Bills Digest No. 159 2001-02
Family and Community Services Legislation Amendment (Australians Working
Together and other 2001 Budget Measures) Bill 2002
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
Main Provisions
Endnotes
Contact Officer & Copyright Details
Passage History
Family and
Community Services Legislation Amendment (Australians Working Together
and other 2001 Budget Measures) Bill 2002
Date Introduced:
16 May 2002
House:
House of Representatives
Portfolio:
Family and Community Services
Commencement:
the Schedules commence on the following dates:
- Schedules 1, 4
& 5 – 1 July 2003,
- Schedule 2 – 20
September 2002,
- Schedules 3 &
7 – 1 July 2002, and
- Schedule 6 – 28
April 2003.
Purpose
The Bill will give effect to a range
of measures that were announced in the 2001-2002 Budget and form part
of the Australians Working Together
Package. The package of measures is the first stage of the Government’s
response to the McClure Report on welfare reform.(1)
In July 2000 the final report of the Reference Group
on Welfare Reform was delivered to Senator Newman the then Minister for
Family and Community Affairs. The Group, chaired by Patrick McClure of
Mission Australia, had been commissioned in October 1999 to advise the
Government on possible approaches to welfare reform.(2) The
Government's response to the report was the Australians
Working Together Package in the 2001-02 Budget.(3)
This Bill provides the legislative changes required to implement the package.
Background
The McClure Report recommended the extension of a form
of mutual obligation to parents receiving income support that took account
of their caring responsibilities, while preparing them for workforce re-entry.
Recommendation D12 read as follows(4):
D12 Implement,
with phased transitional arrangements, a participation model of income
support for parents with the following features:
- The substantial caring responsibilities of those with
children under school age (six years of age) and those caring for a
child with a disability be regarded as meeting participation requirements.
- Parents with primary school aged children (six to thirteen
years of age) be required to attend an annual compulsory interview to
discuss their current and future capacity for increasing participation.
- Parents could choose to enter into a voluntary participation
plan, which linked them to available assistance for education, training,
employment and other forms of participation. Parents of high school
aged children (thirteen and over) be required to enter into a Participation
Plan, including job readiness and needs assessment, part-time job search,
part-time employment or part-time preparation for paid employment (including
education, training, or other relevant forms of participation).
Parents receiving income support have been able to continue
for many years without actively preparing for self-support when they no
longer have dependent children. Measures to assist them to prepare for
that eventuality have been entirely voluntary. Many parents, when their
children reached 16 years of age, have had difficult transitions back
into the workforce, because of the erosion of skills and loss of networks.
The report refers to a pilot study by the Department of Family and Community
Services (FACS) that suggested that few of this group participate voluntarily
in programs like the Jobs Education and Training Program (JET). The results
suggested that there is a low uptake in voluntary interviews, making them
'relatively ineffective'. On the other hand, compulsory interviews were
found to be valuable and were supported by a majority of participants.
'For most groups, it appears as if a structured approach within a requirement
framework provides the best measure of assistance for Parenting Payment
recipients.'(5)
This Government has adopted this recommendation in the
following form:(6)
- From September 2002, people who receive parenting payment and whose
youngest child is aged 12 to15 years will need to attend an annual interview
with a Centrelink Personal Adviser. From July 2003 they will be expected
to undertake part-time activity of around six hours each week.
- From July 2003, all people who receive parenting payment and whose
youngest child is aged 6 to 15 years will be required to attend annual
interviews at Centrelink.
- A New Transition to Work program to help people return to paid work
after long absences will be introduced. It will build on the success
of the Jobs, Education and Training (JET) and Return to Work programs.
- Additional assistance with child care will be provided.
Most of these do not require legislative amendments,
but the participation requirement for those with children aged 13 to 15
years does. The amendments in Schedule 1 provide for:
- participation agreements;
- participation agreement breach penalties; and
- access to the approved work programs and the supplement of $20.80
per fortnight.
All of these measures fall colloquially within the notions
of 'mutual obligation' and 'work for the dole'. These notions find their
expression in the Social Security Act 1991 in the form of 'activity
test' requirements, which include the 'newstart activity test agreement'
and 'youth allowance activity test agreement' and the subsidiary 'approved
program of work for unemployment payment'. The measures in this Bill appear
to be modelled substantially on the activity test and activity test agreement
for youth allowance, although a number of the requirements are more flexible
and emphasise issues such as capacity and suitability.
The Bill
Part 1 of Schedule 1 amends the Social
Security Act 1991.
Part 2.10 of the Social Security Act 1991 deals
with parenting payment.
Agreement Requirement
Item 12 inserts a new Division 2 into Part 2.10.
This imposes an obligation on recipients of parenting payment to enter
into a 'participation agreement' where their youngest PP child has turned
13 years (proposed section 501A). A party to an agreement
must 'take reasonable steps' to comply with its terms (proposed subsection
501(1)). However, in any assessment of reasonableness, it is necessary
to consider whether the terms of the agreement were appropriate, having
regard to the person's capacity to comply and to the person's needs (proposed
subsections 501(2) and (3)). Recipients are exempt if,
for example, their child is profoundly disabled (proposed subsection
501A(2)).
Items 43 and 48 of Schedule 1 amend
the Social Security (Administration) Act 1999. They deal with automatic
payment pending internal or external merits review of a decision regarding
a person's refusal to enter into a participation agreement.
Participation Agreement Terms
The terms of the participation agreement are generally
consistent with the terms that apply to the youth allowance activity agreement.
However, there is a general presumption that the participation agreement
will involve 150 hours of 'approved activities' per six months (proposed
subsection 501B(1)); the 'work for the dole' element in the
'approved activities' is voluntary (proposed paragraph 501B(2)(f));
and the 'other approved activities' element involves a proposal by the
Secretary rather than the parenting payment recipient and it expressly
requires agreement between the parties (proposed paragraph 501B(2)(k)).
In essence, the intent seems to be to impose very general
obligations on parenting payment recipients and provide a range of options
to allow tailoring of participation requirements.
In passing it is worth noting a possibly incongruent
translation from the youth allowance regime. The participation agreement
provisions include an exemption from the 'work for the dole' requirement
relating to issues such as illness, disability or injury (proposed
subsection 501B(7)). This makes sense in the context of a compulsory
'work for the dole' requirement (youth allowance) but might be considered
redundant in the context of a voluntary 'work for the dole' requirement
(parenting payment).
Rate Reduction
Item 13 inserts a new Subdivision A into Division
4, Part 2.10. This deals with the rate of parenting payment where the
recipient is not participating or has breached an agreement. Where a person
takes part in a participation agreement, there becomes payable an 'approved
program of work supplement' of $20.80 per fortnight (proposed section
503A). However, the basic rate is reduced when a person breaches
the agreement once or twice within a two year period. A breach is where
the person 'fails to take reasonable steps to comply' with a participation
agreement (proposed subsection 503B(2)). Following the first
or second breach, the rate of parenting payment is progressively reduced
(proposed section 503E). However, if, within 13 weeks, the recipient
takes 'reasonable steps to comply' with the agreement, the original rate
becomes payable, and the qualification is backdated, notwithstanding the
existence of this or any subsequent 'breach penalty period' that arises
during those 13 weeks (proposed subsection 503C(3)).
Payability
Item 11 inserts new Subdivision C into Division
1, Part 2.10. This deals with payability of parenting payment in circumstances
where the recipient has breached an agreement three or more times within
a two year period (proposed section 500ZA). A breach is
where the person 'fails to take reasonable steps to comply' with a participation
agreement (proposed section 500ZB). Following this third
breach, parenting payment is generally not payable for a period of 8 weeks
(proposed subsection 500ZC(1)). However, as above, if, within
13 weeks, the recipient takes 'reasonable steps to comply' with the agreement,
it becomes payable again and the qualification is backdated (proposed
subsection 500ZC(3)).
Items 40 and 46 amend the Social Security
(Administration) Act 1999. They deal with discretionary payment pending
internal or external review of a decision regarding breach of a participation
agreement that would result in a non-payment period.
Special Benefit
Generally, the Secretary has a discretion to pay Special
Benefit to a person who has been disqualified from a social security payment
or for whom it is not payable. However, that discretion cannot be exercised
in some circumstances, including where a person has been disqualified
from newstart allowance for failure to enter into or comply with an activity
agreement. Item 35 extends this prohibition to the participation
agreement above.
Grant
Part 2 of Schedule 1 amends the Social
Security (Administration) Act 1999.
Generally, a payment must be granted if the claimant
is qualified and the payment is payable. The disjunction between qualification
and payability allows the social security law to deal with these issues
separately. The separation is significant in various areas, including
the initial grant. For example, under the Social Security (Administration)
Act 1999 newstart allowance must be granted notwithstanding that it
is not payable because of a waiting, non-payment or rate reduction period
(subsection 37(1)).
The Australians Working Together package included
a supplementary payment for people attending approved literacy and numeracy
training, of $20.80 per fortnight.(7)
Schedule 2 provides for this supplement to be
available to recipients of newstart allowance, youth allowance, parenting
payment, mature age allowance, widow allowance, partner allowance and
disability support pension. To be qualified, a person must attend an approved
literacy and numeracy course on at least one day during the relevant fortnight.
This supplement is not payable if the person receives
a pensioner education supplement, approved program of work supplement
or a CDEP Scheme Participant Supplement.
No claim is required for the supplement (Part 2,
item 4)
This program is an expanded version of the existing Community
Support Programme (CSP). Schedule 3 provides for PSP to replace
CSP as an activity under the activity test. The bulk of the provisions
provide for participation in the PSP to cancel the effect of certain penalties
and waiting periods imposed under:
- the liquid assets test,
- moving to an area of low employment prospects non-payment period,
- the seasonal workers preclusion period,
- the ordinary waiting period for newstart allowance,
- the activity test, and
- the administrative breach arrangements.
The program is directed at people with multiple non-vocational
barriers to employment such as homelessness, drug problems, domestic violence
and mental illness.
The Australians Working Together package included
measures to improve assistance to mature age income support recipients
and to phase out several payments.(8) Schedule 4 deals
with the closure of mature age allowance and partner allowance to new
claimants from 1 July 2003. Both payments were originally conceived as
temporary payments to address the income support needs of particular groups
with little recent attachment to the workforce. MAA was introduced in
March 1994 as an interim measure to assist older long term jobless people
facing difficulties obtaining work in a tight labour market. From 1 July
1996, MAA became a permanent payment. PA was introduced in September 1994
to replace dependent spouse payments to certain income support recipients.
In 1995 it was restricted to people born before July 1955 so that it would
eventually be phased out by 2020. The other payment for mature age jobless
people is the widow allowance (WA) introduced in 1995. WA will be phased
out from 1 July 2005 with new grants from this date only to be made to
women who were born on or before 1 July 1955.
The McClure Report recommended that payments for mature
age jobless people be integrated into a single payment. The Governments
approach differs from this recommendation in that it plans to phase out
all such payments and assist that group through newstart allowance but
with modified activity requirements (see Schedule 5).
Background
To accommodate people affected by the changes set out
in Schedule 4, Schedule 5 provides for changes to the activity
test for those aged 50 or more with limited prospects of employment in
the short-term. Special provision for older unemployed people are not
new. As far back as 1986, reduced reporting requirements were introduced
for them. Activity testing arrangements have also been modified somewhat
for this group. The current Bill adds to the existing arrangements to
increase flexibility.
The Bill
Schedule 5 contains the following adjustments
to the activity testing arrangements:
- greater latitude is allowed for people aged 50 years or more to qualify
as unemployed,
- existing reduced reporting provisions (reporting at up to 12 weekly
intervals rather than fortnightly) for those aged 50 years or more are
modified so that receipt of income support for 12 months or more is
no longer a necessary qualification,
- those aged 50 years or more may not be required to participate in
a work for the dole scheme,
- greater latitude is given for Centrelink officers to suggest activities
for over 50 year olds that will help satisfy the activity test,
- eased application of activity test and administrative breach penalties,
and
- limited access to payment during temporary absences from Australia
(item 15).
Latitude in relation to being 'Unemployed'
In order to qualify for newstart, a person must be unemployed
and must comply with some conditions such as satisfying the 'activity
test' (paragraph 593(1)(b)). Moreover, if a person is required, as part
of the activity test to enter into an 'activity agreement', he or she
must 'enter into that agreement' (paragraph 593(1)(e)). Thus, arguably,
a failure to immediately enter into an activity agreement means that a
person cannot be considered 'unemployed'.
The Bill relaxes the timing requirement for people aged
50 years or more. It is sufficient that they are not 'unreasonably delaying'
entry into an activity agreement (items 1 and 10 of Schedule
5).
This would seem to reflect an assumption that there may
be difficulties in tailoring appropriate activity agreement terms to people
aged 50 years or more. However, it may raise an issue in relation to those
aged under 50 years. If there are difficulties in tailoring appropriate
activity agreement terms to these working age people, it may be considered
appropriate that the same flexibility be introduced in relation to the
timing requirement.
Approved Activities
A number of options are available under the newstart
activity test. For example, a person may be required to participate in
paid work, a work for the dole scheme or work related training (subsection
601(2)). However, there is an exemption from the 'work for the dole' requirement
relating to issues such as illness, disability or injury (subsection 601(2E)).
This is extended to those over 50 years regardless of other considerations
(item 9).
Activity Agreement Terms
In relation to the 'approved activities' for newstart
activity agreements, the 'other approved activities' element is relaxed
in the same was as for parenting payments above (item 11).
Reporting Requirements
Currently, a person is qualified for newstart for a period
where they comply with reporting requirements for that period (generally
12 weeks). However, leeway may be given where, for example, the Secretary
is satisfied that, in the absence of a report, a person may reasonably
be expected to comply with the qualification requirements (section 600).
For people aged over 50 years, leeway may be given where (a) the person
has received a social security payment continuously for 12 months and
(b) the Secretary is satisfied that the person's income from employment
is not likely to increase (paragraph 600(6)(a)).
The Bill removes the requirement relating to receipt
of a payment for 12 months (item 8).
Payability and Rate Reduction
As noted, while there are payability and rate reduction
penalties for repeated breaches of parenting payment participation agreements,
there are concessions where a person takes reasonable steps to comply
with the agreement and thereby remedy the breach. In specific terms, parenting
payment is not payable for 8 weeks and the rate is progressively reduced.
But this can be remedied by any reasonable compliance steps taken within
13 weeks.
The Bill applies a similar set of concessions to newstart
recipients over 50 years, although the remedial steps must be taken during
the 8 week penalty periods (items 12–14).
Background
Schedule 6 provides for a Working Credit for workforce
age income support recipients. Credits would be built up during periods
when little or no private income is earned. Those credits would reduce
the amounts that are counted under the income test when earned income
increases. This idea is not new. In 1987 the Hawke Government introduced
a similar earnings credit for pensioners. In 1994 an earnings credit was
introduced for newstart and sickness allowees. The present Government
abolished both schemes in its first term, citing doubts about their effectiveness
as justification for that action.(9) The then Minister for
Social Security, Mr Ruddock, stated that 'of the estimated 4 million customers
who could potentially access the scheme, only 3 per cent…actually accessed
their earnings credit balance over the course of a year'. The Government's
view was that the existing income test was a 'more equitable arrangement'
which provided 'a better incentive to work for DSS customers due to its
less complicated nature and generous taper provisions'.(10)
This sort of scheme was put back on the agenda because
the McClure Report included a strong recommendation for a ‘transition
bank’. The Government included it in their response to the Report in December
of 2000(11) and the Labor Opposition welcomed the move.(12)
The proposal details were given in the Australians Working Together
package.(13)
Schedule 6 includes the following major measures:
- the working credit rules,
- provisions to allow a person to use their working credit and not lose
qualification for their payment because they are employed, and
- people losing payment because of employment income will, for a twelve
week period, be able to retain concession cards, exemption from income
tests for Family Tax Benefit and Child Care Benefit, exemption from
the Youth allowance parental income test for their child, rent assistance
and partner income test concessions, various supplements and telephone
allowance.
The Bill
Schedule 6 amends the A New Tax System (Family
Assistance) Act 1999, Social Security Act 1991 and the Social
Security (Administration) Act 1999.
Working Credit Rules
Item 26 inserts Division 1AA—Employment income
attribution rules into Part 3.10. This area of the Social Security
1991 that deals with income testing rules.
People on income support with no private income in any
fortnight will build up 48 Working Credits. Their credit will build up
to a maximum of 1000 credits. If they earn income between $1 and $48 per
fortnight the credits they receive will be reduced by one for each dollar
earned. When they have income from employment that is enough to affect
their payment they can use their credit. Income over these amounts would
reduce their credit before any excess was assessed under the income test.
For example if a newstart allowee earned $500 from casual work in a fortnight,
the income free area of $62 would be deducted, leaving $438. If their
Working Credit totalled more than that, they would keep all their payment
for that fortnight. Their credit would be reduced by 438. If their credit
was less than 438 the excess would be assessed under the income test.
Working Credit and qualification for Payments
and other Allowances
The Bill provides that a newstart allowee may earn employment
income without affecting their qualification for newstart if they have
not exhausted their working credit balance (item 8). Moreover,
for any income tested social security payment that has ceased, after a
person has exhausted their working credit balance, they are deemed to
be receiving that payment so as to allow them to receive subsidiary allowances,
such as the 'approved program of work supplement' and the 'language, literacy
and numeracy supplement' (item 7). The extension lasts for 12 weeks
or until they otherwise become disqualified.
- Participation Support for a More Equitable Society, Final Report
of the Reference Group on Welfare Reform, July 2000.
- For further material on the welfare review process see the Welfare
Review e-brief at: http://www.aph.gov.au/library/intguide/SP/welfarebrief.htm.
- For details see Australians Working Together website at: http://www.together.gov.au/.
- Participation
Support for a More Equitable Society, Final Report of the Reference
Group on Welfare Reform (McClure Report), July 2000, p.43.
- McClure Report, op. cit., p.42.
- See fact sheet at: http://www.together.gov.au/GovernmentStatement/FactSheets/FS15.asp
for more detail.
- See fact sheet at: http://www.together.gov.au/GovernmentStatement/FactSheets/FS02.asp
for more detail.
- See fact sheet at: http://www.together.gov.au/GovernmentStatement/FactSheets/FS17.asp
for more detail.
- The Hon. Philip Ruddock MP, 'Earnings Credit Scheme', Answer to Question
on Notice No. 1236, House of Representatives, Debates, 24 Feburary
1997, p. 1160.
- ibid.
- Senator Jocelyn Newman, ‘Welfare Reform Encourages People to reach
Potential’, Media Release, 14 December 2000.
- Senator Chris Evans, ‘No Obligation and No Commitment’, Media Release,
14 December 2000.
- See fact sheet at: http://www.together.gov.au/GovernmentStatement/FactSheets/FS02.asp
for more detail.
Dale Daniels and Nathan Hancock
3 June 2002
Bills Digest Service
Information and Research Services
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ISSN 1328-8091
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