RESEARCH PAPER SERIES, 2019–20              13 March 2020

JobSeeker Payment: a quick guide

Don Arthur

Social Policy Section

From 20 March 2020 Newstart Allowance will be renamed JobSeeker Payment. At the same time, Sickness Allowance and Wife Pension will cease. Recipients of Sickness Allowance will move onto JobSeeker Payment along with some recipients of Wife Pension. Bereavement Allowance will be replaced by new arrangements using the JobSeeker Payment and Youth Allowance.

These changes are part of a package announced in the 2017–18 Budget. According to a Budget fact sheet these changes were guided by the recommendations of the 2015 McClure Review.

As with Newstart Allowance, JobSeeker Payment will include recipients with disabilities and parenting responsibilities that prevent them from pursuing full-time work. Despite its name, JobSeeker Payment will include some recipients who are not required to search for work.

Around half of all Newstart Allowance recipients are classified as job seekers.

This quick guide provides historical background on Newstart Allowance and changes associated with JobSeeker Payment, as well as details on who will receive the payment.

Background

Newstart Allowance

Newstart Allowance was created by the Hawke Labor Government in 1991. As part of a broader set of reforms, the Government replaced the existing Unemployment Benefit with two new payments:

•        Job Search Allowance for people who were unemployed for less than 12 months and all unemployed people under 18 and

•        Newstart Allowance for those still unemployed after 12 months.

Under the reforms, Newstart Allowance recipients were required to accept additional obligations and sign an agreement that set out the activities they would undertake to help improve their job prospects.

Treasurer Paul Keating described it as ‘the abolition of the old unemployment benefit structure’. However, as the Compendium of Legislative Changes in Social Security 1983–2000 notes: ‘Many features of the new payments were the same as those they superseded’ (p. 207).

In 1996 the Howard Coalition Government brought Job Search Allowance and Newstart Allowance together into a single payment called Newstart Allowance. Then in 1998 the Government moved younger Newstart Allowance recipients to the new Youth Allowance.

Currently Newstart Allowance is available to people who meet each of the following conditions:

•        are at least 22 but under Age Pension age

•        are looking for paid work (there are some exceptions to this condition)

•        are under the income and assets test limits

•        are prepared to meet mutual obligation requirements.

McClure Review recommends tiered Working Age Payment

In December 2013 the Minister for Social Services, Kevin Andrews, commissioned a review of the income support system headed by Patrick McClure.

The 2015 report of the McClure Review noted that current allowances ‘do not reflect that people with limited capacity to work can stay on an allowance for a significant period of time’. To address this problem it recommended creating a new Working Age Payment with three different rates of payment:

•        an Upper Tier ‘for people with disability with a limited capacity to work because of disability and therefore are more likely to stay on payments for a longer duration’

•        a Middle Tier ‘for people with moderate limitations on their capacity to work and/or people with dependent children’ and

•        a Foundation Tier ‘for people with full capacity to work and/or to study’.

Under this proposal, the Foundation Tier would not be less that the current rate of Newstart Allowance.

2017–18 Budget—Welfare reform

Renaming Newstart Allowance was part of a broader set of changes announced as part of the 2017–18 Budget. The Government announced that ‘seven current working age payments will be consolidated or ceased’. These payments are Newstart Allowance, Sickness Allowance, Bereavement Allowance, Wife Pension, Partner Allowance, Widow B Pension and Widow Allowance. This was consistent with the McClure Review’s proposal to bring together allowances with similar rates and conditions.

Recipients of Sickness Allowance and some recipients of Wife Pension will transfer to JobSeeker Payment. Bereavement Allowance will be replaced by new payment arrangements for people on JobSeeker Payment and Youth Allowance. Newly bereaved people will receive a triple fortnight’s pay in the first fortnight instead of a separate allowance.

Recipients of Widow B Pension, Partner Allowance, Widow Allowance and some recipients of Wife Pension will transfer to the Age Pension. Some recipients of Wife Pension will transfer to Carer Payment. All of these payments have previously been closed to new entrants. The Government began phasing out Widow B Pension in 1987 and Widow Allowance in 2005. Wife Pension was closed to new entrants in 1995 and Partner Allowance in 2003. These payments are often known as ‘dependency-based payments’ because they were granted on the assumption that recipients were financially dependent on another social security recipient or a deceased or divorced husband or partner.

Links to further information

Details for each of these payments is available in historical versions of A Guide to Australian Government Payments. Information on the numbers of people receiving each payment is available from data.gov.au: DSS Payment Demographic Data.

For more information on the changes, see the article: ‘A simpler welfare system’ in the Parliamentary Library’s Budget Review 2017–18.

The changes were made by the Social Services Legislation Amendment (Welfare Reform) Act 2018. For an explanation of the legislation, see the Bills Digest and Explanatory Memoranda available on the Bill’s home page.

Payment rates and conditions will stay the same

Services Australia has advised Newstart Recipients that: ‘Newstart Allowance will end on 20 March 2020 and we’ll transfer you to JobSeeker Payment. There are no other changes if you continue meeting your requirements’.

Apart from changes made to incorporate Wife Pension, Sickness Allowance and Bereavement Allowance into JobSeeker Payment, payment rates and conditions for JobSeeker Payment will remain the same as for Newstart Allowance.

Not all recipients will be required to search for work

As with Newstart Allowance, not all recipients of JobSeeker Payment will be required to search for work. In December 2019 the Department of Social services classified around half of all Newstart Allowance recipients as ‘job seekers’ (see Table 2).

There are a number of reasons Centrelink may not require Newstart recipients to search for work. In some cases where people are expected to work, but not full-time, Newstart functions as an income supplement for part-time workers. In some circumstances, such as serious illness, Newstart recipients are not expected to work at all.

Disability

A significant proportion of Newstart recipients have a disability that limits their ability to work. These recipients may be assessed as having a ‘partial capacity to work’, which means they are only required to work or study for a limited number of hours a week. If they work or study for the required number of hours, they can continue to receive Newstart without having to engage in any further mutual obligation activities.

Changes designed to reduce the flow onto the Disability Support Pension are likely to have increased the number of Newstart recipients with partial capacity.

Sickness

Newstart recipients can be exempted from mutual obligation activities if they are temporarily incapacitated due to illness or injury. These exemptions can be long-term, where a recipient has a condition such as cancer, severe stroke or serious burns.

Prior to March 1996 Centrelink moved Newstart recipients to Sickness Allowance if their period of incapacity extended beyond 13 weeks. Sickness Allowance is paid to those who have a job or are studying, but are temporarily unable to work or study because of a medical condition.

Caring for a child under 16

Newstart recipients who are the principal carer of a dependent child under 16 are not required to search for work if they are participating in 30 hours per fortnight of any combination of paid work, study or, in some circumstances, voluntary work.

Changes in 2006 and 2013 designed to reduce the number of single parents eligible for Parenting Payment Single are likely to have increased the number of principal carers receiving Newstart Allowance.

Mature age

Newstart recipients who are 55 or older can meet their mutual obligation requirements by engaging in 30 hours per fortnight of activities that can include paid work, self-employment, or approved voluntary work. Some recipients must engage in at least 15 hours of paid work to meet this requirement.

In the past the Department of Social Services had a Mature Age Allowance for people 60 and over who were unemployed. This was closed to new entrants in 2003 and ceased in 2008.

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