CHAPTER 1
Introduction
Reference
1.1
On 19 June 2012, the Senate referred the provisions of the Social
Security Legislation Amendment (Fair Incentives to Work) Bill 2012 (the bill)
to the Senate Education, Employment and Workplace Relations Legislation
Committee (the committee) for inquiry and report by 22 August 2012.[1]
Conduct of inquiry
1.2
The committee advertised in The Australian on 4 June 2012,
calling for submissions by 23 July 2012. Details of the inquiry were also made
available on the committee's website.[2]
1.3
The committee also contacted a number of organisations inviting
submissions to the inquiry. Submissions were received from 37 individuals and
organisations, as detailed in Appendix 1.
1.4
A public hearing was held in Melbourne on 9 August 2012. The witness
list for the hearing is at Appendix 2.
Purpose of the bill
1.5
The bill was introduced in the House of Representatives by the Hon. Bill Shorten
MP, Minister for Financial Services and Superannuation and the Minister for
Employment and Workplace Relations on 31 May 2012. It seeks to implement
measures relating to Parenting Payment, the liquid assets test and the
definition of termination payments in line with announcements in the 2012–13
Budget.
1.6
The bill has three objectives. Broadly, the bill proposes to:
-
amend the Social Security Act 1991 to remove transitional
arrangements for certain Parenting Payment recipients (Schedule 1);
-
amend the Social Security Act 1991 to increase the liquid
assets limit for certain income support applicants (Schedule 2); and
-
amend the definition of 'termination payment' in the Social
Security Act 1991 as it relates to income maintenance periods
(Schedule 3).[3]
1.7
According to the Financial Impact Statement, Schedule 1 measures would
save $727.9 million over four years and the Schedule 2 measure would cost $36
million over four years.[4]
Key provisions of the bill
Removal of grandfathering
provisions
1.8
Schedule 1 of the bill seeks to remove 'grandfathering' provisions,
established on 1 July 2006, with the result that from 1 January 2013,
eligibility for parenting payment for all recipients would cease when the child
of a partnered parent turns 6 years old, or when the child of a single parent
turns 8 years old.[5]
Parents no longer eligible for parenting payment would be moved to Newstart
Allowance. For those coming from Parenting Payment (PP) Single this means a
lower rate of payment and similar activity requirements. (PP Partnered is the
same payment rate as Newstart). There are also other financial consequences,
which are discussed in Chapter 2.
1.9
Previously, 'grandfathered' recipients could receive parenting payment
until their youngest child turned 16 years old if the child was in their care
before 1 July 2011. Changes passed by Parliament on 9 May 2012
reduced this age to 12 years. The government's stated intention is that
these further changes would encourage parents with school age children to
return to the workforce earlier and ensure that all parents are treated equally.[6]
1.10
Currently, more than two thirds of parents in receipt of parenting
payment cease to receive PP once their youngest child turns 6 (or 8 in the case
of single parent families). However, one third of recipients of PP, all of whom
began claiming PP before 1 July 2006, are currently eligible for PP until their
child turns 12. The bill proposes to remove this distinction. If passed, this
proposal will eventually affect all 147 000 grandfathered PP recipients. On 1
January 2013, just under 63 000 recipients would be affected (of which the
majority are PP Single).
Liquid assets limit
1.11
Schedule 2 of the bill would amend the Liquid Assets Waiting Period
thresholds to allow newly unemployed Australians and new students to retain
more of their savings when they commence looking for work or studying.
Currently, people claiming Newstart Allowance, Youth Allowance, Sickness
Allowance and Austudy Payment who have liquid assets above a maximum reserve
amount ($2500 singles without dependents or $5000 otherwise) must in most cases
wait 13 weeks before receiving income support. The bill proposes to double,
from 1 July 2013, the maximum reserve amount to $5000 for singles without
dependents and $10 000 for others, resulting in reducing waiting times for
around 21 000 applicants each year by up to five weeks.[7]
Definition of 'termination payment'
1.12
Schedule 3 of the bill proposes to revise the technical definition of
'termination payment' for the purposes of the Income Maintenance Period, such
that termination payments would include payments that are redundancy payments,
leave payments and other payments connected with termination of employment.
The effect of this change would be to clarify that any payments made to an
employee at the termination of their employment is considered in determining
the Income Maintenance Period.[8]
Compatibility with human rights
1.13
The explanatory memorandum contains a Statement of Compatibility with
Human Rights (the Statement), which acknowledges the implications of the bill
on the right to social security under Article 9 of the International Covenant
on Economic, Social and Cultural Rights (ICESCR) and the right to education
under Article 13 of the ICESCR. The Statement concludes that the bill is
compatible with human rights and that any adverse impact the bill may have on
those rights is reasonable and for legitimate reasons.[9]
1.14
The Australian Council of Social Service (ACOSS) wrote to the
Parliamentary Joint Committee on Human Rights ('Human Rights committee')
arguing that the intention of the bill to cease parenting payments when a
single parent's child turns 8 years old is a violation of human rights. On 21
June 2012, the Human Rights committee held a hearing in relation to the bill,
during which evidence was received from ACOSS, the Australian Human Rights
Centre in the University of New South Wales, the National Council for Single
Mothers and their Children, the National Welfare Rights Centre, and the
Department of Education, Employment and Workplace Relations (the department).[10]
1.15
The Human Rights committee has not finalised its consideration of the
bill.
Other inquiries
1.16
The Senate Education, Employment and Workplace Relations References
Committee is currently inquiring into the adequacy of the allowance payment
system for jobseekers and others, the appropriateness of the allowance payment
system as a support into work and the impact of the changing nature of the
labour market. This inquiry will consider, in particular, the adequacy of
Newstart Allowance. Submissions closed on 3 August 2012, and the committee will
report by 1 November 2012.[11]
Acknowledgement
1.17
The committee thanks those individuals and organisations who
contribution to the inquiry by preparing written submissions and giving
evidence at the hearing.
Notes on references
1.18
References in this report to the Hansard for the public hearing
are to the Proof Hansard. Please note that page numbers may vary between
the proof and the official transcripts.
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