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Social Policy Section
From 20 March 2020 Newstart Allowance
will be renamed JobSeeker Payment. At the same time, Sickness Allowance and
Wife Pension will cease. Recipients of Sickness Allowance will move onto
JobSeeker Payment along with some recipients of Wife Pension. Bereavement
Allowance will be replaced by new arrangements using the JobSeeker Payment and
These changes are part of a package announced in the 2017–18
Budget. According to a
Budget fact sheet these changes were guided by the recommendations of the 2015
As with Newstart Allowance, JobSeeker Payment will include
recipients with disabilities and parenting responsibilities that prevent them
from pursuing full-time work. Despite its name, JobSeeker Payment will include some
recipients who are not required to search for work.
half of all Newstart Allowance recipients are classified as job seekers.
This quick guide provides historical background on
Newstart Allowance and changes associated with JobSeeker Payment, as well as
details on who will receive the payment.
Newstart Allowance was created by the Hawke Labor Government
in 1991. As part of a broader set of reforms, the
Government replaced the existing Unemployment Benefit with two new payments:
- Job Search Allowance for people who were unemployed for less than
12 months and all unemployed people under 18 and
- Newstart Allowance for those still unemployed after 12 months.
the reforms, Newstart Allowance recipients
were required to accept additional obligations and sign an agreement that set
out the activities they would undertake to help improve their job prospects.
Keating described it as ‘the abolition of the old unemployment benefit
structure’. However, as the Compendium
of Legislative Changes in Social Security 1983–2000 notes: ‘Many
features of the new payments were the same as those they superseded’ (p. 207).
In 1996 the Howard Coalition Government brought
Job Search Allowance and Newstart Allowance together into a single payment
called Newstart Allowance. Then
in 1998 the Government moved younger Newstart Allowance recipients to the
new Youth Allowance.
Allowance is available to people who meet each of the following conditions:
- are at least 22 but under Age Pension age
- are looking for paid work (there are some exceptions to this
- are under the income and assets test limits
- are prepared to meet mutual obligation requirements.
McClure Review recommends tiered
Working Age Payment
In December 2013 the Minister for Social Services, Kevin
Andrews, commissioned a review of the income support system headed by Patrick
2015 report of the McClure Review noted that current allowances ‘do not
reflect that people with limited capacity to work can stay on an allowance for
a significant period of time’. To address this problem it recommended creating
a new Working Age Payment with three different rates of payment:
- an Upper Tier ‘for people with disability with a limited capacity
to work because of disability and therefore are more likely to stay on payments
for a longer duration’
- a Middle Tier ‘for people with moderate limitations on their
capacity to work and/or people with dependent children’ and
- a Foundation Tier ‘for people with full capacity to work and/or
Under this proposal, the Foundation Tier would not be less
that the current rate of Newstart Allowance.
2017–18 Budget—Welfare reform
Renaming Newstart Allowance was part of a broader set of
changes announced as
part of the 2017–18 Budget. The Government announced that ‘seven current
working age payments will be consolidated or ceased’. These payments are
Newstart Allowance, Sickness Allowance, Bereavement Allowance, Wife Pension,
Partner Allowance, Widow B Pension and Widow Allowance. This was consistent
with the McClure Review’s proposal to bring together allowances with similar
rates and conditions.
Recipients of Sickness Allowance and some recipients of Wife
Pension will transfer to JobSeeker Payment. Bereavement Allowance will be
replaced by new payment arrangements for people on JobSeeker Payment and Youth
Allowance. Newly bereaved people will receive a triple fortnight’s pay in the
first fortnight instead of a separate allowance.
Recipients of Widow B Pension, Partner Allowance, Widow
Allowance and some recipients of Wife Pension will transfer to the Age Pension.
Some recipients of Wife Pension will transfer to Carer Payment. All of these
payments have previously been closed to new entrants. The Government began
phasing out Widow B Pension in 1987 and Widow
Allowance in 2005. Wife
Pension was closed to new entrants in 1995 and Partner
Allowance in 2003. These payments are often known as ‘dependency-based
payments’ because they were granted on the assumption that recipients were
financially dependent on another social security recipient or a deceased or
divorced husband or partner.
Links to further information
Details for each of these payments is available in historical
versions of A Guide to Australian Government Payments. Information
on the numbers of people receiving each payment is available from data.gov.au: DSS
Payment Demographic Data.
For more information on the changes, see the article: ‘A
simpler welfare system’ in the Parliamentary Library’s Budget
The changes were made by the Social Services
Legislation Amendment (Welfare Reform) Act 2018. For an explanation of
the legislation, see the Bills Digest and Explanatory Memoranda available
on the Bill’s home page.
Payment rates and conditions will
stay the same
Australia has advised Newstart Recipients that: ‘Newstart Allowance will
end on 20 March 2020 and we’ll transfer you to JobSeeker Payment. There are no
other changes if you continue meeting your requirements’.
Apart from changes made to incorporate Wife Pension,
Sickness Allowance and Bereavement Allowance into JobSeeker Payment, payment
rates and conditions for JobSeeker Payment will remain the same as for
Not all recipients will be required
to search for work
As with Newstart Allowance, not all recipients of JobSeeker
Payment will be required to search for work. In December 2019 the
Department of Social services classified around half of all Newstart Allowance
recipients as ‘job seekers’ (see Table 2).
There are a number of reasons Centrelink may not require
Newstart recipients to search for work. In some cases where people are expected
to work, but not full-time, Newstart functions as an income supplement for part-time
workers. In some circumstances, such as serious illness, Newstart recipients
are not expected to work at all.
A significant proportion of Newstart recipients have a
disability that limits their ability to work. These recipients may be assessed
as having a ‘partial
capacity to work’, which means they are only required to work or study for
a limited number of hours a week. If they work or study for the required number
of hours, they can continue to receive Newstart without having to engage in any
designed to reduce the flow onto the Disability Support Pension are likely
to have increased the number of Newstart recipients with partial capacity.
Newstart recipients can be exempted from mutual obligation
activities if they are
temporarily incapacitated due to illness or injury. These exemptions can be
long-term, where a recipient has a condition such as cancer, severe stroke or
March 1996 Centrelink moved Newstart recipients to Sickness Allowance if
their period of incapacity extended beyond 13 weeks. Sickness
Allowance is paid to those who have a job or are studying, but are
temporarily unable to work or study because of a medical condition.
Caring for a child under 16
Newstart recipients who are the principal
carer of a dependent child under 16 are not
required to search for work if they are participating in 30 hours per
fortnight of any combination of paid work, study or, in some circumstances,
in 2006 and 2013 designed to reduce the number of single parents eligible
for Parenting Payment Single are likely to have increased the number of
principal carers receiving Newstart Allowance.
recipients who are 55 or older can meet their mutual obligation
requirements by engaging in 30 hours per fortnight of activities that can
include paid work, self-employment, or approved voluntary work. Some recipients
must engage in at least 15 hours of paid work to meet this requirement.
In the past the
Department of Social Services had a Mature Age Allowance for people 60 and
over who were unemployed. This was closed to new entrants in 2003 and ceased in
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