Bills Digest no. 124 2007–08
Social Security and Other Legislation Amendment
(Employment Entry Payment) Bill 2008
WARNING:
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.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Contact officer & copyright details
Passage history
Social Security and Other
Legislation Amendment (Employment Entry Payment) Bill
2008
Date
introduced: 29 May
2008
House: House of Representatives
Portfolio: Employment and Workplace
Relations
Commencement:
1 July 2008
Links: The
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
To abolish the Employment Entry
Payment Scheme, which will require amendments to the Income Tax
Assessment Act 1997, the Social Security Act 1991 and
the Social Security (Administration) Act 1999.
The Employment Entry Payment (the EEP) was introduced by the ALP
in 1989, and is a one off payment designed to assist those
unemployed for a period of 12 months or more who are meeting the
short term costs of moving into and retaining full time work, such
as clothing and transport costs .[1] The EEP has been argued to be of great assistance
to people re-entering the workforce [2] by further removing barriers to
employment.[3]
- It is paid after a person starts a full-time job.[4]
- It does not need to be claimed it is paid automatically.
- It is only payable once every 12 months.
- It is not refundable.
An income support recipient may be entitled to $312.00 if they
receive:
- Disability Support Pension or have a partial capacity to work
and receive either Newstart Allowance or Youth Allowance.
An income support recipient may be entitled to $104.00 if they
receive:
- Newstart Allowance or Youth Allowance (Jobseeker) as a
principal carer of dependent children, or
- Mature Age Allowance, Partner Allowance, Widow B Pension, Widow
Allowance, Carer Payment, Parenting Payment or Special
Benefit.[5]
In 1996 and 1997 the Coalition Government unsuccessfully
attempted to abolish the EEP on the grounds that Departmental
evaluations of the EEP indicated that it did not appear to have
been a major factor in influencing people s decisions to take up
work, that is, that the payment did not operate as an
incentive.[6]
However, the payment is more appropriately characterised as a
facilitative payment -- to help with the extra costs of starting
work, eg. new or special work clothes or uniform, travel costs
before first salary/wages payment.
The ALP opposition raised objections to the Coalition Government
s attempts to abolish the EEP, making the following points in
reply:
Jenny Macklin, MP (the then Shadow Minister for Social Security,
the Aged, Family and Community Services and Status of Women) argued
that:
The taking away of these payments is going to
mean that people are going to be on unemployment benefits and are
not going to be able to access employment in the same way that they
were before.[7]
Martin Ferguson, MP pointed out that:
There is not a huge payment, but a payment that
was very much valued by the unemployed to assist the unemployed in
getting back to work.[8]
And Leo McLeay, MP served a reminder that:
Often it is little barriers which stop people
getting into the workforce. But the government is going to abolish
that now and make it harder for people to get work.[9]
In 1999, the Coalition Government again unsuccessfully attempted
to remove the EEP by claiming that it was replacing it with
something akin to the EEP - the Special Advanced Payment.[10] Specifically, the
proposal at the time was to replace the $100 EEP with a Special
Employment Advance payment of between $50 and $500. However, ALP
Member Craig Emerson, MP, pointed out that:
this advance would have to be paid back out of
future income. [And] because of the strict eligibility conditions
applying to the proposed advance and the fact that it is repayable,
it will not come close to making up for the abolition of the
employment entry payment.[11]
The then Coalition Government reconsidered its position,
retained the payment and subsequently made policy initiatives and
statements that were more embracing and positive about the value of
the EEP. For example, in 2005, Job seekers with a disability and a
part-time requirement were made eligible for a $312 EEP.[12] Also in 2006, the EEP
was further extended to income support recipients who had breached
compliance with activity requirements that is, people who are
subject to a non-payment period would still be eligible for the
employment entry payment if they find
and commence employment or increase the number of hours of
employment during the non-payment period .[13]
According to Stewart McArthur, MP:
This [was] a sign of the Howard government s
commitment to assisting people to make the transition from welfare
to work. It is a relatively small point, but it does show that some
of the changes .do assist people to make that sometimes difficult
move from welfare, where they collect their money every two weeks,
back into a job. That is sometimes quite difficult to achieve, and
we are trying to make that transition as easy as possible.[14]
In her Second Reading Speech, the
Minister for Employment and Workplace Relations, the Honourable
Julia Gillard stated:
Consistent with its theme of responsible
economic management, the government identified a number of programs
that were inefficient or wasteful, or were largely duplicated
elsewhere. The employment entry
payment is one such scheme.[15]
In this regard, the Minister pointed to the introduction of what
she considered to be similar or better assistance programs which
are more flexible in their application. These are the special
employment advance, job seeker accounts provided via the job
network, and the working credit . The Minister also indicated that
further improvement to the existing system would occur through the
new employment services model. [16]
Interestingly though, the three programs that the Minister
refers to in her speech do not seem to serve exactly the same
function as the EEP.
The Special Employment Advance was introduced by the Coalition
Government in 1999.
- It can be paid from $50 to $500.
- It is refundable.
- It must be claimed.
- Approval and payment is cumbersome it can often take 7 to 10
days to get paid.
Job seeker Accounts provided via the job network were introduced
by the Coalition Government in 2003.
Key operation features of this payment include:
- It must be applied for and approved through the Job Network
provider.
- It is not reactive if a job opportunity comes up quickly, the
approval and payment time can often take several days like the
Special Employment Advance.
The Working Credit was introduced by the Coalition Government in
2001 and is similar to the earnings credit for Newstart and
Sickness allowees, introduced by the Labor Government in 1994. The
purpose is to allow those out of work the right to accumulate up to
$1,000 of earnings without losing income support .[17] The aim was to remove a
disincentive to take intermittent jobs or short-term work which
could open the door for [the unemployed] to get long-term
employment .[18]
Some
key operational features about working credits include:
- It is accumulated as a person spends time on payment with no
employment income.
- A credit of up to 1,000 points can be accrued.
- These points are used first if the person has any employment
income and is still on income support so essentially part-time
work.
- It cannot be used if the person starts full-time work as they
are then cancelled off payment.[19]
According to the Explanatory Memorandum, the cessation of the
scheme is expected to provide a net savings of $60.8 million over a
five year period.[20]
Items 3, 4, 9 and 10 of the Bill repeal the key
provisions relating to employment entry payment, so abolishing the
scheme.
Item 5 repeals paragraph 1061EO(a) of the
Social Security Act 1991, which currently provides that a
person is not eligible for a special employment
advance if they are eligible for an EEP in respect of
offered employment. Because the EEP scheme is being terminated,
this provision will no longer be required.
Item 11 is a transitional provision designed to
ensure that those who are eligible and qualify for the EEP but do
not put in a claim prior to 1 July 2008, will not be disadvantaged
by these amendments. In practice, this means that where an income
support recipient qualifies for an EEP prior to 1 July 2008, then
as long as the claim for the EEP is made in accordance with the
rules that would have applied if the EEP were not repealed, then
that person will still be able to receive an EEP after 1 July
2008.
Juli Tomaras
4 June 2008
Bills Digest Service
Parliamentary Library
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