Bills Digest no. 70 2005–06
Employment and Workplace Relations Legislation Amendment (Welfare
to Work and Other Measures) Bill 2005
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
Purpose
Background
Schedule Disability Support Pension (DSP)
Introduction
Background
Influences driving the changes to the DSP qualification rules
Expenditure and savings attached to these DSP reform proposals
Current DSP ‘continuing inability to work’ test
Current local labour market rule for DSP claimants aged 55 or more
Proposed changes to DSP continuing inability to work test
30 hour a week test to a 15 hour a week test
Changes to definition of continuing inability to work
New definition of ‘doing work independently of a program of support’
New and broader definition of ‘training activity’
Schedule 1 – Part 1 - New definition of ‘partial
capacity for work’
Comment
Second assessment of continuing inability to work after two years -
qualification to DSP
Introduction
Background
Comment
DSP recipients and claimants – overview of who will be affected when
and how?
Current DSP recipients
Persons who claim DSP from 11 May 2005 to 30 June 2006
Persons who claim DSP on or after 1 July 2006
How many might be affected by this tightening of the DSP incapacity
for work test?
Schedule 2 – Part 2, Schedule 3, Schedule
4 - Part 3, Schedule 6 – Part 2, Schedule 9 and Schedule 22 – Part 6 –
Seasonal work preclusion period
Introduction
Origins of the SWPP
Background
Current SWPP rules
What is seasonal work?
What is the SWPP length?
Proposed change to the SWPP
Anticipated savings to government
Comment
Schedule 4 – Parenting Payment
History
McClure Report
Australians Working Together Package
2005-06 Budget – PP reforms in Welfare to Work
Post 2005-06 Budget Developments
Senate Committee referral
Reduced expenditure on Parenting Payment
Major Changes
Participation Requirements
Exemptions
Unsuitable work
Suitable activities
At least 15 hours but up to 25 hours
Reduced level of income support
Impact on those affected
How will savings be realised with more persons paid NSA and less persons
paid DSP and PP - Single?
DSP is paid at a higher rate than NSA
Tighter income testing on NSA than on DSP
Pensioner Education Supplement (PES) payment and qualification
Schedule 2 – Part 3 Approved program of support
supplement
Schedule 5 – Part
1, Schedule 7 – Part 1 and Schedule 22 – Part 1 – RapidConnect
Introduction
Brief overview of current jobseeker NSA/YA registration and referral
to Job Network processes
Change in jobseeker NSA/YA claim and referral to Job Network processes
with RapidConnect
RapidConnect - new requirements for jobseekers claiming NSA/YA
Comment
Schedule 5 – Part 2, Schedule 7 – Part 2, Schedule
10 – Part 1 - Participation
Introduction
Background
Legislative rigour behind the activity test
New ‘participation’ requirements in the SSA for jobseekers with a restricted
work capacity due to a medical condition or with ‘principal carer’ status
Requirement to undertake suitable paid work
Unsuitable paid work
Repeal of reasonable commuting distance to travel to and from work
provisions
Repeal of SSA provisions that stipulate the situations in which participation
in an approved program of work for income support payment cannot be
required – no replacement legislation
Attempts by the jobseeker to comply with a directive – removal of the
‘take reasonable steps’ provisions
New categories for exemptions from the requirement to participate in
a program of work – domestic violence, caring for disabled child, foster
carer, home educator, distance educator
Exemptions from participation requirements
Activity test requirements – detail to be taken out of the SSA and replaced
with a Legislative Instrument specified by the Secretary
Comment
Unemployed while working to capacity
Unsuitable work and award work
Guidelines are discretionary and flexible
Schedule 16, Schedule 17 – Part 6, Schedule 18 – Part
2, Schedule 19 – Part 4, Schedule 20 – Part 2 - Income maintenance period
(IMP)
Introduction
Current IMP application
Origins and purpose of the IMP
Savings
Comment
Schedule 8 – Employment Entry Payment (EEP)
Background
Current EEP payments
Current rate of EEP
Current qualification for EEP
Proposed new EEP payments
Schedule 9 – Sickness allowance
Schedule 10 – Special benefit
Schedule 11 – Mobility Allowance (MA)
Current MA qualification requirements and payment rate
Proposed higher rate of MA
Expenditure
Schedule 12 – Advance payment of PP – Partnered
Schedule 13 – PES
Schedule 19 – Part 3 Pharmaceutical Allowance, Schedule
15 - Pensioner Concession Card and Schedule 14 - Telephone Allowance
Schedules 17, 18, 19, and 20 – The Youth Allowance,
Austudy Payment, Benefit and Parenting Payment Partnered Income Test thresholds
and taper rates
Schedules 17 and 19 – A new maximum rate of Youth Allowance
and Newstart Allowance for certain groups
Schedule 21 – 10% recovery fee on earnings related debts
Background
Current penalties
New 10 per cent of debt penalty
Schedule 4 – Part 2, Schedule 5 – Part 3, Schedule
6 – Part 1, Schedule 7 - Part 3, Schedule 10 – Part 2 and Schedule 22
– Part 4 - Compliance
Introduction
Current compliance regime
Activity test breaches
Activity test breach penalties
Administrative breaches
Administrative breach penalties
Proposed activity test breach regime – non-payment periods
How long will the non-payment periods be?
Comment
Payment rate reduction periods versus non-payment periods
Projected savings
Activation of a penalty – which is easier – a non-payment period or
a payment rate reduction period
Parenting payment – compliance requirements
Background
PP recipients with participation requirements
Austudy payment – compliance requirements
Background
Austudy payment compliance regime
Schedule 22 – Administration
Part 2 – Disability support pension
Schedule 23 – Other amendments
Current approval of rehabilitation
Main Provisions
Schedule 1 – Definitions and other interpretive provisions
Schedule 2 – Disability support pension
Part 1 – Participation
Part 2 – Seasonal work preclusion period (SWPP)
Part 3 – Approved program of work supplement
Schedule 3 – Carer payment
Schedule 4 – Parenting payment
Part 1 – Participation
Part 2 - Compliance
Part 3 – Seasonal work preclusion period
Schedule 5 – Youth allowance
Part 1 – RapidConnect
Part 2 – Participation
Part 3 – Compliance
Schedule 6 – Austudy payment
Part 1 – Compliance
Part 2 – Seasonal workers preclusion period
Schedule 7 – Newstart allowance
Part 1 – RapidConnect
Part 2 – Participation
Part 3 – Compliance
Schedule 8 – Employment entry payment
Schedule 9 – Sickness allowance
Schedule 10 – Special benefit
Part 1 – Participation
Part 2 – Compliance
Schedule 11 – Mobility allowance
Schedule 12 – Advance payment of PP – Partnered
Schedule 13 – Pensioner education supplement
Schedule 14 – Telephone allowance
Schedule 15 – Concession cards
Schedule 16 – Pension rate calculators
Schedule 17 – Youth allowance rate calculator
Part 1 – Income test
Part 2 – Maximum benefit rate calculator
Part 3 – Pharmaceutical allowance (PhA)
Part 4 – Youth disability supplement
Part 5 – Exemption from parental means test
Part 6 – Income maintenance period (IMP)
Schedule 18 – Austudy payment rate calculator
Part 1 – income test
Part 2 – Income maintenance period (IMP)
Schedule 19 – Benefit rate calculator
Part 1 – income test
Part 2 – Maximum benefit rate for certain newstart allowance recipients
Part 3 – Pharmaceutical allowance (PhA)
Part 4 – Income maintenance period (IMP)
Schedule 20 – Parenting payment rate calculators
Part 1 – income test
Part 2 – Income maintenance period (IMP)
Schedule 21 – Overpayments and debt recovery
Schedule 22 – Administration
Part 1 – RapidConnect
Part 2 – Disability support pension
Part 4 – Compliance
Part 5 – Information exchange
Schedule 23 – Other amendments
Concluding Comment
Endnotes
Contact Officer & Copyright Details
Passage History
Employment and Workplace Relations Legislation Amendment
(Welfare to Work and Other Measures) Bill 2005
Date Introduced: 9 November 2005
House: House of Representatives
Portfolio: Employment and Workplace Relations
Commencement: The main consequential provisions concerning the
welfare to work initiatives for the Disability Support Pension (DSP) and
the parenting payments (Parenting Payment – Partnered and Parenting Payment
– Single) (PP) are to commence from 1 July 2006. Other commencement dates
are set out in the Table in Clause 2 of the Bill.
To provide the legislation to support the government’s welfare to work
reforms that were announced in the 2005-06 Budget.
The provisions in this Bill change requirements to qualify for the DSP.
The Bill puts in place stricter criteria for assessing a person’s ‘continuing
inability to work’ which will tighten the DSP incapacity for work qualification
requirements. The proposed reforms to the DSP program were announced
in the 2005-06 Budget.(1) In tightening the qualification
criteria for access to DSP by reducing the work incapacity test from 30
hours a week down to 15 hours a week, fewer persons with a disability
will be able to access DSP. The vast majority of those not able to access
DSP will be provided with ‘enhanced’ New Start Allowance (NSA.
The government has attempted three times to change the DSP qualification
requirements but the changes were not passed by the Parliament. The relevant
Bills were:
- Family and Community Services Legislation Amendment (Disability
Reform) Bill 2002. The Bills Digest
for that Bill is No. 157 2001-02.(2)
- Family and Community Services Legislation Amendment (Disability
Reform) Bill (No. 2) 2002. The Bills
Digest for that Bill is No. 3 2002-03.(3)
- Family and Community Services Legislation Amendment (Disability
Reform) Bill (No. 2) 2002 [No. 2]. The Bills Digest
for that Bill is No. 125 2002-03.(4)
The ever increasing numbers of DSP recipients over the past 15 years
is one of the main influences driving the Government in pressing for changes
to the DSP qualification criteria. In June 1990 there were 316,713 DSP
recipients(5) and as at June 2005 there were 706,800 recipients.(6)
A background to increasing DSP recipient population is provided in the
Bills Digest
to the first of the above Bills (Family and Community Services Legislation
Amendment (Disability Reform) Bill 2002).(7)
Another impetus for the proposed changes to the DSP program in this Bill
arises from the recommendations from the McClure
Report into welfare reform of July 2000. The McClure Report recommended
the development of expected levels of participation for people with a
disability and also a review of the capacity for work criterion (the 30-hour
threshold) for people with disabilities, ensuring that any such criterion
is in line with contemporary patterns of labour market participation.(8)
The total estimated cost of the DSP reforms presented in the 2005-06
Budget were then $562.3 million over four years. $38.8 million in 2005-06,
$153.7 million in 2006-07, $160.2 million in 2007-08 and $209.6 million
in 2008-09.(9)
The extra expenditure involved in this proposal is largely made up of
the money allocated for training, rehabilitation and job enhancement programs
and also on Job Network employment placement assistance for jobseekers
as announced in the Budget. There are some program savings in having
jobseekers on payments that cost less to administer and deliver, like
‘enhanced’ Newstart Allowance (NSA), rather than being on more expensive
programs like DSP and PP – Single. See ‘How will savings be realised
with more persons paid NSA and less persons paid DSP and PP - Single?’
in this Digest.
The Government’s estimate of reduced outlays
for DSP and increased outlays for NSA, YA and other allowance payments
were provided in an answer to a question on notice (No. W156-06) asked
by Senator Penny Wong at Senate Employment,
Workplace Relations and Education Legislation Committee estimates hearings
for the 2005-2006 Budget:
The estimated changes to income support payments administered
by the Department of Employment and Workplace Relations as a result
of the Welfare to Work, increasing participation of people with a disability
measure are:
Estimated Payment Cost ($m) - People with a Disability
| Payment
Type: |
2006/07 |
2007/08 |
2008/09
|
3
Yr Total |
| Disability Support Pension |
-443.978- |
-766.265 |
-1094.508- |
-2304.751 |
| Mobility Allowance |
27.963 |
34.23 |
40.602 |
102.795 |
| Newstart |
283.94 |
470.492 |
663.635 |
1418.067 |
| Pensioner Education Supplement |
-1.162 |
-1.985 |
-2.8 |
-5.947 |
| Parenting Payment - Partnered |
6.779 |
11.238 |
15.853 |
33.87 |
| Parenting Payment - Single |
14.066 |
23.603 |
33.703 |
71.372 |
| Youth Allowance (Unemployed) |
27.624 |
31.393 |
35.054 |
94.071(10) |
Program savings in the DSP and Employment Entry payment (EEP) programs
are more than offset by the proposed extra spending on employment placement
assistance.
The current DSP incapacity for work test as spelt out in section 94 of
the Social Security Act 1991 (SSA) is basically made up of two
main components:
- the person has an impairment (as measured by the DSP impairment tables)
of at least 20 points or more; and
- because of this impairment, the person has a continuing inability
to work.(11)
The current DSP definition of ‘continuing inability to work’ as defined
by sub-section 94(2) of the SSA is:
the impairment is of itself sufficient to prevent the person from doing
any work within the next 2 years.
‘Work’ is defined in sub-section 94(5) of the SSA as:
(a) that is for at least 30 hours per week at award wages
or above; and
(b) that exists in Australia,
even if not within the person's locally accessible labour market.
Just because a person has a an impairment of 20 points or more does not
automatically mean they are qualified for DSP. They must also meet the
continuing inability to work test. There will be many claimants with
high impairment levels, for example 30 points or even 60 points, but they
may also be able to do substantial levels of work (that is for 30 hours
a week or more) and will therefore not qualify for DSP. For example,
an accountant who has lost the use of both legs will have a high impairment
rating but may also be able to work full-time, so is not qualified for
DSP.
The continuing inability to work test is a subjective test. It is applied
by the delegate and it is the delegate under the SSA who makes this decision,
not the claimant’s treating doctor or the Australian Government Health
Service medical officer.
Currently, section 94(4) of the Social Security Act 1991 (SSA)
allows for a special work test for claimants aged 55 or more, with the
work test only against work in their locally accessible labour market.(12)
For persons aged up to 54, work means any work the person could be reasonably
able to do, regardless whether the work is locally available or not.(13)
This means the test is not against any work the person could reasonable
do, regardless if it is locally available or not, rather only against
work available in the local labour market. This has allowed many older
aged DSP claimants in remote/regional areas, where the labour market is
a lot more limited, access to DSP. This special labour market test for
those aged 55 or more partially explains why rural and regional Australia
has a higher proportion of DSP recipients than metropolitan Australia.(14)
This Bill proposes to remove sub-section 94(4) from the SSA and consequently
will see fewer numbers of older aged DSP claimants qualifying for DSP.
The Bill does not propose to make any changes to the DSP impairment tables
or to the 20 points impairment rating requirement.
The Bill does propose to alter the ‘work’ definition in the continuing
inability to work test by reducing the 30 hours a week test to a 15 hours
a week test. This is the same change presented in the three previous
DSP amendment Bills – see above. However, only the first of the previous
Bills had a retrospective element to apply the 15 hour rule to all DSP
recipients and claimants. This Bill, like the latter two earlier Bills,
makes it prospective – in this case from 1 July 2006.
The change from a 30 hours a week test to a 15 hour a week test means
that applicants will have a lower work capacity in order to qualify.
The amendments in the Bill will therefore see reduced access to DSP for
new claimants.
For the vast majority of current DSP recipients no record is kept as
to their work capacity either at the grant or review stage. An assessment
of actual hours of work capacity is not made, the only assessment being
against whether they fall above or below the 30 hour a week requirement.
The proposed 15 hour a week test is only to apply to DSP claimants who
claim on or after 1 July 2006
and also to those granted DSP between 11 May 2005 and 30 June 2006 at the time of their 2 or 5 year review. Every
DSP recipient has a qualification and payment rate review every 2 or 5
years, depending on the severity of their inability to work, with the
less severe being reviewed every 2 years.
The Bill also proposes to change the definition of ‘continuing inability
to work’ in sub-section 94(2) of the SSA. The proposed replacement 94(2)
is:
94(2) A person has a continuing inability to work
because of an impairment if the Secretary is satisfied that:
(a) the impairment is of itself sufficient to prevent
the person from doing any work independently of a program of support
within the next 2 years; and
(b) either:
(i) the impairment is of itself sufficient to prevent
the person from undertaking a training activity during the next 2 years;
or
(ii) if the impairment does not prevent the person from
undertaking a training activity—such activity is unlikely (because of
the impairment) to enable the person to do any work independently of
a program of support within the next 2 years. Note: For work see
subsection (5).
The proposed new sub-section 94(2)(a) adds the qualification that ‘work’
means ‘work independently of a program of support’. This change of work
definition makes it clearer that where a person needs significant support
to achieve employment of more than 15 hours a week (for example attendant
care, with toileting or eating), they will qualify for DSP. For some
this expands opportunities for access to DSP.
The proposed amendments also mean that where the person is assessed as
being unable to work for at least 15 hours a week at the time of assessment,
but it is also assessed they could work for more than 15 hours a week
with targeted assistance within the next two years they do not qualify
for DSP. For some this reduces opportunities to access DSP.
Item 5 in Part 1 of Schedule 2 provides a new definition of ‘doing work
independently of a program of support’:
A person is treated as doing work independently
of a program of support if the Secretary is satisfied that to
do the work the person:
(a) is unlikely to need a program of support that:
(i) is designed to assist the person to prepare for,
find or maintain work; and
(ii) is funded (wholly or partly) by the Commonwealth
or is of a type that the Secretary considers is similar to a program
of support that is funded (wholly or partly) by the Commonwealth; or
(b) is likely to need such a program of support provided
occasionally; or
(c) is likely to need such a program of support that
is not ongoing.
Interpretations of the meaning of ‘occasionally’ and ‘not ongoing’ may
be a matter that is decided by the tribunals or the courts. There are
some helpful case examples in the Explanatory Memorandum(15)
providing some clarity as to the intention of ‘occasionally’ and ‘not
ongoing’, but interpretation may be subject to some dispute or contention
as cases come close to the definition.
The proposed sub-section 94(2)(b)(i) deletes the previous ‘educational
or vocational
training or on-the-job training’ and replaces it with ‘training activity’.
Training activity is proposed to be defined as including:
- education,
- pre-vocational training,
- vocational training,
- •vocational rehabilitation, and
- work-related training (including on-the-job training).
This is a much broader definition of training than the current ‘educational
or vocational
training or ‘on-the-job training’ definitions being:
"educational or vocational training" does not
include a program designed specifically for people with physical, intellectual
or psychiatric impairments;
'on-the-job training' does not include a program designed
specifically for people with physical, intellectual or psychiatric impairments;(16)
The current ‘educational or vocational
training or on-the-job training’ definition in 94(2)(b)(i) deliberately
and specifically excluded any reference to programs designed specifically
for people with physical, intellectual or psychiatric impairment. This
provision goes back to the introduction of DSP in November 1991 and was
done so that where it was considered a claimant could be rehabilitated
and/or trained to work for more than 30 hours a week within 2 years, they
could initially gain access to DSP but would then be taken off DSP (over
the next two years), as they were exposed to that appropriate rehabilitation
and/or training. In most cases this exposure to rehabilitation and/or
training has not happened and these claimants have remained on DSP.
The proposed changes to the DSP qualification requirements means that
where a person is assessed as not being able to work for at least 15 hours
a week now, but is considered to be able to work for more than 15 hours
a week in the next two years without ongoing assistance. Access to DSP
will be more difficult.
The Bill proposes to insert a new definition of ‘partial capacity to
work’ using a new section 16B. This will be used for those assessed as
being able to work for more than 15 hours a week (and therefore do not
qualify for DSP), but are able to work for less than 30 hours a week independently
of a program of support and where no training or assistance program will
increase their work capacity to over the 30 hours a week in the next two
years. These persons are to be provided with ‘enhanced’ NSA/YA or PP.
There has not been nor has there been a need for a definition of ‘partial
capacity for work’ in the SSA before. Where a person did not meet the
requirement of being unable to work for 30 hours a week or more, it was
just assumed that they had a sufficient work capacity to work part-time
work or even for some full-time.
Even under the new lower qualification requirement
of 15 hours a week work, a DSP qualified recipient may work 14 hours a
week and continue to receive DSP (subject to the income test being met),
so long as the recipient is unable to work for 15 hours a week or more.
This new ‘partial capacity for work’ definition in the SSA is likely to
be used for those recipients on ‘enhanced’ NSA and PP, who can be required
to undertake work enhancement activities like training, job search activities
and even a program of work. These persons might have work enhancement
activities modified or reduced recognising their reduced work capacity.
The proposed new section 94A would allow qualification for DSP where
a two year income support recipient (not on DSP) has a second assessment
and is assessed as being unable to work for at least 15 hours a week.
The proposed amendment to the DSP ‘continuing inability to work test’
discussed above relates to being unable to work for at least 15 hours
a week at assessment and also for the next two years without ongoing assistance.
This could apply in cases where a person paid NSA and receives some work
enhancement assistance over that two year period, and is again assessed
as being unable to work for at least 15 hours a week. In this sort of
case, the person could qualify for DSP. This access to DSP on the second
assessment is not to be retrospective, only prospective, that is from
the date of the second assessment.
To qualify for DSP under the proposed section 94A there are other requirements
that will also need to be met:
- the Secretary is satisfied that the person has a current continuing
inability to work (that is, is unable to work for at least 15 hours
a week or more),
- is currently in receipt of an income support payment (other than
DSP),
- has been continuously in receipt of that payment for two or more
years,
- it is two years or more since a previous assessment as to continuing
inability to work requirements for DSP has been made, and
- the person has complied with any training activities required of
the person during the two year period.
This proposed new section 94A is beneficial legislation in that it will
prevent rolling non-qualification for DSP for claimants who are repeatedly
assessed as being unable to work for 15 hours a week but able to work
for more than 15 hours a week in the next two years, and yet after intervention
in that two years, are again similarly assessed.
Generally speaking the tightening of the DSP qualification requirements
will see fewer people with a disability qualifying for DSP and being alternatively
provided with ‘enhanced’ NSA. The Australian Council of Social Service
(ACOSS) has predicted that the changes to the DSP qualification requirements
will have a greater affect on people with a disability in regional/rural
areas.(17) In response, the Government has suggested that
many of these persons will be better off as they are encouraged and supported
to maximise their own self-support from employment.
Those who claimed DSP on or before 11 May 2005 will not be affected by the continuing
inability to work changes. They will continue to be assessed and reviewed
against the current inability to work test, being the 30 hours a week
test.
Persons who claimed DSP between 11 May 2005 to 30 June 2006 will also be assessed against the current continuing
inability to work for 30 hours a week test. However, when they are subsequently
reviewed (every two or five years) it will be against the proposed 15
hour test. Where it is later assessed that they do not meet the 15 hour
test, they will be transferred to ‘enhanced’ NSA and required to seek
part-time work.
Persons who claim DSP on or after 1 July 2006 will need to meet the proposed 15 hours
a week test. Where a claimant is not qualified for DSP, as they do not
meet the 15 hour a week test, and it is assessed that they can work for
between 15 to 29 hours a week, they may qualify for ‘enhanced’ NSA and
will be required to seek part-time work.
Some estimates of the impact of this policy change have been provided
in a response to a Question on Notice at Senate Estimates for the 2005-06
Budget from Senator Penny Wong by the Department of Workplace Relations
(DEWR):(18)
Senator Wong asked:
Question: Out of the 70,000 grants a year for
Disability Support Pension, how many fall between the 15-29 work capacity
cohort?
Answer: Approximately 14,200 of the 73,500 people
granted DSP between 20/9/03
and 20/9/04 have an assessed work capacity
of 15 to 29 hours per week.
Therefore approximately 20 per cent of DSP claimants who claimed from
11 May 2005 to 30
June 2005 may be affected. It may therefore also be estimated
that for those who claim from 1
July 2006, about 20 per cent might be affected.
Some further figures about anticipated numbers of DSP recipients and
new claimants affected were supplied in answers to further Questions on
Notice from Senator Wong at 2005-06 Budget
estimates – see below:
Senator Wong asked:
How many people who would previously have been on the DSP will be on
enhanced Newstart under the Welfare Reform package?
Answer:
The estimated costs of the Welfare to Work package included, amongst
other things, the impact of the following number of people who would
have been on DSP, but will instead be on Newstart Allowance, as a result
of the Welfare to Work package:
- 34,400 in 2006-07;
- 57,900 in 2007-08; and
- 75,700 in 2008-09.
These costing estimates include people who will be granted DSP between
11 May 2005 and 30 June 2006 and will be reviewed with some (those with
15-29 hours per week capacity) transferring to Newstart Allowance as a
result of the review process. These estimates represent annual average
impacts for the relevant year, and have been rounded to the nearest 100.(19)
The government announced in the 2005-06 Budget the extension of the seasonal
work preclusion period (SWPP) to all the income support payments for the
working aged and a broadening of the SWPP provisions to also refer to
highly paid contract and intermittent workers.(20) Various
Schedules and Parts of Schedules in this Bill propose to amend the SSA
so that the SWPP will also apply to DSP, Carer Payment, PP - Single, Austudy
payment and Sickness Allowance from 20 September 2006.
The SWPP was originally introduced with the passage of the Social
Security and Veterans' Affairs Legislation Amendment (Budget and Other
Measures) Act 1997. See Bills Digest
No. 138 1997-98.(21) The original SWPP (described below) was
designed to prevent high income seasonal workers, intermittent and contract
workers from accessing income support payments between seasons or between
contracts.(22) It was designed to address the issue of seasonal
abattoir workers in northern Australia working in remote locations for
six months of the year then claiming unemployment payments for the other
six months. These workers had very little prospect of finding alternative
employment in the six month lay-off due to their remoteness. Often these
workers were paid penalty rates when working, recognising that their work
was seasonal. The same issues applied to other seasonal workers like
seasonal fishing industry workers.
Currently the SWPP applies to the following payments:
- newstart allowance
- partner allowance
- •mature age allowance
- youth allowance – unemployed jobseekers
- widow allowance
- parenting payment - partnered
The Secretary determines what work is seasonal work under sub-section
16A(2) of the SSA and the determination is a disallowable instrument placed
before the Parliament.(23) Commonly, seasonal work refers
to work that is performed for only part of the year and is often linked
to primary production.
The SWPP period a claimant might have to serve is calculated on an individual
basis. The calculation takes into account the number of weeks worked,
the period of weeks since they last worked prior to claiming assistance
(that is the self-support weeks) and how much earnings the person earned
when working, calculated against average ordinary time weekly earnings.
Often seasonal workers are provided with a lump-sum payment or a retainer
at the end of the season and this can also be regarded when calculating
the SWPP.
The SWPP only refers to seasonal work performed in the six month period
prior to the date of claim for payment. The SWPP may not apply where
the claimant is in severe financial hardship that is unforseen.
Part 2 of Schedule 1 proposes to expand the definition of seasonal
work for the purposes of the SWPP to include work that is:
- intermittent,
- is less than for 12 months,
- was for a specific task, and
- for which the person did not include any leave entitlements.
This is an expansion of the definition of seasonal work and will see
the SWPP applied to a greater range of casual work.
The 2005-06 Budget papers anticipate the extension of the broadened SWPP
(and the expansion of the Income Maintenance Period (IMP)) provisions
to all of the current income support payments for persons of working age
will save $43.0 million in 2006-07, $62.1 million in 2007-08 and $63.8
million in 2008-09.(24) These savings of $176.1 million over
four years are for all the payments proposed to gain the SWPP and the
IMP. No discrete savings figure for the expanded SWPP alone was provided
in the Budget papers.
Currently the SWPP is mainly applied to NSA/YA and the expansion of the
SWPP to DSP, Carer Payment, PP – Single, Austudy payment and Sickness
Allowance will mean the SWPP will apply to all income support payments
for the working aged.(25)
It is not likely that there will be many DSP claimants who will be subject
to the SWPP, as it is probably not likely that many DSP claimants, who
qualify under the 15 hour a week rule, will also have been seasonal or
highly paid contract or intermittent workers. The other payments will
probably have a higher incidence of the SWPP being applied.
Parenting Payment was introduced in March 1998 by the merger of Parenting
Allowance (PgA) and Sole Parent Pension (SPP).
PgA had been an income support payment for partnered parents who were
the primary carer for their children. It was paid at the same rates and
under similar income and asset tests to allowances such as Newstart Allowance
or Sickness Allowance.
SPP had been an income support payment for single parents caring for
dependant children. It was paid at the higher pension rate and under
the more generous pension income and assets tests.
The new Parenting Payment brought income support for all low-income parents
who were primary carers together. However the rates and eligibility conditions
for the two superseded payments were largely unchanged resulting in separate
rate and eligibility structures for Parenting Payment - Single (PP - Single)
and for Parenting Payment – Partnered (PP – Partnered).
McClure Report
In July 2000 the final report of the Reference Group on Welfare Reform
was delivered to Senator Newman the then Minister for Family and Community
Affairs.(26) The Group, chaired by Patrick McClure of Mission
Australia, had been commissioned in October 1999 to advise the Government
on possible approaches to welfare reform.
The McClure
Report recommended the extension of a form of mutual obligation to
parents receiving income support that took account of their caring responsibilities,
while preparing them for workforce re-entry. Recommendation D12 read
as follows:(27)
Implement, with phased transitional arrangements, a participation
model of income support for parents with the following features:
- The substantial caring responsibilities of those with children
under school age (six years of age) and those caring for a child with
a disability be regarded as meeting participation requirements.
- Parents with primary school aged children (six to thirteen years
of age) be required to attend an annual compulsory interview to discuss
their current and future capacity for increasing participation.
- Parents could choose to enter into a voluntary participation plan,
which linked them to available assistance for education, training,
employment and other forms of participation. Parents of high school
aged children (thirteen and over) be required to enter into a Participation
Plan, including job readiness and needs assessment, part-time job
search, part-time employment or part-time preparation for paid employment
(including education, training, or other relevant forms of participation).
Parents receiving income support had been able to continue for many years
without actively preparing for self-support at a time when they no longer
had dependent children. Participation in measures to assist them to prepare
for that eventuality have been entirely voluntary. Many parents, when
their children reached 16 years of age, had difficult transitions back
into the workforce, because of the erosion of their skills and loss of
networks.
The McClure Report refers to a pilot study by the Department of Family
and Community Services (FACS) that suggested that few of this group participate
voluntarily in programs like the Jobs Education and Training Program (JET).
The results suggested that there is a low uptake in voluntary interviews,
making them 'relatively ineffective'. On the other hand, compulsory interviews
were found to be valuable and were supported by a majority of participants.
The McClure Report concluded that:
'For most groups, it appears as if a structured approach
within a requirement framework provides the best measure of assistance
for Parenting Payment recipients.'(28)
The Government's response to the McClure Report was the ‘Australians
Working Together’ Package (AWT) in the 2001-02 Budget. The Government
addressed the McClure Report recommendations in the following form:
- From September 2002, people who receive PP and whose youngest child
was aged 12 to 15 years were required to attend an annual interview
with a Centrelink Personal Adviser. From July 2003 they were expected
to undertake part-time activity of around six hours each week. A system
of participation agreements and participation agreement breach penalties
was introduced. Access to approved work programs (Work for the Dole)
and the supplement of $20.80 per fortnight was also provided.
- From July 2003, all people who received PP and whose youngest child
was aged 6 to 15 years were required to attend annual interviews at
Centrelink.
- A New Transition to Work program to help people return to paid work
after long absences was introduced. It built on the Jobs, Education
and Training (JET) and Return to Work programs processes.
- Additional assistance with child care was provided.
Those parts of the AWT package requiring legislative amendments were
delayed by opposition to the package in the Senate. The amending legislation
entitled the Family and Community Services Legislation Amendment (Australians
Working Together and other 2001 Budget Measures) Bill 2003 introduced
into the Parliament in May 2002 but was not passed until March 2003.
See Bills Digest
No. 159 2001-02.(29) The AWT Bill required that an evaluation
of the AWT package be conducted. The report of this evaluation was released
in October 2005.(30)
2005-06 Budget – PP reforms in Welfare to Work
The AWT package was the first round response by the Government to the
McClure Report. The 2005-06 Budget provided a second round of reforms
to Parenting Payment. Minister Andrews
said this of the reforms in his press
release:
The 2005-06 Budget invests $389.7 million over four years
to help parents into work. A significant increase in employment services
will be combined with changes to income support payments and participation
requirements for single and partnered parents with school-aged children.
These changes are designed to assist, support and encourage parents
to return to work when their children are old enough to go to school.
“The changes are designed to increase the workforce participation of
parents and reduce their dependency on welfare. The best way to help
parents and their children is to help the parents find a job. This change
is in step with current community attitudes,” said Mr
Andrews. “Children growing up in a jobless household
often face greater disadvantage in their community and an increased
chance of becoming welfare-dependent as they leave school.”(31)
The Budget announcement proposed the following changes to Parenting Payment:(32)
- People receiving Parenting Payment on 1 July 2006 would be required to seek
part-time work of at least 15 hours per week once their youngest child
reached the age of six years. They would be able to continue to receive
Parenting Payment until their youngest child reached the age of sixteen
years.
- People applying for Parenting Payment after 1 July 2006 would only qualify until
their youngest child reached the age of six years. At that time they
would transfer to ‘enhanced’ NSA and be required to seek part-time work
of at least 15 hours per week.
- Parents with a youngest child aged between six and fifteen years
applying for income support from 1 July 2006 would go straight on to ‘enhanced’ NSA with the
requirement to seek part-time work of at least 15 hours per week.
- The requirement to seek work could be satisfied by job search, participating
in Job Network or other services or other mutual obligation activities.
- The work requirement would be modified in special family circumstances
such as having a child with a disability.
- Sole parents receiving ‘enhanced’ NSA would have access to Pharmaceutical
Allowance, a Pensioner Concession Card and Employment Entry Payment.
- The NSA income test would be eased by reducing the 70 per cent taper
rate to 60 per cent(33) and increasing the threshold at which
it comes into effect from $142 per fortnight to $250 per fortnight.
These reforms are the subject of the present
Bill.
Since the initial announcement the package has been modified in a number
of ways. In September 2005 changes to the Carer Payment were announced
which broadened the eligibility for carers of children with severe disabilities.
The change was in part prompted by the need to provide for PP recipients
who would otherwise be required to seek part-time work under the welfare
to work measures announced in the Budget(34). As this measure
is not included in the present Bill, it may be expected to be dealt with
in the form of amendments to this Bill or in a subsequent Bill.
The following changes were announced just before the Bill was introduced
to Parliament and are included in this Bill:
- Sole parents will be able to remain on Parenting Payment until their
youngest child reaches the age of eight years. They will however still
be required to seek part-time work once their youngest child reaches
six years of age.(35)
- Parents on NSA or Youth Allowance (YA) or other allowance payments
and who are the ‘principal carer’ or are a ‘registered and active foster
carer’, or a ‘home educator’ or a ‘distance educator’, as defined in
Schedule 1 of this Bill, will automatically be exempt from the
part-time work requirements. Sole parents in this category will receive
a higher rate of NSA/YA, which will bring their income support payment
up to the equivalent of the PP –Single rate.(36)
- The legislative definition of unsuitable work will be adjusted for
parents so that:
‘Parents will not have to accept a job if there is
no appropriate schooling or outside school hours care available
at the times they are expected to undertake the work, or if the
costs of outside school hours care make the job financially unviable.
Nor will parents have to accept a job if the travel
to and from the place of employment is unreasonably difficult, that
is, if it is too long or expensive. The guidelines to the Act will
state that a general travel time rule of more than 60 minutes is
to be considered unsuitable for commuting between home and work
and vice versa. The job seeker will be not be required to accept
job offers exceeding the 60 minute travel rule.
Job seekers will also not be expected to take a job
if their travel costs are likely to exceed 10% of their gross wage.’(37)
On 9 November 2005 the Senate referred the Bill to the Senate Community
Affairs Committee for inquiry and report by 28 November 2005.(38)
The Committee received over fifty submissions.(39) The Committee’s
report was published on 29 November 2005.(40)
The package of measures designed to address welfare to work for parents
involves expenditure of $389.7 million over 4 years.(41) The
changes to PP eligibility will result in reductions to the forward estimates
for that payment and increases to the forward estimates for those payments
such as NSA. Estimates provided in the Budget Estimates:(42)
The estimated changes to income support payments administered
by the Department of Employment and Workplace Relations as a result
of the Welfare to Work, increasing participation of parents measure
are:
Estimated Payment Cost ($m)
| Parents
– Income Support Payment: |
2006/07 |
2007/08 |
2008/09 |
3 Year Total |
| Disability Support Pension |
0.364 |
29.117 |
46.526 |
86.007 |
| Newstart |
186.704 |
518.216 |
818.088 |
1,523.008 |
| Pensioner Education Supplement |
-6.370 |
-6.565 |
-6.716 |
-19.651 |
| Parenting Payment Partnered |
75.039 |
78.251 |
75.077 |
228.367 |
| Parenting Payment Single |
-302.556 |
-748.566 |
-1,191.062 |
-2,242.194 |
Note: 1 Slight discrepancies may occur between the sum of
the three years and the total figure due to rounding. 2 There are no
administered costs for income support payments in 2005-06.
This data indicates that the increased expenditure identified in the
Budget will in large part be offset by the reduced expenditure in the
PP.
The adjustments to the original package in relation to the obligations
required of ‘principal carer’ parents may arguably significantly influence
the effectiveness of the reform program. See also discussion below in
relation to Schedule 5 – Part 2 (YA), Schedule 7 – Part 2 (NSA), Schedule
10 – Part 1 (Special Benefit) – Participation.
The Bill provides for exemptions from the participation requirements
for NSA and PP where:
- Recent domestic violence has occurred,
- Care of children with disabilities are involved,
- The parent is a foster carer,
- The parent is a Home educator or distance educator, or
- The parent fits into a class of people determined by legislative
instrument.
The last group could include people in a diverse set of circumstances
according to the DEWR submission to the Senate inquiry.(43)
The Explanatory Memorandum specifically mentions that principal carers
with large families are likely to be included.(44)
The definition of unsuitable work is also modified in the Bill to take
account of ‘principal carers’ particular circumstances, particularly in
relation to access to appropriate child care and limits to travel times
and costs. The DEWR submission gives some detail on how this is likely
to operate.(45)
At present section 501B(2) of the SSA sets out the approved activities
that can be used to satisfy the requirements of a Parenting Payment participation
agreement.
The Bill replaces this approach with a statement that a person can be
required ‘to undertake activities that the Secretary regards as suitable
for the person’ in new section 501A.(1) – see discussion about Schedule
5 – Part 2, Schedule 7 – Part 2, Schedule 10 – Part 1 – Participation
in this Digest. The Secretary may however determine by legislative instrument
requirements that cannot be made under an activity agreement. According
to the Explanatory Memorandum this new approach is ‘less restrictive and
more flexible’ but ensures that jobseekers are ‘not permitted or compelled
to undertake activities that are not consistent with the Government’s
policy intention’.(46)
The original Budget announcement made it clear that ‘principal carers’
will be required to seek part-time employment of at least 15 hours per
week.(47) However, the Bill makes it clear that they may be
required to undertake work of up to 25 hours per week provided it was
not unsuitable work and that was within their capacity (taking into account
such things as child care and travel). This has come as something of
a surprise to some interested sections.(48)
ACOSS and others have expressed reservations about the shift from pensions
to benefits for many people with disabilities and for sole parents. In
their response to the Government proposals in July they had this to say:(49)
We acknowledge and support the main elements of the investment
needed to get jobless people into employment. However, as it is presently
structured, the “Welfare to Work” package has critical weaknesses that
will reduce the employment gains and push many people into poverty.
It is of deep concern to us that the Welfare to Work
package diverts many future applicants for income support from pensions
down to lower allowance payments – sharply reducing their income support…
The Government has acknowledged that the present division
between pensions and allowances for people of workforce age is unfair
and discourages participation in the workforce. By making pensions harder
to get in future, the Welfare to Work package entrenches these problems.
There is no need to reduce people’s future payments to help them into
employment.
The National Council of Single Mothers and their Children in their submission
to the Senate inquiry had this to say on the same subject:(50)
The legislation will increase financial hardship and
reduce social security protections for vulnerable families. Children
in single parent households will have reduced access to parental care
and income support can be more easily stopped with fewer protections
from unfair and ill-informed decisions. The legislation seriously erodes
the social safety net for single parents and their children and the
consequences of this will have the highest adverse impact on the children
whose families are further impoverished.
The Government view of the impact of these Welfare to Work changes is
clearly expressed in the second reading speech:
Moving from welfare to work helps people achieve higher
incomes and a better standard of living, participate in mainstream social
and economic life and achieve a better future for their families. It
also reduces the obligation on taxpayers, creating a positive cycle
of work, higher incomes and more sustainable and better targeted welfare
expenditure.(51)
The Government has also provided estimates on the impact of the changes
on the number of people who are expected to be unable to qualify for PP
and the payments they are likely to receive instead.(52)
- In 2006-07, it is estimated that around 23,900 sole parents will receive
an alternative payment (to Parenting Payment Single) as a result of
the eligibility changes associated with the Welfare to Work reforms.
This estimate increases to around 63,100 in 2007-08 and around 95,100
in 2008-09.
- The estimated number of partnered parents who are expected to receive
an alternative payment (to Parenting Payment Partnered) is around 7,770
in 2006-07, increasing to around 19,400 in 2007-08 and 26,100 in 2008-09.
For costing purposes only, this group were treated as if they were remaining
on Parenting Payment Partnered after their youngest child turns six
rather than moving to another payment. As a consequence, there is no
breakdown of customers who were estimated to receive an alternative
payment to Parenting Payment Partnered (see part (d)). The vast majority
of this group will receive Newstart Allowance, which has the same rate
of payment as Parenting Payment Partnered, and therefore, this will
have a negligible cost impact.
- In 2006-07, it is estimated that around 100 people will receive no
payment as a result of the proposed changes to Parenting Payment eligibility
rules. This estimate increases to 1,600 in 2007-08 and 4,800 in 2008-09.
Please note that these figures are annual averages and have been
rounded to the nearest 100.
(d) In the main, people who do not meet the new eligibility requirements
for Parenting Payment may be eligible for:
- Newstart Allowance,
- Austudy,
- Disability Support Pension, or
- Carer Payment.
- Customers estimated to receive alternative payments other than PPS
| Payment
|
2006/7 |
2007/8 |
2008/9 |
| Newstart Allowance
|
21,800 |
57,300 |
86,200 |
| Austudy |
900 |
2,500 |
3,800 |
| DSP |
1,000 |
2,700 |
4,100 |
| Carer Payment
|
200 |
600 |
1,000 |
Notes: 1 These figures have been rounded to the nearest
hundred, and therefore components may not add to the total provided
in the first dot point of part (c).
1 These figures are annual averages.
1 These estimates do not include estimates of alternative
payments to PPP (see the answer to the second dot point of part (c)).
It should be noted that this data was provided before the post-Budget
modifications to the measures were announced.
Analysis of the impact of the changes was also undertaken by Ann
Harding and colleagues at the National Centre for Social
and Economic Modelling (NATSEM). Their research was summarised as follows:(53)
This report analyses the impact of the proposed changes
upon the disposable incomes and effective marginal tax rates of these
two groups of people. It shows that the disposable incomes of sole parents
can be up to about $100 a week lower under the proposed new system than
under the current system and that the losses for people with disabilities
could be as high as $120. It also finds that effective marginal tax
rates will be sharply increased under the proposed new system over a
reasonably wide range of earned income for these two groups of people.
A further paper from NATSEM examined options to reduce the adverse effects
identified. For sole parents the paper suggested that those receiving
allowances rather than parenting payment have access to the pensioner
tax offset rather than the allowance tax offset. This would both reduce
the drop in disposable income and the increase in effective marginal tax
rates resulting from a shift from parenting payment to an allowance.(54)
ACOSS has also provided some analysis of regional distribution of the
impact of the changes.(55) The report concluded that:
This research indicates that people living in regional
Australia,
in the north and west of the country, and in Coalition electorates will
be disproportionately affected by the cuts to future social security
payments proposed in the Government’s Welfare to Work policy…
ACOSS supports the Government’s objective to assist more
single parents and people with disability into employment. However,
it is not necessary to cut people’s future income support payments to
achieve this goal. The proposed cuts are actually counterproductive.
They would further constrain people’s ability to live in areas where
their job prospects are better and would drive more recipients into
areas where fewer jobs are available.
The Budget papers indicate that most of those persons unable to access
DSP because they can work for more than 15 hours a week, will be provided
with ‘enhanced’ NSA as an alternative income support payment. Similarly
with those no longer provided with PP – Single. However, despite more
being paid NSA with the reduction in numbers being paid DSP and PP, savings
will be realised for several reasons:
DSP and PP – Single is paid at a higher rate than NSA,
even the ‘enhanced’ NSA
- The DSP and PP – Single income test is less stringent than the NSA
income test with a higher free area(56) and lower taper rate,(57)
- Pensioner Education Supplement (PES) is paid attached to DSP but
not attached to NSA (note: some NSA recipients with a partial capacity
for work or are a ‘principal carer’ will continue to qualify for PES
– see below),
- DSP attracts the Pensioner Concession Card (PCC) which provides access
to a wider range of concessions than the Health Care Card (HCC) which
is provided with NSA (note: some NSA recipients with a partial capacity
for work or are a ‘principal carer’ will continue to qualify for a PCC),
- Reduced outlays on Pharmaceutical
Allowance (PhA) as most allowance payment (for example, NSA, YA,
Sickness Allowance, Widow Allowance) recipients do not qualify for PhA
(note: some NSA/YA recipients with a partial capacity for work or are
a ‘principal carer’ will continue to qualify for a PhA), and
- Reduced outlays on Employment Entry Payment (EEP) as the rate of
EEP paid to DSP recipients is higher than for other payments.
The current fortnightly maximum single rate of DSP is $488.90, whereas
the fortnightly maximum single rate of NSA is $404.50 - a difference of
$84.40 per fortnight.
Currently the DSP the income test for a single person has a free area
of $124 per fortnight and income above this reduces the maximum pension
rate by 40 cents in the dollar to a cut-out limit of $1 360.75 a fortnight.
For NSA the income test free area is $62, then income from $63 to $142
reduces the rate by 50 cents in the dollar and income above $142 reduces
the rate by 70 cents in the dollar to a fortnightly cut-out limit of $655.29.
The 2005–06 Budget proposed the 50 cents in the dollar withdrawal rate
apply to income from $63 to $250 and for income above this to reduce the
rate by 60 cents in the dollar. The amendments to the SSA to effect this
are largely presented in Schedule 19 of this Bill.
The PES of $62.40 per fortnight is payable to
DSP recipients undertaking the requisite amount of study but it is not
payable to NSA recipients doing the same study.
This Bill proposes that former DSP and PP – Single recipients who had
been receiving PES prior to moving on to NSA or YA will be able to retain
their PES, until they complete their present course of study. Also this
Bill proposes that former DSP recipients, who claimed between 11 May 2005
and 1 July 2006, will continue to receive PES as will former PP – Single
recipients who move to NSA/YA, because their youngest child reaches the
age of eight years.
Other allowance recipients, who would formerly have qualified for DSP
or PPS will not have access to the PES if they undertake the requisite
study.
This part of the Bill provides for the payment of a participation supplement
to DSP recipients participating in an approved program of work. The participation
supplement has its origins as an extra payment for those undertaking a
Work
for the Dole (WftD) program. The WftD supplement was introduced when
the WftD legislation was passed, see Bills Digest
No. 136 1996-97.(58) The WftD participation supplement is
currently $20.80 per fortnight. This Bill provides for the payment of
the same amount to DSP recipients.
The original purpose of the WftD participation supplement was to assist
persons undertaking a WftD program meet the extra costs of participation,
for example transport, clothing, food.
The participation supplement to DSP recipients undertaking an approved
program of work was not provided for in the 2005-06 Budget.
Given the new 15 hours a week test (for new claims from 1 July 2006),
most of the DSP recipients who will probably participate in an ‘approved
program of work’ will be those recipients granted DSP before 11 May 2005
who originally qualified under the 30 hours a week incapacity for work
rule. The participation supplement will provide an added financial incentive
for DSP recipients to participate in a program of work.
RapidConnect was announced in the 2005-06 Budget.(59) This
Bill proposes to apply the new RapidConnect requirements to unemployed
jobseekers claiming either NSA (Schedule 7 – Part 1) or YA (Schedule 5
– Part 1). RapidConnect was explained by the Minister for Workforce Participation,
the Hon. Mr Peter Dutton, MP on 10 May 2005 in the context of the 2005-06 Budget.(60)
Under the current NSA/YA claim and payment commencement processes, it
can take as much as 3 – 4 weeks before a jobseeker claiming NSA/YA registers
with a Job Network provider.
Essentially the revised NSA/YA ‘RapidConnect’ claim processes presented
in this Bill are designed to require an unemployed jobseeker claiming
NSA/YA to register with a Job Network provider as a jobseeker and to sign
up to a job search activity agreement at the earliest time in the NSA/YA
claim process, even before actually lodging a claim for NSA/YA with Centrelink.
The proposed changes in this Bill will make it a qualification requirement
that the jobseeker register with a Job Network provider. In some cases,
even the date of commencement of NSA/YA payment may be delayed where the
registration with the Job Network provider is delayed.
The Government’s argument for these revised claim processes is essentially
presented in the Explanatory Memorandum; that is the jobseekers chances
of being assisted and provided with employment are enhanced the earlier
the jobseeker is registered with a Job Network provider.(61)
The usual steps taken by an unemployed jobseeker claiming NSA/YA at present
are set out below:
- Unemployed jobseeker contacts Centrelink to register an interest
in claiming NSA or YA (or actually lodges a NSA/YA claim form with Centrelink).
- Jobseeker attends an interview at Centrelink where NSA/YA claim,
payment processes and the mutual obligation (MO) requirements are explained.
MO requirements feature the requirements to hand fortnightly forms in,
to attend interviews and to look for work. Another MO requirement,
which is to register with a Job Network provider is explained. Jobseeker
is issued with NSA/YA claim form (if not already lodged a claim) and
other papers necessary for the determination of qualification and payment
rate, for example income and assets, proof of identity, living arrangements,
partner’s details.
- Jobseeker completes all the NSA/YA claim papers and processes, like
proof of identity, proof of income and assets, living arrangements etc
and provides them to Centrelink.
- Jobseeker is provided with a Jobseeker Provider Number by Centrelink
to take to register with a Job Network employment placement assistance
provider.
- A determination of NSA payment qualification and payment rate made
by Centrelink.
- Jobseeker hands in first fortnightly NSA continuation form declaring
any income earned in the fortnight and efforts to find work.
- First fortnightly NSA payment made on the basis of information provided
on the fortnightly form.
- Jobseeker registers with Job Network provider.
RapidConnect is designed to move Step 8 above up to Step 2. Therefore
until the jobseeker registers with the Job Network provider as a jobseeker,
the rest of the NSA/YA claim processes are not advanced by Centrelink.
If the registration with a Job Network provider by the jobseeker is undertaken
within 14 days of registering an interest with Centrelink to claim NSA/YA,
then payment will be made from the earliest date of commencement (subject
to any waiting and deferment periods). However, if the jobseeker registers
with the Job Network provider more than 14 days after registering an interest
to claim NSA/YA with Centrelink, then payment will commence from the day
of Job Network registration (subject to any other waiting or deferment
periods).
The amendments for RapidConnect place new qualification requirements
on jobseekers. One of these is the requirement to attend an interview
at a specified time and place with a Job Network provider. If this is
not met then the NSA/YA claim can be rejected. The Secretary has the
discretion to waive, or change the requirements or deem that they have
been met.
RapidConnect is anticipated to save $7.7 million over 4 years.(62)
RapidConnect involves a jobseeker registering a NSA/YA claim or expressing
an interest in claiming with Centrelink and then being told to attend
an interview with a Job Network provider, in another place with another
organisation. There is significant potential for confusion unless this
process is explained, communicated and managed very well.
The Australian National Audit Office (ANAO)
in its August 2005 report made some critical; observations about computer
networks between DEWR and Job Network providers.(63) The criticisms
centred on computer systems problems between DEWR and Job Network providers(64)
and about low jobseeker attendance at jobseeker interviews with Job Network
providers.(65) Addressing these problems was a feature of
the implementation of the Employment Services Contract No. 3 (ESC3) from
1 July 2004.(66)
The estimated $7.7 million is savings over four years is relatively small
in the context of the total cost of NSA/YA claim processes.
This focus on Job Network registration is possibly related to the change
in administration of the NSA/YA programs from the Family and Community
Services portfolio to DEWR.
The Parts in this Bill titled ‘Participation’, provide special work and
activity test rules for jobseekers claiming, or being paid NSA/YA, who
have a long-term medical condition and a partial capacity for work and
also for ‘principal carers’, who do not qualify for PP. Theses are jobseekers
who do not qualify for DSP, under the new proposed 15 hours a week continuing
inability to work test, so therefore can work for 16 hours a week or more
but are unable to work full-time. They are also the ‘principal carers’
who do not qualify for PP because of the age of their youngest child.
Also see the comments on PP and participation in Schedule 4 above.
The NSA/YA work test has never been a full-time work test. Essentially
work that an unemployed jobseeker on NSA/YA can be required to look for
and do is suitable paid employment (sub-section 601(1) of the SSA). Suitable
work is not restricted to a person's traditional occupation or to work
that they would prefer to do. Jobseekers are encouraged and required
to look for all types of suitable work, that is all work that a jobseeker
is capable of performing. Where a jobseeker is capable of work, that
is up to full-time work, then that is the work they are required to look
for and accept. This flows through to the work search activity test requirements,
so that jobseekers are required to search for work in a wide range of
suitable areas and without a reasonable excuse, may be subject to an activity
test breach.
Jobseekers, who due to ‘principal carer’ status or due to their incapacity,
are not able to work full-time or are restricted to a limited range of
positions, are expected to look for work to their capacity. Amendments
presented in this Bill will mean that a jobseeker in this situation who
is undertaking work up to their capacity, will satisfy the activity test.
The legislative rigour behind activity test requirements has stemmed
from the words in section 601(1) of the SSA:
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.
If a jobseeker did not attend an interview, didn’t attend a training
course or did not take on a reasonable job offer, then a breach or even
cancellation of payment could be made on the grounds that the ‘Secretary
was no longer satisfied the jobseeker was actively seeking and willing
to undertake suitable paid work’.(67) In the early 1990s,
some specific activity test requirements were itemised in the SSA, like
attend a training program, attend an interview. The AWT initiative continued
this trend.(68)
The amendments to the activity test requirements proposed in the ‘Participation’
sections of this Bill spell out in more specific detail what the activity
requirements and work participation requirements are for jobseekers with
a disability and with a reduced work capacity and also for jobseekers
who are ‘principal carers’ of a child.
The amendments to the SSA in the ‘participation’ parts of the Bill also
change what is to be accepted as ‘unsuitable paid work’.
The ‘participation’ provisions for jobseekers with a restricted work
capacity due to a medical condition and those with ‘principal carer’ status
include:
- The requirement to attend an interview and/or enter into an activity
agreement to qualify for NSA/YA.
- The power for the Secretary to still consider a person as ‘unemployed’
even though they are working, or involved in an approved activity, to
the maximum of their restricted capabilities. This means they can still
qualify for NSA/YA.
- The power for the Secretary to regard the ‘principal carer’ of a child
or a person with a partial work capacity to be considered as unemployed
and also satisfying the activity test if work for at least 15 hours
a week.
A person satisfies the activity test requirements if directed to undertake
suitable paid work and they comply with that directive.
Essentially work that an unemployed
jobseeker on NSA/YA can be required to do is ‘suitable paid’ employment.
This arises from sub-section 601(1) of the SSA.(69) And also
for activity test compliance purposes from sub-paragraph 541(1)(b) of
the SSA.(70)
Correspondingly there is also a description
in the SSA of what is ‘unsuitable’ paid work in sub-paragraph 541(D)(1)(e).(71)
Unsuitable paid work - What is unsuitable paid
work
541D.(1) Subject to subsections
(1A) and (1B),
for the purposes of section
541, particular paid work is unsuitable for a person if, and only
if, in the Secretary's opinion: (e) the work would be covered by an
industrial award but the employer would only employ the person if the
person agreed to become a party to an agreement reducing or abolishing
rights that the award confers on employees; or
This Bill proposes to replace sub-paragraph
(e) in 541(D)(1)(e), which refers to work below award conditions with
a reference to the work covered by the an Fair Pay and Conditions Standard
(AFPACS). The AFPACS are provided for in the Workplace Relations Act
1996 (WRA), which is currently subject of amendment by the Workplace Relations
Amendment (Work Choices) Bill 2005.(72) See Bills Digest
No. 66 2005-06.(73) This may see ‘suitable work’ that a jobseeker
may be required to do being work that is remunerated at less than current
awards conditions.
The SSA sets out in section 541(D)(2)
a 90 minute limit (each way) as a reasonable commuting distance to ask
a jobseeker to attend a job. The 90 minute limit is not a restriction
on the Secretary in forming another opinion as 541(D)(3) allows.(74)
Even though the Secretary has this discretion the Explanatory Memorandum
states that the intention behind repeal of 541(D)(2) and 541(D)(3) is
‘to allow flexibility in dealing with the concept of unreasonably difficult
commuting’.(75)
This Bill includes many new provisions that describe when a jobseeker
is required is to undertake certain actions, like attend an interview,
or undertake a program of work. It also proposes to repeal some existing
provisions that currently describe when the Secretary cannot ask a jobseeker
to undertake a program of work such as when:(76)
- the person has an illness, disability or injury that would be aggravated
by the conditions in which the work would be performed
- performing the work would constitute a risk to health or safety or
would contravene a law of the Commonwealth, a State or a Territory relating
to occupational health and safety
- or the program of work requires the person to move from a home in
one place to a home in another place.
The Bill proposes to remove the words ‘take reasonable steps to’ from
several sections in the current SSA. Items 11, 33, 35, in Part
2 refer.
As the provisions currently stand in the SSA, where a jobseeker made
every reasonable effort to comply, there is discretion to not remove their
temporary incapacity for work exemption. For example section 542(B)(1)
prescribe when a jobseeker would have their temporary incapacity for work
exemption revoked on account of not complying with activity test requirements.(77)
The removal of these words from the SSA will remove the jobseeker’s rights
to argue they were not able to comply for reasonable reasons beyond their
control, for example a sick child. The Secretary will still have discretion
as to whether to withdraw the jobseeker’s temporary incapacity for work
exemption, but this is a diminution of jobseeker’s rights as they currently
exist in the SSA.
The Bill proposes to insert into the SSA new categories of exemption
for jobseekers to undertake a program of work. In doing this the Bill
removes the voluntary work exemption, which is not replaced, presumably
because voluntary work is no longer to be classified as an activity for
the activity test or for the activity agreement exemption.
These new sections also empower the Secretary to change the categories
of activity test exemptions (add or delete) by way of a Legislative Instrument.
Legislative Instruments are subject to some scrutiny of Parliament.(78)
Essentially a Disallowable Instrument sits on the notice paper before
parliament for 15 sitting days. If it is not amended or rejected by a
vote of either House of the Parliament in that 15 day period, it then
becomes a matter of law.
The proposed amendments set out some circumstances where
the Secretary may exempt a person from the participation requirements;
for example attend a training program or undertake a program of work.
‘Home educator’ is defined in the proposed section 5C in Schedule 1 of
the Bill. However, there is no explanation or justification provided
as to why a jobseeker who choses to educate their child at home, as opposed
to sending their child to a school, should be provided with a blanket
exemption. Likewise the same issue arises for ‘distance educators’, as
is defined in section 5D in Schedule 1 of the Bill.(79)
Currently, the detailed activity test requirements that a jobseeker can
be asked to comply with are spelt in section 544(B)(1) of the SSA.(80)
Youth Allowance
Activity Agreements-terms - Approved activities
544B.(1)
A Youth Allowance Activity Agreement with a person is to require the
person to undertake one or more of the following activities approved
by the Secretary:
(a) a job search;
(b) a vocational
training course;
(c) training that
would help in searching for work;
(d) paid work experience;
(e) measures designed
to eliminate or reduce any disadvantage the person has in the labour
market;
(f) subject to subsection
(7)-an approved
program of work for income support payment;
(g) subject to section
544D-development of self-employment;
(h) subject to section
544E-development of and/or participation in group enterprises or
co-operative enterprises;
(i) participation
in a labour market program conducted by the Department;
(ia) participation
in the PSP;
(j) participation
in a rehabilitation
program;
(k) a course of
education;
(l) an activity
proposed by the person (such as unpaid voluntary work proposed by the
person).
The Bill proposes to repeal these specific activity test requirements
from the SSA and have them replaced with the power for the Secretary to
specify in a Legislative Instrument what the requirements are.
The amendments detailing that a person is still ‘unemployed’ while working
or being active to the maximum of their capacity is a long needed amendment.
This is made necessary by the fact there will be far more jobseekers on
NSA/YA for the long-term, with restricted work capacities, arising from
the tightening of the DSP qualification requirements.
The alteration to the definition of ‘unsuitable’ work in sub-paragraph
541(d)(1)(e) in the SSA will refer to all jobseekers claiming/receiving
NSA/YA or any other work search activity tested payment like Widow Allowance,
Mature Age Allowance, Partner Allowance, Parenting Payment – Partnered
and Single. The concern is that suitable work now includes work remunerated
at less than award conditions and that unemployed jobseekers may be required
to undertake such work and fai | 
