2.1
This chapter provides context for the amendments contained in the Social Security Amendment (Streamlined Participation Requirements and Other Measures) Bill 2021 (the bill), before providing an overview of the measures to be enacted by each of its schedules. The bill's financial impact is also examined.
Context of the amendments
2.2
The proposed amendments to the social security law are designed to enable it to keep pace with changes to employment services, mutual obligation requirements, and available technology. This would include supporting job seekers to self-manage their requirements online. The bill would also streamline and reduce the complexity of the social security law, removing around 130 pages of unnecessary legislation.
Keeping pace with change
2.3
Currently, the social security law does not make the best use of technology—despite technology being used increasingly to support delivery of employment services. This has involved the New Employment Services Trial (NEST) and the Online Employment Services Trial (OEST). In 2020, in response to COVID‑19, online employment services were significantly expanded.
2.4
Both the NEST and OEST have informed development of the proposed
New Employment Services Model (the new model). The new model is scheduled to replace the jobactive program from July 2022 and aligns with recommendations made in the Employment Services Expert Advisory Panel report, I Want to Work: Employment Services 2020. The new model allows job‐ready job seekers to self-manage their requirements online, while increasing investment in those job seekers who are long‐term unemployed or at risk of becoming so. Enabling job seekers to self‐manage their requirements online is a critical element of the new model, but is not the entire model.
2.5
There are multiple safeguards in place in the Online Employment Services (OES) and NEST to ensure job seekers in digital services have access to the support they need. This includes periodic reviews, the ability for job seekers to transfer to a service provider at any time, as well as web, phone and email support from the Digital Services Contact Centre. Additionally, existing compliance safeguards mean that human delegates assess the appropriateness of requirements twice before a job seeker faces a penalty for not meeting those requirements.
Streamlining social security law
2.6
Much of the existing social security law relating to mutual obligation requirements has been in place for decades. Many provisions were drafted to support policies that have either ceased or been altered substantially.
2.7
As a result of iterative amendments, as well as outdated historical reasons, the social security law also contains many needlessly complicated, ambiguous, or confusing provisions. At present, it encompasses over 3000 pages of primary legislation and well over 100 legislative instruments and is second only to the tax law in size. The complexity of the law is exacerbated by the fact that many of its provisions are effectively duplicated for the four participation payments—Jobseeker Payment, Youth Allowance (for job seekers), Parenting Payment (for those with requirements) and Special Benefit for nominated visa holders.
2.8
As well as attracting stakeholder criticism, the complexity of the law has also been recognised by the Federal Court of Australia (the Federal Court) on more than one occasion. For example, in 1993 the Federal Court commented on its 'maze of provisions' and 'prolix definitions, provisos and exceptions' and the difficulty these posed for both administrators and claimants when trying to understand when a benefit is payable.
Overview of the bill
2.9
The bill would amend the Social Security Act 1991 (the Social Security Act), the Social Security (Administration) Act 1999 (the Administration Act), and the
Farm Household Support Act 2014 (the Farm Household Support Act) in order to support job seekers to self‐manage their requirements online—by providing them with greater agency—and to streamline and modernise the social security law. The bill would also support the budget measure to align payment commencement for job seekers using the online employment services model and those referred to a job services provider. The remainder of this chapter sets out the primary measures enacted by each schedule of the bill.
Schedule 1 – streamlined participation requirements
2.10
Schedule 1 would amend the Farm Household Support Act, the Social Security Act and the Administration Act to support the new model, provide more support for vulnerable job seekers, and make the law more understandable. Taken together, these amendments would operate chiefly to:
repeal the redundant 'activity test' provisions to make it clear that job seekers may meet their requirements by complying with the terms of their employment pathway plan;
allow better use of technology and provide greater flexibility in how job seekers enter into, and meet the requirements of, an employment pathway plan; and
create a single set of employment pathway provisions and criteria for exemptions from mutual obligation requirements.
2.11
An overview of key amendments to each of the acts is provided below.
The Farm Household Support Act
2.12
In summary, the proposed amendments to the Farm Household Support Act would:
continue to provide for pharmaceutical allowance to be payable for persons in receipt of farm household allowance who have turned 22 years of age and have been granted an incapacity exemption;
specify how provisions in the social security law would be modified in their application to payments and benefits under the Farm Household Support Act; and
set out which provisions of the Administration Act would not apply to payments and benefits under the Farm Household Support Act.
The Social Security Act
2.13
Broadly, the proposed changes to the Social Security Act would:
repeal provisions related to the redundant activity test and its exemptions, or replace them with references to the employment pathway plan requirements and exemptions (as appropriate);
consolidate employment pathway plan requirements;
amend definitions of 'Secretary' and 'Employment Department';
replace in a consolidated way definitions relating to the concept of unsuitable paid work, as well as when a person satisfies the employment pathway plan requirements;
make technical amendments to the disability support pension consequential to above amendments related to the activity test and exemptions;
update the criteria for a person to qualify for the Parenting Payment to reflect the new terminology about employment pathway plan requirements; and
simplify the provisions that relate to Youth Allowance (other).
Repeal of activity test provisions
2.14
The current activity test provision was inserted into the Social Security Act in 1991 to cover both Job Search and Newstart Allowance participants. Since that time, mutual obligation requirements have evolved. In practice, the requirements are generally met when a person complies with the terms of their employment pathway plan (also known as a job or participation plan). These plans include a requirement to actively seek and undertake paid work.
2.15
Accordingly, the bill would repeal the largely redundant provisions in the Social Security Act that impose an activity test on payment recipients.
The Administration Act
2.16
Broadly, the proposed amendments to the Administration Act would:
insert new provisions related to entering into employment pathway plans through technological processes;
insert provisions about what plans may and cannot contain; and
insert consolidated provisions related to:
employment pathway plans;
what makes paid work unsuitable for a person;
the variation, cancellation and review of employment pathway plans; and
when a person may or must be exempted from pathway plan requirements.
Use of technological processes
2.17
Section 40B would enable the use of technological processes to enter into employment pathway plans. This would apply both to traditional plans approved by a delegate of the Employment Secretary as well as plans created via the new streamlined process.
2.18
Under Section 40C, the Employment Secretary would be able to use a questionnaire to determine whether a person should enter into an employment pathway plan via the traditional or streamlined process.
2.19
These provisions would better enable job seekers who are assessed as job-ready (and who are able to access and use Digital Services) to self-manage their requirements online.
2.20
This includes use of more flexible requirements, including the Points Based Activation System, which was recommended by the Employment Services Advisory Panel and is currently being trialled in the NEST.
What plans may and cannot contain
2.21
While it would not limit the requirements that an employment pathway plan could include, section 40G would provide examples of such requirements. This would include requirements related to a person:
seeking, accepting and undertaking paid work (except particular paid work that is unsuitable to be done by the person);
undertaking other activities such as training, study, volunteering, or participating in an approved program of work;
reporting on compliance with the plan; and
in the case of a Parenting Payment, requirements related to the person's education or the health or education of their child.
2.22
The bill would also establish what employment pathway plans must not contain. Under new sections 40(H), 40(J) and 40(K), employment pathway plans would not be able to contain:
requirements about undertaking unsuitable paid work;
requirements to participate in an approved program of work (in certain circumstances); and
certain other requirements, which the Employment Secretary would be required to determine by legislative instrument.
Consolidated provisions
2.23
Section 40A would consolidate employment pathway provisions for the four participation payments—Jobseeker Payment, Youth Allowance (for job seekers), Parenting Payment (for those with requirements) and Special Benefit for nominated visa holders.
2.24
Section 40X would establish the circumstances in which paid work would be unsuitable for a person. These circumstances would be the same as those currently listed in multiple subsections of the Administration Act. However, subsection 40X(6) would introduce a new provision to make clear that work would not be unsuitable for a person merely because it was not their preferred type of work, they considered they were overqualified for it, or would have preferred a higher rate of pay. This would be consistent with how the policy is currently applied and the way existing provisions have been interpreted by the courts.
2.25
Section 40V relates to the variation, cancellation and review of a person's employment pathway plan. This section would provide that:
a person's employment pathway plan could only be varied by the Employment Secretary after discussion with the person and after taking into account their needs, circumstances, capacity to comply with the plan, and any other relevant matter;
a person's plan must be reviewed if requested by the person, and may be varied on the initiative of the Employment Secretary or on request of the person;
the Employment Secretary could refuse a request to vary a plan;
a person may vary their plan by technological means;
the Employment Secretary would need to notify the person of the variation or the decision to refuse to vary the plan; and
the Employment Secretary would need to cancel an employment pathway plan if a person enters into another plan.
2.26
The bill would also create a single set of exemption criteria for all four participation payments. These amendments would not expand or reduce the circumstances in which exemptions would be granted; rather, they would remove duplication, provide the flexibility to account for different circumstances, and better align the legislation with the flexible and less administratively burdensome way the provisions are administered in practice. The new provisions also safeguard job seekers' rights to a greater extent than many of the current specific exemption provisions.
2.27
In relation to general exemptions, section 40L would provide that a person would not have to satisfy the employment pathway plan requirements if the Employment Secretary determined that circumstances existed which would make it unreasonable to expect the person to comply with the requirements (these circumstances could be either within or outside a person's control). These circumstances could include, for example, a relationship breakdown, incapacity arising from illness or accident, the death of an immediate family member, or the impact of an emergency, disaster, or public health crisis.
2.28
The bill also contains a number of specific exemption provisions in relation to the death of a person's partner (section 40M), domestic violence (section 40N), caring responsibilities (section 40P), pre-natal and post-natal relief
(section 40Q), persons engaged in work (section 40R), Jobseeker payment rules (section 40S) and exceptional circumstances (section 40T).
Schedule 2 – arrangements and grants related to assisting persons to obtain paid work
2.29
Currently, legislative authority for Commonwealth expenditure on employment programs is provided in the Financial Framework (Supplementary Powers) Regulations 1997, which are the responsibility of the Minister for Finance.
2.30
Schedule 2 of the bill would move legislative authority for Commonwealth expenditure on employment programs into social security law and enable the Employment Secretary to make, vary or administer arrangements and grants for the purposes set out in new subsection 1062A(1) of the Social Security Act. These purposes would be the same as those of the programs currently authorised by the Financial Framework (Supplementary Powers) Regulations 1997. Where these purposes do not apply clearly to an employment program, the Employment Minister would be able to specify that program by legislative instrument.
2.31
Schedule 2 would also amend the Administration Act to provide that funding for programs established under section 1062A of the Social Security Act would not be supported via the standing appropriation in social security law. Funding for such programs would need to be sourced from annual appropriations, as is the situation currently, and would therefore continue to be subject to Budget and Parliamentary processes.
Schedule 3 – compliance with participation payment requirements
2.32
Schedule 3 would amend the Administration Act in relation to the Targeted Compliance Framework for payment recipients who are not declared program participants (e.g. Community Development Program participants). The proposed amendments would affect provisions related to:
suspension of a person's participation payment for a mutual obligation failure;
suspension or cancellation of a person's participation payment for a work refusal failure; and
cancellation of a person's participation payment for an unemployment failure.
2.33
Currently, a mutual obligation failure (including, for example, failure to make adequate search efforts, attend a job interview, or attend an appointment with an employment services provider) generally requires the Employment Secretary to suspend a person's participation payment. Where this requirement applies, the Employment Secretary is obliged to suspend a person's payment—even if they have a reasonable excuse or have already reconnected with their provider by the time the failure comes to the Employment Secretary's notice. In some cases, this means the Employment Secretary suspends a person's payment only for the suspension to end immediately, with no practical consequence.
2.34
Similarly, a work refusal failure (that is, refusing an offer of suitable employment) requires the Employment Secretary to suspend or cancel a person's participation payment, depending on whether the person has a reasonable excuse for the failure. As with suspensions for mutual obligation failures, this can result in suspensions with no practical consequence, as the period of suspension ends immediately. Potentially, it can also lead to inappropriate payment cancellations; for example, when a failure occurs due to a disaster or emergency and it has not been practical for the job seeker to demonstrate they have a reasonable excuse for the failure.
2.35
An unemployment failure (that is, becoming unemployed as a result of a voluntary act which was not reasonable, or as a result of misconduct) also requires the Employment Secretary to cancel a person's participation payment. Currently, this requirement depends purely on whether a person has refused work or become voluntarily unemployed. As with cancellations for work refusal failures, this can potentially result in inappropriate cancellations where a failure occurs during a disaster or emergency.
2.36
The bill would replace the language in compliance legislation stating that the Employment Secretary 'must' suspend, reduce or cancel a person's payment with the flexibility that they 'may' do so. This would provide the Employment Secretary with the flexibility not to alter a payment where it would have no practical effect or would be an inappropriate response to a failure. It would also more clearly align the legislative arrangements with policy intent and practice.
Schedule 4 – amounts not counted as income
2.37
Currently, the Social Security Act provides that some payments and benefits are not considered income for the purposes of the Act, meaning they are not included in income tests that affect payments made under the Act. The Social Security Act also allows the Employment Secretary to determine, by legislative instrument, classes of amounts that are exempt lump sums and not part of a person's ordinary income.
2.38
However, not all amounts paid under employment or sectoral adjustment programs are covered by existing provisions. These amounts must be reported to Services Australia, potentially affecting a person's income support payment and creating a disincentive to participate in programs designed to help job seekers find paid work.
2.39
The bill would amend the Social Security Act to allow payments and benefits from Commonwealth, state and territory employment programs not to be considered income for the purposes of social security law. The amendments would also enable the Employment Secretary to determine, by notifiable instrument, programs that would not be considered income for those purposes.
Schedule 5 – approved programs of work for income support payments
2.40
Schedule 5 would amend the Social Security Act to clarify that the Employment Secretary's declaration of an approved program of work for income support payment is by legislative instrument. Currently, participants in a declared program of work for income support payment are entitled to a supplement (currently $20.80 per fortnight) as part of their income support payment.
2.41
The proposed amendment would 'remove uncertainty by clarifying the status of the instrument, bring the provision into line with modern drafting practices, and provide Parliamentary oversight of such declarations by requiring the instrument to be registered on the Federal Register of Legislation, and tabled'.
2.42
The amendment would apply in relation to declarations made by the Employment Secretary on or after its commencement and would not affect current declarations of approved programs of work for income support payments.
Schedule 6 – activities that do not give rise to employment under certain industrial relations legislation
2.43
The bill would insert a new section into the Social Security Act to consolidate four current provisions that set out that a person engaged in an employment program will not be treated as a worker for, or employee of, the Commonwealth for the purposes of the Work Health and Safety Act 2011, the Safety, Rehabilitation and Compensation Act 1988, the Superannuation Guarantee (Administration) Act 1992 or the Fair Work Act 2009.
2.44
The new section would apply in connection with a person's participation in a designated employment program, whether or not the program is an approved program of work or the participation is in accordance with a term of an employment pathway plan. The amendments would not impact existing Commonwealth requirements that providers of employment programs offer safe workplaces, nor affect the existing insurance coverage of job seekers.
2.45
The schedule would also repeal equivalent provisions in relation to recipients of Jobseeker Payment and Special Benefit, consistent with the repeal of similar provisions for the Parenting Payment and Youth Allowance in Schedule 1.
Schedule 7 – Youth Allowance ordinary income free area
2.46
Schedule 7 would amend the Social Security Act so that those job seekers receiving Youth Allowance continue to be treated as such when undertaking study or training as a requirement in their employment pathway plan.
2.47
The proposed amendments would make clear that the Youth Allowance ordinary income free area and rate reduction available to full-time students would 'not apply to persons who undertake full-time study during a particular fortnight because they complied with a requirement to undertake that study under their employment pathway plan'. This is consistent with longstanding policy and practice, so payment is not adversely affected.
2.48
The proposed amendments would provide that the changes would 'apply to working out the rate of Youth Allowance for days on or after commencement of the amendment'.
Schedule 8 – start day for Jobseeker Payment and Youth Allowance
2.49
Schedule 8 of the bill would amend the Social Security Act, the Administration Act and the Farm Household Support Act to align the start day provisions for certain job seekers claiming Jobseeker Payment or Youth Allowance.
2.50
Currently under clause 4A of Schedule 2 to the Administration Act, job seekers who have been required by the Employment Secretary to attend an interview receive Jobseeker Payment or Youth Allowance 'from the day they attend the interview with their employment services provider (if that occurs within two business days of them being given notice of the requirement to attend) or from the day that they are given notice of the requirement to attend'.
2.51
However, job seekers who access employment services online do not have a requirement to attend an interview with an employment services provider and receive payment after entering into an employment pathway plan (but are then back-paid to the date of their claim). As a result, they 'receive payment from the date of their claim rather than when connecting with employment services like those serviced by providers – who may need more assistance to find work'.
2.52
The bill would amend Schedule 2 of the Administration Act and insert a new clause 4B so that payment would not commence for job seekers referred to online employment services until they have entered into an employment pathway plan online. This would align start day provisions with those job seekers that are referred to a provider and subject to clause 4A.
2.53
This measure would also address an inequity that currently exists, whereby the start date for job seekers' income support payments depends on whether they are referred to online employment services or referred to an employment services provider.
2.54
In the event that a person fails to enter into an online employment pathway plan on a particular day, and the Employment Secretary is satisfied that it was for reasons beyond their control, then that person's start day would be 'either the day they were given notice of the requirement to enter into an employment pathway plan, or (if they were not given such a requirement), the day they made the claim'. The proposed section would also give the Employment Secretary the 'discretion to provide that clause 4B does not apply to work out a person's start day'.
2.55
The schedule would also amend provisions in the Social Security Act, which cross-refer to clause 4A of Schedule 2 of the Administration Act, to include reference to the new clause 4B.
2.56
Additionally, the bill would amend the Farm Household Support Act so that the new clause 4B does not apply in relation to that Act.
Schedule 9 – repeal of spent provisions
2.57
Schedule 9 would repeal redundant provisions in the Social Security Act and the Administration Act that relate to the National Green Jobs Corps, the Green Army Programme and training programs for the training supplement. As these programs have ceased, along with the associated payments and supplements, 'there is no longer any need for provisions in the social security law that relate to them'.
Schedule 10 – contingent amendments
2.58
This schedule would amend the Social Security Act contingent on the commencement of Schedule 7 of the Social Services Legislation Amendment (Welfare Reform) Act 2018 (the Welfare Reform Act) on 1 January 2022.
Consideration by the Senate Standing Committee for the Scrutiny of Bills
2.59
The Senate Standing Committee for the Scrutiny of Bills considered the bill in the Scrutiny Digest 8 of 2021, which was tabled on 16 June 2021.
2.60
At the time of writing, Scrutiny Digest 8 was unavailable.
Compatibility with human rights
2.61
The statement on compatibility with human rights concluded that 'the bill is compatible with human rights because to the extent that it may limit human rights, those limitations are reasonable, necessary and proportionate'.
2.62
The Parliamentary Joint Committee on Human Rights considered the bill in its Human rights scrutiny report 7 of 2021, which was tabled on 16 June 2021.
2.63
At the time of writing, Human rights scrutiny report 7 was unavailable.
Financial impact statement
2.64
The measure in Schedule 8, which aligns payment commencement arrangements for online-serviced and provider-serviced job seekers, is expected to save $191.6 million over the forward estimates. Other amendments in the bill would have no financial impact.