Job seeker compliance and workforce participation

Budget Review 2017–18 Index

Matthew Thomas

New job seeker compliance framework

The Government has for some time been dissatisfied with the current job seeker compliance system, and, in particular, the system of connection and reconnection failures.

Where a job seeker fails, without reasonable excuse, to attend an appointment with their employment services provider, this constitutes a connection failure. Currently, a connection failure does not result in an immediate financial penalty.[1] Instead, the job seeker’s payment is suspended. Once the job seeker contacts or is contacted by Centrelink and agrees to attend a further appointment, their payment is restored from the date that it was suspended (that is, they are fully back paid). If the job seeker does not agree to attend the further appointment, it is booked regardless and their payment remains suspended.

If the job seeker fails to attend the further appointment without a reasonable excuse, this results in a reconnection failure and the suspension of their payment until they comply with the reconnection requirement. During a reconnection failure period, a person accrues a penalty equivalent to their daily rate of payment for each day of the reconnection failure period—that is, they are not back paid upon meeting their requirement.[2]

As the Government sees it, the above arrangements provide insufficient incentive for job seekers to comply with their mutual obligation requirements.[3] It maintains that a small number of job seekers are repeatedly missing their appointments but agreeing to attend a re-scheduled appointment and thereby avoiding any financial penalties. The Government’s preference is for immediate penalties to apply to job seekers who fail to attend appointments without having a reasonable excuse.

The Government has also argued that the current arrangement under which job seekers are able to have their eight-week income support non-payment period for failing to accept or commence a suitable job without good reason waived through participating in a compliance activity means that there is an insufficient deterrent to refusing work.[4]

The Government has previously sought to deal with the above perceived failings through measures contained in three different Bills.[5] These aimed to apply more immediate penalties and stop eight-week non-payment penalties for failures to accept an offer of suitable employment from being waived. As a part of this Budget, the Government has determined not to proceed with the measures in the Social Security Legislation Amendment (Further Strengthening the Job Seeker Compliance Framework) Bill 2015 (which lapsed on the prorogation of Parliament on 17 April 2016), but rather to introduce a new compliance framework.[6]

Under the new framework, to be introduced from 1 July 2018, there are to be two compliance phases.[7] In the first of these—the Personal Responsibility Phase—demerit points will be applied for any mutual obligation failure, with more points lost according to the severity of the failure. If a job seeker accrues three demerit points over a six-month period they will be subject to a jobactive interview to assess whether their current activity requirements are appropriate.[8] If a job seeker accumulates four demerit points over a six-month period, they will be required to undergo a Centrelink assessment which will determine whether they require additional support or are to enter the second phase. If at either of these assessments the job seeker’s activity requirements are found to be inappropriate then their demerit points may be reset.

Under the second Intensive Compliance Phase there will be escalating penalties for additional failures: a loss of 50 per cent of a fortnightly payment for the first failure, 100 per cent of a payment for the second failure and cancellation of payment for four weeks for a third failure. If a job seeker does not breach their mutual obligation requirements for three months while in the second phase, they will return to the first phase.

Where a job seeker fails to accept an offer of suitable work, they will have their payment cancelled for four weeks, irrespective of which phase they are in.

Comment

The new framework will eliminate the gaming of the compliance system by some job seekers, as described above.

The new arrangements are more stringent those currently in place. This is reflected in the fact that the Government anticipates the changes will result in overall savings of $204.7 million over the forward estimates period.[9] To the extent that the savings are a result of the application of additional penalties, rather than administrative savings, then there could be a range of explanations for this. These include the sanctions: not having a sufficient deterrent effect; being inadequately understood by job seekers; and/or penalising job seekers who know what their requirements are, but are, for whatever reason, and despite any support provided, incapable of meeting them.

The proposal to impose an immediate penalty on job seekers who refuse a suitable job offer has been strongly criticised by Labor, the Greens and welfare groups in the past, on two main grounds.[10] Firstly, it has been argued that removing the ability of job seekers to have their penalty waived would result in the counterproductive outcome of their becoming disengaged. Secondly, it has been argued that the penalty is likely to result in financial hardship and related problems such as homelessness.

This measure will require amending legislation.

Increased mutual obligation requirements

The Government has also tightened the annual activity requirements and mutual obligation requirements for job seekers (mutual obligation requirements refers to all of the things that job seekers must do on an ongoing basis in return for payment, while the annual activity requirement refers to the additional activities job seekers must undertake for six months of every year after 12 months on payment).[11] From 20 September 2018, job seekers aged from 30 to 49 with an annual activity requirement will see this requirement increased to 50 hours per fortnight, up from the current 30 hours. Job seekers aged 55 to 59 will no longer be able to fully meet their mutual obligation requirements by undertaking 30 hours per fortnight of approved voluntary work alone. Subject to the passage of legislation, they will only be able to fully meet their requirements through undertaking a total of 30 hours paid or volunteer work, 15 hours of which is paid work. And, job seekers aged over 60 will have an annual activity requirement of 10 hours per fortnight, but this requirement will be able to be met entirely through volunteering. Currently there is no annual activity requirement for job seekers aged over 60. If job seekers aged 60 and over are currently undertaking sufficient participation in suitable activities this would meet the new annual activity requirement. Job seekers over 60 will also continue to be able to fully meet their mutual obligation requirements through undertaking 30 hours per fortnight of any combination of approved voluntary work and paid work (including self-employment).

Tightening reasonable excuse for non-compliance

Under current reasonable excuse provisions, a job seeker’s drug or alcohol dependency must be taken into account by Centrelink in determining whether the job seeker has a reasonable excuse for not meeting their mutual obligation requirements.[12]

The Government seeks to change the existing provisions to only enable a job seeker to use their drug or alcohol dependency as an excuse for non-compliance if they undertake treatment.[13] Participation in treatment may either meet or reduce the job seeker’s mutual obligation requirements. If the job seeker refuses to participate in treatment and fails to meet their mutual obligations again, then drug or alcohol dependency will not be considered a reasonable excuse, and sanctions may be applied. (See also Budget Review article, ‘Drug testing for welfare recipients’.)

Comment

Relapse rates are high among substance users. It has been estimated that around 40 per cent to 60 per cent of substance users have at least one relapse in the first year after completing treatment.[14] While relapse is frequently considered to be a mark of failure for a given treatment program, arguably this is not necessarily the case. Given the chronic relapsing nature of drug dependence, it is to be expected that some people will relapse. However, it is not clear whether or not job seekers who relapse will be able to have their drug or alcohol dependency considered a reasonable excuse following the first instance of non-compliance.

This measure will require a change to the regulations.

ParentsNext—national expansion

A trial of the ParentsNext program was introduced by the 2015–16 Budget.[15] The program is intended to assist parents with young children in planning for future employment by arranging activities and connecting them to local services to prepare them for work by the time their children are at school.

The program is currently operating in ten disadvantaged local government areas, and is to be expanded nationally at a cost of $150.1 million over the forward estimates period.[16] An intensive ParentsNext service is to be offered to all qualifying job seekers in 30 locations where a high number of Parenting Payment recipients are Indigenous. Funding of $113.0 million has been allocated over the forward estimates for this measure.

Comment

The evaluation of the ParentsNext trial has yet to be completed.[17] Nevertheless, it has been argued by the Organisation for Economic Co-operation and Development and the International Labour Office, among others, that intensive interventions for disadvantaged young people who are at risk of becoming disengaged and long-term unemployed—such as the ParentingNext program—are best practice when it comes to supporting young people in moving towards employment.[18]

This measure will not require legislation.



[1]. A connection failure does, however, contribute towards a count of failures used to determine whether a job seeker has committed a serious failure due to persistent non-compliance. Before determining if a job seeker has committed a serious failure due to persistent non-compliance a Comprehensive Compliance Assessment (CCA) must be undertaken. If a job seeker has incurred three or more connection or reconnection failures in the six months before the CCA, then this may result in their being assessed as persistently non-compliant. See Department of Social Services (DSS), ‘3.1.13.40 Serious Failures and Penalties’, Guide to social security law, version 1.232, released 8 May 2017, DSS website.

[2]. For further details, see Department of Social Services (DSS), op. cit., ‘3.1.13.30 Participation Payment Suspensions, Connection Failures, Non-Attendance Failures, Reconnection Failures and Penalties’.

[3]. See C Porter (Minister for Social Services), M Cash (Minister for Employment) and A Tudge (Minister for Human Services), A fairer welfare system that supports more people into work, media release, 9 May 2017.

[4]. See for example L Hartsuyker, ‘Second reading speech: Social Security Legislation Amendment (Stronger Penalties for Serious Failures) Bill 2014’, House of Representatives, Debates, 4 June 2014.

[5]. Parliament of Australia, ‘Social Security Legislation Amendment (Stronger Penalties for Serious Failures) Bill 2014 homepage’, ‘Social Security Legislation Amendment (Strengthening the Job Seeker Compliance Framework) Bill 2014 homepage’, ‘Social Security Legislation Amendment (Further Strengthening Job Seeker Compliance) Bill 2015 homepage’, Australian Parliament website.

[6]. Australian Government, Budget measures: budget paper no. 2: 2017–18, 2017, p. 78.

[7]. The following information is largely derived from M Cash, Helping more Australians into jobs, media release, 9 May 2017.

[8]. Department of Employment (DoE), ‘jobactive’, DoE website.

[9]. Ibid. The budget papers indicate savings of $632.0 million over five years from 2016–17 but this figure includes savings from other welfare measures. See Australian Government, Budget measures: budget paper no. 2: 2017–18, 2017, p. 89.

[10]. See M Thomas, Social Security Legislation Amendment (Further Strengthening the Job Seeker Compliance Framework) Bill 2015, Bills digest, 39, 2015–16, Parliamentary Library, Canberra, 5 November 2015, pp. 10–11.

[11]. Australian Government, Budget measures: budget paper no. 2: 2017–18, 2017, p. 159.

[12]. Social Security (Reasonable Excuse—Participation Payment Obligations)(DEEWR) Determination 2009 (No. 1).

[13]. M Cash, Helping more Australians into jobs, op. cit.

[14]. A McLennan, D Lewis, C O’Brien and H Kleber, ‘Drug dependence, a chronic mental illness’, JAMA, 284(13), 4 October 2000,
pp. 1689–95.

[15]. Australian Government, Budget measures: budget paper no. 2: 2015–16, 2016, p. 159.

[16]. Australian Government, Budget measures: budget paper no. 2: 2017–18, 2017, p. 93.

[17]. Department of Employment (DoE), ‘Evaluation of ParentsNext’, DoE website.

[18]. Organisation for Economic Cooperation and Development (OECD), Off to a good start? Jobs for youth, OECD, Paris, 2010; and International Labour Office (ILO), Increasing the employability of disadvantaged youth, Skills for Employment policy brief, ILO, Geneva, 2011.

 

The previous version of this article incorrectly stated that there is currently no activity requirement for job seekers aged over 60. The article was amended on 22 January 2017 to clarify that job seekers aged over 60 do currently have mutual obligation requirements of 30 hours per fortnight, and to spell out the difference between mutual obligation and annual activity requirements.

All online articles accessed May 2017. 

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