Bills Digest No. 76   1997-98 Social Security Legislation Amendment (Youth Allowance) Bill 1997

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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.


Passage History

Social Security Legislation Amendment (Youth Allowance) Bill 1997

Date Introduced: 2 October 1997
House: Representatives
Portfolio: Social Security
Commencement: 1 July 1998 *
* Clause 2 of the Bill specifies that the amending Act is to commence on 1 July 1998. However, if Part 8 of the Student and Youth Assistance Act 1973 (containing the current YTA provisions) has not been repealed by the anticipated commencement of the amending Act, then the amending Act commences immediately after that Part is repealed.


The Youth Allowance is to replace a number of payments presently made under the Social Security Act 1991 and the Student and Youth Assistance Act 1973. The payments that are to be replaced include:

  • Youth Training Allowance (YTA), Newstart Allowance (NSA), and Sickness Allowance for 16 to 20 year olds and most 15 year olds receiving these payments;
  • Austudy for students aged 16-24 inclusive, and older if the student commences a course prior to turning 25 years, and 15 year olds receiving Austudy;
  • 'More than minimum Family Payment' for secondary students aged 16-18 not receiving Austudy.

The main aims of the government in presenting the legislation are spelt out in the Explanatory Memorandum and include:

  • Reducing complexity and duplication by providing for a single payment, thus creating a more flexible income support system;
  • Reducing the number of different rates of payment and addressing concerns relating to the fragmentation of income support schemes between DEETYA and DSS;
  • According to the explanatory memorandum, 'The Youth Allowance reinforces the Government's philosophy that families should support young people until they have achieved financial independence.'(1)


Trends in the youth labour market

Over the last two decades, massive changes have occurred in the employment, education and life cycle experiences of young people.However, the presumptions underlying income support arrangements for young unemployed people and students have not kept pace with these changes.

In the late 1970s and early 1980s most young people left school before completing Year 12 and moved into the labour market often into unskilled and low paying jobs. In 1966 nearly 60 per cent of 15-19 year olds were in full-time employment.

By 1996 the situation had changed dramatically, with two thirds of teenagers being engaged in education and training and only around 30 per cent being in the labour market.This large shift in the activity of teenagers reflects to a significant degree the declining opportunities for less skilled workers in the labour market in general and especially for young people.

Recent NATSEM research on young people found that:(2)

  • Between 1978 and 1996 the share of all full-time employment in Australia held by 15-24 year olds fell from 26 per cent to 16 per cent while their share of part-time employment grew from 23 per cent to 29 per cent.
  • The proportions of 15-24 year old men and women in full-time employment fell from 59 per cent to 44 per cent for men and from 44 per cent to 32 per cent for women.At the same time the proportions of part-time employment rose from 6 per cent to 18 per cent for men and from 10 per cent to 27 per cent for women.

Young people who leave school and do not continue on to full-time education or training are increasingly disadvantaged in the labour market.The proposed Youth Allowance represents a desire to maximise incentives/pressure for young people to achieve a minimum level of education before they look for work and to ensure that the costs of young people's exclusion from the labour market are passed on to families rather than to public transfers.

Trends in income support for unemployed young people

Policy in relation to youth unemployment benefits from their inception to the 1970s, generally supported a differential between youth and adult benefits consistent with age related wage structures and with the belief that young people would receive some parental support.

A deterioration in the labour market for young people marked by an increase in unemployment in the 1970s, shifted attention to the incentive effects of unemployment benefit rates.Linkages in Government policy between age related educational outcomes and unemployment benefits for the young unemployed were introduced in the 1980s, aimed at increasing education retention rates.Parental responsibility for the younger unemployed has been reinforced through income tests.At the same time income support policy has had to contend with the complexities and diversity of young peoples' life experiences during a period of considerable social change eg. independence and homelessness.

Factors influencing school completion

A major priority for government over the past two decades has been to increase Australia's school retention rate.After a period of substantial and sustained growth in the proportions of young people completing school during the 1980s, recent years have seen a marked downturn.

Nationally, the proportion of young people remaining to Year 12 grew from approximately one-third at the beginning of the 1980s to a peak of 77 per cent in 1992.Since then it has fallen annually, dropping to a rate of 71 per cent in 1996 (ABS, 1996).(3)The trend has been experienced by both males and females, though slightly stronger amongst males.

A similar pattern of decline was recorded in the 1970s largely involving males.Underpinned by growth in apprenticeships and by narrowly focused senior school programmes which failed to appeal to broader populations, teenagers (particularly males) placed more value on the labour market than on school as a source of economic security.A further incentive to leave school was the provision of unemployment benefits for 16-17 year olds which provided short-term financial incentives to leave full-time education.

Growth in school retention returned in the 1980s.Factors which contributed to this increase included increased government financial assistance (study allowances) for low income families and the abolition of unemployment benefits for 16-17 year olds.In addition, several states made important changes to the provision of senior secondary curriculum to accommodate a broader range of students.

Trends in school completion have been based on long-term social and economic influences such as changes in industry and occupational structures, shifts in the full-time and part-time labour markets for young people, and changing attitudes on the importance of school.

Lamb (1996) argues that one of the effects of the large expansion in school completion in the 1980s has been the devaluation of the benefits of completing Year 12.Completion of Year 12 has become widespread and available to a broadening population of qualifiers, which tends to lessen its economic and social value.In addition, the growth in post-school opportunities and further education and employment has not kept pace with the expansion of the number of school leavers, there is now a high level of disappointment attached to school completion.

A recent study of educational disadvantage in Victoria found that across the state, regions which experienced the biggest falls in school completion had also experienced increases in VCE failure in the 1990s.This suggest that academic achievement is a strong influence on young people's plans and behaviour, reinforcing the need for schools to find appropriate ways of maintaining high levels of general attainment and ensuring that young people from all backgrounds are able to reach those levels.(4)

Transition to stable employment

Most young people make the transition to continuous full-time employment.However, there is a substantial proportion of young people who have not had a continuous period of full-time employment of at least a year even by the age of 24.

Casual part-time work, combinations of full-time and part-time work, periods of job seeking, and working for multiple employers are now the norm for a significant number of young people after they leave school.Full-time work for a year with the one employer now seems to be the exception rather than the rule.

Over recent years there has been a growing awareness of the limited size of Australia's arrangements for the transition from school to work, compared to those available in other OECD countries.This has led to the development of national targets for young people's education and training.These specify that by the year 2001, ninety-five per cent of nineteen year olds should have completed Year 12, an initial post-school qualification or be participating in recognised education and training (Finn, 1991).

ACOSS have argued that Australia does not do well in preparing many of its young people for work even though the doubling of school retention rates over the last decade has resulted in us now having the best educated cohort of school leavers in our entire history.(5)

In 1996 15-24 year olds constituted over 40 per cent of participants in VET, with the participation for 15-17 year olds close to world's best practice levels.However, even when differences in data definitions and OECD cross country comparisons are taken into account, there is a gap between the current Australian participation rates and the country with the highest participation rate per age cohort.In particular, the participation of 18-24 year olds would need to be expanded considerably in order to obtain the participation rates of 'best practice' countries.(6)

Availability of VET places

DEETYA have argued that not all young people affected by the proposed changes to income support would seek a training place in the vocational education and training (VET) sector.The Department predict that the majority of young people will seek to remain at school or return to school and that around 25 000-27 000 may seek to return to education and training as a result of the Youth Allowance.(7)

In the context of current negotiations over a new ANTA agreement, State, Territory and Commonwealth Ministers for Vocational Education and Training have recognised that the Youth Allowance and an increased emphasis on the provision of vocational education and training in schools will impose additional costs for the VET sector.(8)

In the 1996-97 Budget an efficiency dividend on Commonwealth own-purpose outlays resulted in a 5 per cent reduction of funding provided to ANTA. In 1997-98 the Commonwealth will reduce annual funding to the States and Territories appropriated under the Vocational Education and Training Funding Act 1992, to provide 'an incentive to the States and Territories to achieve efficiency gains in vocational education and training operations.'(9) The reduction, which takes effect from 1 January 1998 and is anticipated to be carried into subsequent years, is estimated to be $20 million in the 1998 calendar year.

There is greater unmet demand for VET than higher education, 8.3 per cent of VET placement seekers unable to gain a place compared with 3.1 per cent of higher education placement seekers.In addition the Government's promotion of the availability of funding for 220,000 new apprenticeships and traineeships in the next two years with 35,000 being made available in the next six months, has contributed to the need for growth in the VET sector.

Historical trends in income support - 1940s to the 1970s

From the 1940s to the early 1970s, there was very little change to the income support arrangements for unemployed youth.The 1990s saw a long list of incremental changes to the income support arrangements for unemployed youth and students.Set out below is a chronology of these developments.Generally, the changes to income support responded to the changed life experiences of young people in the 1990s featuring increased financial and social independence and the mixing of employment with study.However, the changes were largely at the margin rather than achieving fundamental change to address the issues of inequity, complexity and adequacy.

The issues and objectives that drove these changes were:

  • the provision of equitable assistance between like groups based on need rather than activity;
  • the removal of disincentives for young people in low income families to remain in or re-enter education;
  • the provision of assistance that is adequate;
  • the tensions between lower youth rates of assistance compared to higher adult rates without incurring increased cost; and
  • the provision of appropriate assistance during the school to work transition.

The fact that the current system still has five different income support payments featuring thirteen different payment regimes clearly indicates that despite the best efforts of Governments, the current arrangements are still complex and inequitable.

Unemployment benefit introduced in 1944

With the introduction of unemployment and sickness benefits in 1944, the rates for single persons aged less than 21 years were set at a lower rate than the full adult rate.This mirrored the prevailing age related wages structure in Australia.

The full adult rate of unemployment benefit was also kept at a level substantially less than minimum award wages recognising its purpose as temporary assistance and that payment should not act as a disincentive to look for and accept work.Lower than full adult rates of unemployment benefit for youth also acknowledged the belief young people would be at home and receiving support from parents.

The long periods of high levels of economic growth and low levels of unemployment which prevailed from 1945 to the early 1970s placed little pressure for change on the rates of unemployment benefit

Increased unemployment instigated changes to income support arrangements in the 1970s

For much of the period since 1944, youth rates of unemployment benefit have been consistently less than the full adult allowance rate, except in the period March 1973 to November 1975, when the rates were at the same level.The then Government accepted the concept that a young unemployed person did not have lower living costs.

The rate differentials were resumed with the introduction of the intermediate rate (18 to 20 year olds) in November 1975 which was not indexed.

Levels of unemployment increased dramatically from the early 1970s.In 1972 there were about 70,000 unemployed aged 15 to 25, growing to 320,000 for the same group by 1983 and 364,400 in May 1992.In the mid-1970s, increased education participation rates did assist in pegging levels of young unemployed, except for those who left education very early.

In the early 1970s, the Whitlam Government formulated the policy of bringing benefit rate levels up to parity with pension rate levels and raising both payments progressively to the equivalent of 25% of average weekly earnings.Concerns grew that income support rates were providing too much of a financial advantage to the unemployed.Support for this view is generally agreed to emanate from the correlation of increases in youth wages relative to those of adults in the period 1972 to 1974, the significant jump in youth unemployment rates in 1975 and the continuance of high youth unemployment through the 1970s.

Increased youth unemployment was due to both reductions in full-time jobs arising from changes in the labour market and the population growth in this age grouping generated by the bulge in Australia's demographic profile.There is some evidence the full-time labour market for young people began to collapse before the commencement of the recession in 1971.

In August of 1966, 59% of teenagers held full-time jobs, but by 1984 this had fallen to 32.6%.This fall corresponded with the rise in casual/part-time work being undertaken by students.

Changes in the 1980s - income support young unemployed needed to complement student assistance and to promote education

The 1984/85 Budget saw the commencement of explicit linkages in Government policy between age-related educational allowances and unemployment benefits for young unemployed aged 16 to 20.

Young Homeless Allowance was introduced in July 1986 as an additional payment for single unemployed aged less than 18 who are by definition homeless.

1986 and 1987 saw substantial increases in the rates of educational allowance for secondary students and the liberalisation of the parental income test for these allowances.

Initiatives aimed at increasing post-compulsory school retention rates and increasing places in tertiary and further education were introduced in the 1986/87 Budget.The initiatives reflected the unstated desire to discourage young people from leaving home and seeking unemployment assistance.

These initiatives featured:

  • Unemployment assistance was re-structured attempting to achieve parity with student assistance rates.
  • The expansion of the work search activity test for unemployed 18 to 20 year olds to include the requirement to undertake training to improve labour market skills.
  • Educational allowance (now called AUSTUDY) moved to an age-related basis.

1988 saw the introduction of Job Search Allowance (JSA) for the 16 to 17 year old unemployed and confirmed the concept of responsibility for parents to provide support for younger unemployed with the associated parental income test similar to that applied under AUSTUDY.

Changes in the 1990s- many incremental changes but no structural reform

January 1990

Young Homeless Allowance as a separate component to JSA ceased to be paid.These cases were paid the 'independent' and 'homeless' rate.

September 1990

A lower 'at home' rate of JSA for 18 to 20 year olds was introduced.The higher 18 to 20 year JSA rate continued to be paid to those who do not live at the home of their parent(s)/guardian(s).

Up to September 1990, the full adult rate was paid to all married unemployed regardless of age or number of children. From 20 September 1990, the married rate was only paid where both of the married couple were aged 21 years or more, or, had a dependent child.For married recipients under 21 years without children the rate was restricted to an age based rate.

October 1991

Entitlement to special benefit was extended to single under 21 year olds with no dependents during 13 week education leavers deferment period if in severe financial hardship and eligible recipients were exempted from parental income test (i.e. they met the independent requirements).

January 1992

Certain 15 year olds could qualify for JSA, Sickness Allowance or Special Benefit.The conditions to be met were:

  • a full-time employment history;
  • reached the minimum school leaving age, or exempted from attending school by the education authority of the State or Territory in which they were living;
  • not at the home of either parent/guardian; and
  • not receiving regular financial support from either parent/guardian.

Also, for an independent young person, 13 weeks registration with the CES as unemployed was interchangeable with the requirement to be employed full-time for at least 13 weeks, since leaving the parental home.

16 to 17 year olds in substitute care (care by a person other than the natural or adoptive parent in the carer's home) under State or Territory law, for whom no on-going substitute care or similar allowance is paid, were also able to be paid the independent rate.

Independent rate YTA recipients could elect to be paid weekly rather than fortnightly to assist with their budgeting.

March 1992

The Rent Assistance (RA) waiting period abolished for people aged 18 years or more and also for people under 18 years with a dependent child and/or partner.Prior to 20 March 1992, allowance recipients with a dependent child did not serve a RA waiting period.

RA was extended to people under 18 years of age, paid at the homeless or independent rate of allowance or benefit, after an 18 week waiting period.

March 1993

The full-time employment eligibility criteria for certain 15 year olds was made more flexible.Periods of CES registration could be included to make up the required 13 weeks of full-time employment history.

Also, for an independent young person living away from home, the period to be considered independent was reduced from 6 months to 18 weeks.

January 1994

Newstart Allowance (NSA) and JSA clients aged under 18 registered with the CES for 12 months or more became eligible for the $200 Education Entry Payment.

March 1994

The 18 week waiting period for RA for persons under age 18 years receiving JSA was abolished.

January 1995

Youth Training Allowance (YTA) was introduced.Young people aged 16 to 17 either unemployed or in training (and certain 15 year olds) are eligible for YTA rather than JSA.

There are three rate categories for YTA payment:

  • at home
  • away from home, ie living away from home to undertake training or job search approved by the Commonwealth Employment Service
  • independent (including homeless)

These are the same as the AUSTUDY basic rates of payment.YTA rates are indexed every January.

July 1995

All YTA under 18 year olds receiving the independent and homeless rate have a review by a social worker 3 months after grant.

January 1997

The minimum rate for YTA was abolished.The parental income test (PIT) was applied to determine an actual rate of payment.The PIT was not be applied to those under 18 who are eligible for the independent, married or with dependent child rates.

Main Provisions


This Bill makes use of two schedules to amend the Social Security Act 1991 (the Act). Schedule 1 sets out provisions relating to the Youth Allowance. Schedule 2 sets out provisions to create a Youth Allowance Rate Calculator. The sections of the Bill relating to the calculator are important as they set out criteria according to which the rate of benefits payable is determined, eg. defining when a person is considered 'independent'.

Schedule 1 - Youth Allowance

The proposed provisions creating the Youth Allowance are to be inserted in a new Part 2.11 of the Act. (Item 6 of Schedule 1). The Job Search Allowance previously occupied Part 2.11 of the Act, but provisions relating to it were repealed in 1996. On 20 September 1996, Job Search Allowance and NSA payments were merged into one payment, Newstart Allowance (NSA).(10)

Schedule 1 comprises ten Divisions.

Qualification for Youth Allowance

These provisions are contained in Division 1 of Schedule 1 of the Bill.

Proposed s. 540 sets out the general rule for qualification for Youth Allowance (YA). This includes:

  • satisfaction of the activity test (Subdivision B); or, in some circumstances, not being required to satisfy the activity test (Subdivision C);
  • being of YA age(Subdivision D);
  • satisfying requirements of a Youth Allowance Activity Agreement (YAAA) (Subdivision E);
  • satisfying residency requirements (Subdivision F).

Proposed s. 541 provides the detailed requirements of the Activity test, which must be met for an applicant to qualify for YA payments. The Bill contains many similar provisions to those applying in the present activity tests for NSA and YTA payments. As the Bill seeks to achieve the aim of creating a single payment by combining Austudy, NSA and YTA payments, the activity test provisions are necessarily broad. The YA test can be satisfied by a person undertaking full-time study or a combination of activities including study, voluntary work, part-time work and job search.

The person seeking YA payments must be:

  • undertaking full-time study, or
  • actively seeking and willing to undertake 'paid work' (other than work which is unsuitable according to proposed s.541D)or
  • taking reasonable steps to comply with a YAAA, or
  • taking reasonable steps to comply with particular requirements of the Secretary that can be issued to an applicant under proposed s. 541(2). These include a requirement to
    • undertake paid work; or
    • participate in a 'work for the dole' program; or
    • participate in training, rehabilitation or labour market program.

The proposed section makes provision for the particular circumstances of remote areas where there is no locally accessible labour market.

Proposed s. 541A lists the circumstances in which there will be found a failure to satisfy the activity test. The section is broadly modelled on the YTA and NSA provisions. The circumstances (in summary) are:

  • failure to satisfy notified requirements of the Secretary;
  • failure to comply with a Youth Allowance Activity Agreement;
  • failure to attend job interview;
  • failure or refusal to participate in a labour market program;
  • failure to participate in 'work for the dole' program as required;
  • failure (of YA recipients not in full-time study) to comply with a notice requiring application for a particular number of advertised job vacancies (proposed s. 541C(1)); and
  • failure to supply a written statement from employers confirming that the YA recipient applied for a job vacancy (proposed s. 541C(2)).

The section uses the term 'reasonable steps' the meaning of which is elucidated in proposed s. 541F.

Proposed s. 541B sets about defining full-time study for the purposes of qualification for YA. Five proposed requirements must be met before an applicant will meet the definition of a 'full-time student'.

Proposed s. 541C provides that the Secretary can require a YA applicant to apply for a particular number of advertised job vacancies within a notified time period. It mirrors existing requirements in YTA and NSA legislation.In addition, the discussion below of the decision of the Social Security Appeals Tribunal (SSAT) in Re Bartlett (1994) is relevant [under heading 'Youth Allowance Activity Agreements'].

Proposed s. 541D defines unsuitable paid work for the purposes of the activity test. This proposed section is virtually identical to the provisions relating to NSA in s.601(2A) of the Act, except for the removal of provisions in relation to work considered unsuitable where it would require a person to move home to another location considered unsuitable. In summary, the types of work that can be held unsuitable 'in the Secretary's opinion' , are if the:

  • applicant lacks required skills and no training is available;
  • applicant has illness or injury likely to be aggravated by the work;
  • work conditions are a risk to health and safety and would contravene OH&S laws;
  • work involves 'self employment';
  • work would be covered by an award but employment was made conditional upon employees agreementto join an agreement that would reduce or abolish award rights;
  • work was not covered by an award and involves under-award pay;
  • work requires excessive commuting; or
  • the work requires enlistment in the Defence Forces.

Proposed s.541E contains provisions which qualify proposed s.541A relating to failure to satisfy the activity test. It provides a number of exemptions from the requirement to participate in a 'work for the dole' program. In normal circumstances, under the proposed scheme a refusal would risk of failure of the activity test.

Proposed sub-section 541E(3), in effect, states that the mere fact of participation by a YA recipient in a 'work for the dole' program, as directed by the Secretary under proposed s.541(2), does not provide the participant with the legal status of 'employee' for the purpose of various Commonwealth statutes. This legislation is the Occupational Health and Safety (Commonwealth Employees) Act 1991, the Safety, Rehabilitation and Compensation Act 1988, the Superannuation Guarantee (Administration) Act 1992, and Workplace Relations Act 1996. In other words, the benefits, protections and obligations associated with 'employee' status under that legislation will not be available to a YA recipient in these circumstances.

Proposed s. 541F contains a definition of 'reasonable steps', necessary for the functioning of Subdivision B of Division 1 (Qualification for Youth Allowance). These provisions are virtually identical to those presently applicable to Newstart applicants in the context of Newstart Activity Agreements (s.601(6) of the Act).

The proposed section sets out that a failure to take reasonable steps will be established with a failure to meet:

  • a notice of Secretary's requirements (proposed s.541(2)); or
  • a Youth Allowance Activity Agreement (YAAA); or
  • a notice under proposed s. 541C(1).

where this failure was within the person's control, or was a matter reasonably foreseeable by that person.

Proposed subdivision C sets out exemptions from the activity test. Proposed s. 542 sets out situations in which the activity test is not applicable. The provisions following it, proposed sections 542A- 542H set out the detail of each exemption. These include:

  • temporary incapacity (proposed s.542A);
  • pre and post natal exemptions (proposed s.542D);
  • remote area exemption (proposed s.542E);
  • unpaid voluntary work (proposed s.542F);
  • defence force reserve training camp (proposed s.542G); and
  • special circumstances (proposed s.542H). These are not specified in the Bill, in order to provide a wide discretion to the decision maker. This replicates provisions presently found in the Part of the Act dealing with NSA at s.603A(1).

Proposed sections 542A, 542B, 542C set out the temporary incapacity exemption, and circumstances in which it may terminate. Proposed s. 542B provides, along the lines of the present NSA and YTA provisions, that an exemption of this nature may be terminated for failure to attend an interview, complete a questionnaire or attend a medical, psychiatric or psychological examination. Proposed s. 542C provides that the 'maximum exemption period' is 13 weeks or less.

Ages eligible for Youth Allowance

Proposed subdivision D sets out the ages eligible for Youth Allowance. This part of the Bill is a key area of change to the system of income support. The effect of this subdivision, when read in conjunction with other proposed sections, is to make the following categories of person eligible:

  • full-time students 25 years of age or less (full-time student defined in proposed s.541B);
  • young people 21 years of age or less who are looking for work or combining part-time study with job search; and
  • 15 year olds who are considered independent (eg homeless).

Proposed s. 543 defines the term 'of youth allowance age'.

Proposed s. 543A sets out the minimum age for youth allowance. As a general rule this is 16 years unless the person is 15 years old and 'independent' as defined in proposed s. 1067A (refer discussion below). Note the effect of proposed sub-section 543A(2) in most circumstances is to render unqualified for Youth Allowance persons under the age of 18 unless:

  • the person has completed the final year of secondary school or its equivalent; or
  • the person is undertaking full-time study; or
  • the Secretary has determined the person exempt.

Critics of the Bill have drawn particular attention to the Bill's aim of removing unemployment payments for 16 and 17 year olds.(11) These are the provisions that would attempt to achieve that aim.

Proposed s. 543B sets out the maximum age for youth allowance. It is defined as:

  • 21 years, if person is not in full-time study; or
  • 25 years, if person is in full-time study.

The section contains some qualifications of these basic rules.

Youth Allowance Activity Agreements

The effect of proposed subdivision E of Division 1 is to provide for Youth Allowance Activity Agreements (YAAA). Similar provisions for agreements are contained in the existing YTA and NSA legislation. For example, the Employment Services Act 1994 presently provides in s.39(1) for Case Management Activity Agreements for NSA claimants. YTA payments under the Student and Youth Assistance Act 1973 are similarly subject to a Youth Training Activity Agreement.

The nature of the agreement, obligations generated, and consequences of failure to comply within the proposed sections are all modelled on existing provisions in that legislation.

Proposed s. 544A provides that a person claiming or receiving YA can be required to enter into a YAAA with the Secretary.

Proposed s. 544B sets out the terms of YAAAs. Again, in order to take account of the fact that the Youth Allowance is to be a combination of a number of existing payments, the provisions governing the making of proposed Activity Agreements are necessarily broad. A range of activities can be required of a Youth Allowance recipient including job search, vocational and other training, paid work experience, 'work for the dole', development of self-employment, or participation in group enterprises, or participation in a course of education. Included in the list is the category in proposed s. 544B(1)(e) 'measures designed to eliminate or reduce any disadvantage the person has in the labour market.'

An agreement is to be drafted to require the applicant to undertake any one or more of the activities listed above, where these have been approved by the Secretary.

Note that the proposed subsection 544B(3) requires the Secretary to take into account the applicant's capacity to comply with the proposed agreement and the person's needs. The factors to be taken into account [in proposed subsection 544B(4)] include the person's education, experience, skills, age, physical condition, the state of the local labour market and the training opportunities available.

Proposed s. 544C ('failure to negotiate') will allow the Secretary to deem that a person has failed to enter into a YAAA, thus disqualifying that person for YA during that time period. The section provides that the person must be notified of the requirement to enter into a YAAA. In addition, the section sets out a number of scenarios which will constitute unreasonable delay in entering into the agreement, only one of which the Secretary need be satisfied. One of these is expressed as:

the person's failure to....(iii) agree to terms of the agreement proposed by the Secretary. [proposed sub-section 544C(1)(b)(iii)].

Proposed subsection 544C(2) sets out that a notice of failure to enter a YAAA must be in writing, provide reasons and set out review and appeal rights. In Re Bartlett (1994) the Social Security Appeals Tribunal considered the question of an alleged failure to negotiate a Newstart Activity Agreement. It held that a notice supplied to the applicant in question did not constitute proper notice as it, firstly, was not a notice specifically directed to the applicant, but was a copy of an internal 'Administrative Breach Report' and, secondly, did not contain necessary information relating to appeal rights.(12)

In the same case, the Social Security Appeals Tribunal considered the question of what would constitute appropriate contents of a Newstart Activity Agreement. The Agreement in question had required the applicant to produce copies of job applications for inspection. The Tribunal ruled:

I do not think that there is any place in a Newstart Activity Agreement for a term designed solely to enable officers of the CES or the Department of Social Security to monitor compliance by an individual with the requirements of the [Social Security] Act...The Act is a beneficial piece of legislation which, prima facie, ought to be construed favourably to those whom it was intended to benefit, including the unemployed. Its provisions in relation to Newstart Activity Agreements detract from the operation of the common law principle of freedom of contract, in so far as they permit the Secretary to require the agreements be entered into, and provide for possible adverse financial consequences in the event of a person failing to agree to contractual terms proposed by a CES officer. Given all those factors, I believe that the provisions in question ought to be given a restricted interpretation, at least to the extent they should be construed as not authorising the inclusion of contractual terms purely for the purposes of an allowance recipient's compliance with the Act being monitored.(13)

Note that proposed s. 541C(2) aims to include a similar obligation into the text of the Act. If enacted it will generate an obligation on a YA recipient, if notified, to provide to the Secretary 'a written statement from each employer whose job vacancy the person applied for, that confirms that the person applied for the job vacancy.' This obligation is tempered by proposed subsection 541C(4) which provides that if the Secretary is satisfied that 'special circumstances' exist in which it is not reasonable to expect the person to give the statement' referred to above.

Situations where Youth allowance not payable

This situation is considered within Division 2 of Schedule 1 of the Bill. Seven different circumstances are set out, in which YA is not payable even if the person qualifies for it. The provisions within this division are based closely on the YTA and NSA rules. The circumstances are contained in proposed s. 547 which sets out when YA is not payable, including:

  • during waiting periods (subdivision C);
  • during so-called 'activity test non-payment periods' (Subdivision D), arising from activity test breaches;
  • administrative exclusion (subdivision E);
  • alternative support exclusion (subdivision F); and
  • employment related exclusion ( Subdivision G).

Proposed s. 550 sets out provisions relating to so-called 'activity test breaches'. These provisions replicate existing YTA and NSA rules for non-payment periods resulting from activity test breaches where they are the third or subsequent time a person has committed such a breach.

Whilst many of the administrative exemptions proposed are merely a repetition of present provisions applying to NSA applicants, proposed s.551F is an addition to the range of administrative exemptions. Entitled 'failure to nominate parent', it is proposed to apply to the category of YA applicants who are aged 16-17 and not considered 'independent'. It provides that if a person in this category fails within 28 days to nominate a parent into whose bank account YA payments are to be made (pursuant to proposed s.559E), that person becomes subject to an administrative exclusion. (For discussion of proposed s.559E, refer paragraphs below). Note that proposed s.551F contains a qualification of this general exclusion rule, based on the power granted to the Secretary to direct that payment be made to the applicant or another person, in proposed sub-section 559E(2).

Rate of Youth Allowance

These provisions are contained in Division 5 of Schedule 1 of the Bill. This division provides for:

  • calculation of the rate of YA payable using the YA Rate Calculator(Schedule 2);
  • activity test reductions in rate of YA (Subdivision B);
  • administrative breach reductions in rate of YA (Subdivision C).

Subdivisions B and C replicate provisions in the YTA and NSA legislation.

Payment of Youth Allowance

These provisions are contained in Division 6 of Schedule 1 of the Bill. The provisions set out when payment of YA is to commence, payment by instalments, payment in periods of less than a fortnight, the rounding off of payments,public holidays, payment into bank accounts etc. They are very similar or identical to provisions throughout the Act relating to payment of a range of pensions and benefits including NSA.

Proposed s. 559D deals with the payment of instalments to persons 18 or over or persons under 18 defined as 'independent'. (Proposed s.1067A contains a definition of 'independent'.) Proposed s. 559E deals with persons under 18 not considered independent, and provides as a general rule that YA payments are to be paid on behalf of that person to a nominated 'parent', and not to that person directly (as defined in s.5(1) of the Act). This represents a marked divergence from the provisions of the Act dealing with the payment of NSA (s.649). That section provides that payment of a person's Newstart allowance is to be made to that person. The proposed provision perhaps most clearly implements the government's policy expressed in the Explanatory Memorandum that:

The Youth Allowance reinforces the Government's philosophy that families should support young people until they have achieved financial independence.(14)

It appears that the Bill has been drafted so that one of the only means for YA applicants aged less than 18 years to avoid this system of payment, is if they are considered 'independent' under proposed s.1067A. The principal avenue for gaining such status would be via proposed sub-section 1067A(9) where the applicant can show that it would be 'unreasonable' for that person to live at home. In order to satisfy this test, three criteria must be met, including proof of 'extreme family breakdown or similar exceptional circumstances' or the risk of violence or sexual abuse.

Protection of Youth Allowance

These provisions are contained in Division 7 of Schedule 1 of the Bill. Proposed s. 560 provides that a person's YA payment is to be absolutely inalienable. In other words, it is not to be sold, assigned, or subjected to or affected by a charge, writ of execution, or bankruptcy, or other events. This Division closely matches provisions that applied to the payment of NSA (previously ss 654, 655 of the Act).

However, this protection is subject to a number of conditions and limitations. The Division should be read in the context of Chapter 5 of the Act, entitled 'Overpayments and Debt Recovery'. Within proposed s. 560, these include:

  • payment to the Commissioner of Taxation at the recipient's request,(15) and
  • deductions from YA instalments in order to assist the payment of a debt of a third party (with the recipient's consent) in the same manner as is provided for in the case of other social security recipients by s.1234A of the Act.

Section 1234A makes provision for the voluntary deduction of an amount of money in order to assist the payment of a debt of a third party social security recipient (who is a debtor under the Social Security Act 1991, the Student and Youth Assistance Act 1973, the Data-matching Program (Assistance and Tax) Act 1990, the 1947 Act, or the Farm Household Support Act 1992).

Proposed s. 560A, makes provision for the protection of a 'saved amount' of YA payments in a recipient's bank account to be protected from a garnishee order which has been secured from a Court by third party creditors to recover an unpaid judgment debt. The saved amount is calculated according to a formula provided in sub-section (2), only protecting amounts of YA paid within the four week period preceding the Court orderwhich have not been withdrawn from the recipient's bank account.

Obligations of Recipients

These provisions are contained in Division 8 of Schedule 1 of the Bill. These provisions are very similar to those presently applying to YTA and NSA recipients. These include requirements to supply a tax file number, or the TFN of another person, as well as notice of particular events and changes in circumstances.

Proposed s. 561B confers power upon the Secretary to give a 'recipient notification notice' to a YA recipient(16) requiring the person to tell the Department if a specified event or change of circumstances occurs or if the person is aware that the above is likely to occur. This proposed section closely mirrors the existing s.657 relating to NSA.

Note that failure to comply with proposed s. 561B may lead to automatic termination of YA (s.563C), or automatic reduction of the rate of YA payment (s.564A)

Proposed s. 561C confers power upon the Secretary to give a 'recipient statement notice' to a YA recipient(17) requiring the person to give the Department 'a statement about a matter that might affect the payment of the allowance to the person'. This provision closely mirrors the existing s.658 relating to NSA. Failure to comply with proposed s. 561C may lead to automatic termination (s.563D).

Note that both proposed sections 561B, C create a criminal offence of 'refusal or failure to comply with notice' with a maximum penalty of 6 months imprisonment.

Continuation, variation and termination of payment

These provisions are contained in Division 9 of Schedule 1 of the Bill. The provisions mirror very closely existing provisions relating to the NSA found in ss 660-660L of the Act.

Proposed sections 563B and 563C provide for the Secretary to take follow-up action after issuing a 'recipient notification notice' under proposed s.561B, in the form of automatic termination of payments. This is possible in the event that there is either non-compliance with reporting obligations or indeed compliance with reporting obligations, where either circumstance leads to:

  • the person ceasing to be 'qualified' for YA (in accordance with Division 1); or
  • YA ceasing to be payable to the person. (in accordance with Division 2).

Proposed s. 563D provides for automatic termination of YA where there is a failure by a YA recipient to provide a 'recipient statement notice' in compliance with the requirements of proposed s.561C. Note that the proposed section would provide for the Secretary to disregard the failure in the event of 'special circumstances' (proposed s.563D(2)). There has been some consideration of the meaning of this term by the Tribunal in this and other contexts arising under the Act.xviii

Bereavement provisions

These proposed provisions are contained in Division 10 of Schedule 1 of the Bill. The provisions mirror very closely existing provisions relating to the NSA found in s.660LA to s.660LF of the Act. They allow for the payment of special bereavement payments to a YA recipient upon the death of their partner for a period of 14 weeks. Proposed s. 567 sets out the criteria for qualification for payment. These include the requirements that:

  • the claimant is a long term social security recipient receiving YA; and
  • immediately before the death of the partner, the partner was receiving a social security pension, or a service pension or was a long term social security recipient.

Schedule 2 - The Youth Allowance Rate Calculator

The Youth Allowance Rate Calculator is contained within Schedule 2 of the Bill. It is to be used to determine the rate of YA payable to an applicant, according to criteria such as whether the applicant is of 'independent' status.

The proposed provisions setting out the Calculator are to be inserted a new Part 3.5 into Chapter 3 of the Act. The effect is to replace some provisions previously applying to NSA within the 'Benefit Rate Calculator A' which resides within s.1067 of the Act.

When a person is regarded as independent

Proposed new s. 1067A sets out criteria for determination of whether an applicant fits the definition of 'independent'. This has crucial implications for the rate of YA payable, the payment of rent assistance, and whether the family assets test, parental income test and the family actual means test are applied.

The categories of persons regarded as 'independent' are:

  • a member of a 'Youth Allowance couple';
  • person with dependent child;
  • person aged 25 or more;
  • orphan;
  • if (both) parents cannot exercise responsibilities;
  • refugee;
  • person in State care;
  • where unreasonable to live at home;
  • self supporting applicant; and
  • specially disadvantaged applicant.

The categories 'unreasonable to live at home' and 'people who are disadvantaged' merit particular attention. Proposed sub-section 1067A(9) sets out the criteria for determining if a person gains 'independent' status where it is considered unreasonable for that person to live at home because of the risk of violence or sexual abuse and failure to receive 'continuous' financial or non-financial support. This sub-section would appear to have particular importance for some YA applicants aged less than 18, as the proposed sub-section 1067A(12) ('people who are disadvantaged') only applies to persons aged 18 years or more.

Presently the Act contains definitions of 'homeless person' and 'independent young person', in subsection 5(1). It is relevant to note that the test for determining 'where [it is] unreasonable to live at home' contained in proposed s.1067A(9) is proposed to be inserted into the Act, as opposed to Regulations. This appears to be the first time that this approach has been adopted for this particular test, which is presently part of the Austudy scheme in the form of Regulation 74 of the Austudy Regulations under the Student and Youth Assistance Act 1973. This drafting decision may, in some circumstances, have the effect of reducing the discretion available to departmental staff in administering the scheme to take account of particular client circumstances.

Accommodated Independent Person

Proposed s.1067B defines the category of persons considered 'accommodated independent person', for use within the YA Rate Calculator. The effect is to create an additional category of independent persons, who will receive a lower rate of fortnightly payment than persons classified as an 'independent person'. These persons will be:

  • paid the lower 'at home' maximum basic YA rate (refer Module B3); and
  • will not be paid rent assistance.

Youth Allowance Couple

Proposed s.1067C defines the category 'member of a youth allowance couple' for the purposes of determining the whether the independent rate of payment of youth allowance is payable using the Calculator.

Similarly to other provisions in the Act, this proposed amendment does not make provision for same sex couples. The proposed provisions require that 'the person has a relationship with a person of the opposite sex'.

In Re H (1989), Re Brown and Commissioner for Superannuation (1995) and Secretary DSS v SRA (1993), issues surrounding social security eligibility which turned on definitions of sex and relationships received lengthy consideration.(19)

Proposed s. 1067C sets out when a person is a member of a 'Youth allowance couple'. If a person fits this category he or she fits the criteria for independent rate of payment (proposed s. 1067A(2)).

Living away from home / at home

Proposed s. 1067D defines the category of persons 'required to live away from home', for use within the Rate Calculator. Persons falling within this category, although not being considered independent, will be paid the higher 'away from home' maximum basic rate and may be eligible for Rent Assistance.

Proposed s. 1067E defines the category of persons 'living at home' for the purpose of use within the Rate Calculator. These are persons not considered 'independent' or 'required to live away from home'. These persons are at least 21 years old, not a member of a couple, and are engaged in full-time study, and in addition have been in receipt of any one of a number of allowances and benefits for at least 26 of the 39 preceding weeks, prior to becoming a student.

Rate Calculator Modules

Proposed s. 1067G, a lengthy section, contains the actual text of the Youth Allowance Rate Calculator. It is divided into Modules A to L.According to the Explanatory Memorandum:

It follows a similar course to other overall rate calculation process Method statements in the Social Security Act, including establishing the maximum basic rate, to which is added pharmaceutical allowance and rent assistance to arrive at the maximum payment rate.(20)

Module A contains details of the proposed overall rate calculation process. It states clearly that the rate of allowance is a fortnightly rate.

Module B contains proposed details for working out the maximum basic rate for a person, depending on their circumstances.

Module C provides criteria for determining whether a YA recipient is eligible for pharmaceutical allowance. In order to qualify it is essential that the YA recipient has a 'temporary incapacity exemption' under proposed s. 542A.

Module D provides criteria for determining whether a YA recipient is eligible for Rent Assistance. Broadly, rent assistance will be available to YA recipients who are married or have a dependent child, are independent and living away from their parental home, and dependent recipients who have an employment or study related reason for living away from home. Further, the person must be renting privately and paying rent above a specified minimum threshold, which is set out at Table DA in the Calculator.

For the first time, Commonwealth rent assistance will be available to some students. Previously only State and Territory administered schemes were available to Austudy recipients. According to the Department's document entitled 'Youth Allowance: Questions and Answers':

Rent assistance has been extended to remove one of the key differences in income support arrangements between students and other young people.(21)

Module E contains provisions related to the YA assets test.

Module F contains the parental income test provisions. This module is further divided into six 'Submodules'. It contains points for working out the effect (if any) of the parental income test on a person's rate of payment for a particular payment period. The parental income test applies to persons not considered 'independent' (ie falling outside the definition contained within proposed s. 1067A. (refer to Point 1067G-F2).

Module G contains the 'family actual means test' which is part of the overall parental means test, which when seen together, examines parental income, assets and actual means.

The Actual Means Test (AMT) has applied to students under the Austudy scheme since 1996, and the Bill seeks to adapt and incorporate it into the Youth Allowance scheme. The 'working out' of the actual means of a person's family is to be determined by reference to Regulations. According to the Explanatory Memorandum, these provisions are to be replaced by the inclusion of the substantive provisions within the Act, 'in due course'.(22) However it is unclear from the Explanatory Memorandum as well as the proposed amendments to the Act, in particular Points 1067G-G2 and 1067G-G3 and 1067G-G4, exactly which Regulations are being referred to by the phrase employed, "the regulations". It would appear curious if an attempt were to be made to rely upon the Austudy Regulations, made under the Student and Youth Assistance Act 1973, in order to carry out the legal effect of the Social Security Act 1991. Presumably, prior to the foreshadowed inclusion of the AMT provisions into the Social Security Act, it will be necessary to replicate (with necessary alterations) the AMT provisions of the Austudy Regulations, as Regulations under the Social Security Act 1991. According to Sutherland and Anforth (1996), to date, no regulations have been made using the power provided by s.1364 of the Act.(23)

The operation of the AMT, provided for by Division 1B of Part 1 of the Austudy Regulations, has been the subject of considerable debate and criticism since its introduction, and it is understood that after a Departmental review, the Austudy Regulations under the Student and Youth Assistance Act 1973 are to be amended.(24)

In the main, recent criticism has drawn attention to the complexity of the AMT form and tests and to difficulties for DEETYA clients, especially those of non-English speaking backgrounds, in understanding and complying with the application requirements. One MP argued in a submission to DEETYA that further difficulties could arise if the same test were applied to test the 'actual means' of the parents of the young unemployed:

After seeing the difficulty relatively intelligent people have had understanding the forms and the rationale behind the AMT itself, I question whether the test, in its current form can be successfully applied to those seeking unemployment benefits as is proposed in the Common Youth Allowance.(25)

Another critic, Professor Tim Carney of the National Children's Youth Law Centre stated:

The poor drafting of the AMT has given rise to a host of anomalies which would be laughable were it not for the fact that it is impacting so adversely on hard pressed families.(26)

Module H contains the 'income test', otherwise known as the 'personal income test' which will apply to all YA recipients. The points contained within this module provide a means for determining the effect, if any, of a person's income (and their partner's income, if applicable) on their YA payment rate.

Proposed new Module Jprovides for the creation of a 'student income bank'. This initiative is available to full-time students (as defined in proposed s. 541B) and is designed to accommodate the fact that most full-time students who undertake paid work tend to do so during holiday periods. Students can accumulate any unused part of their fortnightly 'income free area' of $230 per fortnight up to a maximum of $6000. The aim is to enable full-time students to undertake some holiday employment without risking major reductions in their income support.

Module K provides for an additional payment of 'remote area allowance' to YA recipients living in a remote area.

Other issues

Newstart training supplement

This additional payment is presently available to certain NSA recipients under s.644 of the Act. It is unclear whether the Bill or consequential amendments will affect payment of this benefit.

Education and Employment Entry Payments

These payments are presently made available to NSA and YTA recipients by Parts 2.13 and 2.13A of the Act. The entry payments are to be restricted or abolished by the Social Security Amendment (Entry Payments) Bill 1997, which aims to abolish the employment entry payment and to restrict the availability of the education entry payment.(27)

Concession and Health Care Cards

The Health Insurance Act 1973 provides for a scheme of assistance with the cost of health care to 'disadvantaged persons', under the Disadvantaged Persons Health Scheme. Sections 5D and 5E of the Health Insurance Act provides for NSA and YTA recipients to be eligible upon meeting certain residency and dependents tests to be eligible to hold a Health Care Card (HCC).(28)

At present NSA and YTA recipients are automatically entitled to a HCC. However, there appears to be no provision within the Bill to extend this automatic entitlement to Austudy recipients who will be brought within the Youth Allowance scheme. It appears that this category of YA recipients will need to apply for a HCC and satisfy the income tests in order to obtain a card.

Note that the Explanatory Memorandum suggests that a number of matters will be dealt with by forthcoming consequential amendments prior to the anticipated commencement of the Act in July 1998. It states:

A further forthcoming social security Bill will provide for the remaining amendments that are consequential on the primary amendments, including to other legislation. (29)


  1. Explanatory Memorandum, p.2.
  2. National Centre for Social and Economic Modelling (NATSEM) Income Distribution Report, Australia's Youth, issue 6 June 1997.
  3. Australian Bureau of Statistics (1996), Schools, Australia 1995.Catalogue No. 4221.0. Canberra: Australian Bureau of Statistics.
  4. Evidence on poorer higher education transition rates of children from lower socio-economic backgrounds is provided in the report by Williams, Long, Carpenter and Hayden (1993b) on higher education entry, and a report by Lamb (1994) on the benefits of completing Year 12 in Australia.
  5. The Future of Work and Young People's Pathways to Adulthood ACOSS Paper Series Paper No. 76 Commission for the Future of Work Issues Paper No. 3.
  6. Senate Employment, Education and Training Legislation Committee, Vocational Education and Training Funding Amendment Bill 199; September 1997.
  7. ibid
  8. Joint Statement from State, Territory and Commonwealth Ministers for Vocational Education and Training, Australian National Training Authority Agreement25 September 1997
  9. Vocational Education and Training Funding Amendment Bill 1997, Second Reading Speech
  10. CCH Australia, (1997), Australian Social Security Guide, Vol 1, Par 35 050.
  11. Australian Youth Policy and Action Coalition, (1997), Broad Alliance Opposes Youth Allowance Proposal, Media Release, 17 August.
  12. Re Bartlett and SDSS (1994) 19 AAR 398; 80 SSR 1169, cited in Sutherland and Anforth (1996), Annotations to the Social Security Act 1991, Third Edition, Federation Press, at p.319.
  13. Re Bartlett and SDSS (1994) 19 AAR 398; 80 SSR 1169, cited in Sutherland and Anforth (1996), Annotations to the Social Security Act 1991, Third Edition, Federation Press, at pp.318 9.
  14. Explanatory Memorandum, p.2.
  15. In order to comply with s.1359 of the Social Security Act and s.218 of the Income Tax Assessment Act.
  16. Including where payment is being made to the recipient's parent or another person acting on his/her behalf.
  17. Including where payment is being made to the recipient's parent or another person acting on his/her behalf.
  18. In relation to "special circumstances" affecting a decision of automatic termination of a Newstart payment see Re Eisen and SDSS (1993) 30 ALD 750; 76 SSR 1102. For discussion of case law relating to meaning of "special circumstances" in other contexts within the Act refer Sutherland and Anforth, op.cit., pp.536 560.
  19. Re H and SDSS (1989) 17 ALD 639, Re Brown and Commissioner for Superannuation (1995), unreported AAT, No.10186, 15 May 1995; SDSS v SRA (1993) 43 FCR 299; 118 ALR 467.
  20. Explanatory Memorandum, p.69.
  21. Department of Social Security (1997), Youth Allowance : Questions and Answers, October, p.7.
  22. Explanatory Memorandum, p.80.
  23. Sutherland and Anforth, op.cit., p.779. A search of a computerised index of Commonwealth regulations failed to reveal any regulations presently in force that had been made under the Social Security Act 1991: refer to Internet URL
  24. Senator Vanstone (1997) 'Vanstone Intervenes to Streamline Austudy Actual Means Test', Media Release, 20 February 1997. See also Austudy Regulations in force under the Student and Youth Assistance Act 1973, comprising Statutory Rules 1990 No.443 as amended.
  25. Peter Andren MP, submission to DEETYA Austudy Actual Means Test Review, July 1997, at p.2.
  26. ABC, 7.30 Report, 4 February 1997.
  27. Social Security Amendment (Entry Payments) Bill 1997, Bills Digest No.44, 1997 8.
  28. CCHAustralia, Australian Social Security Guide, Vol.1, Par 76-080, 76 100
  29. Explanatory Memorandum, p.61.

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