On 9 February 2012 the Senate referred the Social Security and Other
Legislation Amendment (Income Support and Other Measures) Bill 2012 (the Bill)
to the Community Affairs Legislation Committee (the committee) for inquiry and
report by 19 March 2012.
The committee received 9 submissions, and considered the evidence
received in each one. The Australian Youth Affairs Coalition, the National
Council of Single Mothers and their Children, the Australian Welfare Rights
Network and the Australian Council of Social Security wrote to the committee to
request that hearings be held in relation to this inquiry. However, the
committee received high quality submissions from stakeholders, including those
named. It is normal practice for a bill inquiry to proceed on the basis of
written submissions in such cases. As part of that process, the committee also
wrote to the Department, seeking its response to key issues raised by
stakeholders. The committee assures all those who made submissions that their
evidence has been considered, and referred to, in this report.
A list of individuals and organisations that made public submissions to
the inquiry together with other information authorised for publication is at
The Bill is part of the Building Australia's Future Workforce (BAFW)
package of measures introduced by the government in the 2011–12 Budget. As
the Department of Education, Employment and Workplace Relations (the
The package of measures: improves incentives to work through
changed tax arrangements; provides opportunities for people to take up
employment by providing training, education and improvements to childcare and
employment services; takes new approaches through place-based measures to
addressing entrenched disadvantage; and introduces new requirements for people
Related bills include the Social Security Amendment (parenting Payment
Transitional Arrangement) Bill 2011 and the Social Security and Other
Legislation Amendment Bill 2011. In September 2011 the committee inquired
into Schedule 3 (Impairment Tables for Disability Support Pension) of the
latter bill. On that occasion, the committee recommended the bill be passed,
but that consultation, evaluation and checking mechanisms be expanded. The
Social Security Amendment (parenting Payment Transitional Arrangement) Bill
2011 was referred to the Senate Education, Employment and Workplace Relations Committee.
That committee, pursuant to a resolution of the Senate of 12 May 2011,
determined 'by unanimous decision...that there [were] no substantive matters
that require[d] examination', and reported accordingly.
Purpose of the Bill
According to the Explanatory Memorandum, the Bill, as part of the Building
Australia's Future Workforce (BAFW) package, aims to 'encourage more
participation in work and other activities, better align the treatment of
different recipients, and make the system fairer.'
The bill has five primary effects:
- It changes the age requirement for Newstart Allowance (NSA) from
21 to 22;
- It accelerates the phase out of grandfathering arrangements for
single parents still receiving Single Parent Payments;
- It raises the income threshold for people on Youth Allowance (other)
(YA) and NSA;
- It changes the calculation of penalty rates for non-participation
to apply per business day, rather than per day; and
- It extends the Cape York Welfare Reform Trials.
These effects are discussed in more detail below.
Age eligibility for NSA
Presently, unemployed young people are eligible for YA from the age of
to 21, and eligible for NSA from the age of 21. The Bill raises the age of
eligibility for NSA to 22 years. It also aligns other related benefits,
increasing the minimum age for Sickness Allowance and Long Term Income Support
to 22, and the age at which a person will cease to be qualified for Youth
Disability Supplement to 22.
This change means that unemployed young people receiving YA cannot
transfer to the higher NSA until they are 22, rather than 21. As well as being
paid at a higher rate, NSA has different conditions to YA. NSA recipients must
usually focus on job searching, whereas YA recipients usually focus on study.
However, NSA recipients without a Year 12 qualification may be eligible under the
'learn or earn' policy
to receive their benefit while undertaking a short course. The Bill will
extend the 'learn or earn' policy to 21 year old recipients of YA.
Grandfathering arrangements for
In 2006, the government reformed payments to single parents. However,
parents who were previously receiving the Parenting Payment Single (PPS) were 'grandfathered',
that is, it was planned that they would continue to receive the old rate.
It was originally possible for PPS recipients to continue to receive payments
for children born from 2006 onwards. However, due to a recent change, the payment
cannot be claimed in relation to a child born after 1 July 2011.
The Bill makes changes to the phase out of this measure by introducing a
staggered phase out for the cessation of payments to affect single parents
according to the age of their youngest child:
(a) if the child is aged under 12 on 31 December 2012—when
the child turns 12; or
(b) if the child is aged 12 on 31 December 2012—when the
child turns 13; or
(c) if the child is aged 13 or more and under 16 on 31
December 2012—when the child turns 16.
Affected single parents who are unemployed will need to transfer to NSA when
their child turns the relevant age (as above). In order to ease this
transition, the Bill will amend the Administration Act to allow those affected
to lodge a claim for NSA up to thirteen weeks before they become eligible,
rather than the day they become eligible.
Income threshold arrangements
The Bill amends the income free area
for Youth Allowance recipients from up to $62 per fortnight to up to $143 per
The $143 rate will apply to young people aged 21 who will, if the Bill is
passed, be eligible for YA rather than NSA. This is a more generous rate than
that which currently applies to NSA recipients. The government expects this
will 'encourage young people to take up work'.
The Bill also amends the NSA income test as it applies to single
principal carers. The current NSA income taper test comes into effect at 50
cents for each dollar between $62 and $250 and 60 cents for each dollar above
However, the Bill will change this test to come into effect at 40 cents in each
dollar above $62 per fortnight.
Calculation of penalty rates for
Social security legislation allows penalties to be applied to NSA
recipients who fail to adequately participate in job seeking activities.
Two of these failures are the 'no show no pay' failure and the 'reconnection
failure'. A 'no show no pay' failure is applied for failure to participate in
training or other activities, such as inappropriate behaviour at a job
interview. A penalty is incurred at one-tenth of a job seeker's fortnightly participation
payment per day on which an offence took place. A reconnection failure is
applied for failure to attend an appointment with Centrelink or employment
service provider. This failure incurs a penalty of one-fourteenth of the
recipient's fortnightly payment applied each day until the recipient attends a
subsequent rescheduled appointment.
The Bill amends the Social Security (Administration) Act 1999 to
align penalties applied for each of the above penalties to one-tenth of the
recipient's fortnightly payment.
Cape York Welfare Reform Trials
The Bill amends the Indigenous Education (Targeted Assistance) Act
2000 to extend the Student Education Trusts measure. This extension is part
of a wider extension to the Cape York Welfare Reform Trials announced by the
government in May 2011.
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