Chapter One

Introduction

The inquiry

1.1 On 9 February 2012 the Senate referred the Social Security and Other Legislation Amendment (Income Support and Other Measures) Bill 2012 (the Bill) to the Community Affairs Legislation Committee (the committee) for inquiry and report by 19 March 2012.

1.2 The committee received 9 submissions, and considered the evidence received in each one. The Australian Youth Affairs Coalition, the National Council of Single Mothers and their Children, the Australian Welfare Rights Network and the Australian Council of Social Security wrote to the committee to request that hearings be held in relation to this inquiry. However, the committee received high quality submissions from stakeholders, including those named. It is normal practice for a bill inquiry to proceed on the basis of written submissions in such cases. As part of that process, the committee also wrote to the Department, seeking its response to key issues raised by stakeholders. The committee assures all those who made submissions that their evidence has been considered, and referred to, in this report.

1.3 A list of individuals and organisations that made public submissions to the inquiry together with other information authorised for publication is at Appendix 1.

Related inquiries

1.4 The Bill is part of the Building Australia's Future Workforce (BAFW) package of measures introduced by the government in the 2011–12 Budget. As the Department of Education, Employment and Workplace Relations (the Department) explained:

The package of measures: improves incentives to work through changed tax arrangements; provides opportunities for people to take up employment by providing training, education and improvements to childcare and employment services; takes new approaches through place-based measures to addressing entrenched disadvantage; and introduces new requirements for people to participate.[1]

1.5 Related bills include the Social Security Amendment (parenting Payment Transitional Arrangement) Bill 2011 and the Social Security and Other Legislation Amendment Bill 2011. In September 2011 the committee inquired into Schedule 3 (Impairment Tables for Disability Support Pension) of the latter bill. On that occasion, the committee recommended the bill be passed, but that consultation, evaluation and checking mechanisms be expanded. The Social Security Amendment (parenting Payment Transitional Arrangement) Bill 2011 was referred to the Senate Education, Employment and Workplace Relations Committee. That committee, pursuant to a resolution of the Senate of 12 May 2011, determined 'by unanimous decision...that there [were] no substantive matters that require[d] examination', and reported accordingly.[2]

Purpose of the Bill

1.6 According to the Explanatory Memorandum, the Bill, as part of the Building Australia's Future Workforce (BAFW) package, aims to 'encourage more participation in work and other activities, better align the treatment of different recipients, and make the system fairer.'[3] The bill has five primary effects:

It changes the age requirement for Newstart Allowance (NSA) from 21 to 22;
It accelerates the phase out of grandfathering arrangements for single parents still receiving Single Parent Payments;
It raises the income threshold for people on Youth Allowance (other)[4] (YA) and NSA;
It changes the calculation of penalty rates for non-participation to apply per business day, rather than per day; and
It extends the Cape York Welfare Reform Trials.

1.7 These effects are discussed in more detail below.

Age eligibility for NSA

1.8 Presently, unemployed young people are eligible for YA from the age of 16[5] to 21, and eligible for NSA from the age of 21. The Bill raises the age of eligibility for NSA to 22 years. It also aligns other related benefits, increasing the minimum age for Sickness Allowance and Long Term Income Support to 22, and the age at which a person will cease to be qualified for Youth Disability Supplement to 22.[6]

1.9 This change means that unemployed young people receiving YA cannot transfer to the higher NSA until they are 22, rather than 21. As well as being paid at a higher rate, NSA has different conditions to YA. NSA recipients must usually focus on job searching, whereas YA recipients usually focus on study.[7] However, NSA recipients without a Year 12 qualification may be eligible under the 'learn or earn' policy[8] to receive their benefit while undertaking a short course. The Bill will extend the 'learn or earn' policy to 21 year old recipients of YA.

Grandfathering arrangements for single parents

1.10 In 2006, the government reformed payments to single parents. However, parents who were previously receiving the Parenting Payment Single (PPS) were 'grandfathered', that is, it was planned that they would continue to receive the old rate.[9] It was originally possible for PPS recipients to continue to receive payments for children born from 2006 onwards. However, due to a recent change, the payment cannot be claimed in relation to a child born after 1 July 2011.[10]

1.11 The Bill makes changes to the phase out of this measure by introducing a staggered phase out for the cessation of payments to affect single parents according to the age of their youngest child:

(a) if the child is aged under 12 on 31 December 2012—when the child turns 12; or

(b) if the child is aged 12 on 31 December 2012—when the child turns 13; or

(c) if the child is aged 13 or more and under 16 on 31 December 2012—when the child turns 16.[11]

1.12 Affected single parents who are unemployed will need to transfer to NSA when their child turns the relevant age (as above). In order to ease this transition, the Bill will amend the Administration Act to allow those affected to lodge a claim for NSA up to thirteen weeks before they become eligible, rather than the day they become eligible.[12]

Income threshold arrangements

1.13 The Bill amends the income free area[13] for Youth Allowance recipients from up to $62 per fortnight to up to $143 per fortnight.[14] The $143 rate will apply to young people aged 21 who will, if the Bill is passed, be eligible for YA rather than NSA. This is a more generous rate than that which currently applies to NSA recipients. The government expects this will 'encourage young people to take up work'.[15]

1.14 The Bill also amends the NSA income test as it applies to single principal carers. The current NSA income taper test comes into effect at 50 cents for each dollar between $62 and $250 and 60 cents for each dollar above $250.[16] However, the Bill will change this test to come into effect at 40 cents in each dollar above $62 per fortnight.

Calculation of penalty rates for non-participation

1.15 Social security legislation allows penalties to be applied to NSA recipients who fail to adequately participate in job seeking activities.[17] Two of these failures are the 'no show no pay' failure and the 'reconnection failure'. A 'no show no pay' failure is applied for failure to participate in training or other activities, such as inappropriate behaviour at a job interview. A penalty is incurred at one-tenth of a job seeker's fortnightly participation payment per day on which an offence took place. A reconnection failure is applied for failure to attend an appointment with Centrelink or employment service provider. This failure incurs a penalty of one-fourteenth of the recipient's fortnightly payment applied each day until the recipient attends a subsequent rescheduled appointment.[18]

1.16 The Bill amends the Social Security (Administration) Act 1999 to align penalties applied for each of the above penalties to one-tenth of the recipient's fortnightly payment.[19]

Cape York Welfare Reform Trials extension

1.17 The Bill amends the Indigenous Education (Targeted Assistance) Act 2000 to extend the Student Education Trusts measure. This extension is part of a wider extension to the Cape York Welfare Reform Trials announced by the government in May 2011.[20]

Navigation: Previous Page | Contents | Next Page