or in the sex industry introduces a moral element to the definition of gainful work. While it may be understandable that the Government would not want to be seen to be providing an incentive payment for young people to take-up sex work, it is less clear why the entire sex industry, even retail work, would be excluded. Such work could potentially provide skills and training applicable to any other retail business and it is unclear whether every role connected with nudity or the sex industry would be excluded: photographers, models, artists, camera and boom-operators, directors, editors, distributors, accountants, graphic designers, management roles et cetera.

The SS Act allows for jobseekers to refuse certain employment opportunities where the work might be considered ‘unsuitable’ on the basis of moral, cultural or religious grounds.[35] In such cases it is the jobseeker who refuses certain kind of work on the basis that they consider it objectionable (and the Secretary must determine whether or not it is a valid reason). The proposed new definition of gainful work would exclude certain kinds of employment that the Government considers objectionable, regardless of the jobseeker’s own views. It is worth noting that work undertaken for the purposes of achieving public office is also not to be regarded as ‘gainful work’ in terms of qualification for a Job Commitment Bonus.

It is clear that while the Government is intent on encouraging young people to participate in the workforce, it does not want to reward ongoing employment in particular lines or work. The Bill’s Statement of Compatibility with Human Rights asserts that the exclusion of certain types of work:

… would be consistent with the intention of the Job Commitment Bonus to encourage young people to develop a real commitment to improving their employment skills and to gaining experience in the workplace. As such, the differential treatment of particular types of work would be for a legitimate aim, based on reasonable and objective criteria, and would be proportionate to the aims of the Job Commitment Bonus.[36]

Further justification for the exclusion of this work will be provided in a subsequent Statement of Compatibility with Human Rights which will accompany the legislative instrument setting out the exclusions.[37]

Legislative instruments and the Social Security Act 1991

Many of the conditions for this new payment are to be contained in legislative instruments. Historically, the use of legislative instruments attached to the SS Act has been minimal, with qualification or payment requirements set out in legislation. There has been a trend towards use of legislative instruments in recent years, as they are more easily updated or changed than the provisions of an Act. While the instruments provided for by the Bill can be disallowed by the Parliament, parliamentary debate on the instruments is not required unless there is a motion of disallowance. The use of instruments to set out important payment conditions can reduce the level of scrutiny applied to these details.

Exclusion of all New Zealand citizens

New subsection 861(12) of the SS Act provides for the term Australian resident in the qualification criteria to have the same meaning as the definition at section 7 of the SS Act with the exception of excluding certain New Zealand citizens (protected Special Category Visa (SCV) holders) who are usually included under the definition (at subparagraph 7(2)(b)(iii) of the SS Act). This is an exception to the usual practice in Australian social security law of treating protected SCV holders as having the same entitlements as permanent residents. Non-protected SCV holders, mainly New Zealanders who arrived in Australia on an SCV after 26 February 2001, only have limited access to social security.[38]

The Statement of Compatibility with Human Rights states that the exclusion of protected SCV holders from accessing the Job Commitment Bonus ‘simply means they will be treated like other New Zealand citizens’.[39] While this is true, it is inconsistent with the existing treatment of protected SCV holders under social security law and a change without precedent in the entitlements offered to this group. This group of New Zealanders has been treated in the same way as permanent Australian residents before and after the 2001 changes and there are concerns amongst some in the New Zealander community in Australia that the exclusion signals an end to this arrangement and the possibility of further restrictions on their entitlements.[40]

As noted above, the Parliamentary Joint Committee on Human Rights stated that it would write to the Minister for Employment to ask why it was necessary to exclude protected SCV holders and the basis for considering that their inclusion may jeopardise the goals of the measure.[41] The committee has previously raised concerns regarding the human rights of non-protected SCV holders who have been long-term residents of Australia.[42]

Perverse incentives

The Job Commitment Bonus is a large lump sum payment which could give rise to unintended effects where individuals adjust their behaviour in order to qualify. This might include jobseekers on income support for 11 months attempting to delay taking up an employment opportunity for an extra month in order to qualify for the Job Commitment Bonus further down the line. It also provides an incentive for young people to remain in poor quality jobs or employment with poor conditions, when they are unable to find other work, in order to qualify for the payment. Incentivising long periods in poor-quality jobs could undermine one of the purposes of the Job Commitment Bonus: to reward ‘positive, pro‑work behaviours’ which develop the skills of the long-term unemployed leading to ongoing participation in the workforce.[43]

Paying employment incentives to jobseekers

The Job Commitment Bonus is an experimental measure in employment policy in Australia. While there is a long history of incentive payments being paid to employers who provide opportunities for particular categories of the unemployed, typically via wage subsidies, delivering lump sum payments directly to those who have remained in work for sustained periods is a novel idea. Typically, incentives provided directly to jobseekers are those that reduce the rate at which income support is withdrawn as a person earns income, easing the transition into work and boosting the financial rewards of employment. These kinds of policies reduce immediate disincentives to work that come in the form of high effective marginal tax rates. However, the Job Commitment Bonus does not target this immediate financial disincentive. Rather, it offers a long-term financial gain in the form of large tax‑free payments following 12 and 24 months of employment.

The policy proposal would appear to be based on an assumption that young people who are long-term unemployed do not want to take up ongoing work and that a large financial incentive will draw more of them into employment. While the youth unemployment rate is high, the Government has not provided any evidence that this group is unwilling to work or that a financial incentive paid to those who find work will boost employment rates. Surveys of young people indicate that the majority want to work or want to work more hours but that there are a range of barriers to them achieving their employment goals, including: a lack of available jobs, particularly entry-level positions and full-time work opportunities; not having relevant experience, skills or qualifications required nor the opportunity to acquire experience or training; and, employers unwilling to hire younger people, particularly those who have been out of work for long periods.[44] All of these barriers to taking up paid employment are exacerbated for the long-term unemployed.

Whether or not the long-term unemployed are unwilling to work, income support recipients have strict participation requirements if they are to remain eligible for their payment including:

• actively seeking and being willing to undertake any suitable work in Australia, which includes attending any job interviews offered by prospective employers and being able to show evidence of this activity
• entering into and complying with an Employment Pathway Plan (an agreement which outlines an individual’s requirements under the activity test)
• registering with an employment services provider if required and attending all appointments and acting on any referrals to potential job opportunities
• participating in any required activities that the employment services provider or the Department of Human Services (DHS) regards as suitable and/or
• undertaking particular paid work referred to them by DHS, other than work that is unsuitable to be done by the individual.[45]

They may also be required to undertake mutual obligation activities such as Work for the Dole. Failure to meet any participation requirements can result in non-payment periods or a loss of eligibility for income support.

The long-term unemployed also have large financial incentives to find paid work—Newstart Allowance for a single person with no children is only worth around 41 per cent of the full-time minimum wage. Moving from Newstart Allowance to full-time work at the minimum wage could see gross fortnightly income increase by around $735 a fortnight.[46]

Newstart Allowance and Youth Allowance are designed to encourage participation in paid employment—through low payment rates that provide a clear financial incentive to work and through strict participation requirements as a condition of eligibility, forcing recipients to look for work and undertake training/education to boost their employability. The Job Commitment Bonus will strengthen the incentive of paid work for the long‑term unemployed but, unlike wage subsidies and other employment policies, it is not aimed at creating employment opportunities for the target group. The failure to address the demand side of the youth unemployment rate has been criticised by employment and social policy consultant Toni Wren:

The Job Commitment Bonus appears to assume rising youth unemployment is all about young people’s lack of commitment to work. The reality is that Australia’s labour market has become very casualised and this is reflected in the employment support system—most of the jobs people get are casual or part-time, often not enough to keep them off welfare for very long … Structural change since the early 1990s has meant a significant loss of low-skilled and entry level full-time jobs across the board … Declining full-time work has been accompanied by a steady increase in the proportion of those teenagers not in full-time education who hold only a part-time job … Smart strategies are needed to keep young people in school but also to re-engage in education those who have left prematurely so they can gain the skills they need for the jobs that are available.[47]

The policy would appear to be an experiment based on the assumption that the existing incentives are not large enough for the target group. The PBO’s methodology for costing the Coalition’s election policy applied the value of the payment to the available data on movements of the long-term unemployed into ongoing employment—that is, the costing was on the basis that there would be similar rates of the long-term unemployed moving into employment as in previous years, rather than on the basis of an increase as a result of the policy.[48] It is unclear whether the Government has included an incentive effect in its costing (though the estimated cost is similar to the PBO’s) or how many extra people are likely to move into employment as a result of the measure.

While its rationale is unclear and the likelihood of success difficult to assess, the new payments will be a welcome boost to the incomes of those long-term unemployed young people who do find work and stay off income support.

Relocation Assistance

In the 2010 federal election campaign, both Labor and the Coalition made election commitments to introduce voluntary relocation assistance programs for job seekers in areas of high unemployment. The Relocation Assistance to Take Up a Job program is essentially the program that was promised by the Coalition at that time, and subsequently in the 2013 federal election campaign.[49]

Under the Coalition’s Relocation Assistance to Take Up a Job proposal, job seekers in receipt of Newstart Allowance (NSA), Youth Allowance (Other) and Parenting Payment are to be paid up to $6,000 for relocation expenses if they move to a regional area to take up a job offer.[50] Job seekers in metropolitan areas of high unemployment who relocate to other metropolitan areas to take up a job offer are to receive a payment of up to $3,000 so long as the area to which they move has a lower unemployment rate.[51] It is to be assumed that the rationale behind this aspect of the program is to provide unemployed people with an incentive to move to areas of lower unemployment, where their long-term prospects for employment are improved. Should they lose the job for which they are paid relocation assistance, the logic has it that they will be more likely to find another job in the area to which they have moved.

Eligible job seekers with dependent children who elect to move to take up a job will be allocated an additional $3,000 to help defray their additional costs of relocation. Any job seeker who receives a relocation payment and then leaves the job that they had accepted within six months without reasonable grounds will not be able to receive income support for six months.

Background

Labor’s Connecting People with Jobs relocation assistance policy was similar in most respects to that proposed by the Coalition, with two main differences. Firstly, it operated on a trial basis over two years from 1 January 2011 for up to 2,000 long-term unemployed people.[52] By contrast, the Coalition’s 2010 proposal was for an ongoing program, with no stipulation regarding a maximum number of participants. Secondly, while the Coalition planned to impose a six‐month income support waiting period on program participants who left their job within six months without adequate reason, Labor’s policy imposed a twelve‐week waiting period. This was an increase of four weeks over the previous unemployment non‐payment period that applied to people who became unemployed as a result of their own voluntary act or misconduct.

Following the completion of the Connecting People with Jobs pilot on 30 June 2013, the Rudd-Gillard Government introduced from 1 July 2013 the Move 2 Work program.[53] This program extended assistance to up to 600 job seekers until 30 June 2014.

The program retained a number of elements from the Connecting People with Jobs pilot, but instituted two main changes. Firstly, the distinction between regional and metropolitan areas for the purposes of providing assistance was done away with. Instead, all participants who accepted an ongoing job or apprenticeship that required them to relocate at least 90 minutes from where they lived using normally acceptable travel routes qualified for a single rate of payment. For participants with no dependents, this was up to $4,500 of assistance, and for participants with dependants, $6,500. Secondly, the program relaxed the entry criteria, with no waiting period for a far wider range of eligible job seekers.

Relocation Assistance to Take Up a Job program

Essentially, this Bill will help to enable the implementation of the Government’s Relocation Assistance to Take Up a Job program from 1 July 2014 by increasing the penalty for job seekers who have been paid relocation assistance but lose their employment as a result of their own voluntary act or misconduct. Item 1 of Schedule 2 of the Bill amends paragraph 42S(3)(b)of the SS Admin Act to increase from 12 to 26 weeks the unemployment non-payment period for a job seeker who loses the job for which they are paid relocation assistance due to a voluntary act or misconduct within six months of their being paid relocation assistance.[54] The Relocation Assistance payments will be provided via existing employment services arrangements and delivery of these payments does not require any amendments to social security law.

Based on the experience of the Connecting People with Jobs pilot program—which was similar in most respects, including payment rates, to the Relocation Assistance to Take Up a Job program—job seeker take-up of relocation assistance is likely to be limited. According to the Parliamentary Budget Office only 1,031 job seekers relocated for employment over two years as a part of the Connecting People with Jobs pilot program.[55] And, given that the penalties for leaving employment are now to be made stricter, take-up might be further reduced.[56]

Low take-up of relocation incentives is to be expected. As the Bills Digest for the Social Security Legislation Amendment (Connecting People with Jobs) Bill 2010 observed:

… in the case of job seekers, this is because relocating would mean moving away from home and potentially from any support networks they might have. Should they lose their jobs (for whatever reason), they risk being stranded and, if they become unemployed due to a voluntary act or misconduct in the first six months, they risk losing access to government income support for up to 12 weeks. These factors are likely to act as significant disincentives.

Many employers in areas of skills shortages appear to be looking to employ job seekers with existing skills that are relevant to their industry. It is unlikely that most long term unemployed job seekers in areas of high unemployment will fit this bill.

Hence, the trial is unlikely to play a large role in solving the problem of regional skills shortages or reducing long term unemployment. Arguably, what is required is further investment in skills training that meets the specific needs of industry but is also transferable and mobile, thus meeting the long term needs of job seekers.[57]

Further means of improving the take-up of relocation incentives would involve making the program more attractive to job seekers. This could be achieved through providing assistance with finding affordable housing and child care, and furnishing ongoing mentoring and support services to participants.

Concluding comments

The Bill provides for the implementation of two of the Coalition’s election policies aimed at boosting employment participation. The Job Commitment Bonus, targeted at long-term unemployed young people, is a policy experiment and, at this stage, it is difficult to assess its chances of success. The Relocation to Take Up a Job program expands upon previous relocation schemes. Based on the results of those schemes, the new program is likely to have a low take-up.

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2500.

 

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