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. 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.
As the Government sees it, the above arrangements provide insufficient
incentive for job seekers to comply with their mutual obligation requirements.
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.
The Government has previously sought to deal with the above
perceived failings through measures contained in three different Bills.
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
Under the new framework, to be introduced from 1 July 2018, there
are to be two compliance phases. 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. 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.
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. 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.
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
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). 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.
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. 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’.)
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.
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.
A trial of the ParentsNext program was introduced by the
2015–16 Budget. 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. 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.
The evaluation of the ParentsNext trial has yet to be
completed. 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.
This measure will not require legislation.
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), ‘220.127.116.11
Serious Failures and Penalties’, Guide to social security law,
version 1.232, released 8 May 2017, DSS website.
For further details, see Department of Social Services (DSS), op.
Participation Payment Suspensions, Connection Failures, Non-Attendance
Failures, Reconnection Failures and Penalties’.
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.
See for example L Hartsuyker, ‘Second
reading speech: Social Security Legislation Amendment (Stronger Penalties for
Serious Failures) Bill 2014’, House of Representatives, Debates, 4
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.
Australian Government, Budget measures:
budget paper no. 2: 2017–18, 2017, p. 78.
The following information is largely derived from M Cash, Helping
more Australians into jobs, media release, 9 May 2017.
Department of Employment (DoE), ‘jobactive’, DoE website.
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.
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.
Australian Government, Budget measures:
budget paper no. 2: 2017–18, 2017, p. 159.
Security (Reasonable Excuse—Participation Payment Obligations)(DEEWR)
Determination 2009 (No. 1).
M Cash, Helping
more Australians into jobs, op. cit.
A McLennan, D Lewis, C O’Brien and H Kleber, ‘Drug dependence, a chronic
mental illness’, JAMA, 284(13), 4 October 2000,
Australian Government, Budget
measures: budget paper no. 2: 2015–16, 2016, p. 159.
Australian Government, Budget measures:
budget paper no. 2: 2017–18, 2017, p. 93.
Department of Employment (DoE), ‘Evaluation of
ParentsNext’, DoE website.
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.
For copyright reasons some linked items are only available to members of Parliament.
© Commonwealth of Australia
With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.
In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.
To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.
Inquiries regarding the licence and any use of the publication are welcome to email@example.com.
This work has been prepared to support the work of the Australian Parliament using information available at the time of production. The views expressed do not reflect an official position of the Parliamentary Library, nor do they constitute professional legal opinion.
Any concerns or complaints should be directed to the Parliamentary Librarian. Parliamentary Library staff are available to discuss the contents of publications with Senators and Members and their staff. To access this service, clients may contact the author or the Library‘s Central Enquiry Point for referral.