Social Security Legislation Amendment (Streamlined Participation Requirements and Other Measures) Bill 2021


Introductory Info Date introduced: 27 May 2021
House: House of Representatives
Portfolio: Education, Skills and Employment
Commencement: Schedules 1, 3, and 6 commence on the later of 1 July 2021 and the seventh day after Royal Assent; Schedules 2, 4, 5, 7 and 9 commence the day after Royal Assent; Schedule 8 commences on 1 July 2022; and Schedule 10 commences on the later of the day after Royal Assent and 1 January 2022 (when Schedule 7 of the Social Services Legislation Amendment (Welfare Reform) Act 2018 commences).

Purpose of the Bill

The purpose of the Social Security Legislation Amendment (Streamlined Participation Requirements and Other Measures) Bill 2021 (the Bill) is to amend the Social Security Act 1991, the Social Security (Administration) Act 1999 (the Administration Act) and the Farm Household Support Act 2014. The amendments have a number of purposes including better aligning legislation with the planned administration of the New Employment Services Model (NESM), removing redundant and outdated provisions, and providing legislative authority for expenditure on employment programs.

Structure of the Bill

The Bill consists of 10 schedules:

Schedule 1 Streamlined participation requirements
Schedule 2 Arrangements and grants relating to assisting persons to obtain and maintain paid work
Schedule 3 Compliance with participation payment obligations
Schedule 4 Amounts not counted as income
Schedule 5 Approved programs of work for income support payment
Schedule 6 Activities that do not give rise to employment under certain industrial relations legislation
Schedule 7 Youth allowance ordinary income free area
Schedule 8 Start day for jobseeker payment and youth allowance
Schedule 9 Repeals of spent provisions
Schedule 10 Contingent amendments

Background

In early 2018, in the lead-up to the expiry of the jobactive Deed in 2020, and in the face of increasing criticisms of the system, the Australian Government appointed an independent Employment Services Expert Advisory Panel to ‘help shape the future design of employment services in Australia’.[1]

The Panel’s report found that Australia’s employment services system was not meeting the needs of many job seekers and employers and recommended that the employment services system be restructured to focus on helping those job seekers who most need assistance.[2]

To this end, it proposed that job seekers who are job-ready and digitally literate should no longer use the employment services provider network. Instead, these job seekers would self-service, using online employment services. The resources saved and employment services providers freed up through many job seekers self-servicing would then be dedicated to providing intensive, face-to-face services and support to disadvantaged job seekers.[3]

As a part of the 2019–20 Budget, the Government provided funding for a trial of new employment service arrangements, under which job-ready job seekers would be able to access employment services online, with the savings being realised through moving away from face-to-face delivery of employment services being redirected towards increased support for disadvantaged job seekers.[4]

The New Employment Services Model (NESM) arrangements were to be tested in Adelaide’s southern suburbs and on the NSW Mid-North Coast from 1 July 2019 to 30 June 2022 ahead of the national rollout of the NESM in July 2022.[5] Information on the NESM is available from fact sheets on the Department of Education, Skills and Employment website.[6] A report of the evaluation of the trial has yet to be released.

It should be noted that the Government had already begun trialling online employment services in 2018. Under the Online Employment Services Trial (OEST) job-ready job seekers were able to enter into an Employment Pathway Plan (EPP) and report their job search activity and compliance with mutual obligation requirements online.[7] The findings of the trial have been made available on the Department of Education, Skills and Employment website.[8]

In response to the COVID-19 pandemic and an associated increase in demand for online employment services. these services have been rolled out nationally, with many job seekers now accessing employment services and fulfilling their mutual obligation requirements online.

According to the Explanatory Memorandum to the Bill, the amendments to social security law that the Bill would enable are necessary ‘to better support the new model of employment service and its objectives while still maintaining the protections for job seekers that currently exist in social security law’.[9]

Committee consideration

Senate Education and Employment Legislation Committee

The Bill was referred to the Senate Education and Employment Legislation Committee for inquiry. The Committee reported on 18 June 2021, recommending that the Bill be passed.[10] Labor and the Greens issued dissenting reports, which are discussed below under ‘Policy position of non-government parties’.[11]

The Committee’s report, a transcript of public hearings and submissions to the inquiry are available at the inquiry homepage.

Senate Standing Committee for the Scrutiny of Bills

In its Scrutiny Digest 8 of 16 June 2021, the Senate Standing Committee for the Scrutiny of Bills (Scrutiny Committee) raised a number of concerns about the Bill. These concerns included:

  • instruments not subject to parliamentary disallowance (determinations under proposed section 40T of the Administration Act[12] and proposed subsections 8(8AC) and 40(3)) of the Social Security Act[13]
  • the broad discretionary power for expenditure granted to the Secretary under proposed sections 1062A and 1062B of the Social Security Act.[14]

The discretionary power includes grants to states and territories authorised under section 96 of the Constitution. The Committee suggested amending the Bill to include at least high-level guidance as to the terms and conditions on which arrangements or grants can be made and including a requirement that written agreements with states and territories made under section 1062A are tabled in Parliament and published on the internet.[15]

Policy position of non-government parties

In their dissenting report in the report of the Senate Education and Employment Legislation Committee inquiry into the Bill, Labor Senators raised a number of criticisms of the Bill and agreed with stakeholders who called for more time for consultations. Labor Senators recommended:

  • Schedule 8 of the Bill be opposed, noting it will leave many job seekers financially worse off and
  • the Government engage in further consultation with both the Labor Opposition and stakeholders before the other provisions proceed.[16]

Australian Greens Senators oppose the Bill and have made a number of recommendations about employment services policy.[17]

Position of major interest groups

Fifteen organisations made submissions to the Senate Education and Employment Legislation Committee.[18] The initial closing date for submissions was 4 June 2021, however the Committee later extended the deadline to 9 June 2021.[19] Many of the submissions were brief due to the short timeframe.

Interest groups raised a number of concerns including the lack of time to consider the Bill, the changes to the start day for recipients of jobseeker payment and youth allowance, and the discretionary power given to the Employment Secretary. Other concerns are discussed under the relevant schedules.

Lack of time to consider the Bill

Many of the submissions raised concerns about a lack of time to consider the amendments proposed in the Bill. For example, the Australian Council of Social Service recommended that the Government for consideration of the Bill by at least two months.[20]

Start day for jobseeker payment and youth allowance

A number of submissions raised concerns about changes to the ‘start day’ for jobseeker payment and youth allowance in Schedule 8. For example, the National Employment Services Association (NESA) opposed the measure, arguing:

… under the proposed arrangements job seekers in online services would experience a change in their payment start date if they took time to consider the appropriateness of their Job Plan before accepting it; and as such it is considered that the proposed provision potentially creates inequity.[21]

Secretary’s discretionary power

A number of submissions raised concerns about the level of discretion the amendments gave to the Employment Secretary. For example, in its submission, Anglicare Australia wrote:

Anglicare Australia’s understanding is that this will give more discretion to the Employment Department and Employment Secretary. It may also give more discretion to employment service providers. This discretion is likely to lead to fewer protections, and greater confusion about people’s rights within the system.[22]

Financial implications

The Government expects the measure in Schedule 8 to save $191.6 million over the forward estimates. According to the Explanatory Memorandum, none of the other amendments have any financial impact.[23]

The measure in Schedule 8 affects Jobseeker Payment and Youth Allowance (other) claimants who receive employment services online.[24] It makes savings by delaying the day for which the person’s payment becomes payable. Instead of being payable at the date the person claims the payment, it will be payable at the date they enter into an online EPP.

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[25]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights considered the Bill in its Human Rights Scrutiny Report 7 of 2021. The Committee has not formed a concluded view on the human rights implications of this Bill, and has sought the Minister's advice on a number of matters.[26]

At the time of publishing this Digest, the Minister’s response had not been received by the Committee.[27]

Key issues and provisions

Schedule 1–Streamlined participation requirements

Schedule 1 primarily gives effect to aspects of the New Employment Services Model (NESM) which is to be rolled out nationally from 1 July 2022.

Current participation requirements

Under the Social Security Act recipients of participation payments must satisfy the activity test as a condition of their payment, in addition to meeting other participation requirements.[28] Collectively, these participation requirements are typically referred to as mutual obligation requirements.[29]

To meet the activity test a person must be actively seeking and willing to undertake paid work that is suitable for that person. The general job search activity test applies at all times unless other specific activities are required or the person is exempt from the activity test (if they are sick, injured or unable to meet their activity test requirements because of a personal crisis).

In most instances, job seekers have a specific requirement to demonstrate that they are looking for work—for example, submitting a fortnightly job search report that details contacts with prospective employers. Requirements such as these are included in a job seeker’s EPP, along with other activities that are deemed necessary to help them gain employment.[30]

Under the Social Security Act, the Secretary may require a person to enter into an EPP, with different terms applying to the EPPs associated with each participation payment type.

Currently, activity tested job seekers negotiate an individually tailored EPP—typically with their employment services provider, but potentially with Services Australia which has also been delegated with relevant powers under the Social Security Act.

The EPP identifies the mix of vocational and non-vocational activities that job seekers are likely to need to undertake to gain employment. The EPP incorporates education, training, non-vocational assistance, work experience, job search requirements and other support that is based on the needs of the job seeker. A number of the requirements that are not permitted to be included in an EPP are specified in the Social Security (Employment Pathway Plan Requirements) Determination 2015.

Activities that are included in the EPP must not place unreasonable demands on job seekers, having regard to their individual circumstances. Job seekers are given two business days in which to consider the terms of their EPP before agreeing to it. 

While some of the activities that are included in a job seeker’s EPP—such as attendance at various forms of assessment and assistance and at specified training and work experience—may be optional, others will be compulsory. As a result, job seekers are for the most part required to comply not only with the activity test, but also with an EPP.

If a job seeker refuses to enter into an EPP then this may result in compliance action, and, ultimately, the cancellation of their payment. If a job seeker fails to comply with the compulsory terms of an EPP, this may similarly result in compliance action.

Employment services providers are required to review a job seeker’s EPP and to update it when there is a change in their circumstances.[31]

The activity test—background

Following a substantial review of Australia’s social security system conducted by Professor Bettina Cass from 1986 to 1988, the Hawke Government introduced various reforms to the system, one of which was the activity test. As Carol Ey notes, the activity test was ‘first introduced for the young unemployed when Job Search Allowance was introduced in 1988’ and then ‘extended to all unemployment beneficiaries when Job Search and Newstart Allowances were introduced in 1991’.[32]

The activity test effectively involved an extension of the work test, which had been applied to unemployment benefit recipients since the introduction of the unemployment benefit in 1944. Under the work test an applicant for unemployment benefit ‘was required to show that he was capable of undertaking and willing to undertake “suitable” work and had taken reasonable steps to obtain such work’.[33]

The activity test imposed further requirements on the beneficiary ‘to participate in programs to improve ‘job readiness’ and subsidised employment programs’.[34] This was in line with the Government’s general shift towards active labour market policies—that is, policies that integrate more closely income support arrangements and training and employment assistance.

Amendments

For the most part, the provisions in Schedule 1:

  • remove from the Social Security Act references to the activity test
  • remove from the Social Security Act references to payment-specific EPPs and requirements associated with them, replacing them with references to the single consolidated EPP being inserted into the Administration Act by the Bill and
  • insert into the Administration Act requirements for a new, consolidated EPP.

The most substantive of the changes relate to the new EPP arrangements, outlined below.

Item 123 inserts new Division 2A—Employment pathway plans into Part 3 of the Administration Act. This Division sets out requirements in relation to EPPs that are currently set out in provisions in the Social Security Act and contained in Guidelines. For the most part, the Division replicates and consolidates existing provisions in the Social Security Act.

Proposed section 40A provides for the Secretary to require a job seeker to enter into an EPP if they do not already have an EPP in place and are either receiving or have made a claim for a participation payment (proposed subsection 40A(1)). Where a job seeker does have an EPP in place proposed subsection 40A(2) provides that the Secretary may require the job seeker to enter into an alternative plan. Proposed subsection 40A(3) provides that the Secretary must notify a person who is required to enter into an EPP of the requirement, and give them the option of entering into a plan under proposed section 40D (using traditional means, that is, meeting and entering into a plan face-to-face with an employment services provider) or proposed section 40E (using streamlined arrangements, that is, using a digital self-service interface).

Proposed section 40B provides for the Secretary to use technological processes in relation to job seekers entering into and varying EPPs (both job seekers who are using traditional means to enter into EPPs and those using streamlined processes).

Proposed section 40C provides for the Secretary to administer a questionnaire, the purpose of which is to elicit from the job seeker information that would allow the Secretary to establish their degree of disadvantage and whether they are able to enter into an EPP using streamlined arrangements (under proposed section 40E) or should do so in the traditional manner—that is, meeting with an employment services provider (under proposed section 40D). Some of the matters that are likely to be dealt with in the questionnaire are set out at proposed section 40F.

The Job Seeker Classification Instrument (JSCI) is currently used for the purposes of determining job seekers’ barriers to employment, with the Job Seeker Snapshot being the online version of the JSCI.[35] If job seekers are able to fill out the Job Seeker Snapshot without any guidance or assistance this may result in some being inappropriately directed towards streamlined servicing arrangements, rather than Enhanced Services. The National Employment Services Association (NESA) has expressed some concerns along these lines, arguing that the JSCI and Job Seeker Snapshot are not validated assessments of job readiness or independent job search capability, but rather of relative disadvantage. As such, NESA has indicated that it ‘does not consider that the assessment process is an acceptable assurance that job seekers with inadequate capacity will not inadvertently be assigned to Online Employment Services’.[36] In Per Capita’s view:

Assessments of ‘job readiness’ should be made by a qualified vocational counsellor, employed directly by the Commonwealth, to ensure that people are not inappropriately ‘streamed’ into online-only service provision when they are in need of more personalised support.[37]

Proposed section 40D provides for job seekers to enter into an EPP using traditional face-to-face means (for job seekers in receipt of Enhanced Services). Proposed section 40E provides for job seekers who are in receipt of Digital Services to potentially self-service entirely online—that is, not have to meet with an employment services provider to develop and agree to an EPP.

Proposed section 40D provides for EPPs to be developed by the Secretary. So long as the job seeker has communicated with the Secretary one or more times in relation to the EPP that has been developed for them, then they are able to accept the plan.

Currently, at points in the Social Security Act where the requirement to enter into an EPP are stipulated, reference is made to EPPs being ‘negotiated’.[38] In proposed section 40D the term has been deliberately excluded. According to the Explanatory Memorandum, this is to ensure that job seekers do not ‘misunderstand the degree of latitude they have in determining their employment pathway plan requirements’.[39] While job seekers may discuss with delegates the content of their EPPs, ultimately, the Secretary is empowered to ‘dictate, approve or disapprove’ the EPP.[40] 

Proposed subsection 40D(2) provides that an EPP must contain one or more compulsory requirements. This requirement mirrors current arrangements.[41]

Under proposed subsection 40D(4) the requirements in a job seeker’s EPP must be approved by the Secretary (or their delegate) and not through technological processes. This is to ensure that the EPP process cannot be entirely automated for job seekers in Enhanced Services—for these job seekers, human scrutiny must be involved.

Proposed subsection 40D(5) provides that the Secretary must not approve requirements that are not suitable for the job seeker.[42] While the Bill does not contain any provisions specifically related to what may be considered to be reasonable hours of activities, it is to be assumed that this is covered under this proposed subsection.

Proposed subsection 40E sets out the streamlined processes under which job seekers will be able to enter into an EPP. For job seekers self-servicing online there is no requirement for a human delegate to approve the content of an EPP. However, should a job seeker choose not to accept an EPP that is generated online, they may enter into an EPP using traditional means (Note 1 to proposed subsection 40E(1)). Further, if a job seeker has entered into an EPP online which they do not want to accept then they may enter into an EPP using traditional means (that is, under proposed section 40D) (proposed subsection 40E(2)). In its submission to the inquiry into the Bill the Antipoverty Centre emphasised that, in its view:

Information about the right to support from a ‘human delegate’ within the department must be provided at multiple points throughout the process, both before the person enters online services, during preparation of their job plan and both before and after they have signed it. The option to discuss a job plan with a person or to have it reviewed is insufficient on its own—people must be regularly informed of their rights.[43]

Under proposed subsection 40E(1) job seekers are required to be provided with information to inform them of the matters they should consider in deciding whether to accept the EPP. According to the Explanatory Memorandum, this could include ‘links to sites with further information or the telephone number of the contact centre’.[44] It is questionable whether or not this constitutes sufficient guidance for job seekers who may not be aware of the possible range of options and pathways to employment available to them. Under the current guidelines, job seekers may request that a support person be brought with them to an appointment with their employment services provider to review their EPP.

Proposed section 40G sets out examples of requirements that may be included in EPPs.[45] Other requirements may be included in EPPs (subsection 40G(5)), subject to the limits on requirements set out at proposed Subdivision B. The Australian Council of Social Service (ACOSS) has argued that the primary legislation and related legislative instruments offer limited guidance on what should be included in an EPP, beyond the job search and suitable work provisions.[46] It maintains that while proposed subsection 40G(2) goes some way towards defining the range of activities that may be included in an EPP, proposed subsection 40G(5) provides for a range of other unspecified requirements to be included. In ACOSS’s view, the scope of requirements should be reasonable and ‘limited to activities that improve people’s employment prospects’.[47]

The limits on requirements provide that EPPs must not contain requirements to undertake unsuitable paid work (proposed section 40H), as is currently the case under the activity test requirements at subsection 601(2A) of the Social Security Act, with the circumstances in which paid work is unsuitable set out at proposed Division 2B of Part 3 of the Administration Act, at item 123 of Schedule 1 to the Bill. The unsuitable work provisions—discussed below—are largely unchanged.

Proposed section 40J provides that EPPs must not contain requirements to participate in an approved program of work (such as Work for the Dole or the National Work Experience Program) where specified conditions are met. While these conditions differ for recipients of Parenting Payment, Youth Allowance, Jobseeker payment and Special Benefit payment, the main conditions are that an EPP cannot require a job seeker to participate in an approved program of work if they are undertaking other approved activities, have their income support payment reduced as a result of their participation in paid employment, or are not eligible to be required to participate in Work for the Dole due to their age.

As the Explanatory Memorandum notes, the conditions at proposed subsection 40J are similar to those currently contained in the Social Security Act, with the exception of the removal of a condition that a job seeker cannot be compelled to participate in an approved program of work where the Secretary determines that the work would either aggravate a medical condition or constitute a risk to the job seeker’s health or safety.[48] Such a condition is redundant given that EPPs are not able to contain requirements that are unsuitable for a person (under proposed subsection 40D(5)).

The Bill also does not carry over provisions that enable the Secretary to revoke the requirement for a job seeker to participate in an approved program of work where their circumstances change such that they are no longer required to participate in such a program. Proposed section 40V provides for the Secretary to vary an EPP either on the Secretary’s own initiative, or on the request of the job seeker. 

Under proposed section 40K the Secretary is required to specify by legislative instrument other requirements that EPPs must not contain. This is consistent with current arrangements.

Proposed Subdivision C of new Division 2A of Part 3 of the Administration Act specifies the circumstances under which job seekers may be exempted from EPP requirements. Under the Social Security Act job seekers who are in receipt of participation payments and required to meet mutual obligation requirements may be exempted from these requirements for a number of specific reasons, but also in instances where they are experiencing circumstances that are beyond their control. These exemptions are set out in relation to each participation payment, and in relation to the activity test and EPPs throughout the Social Security Act. The Explanatory Memorandum notes that currently there is:

… duplication of the same provision across the four payments; provisions which apply to only one or two of the participation payments without a good reason for not applying to all four payments; different provisions dealing with essentially the same subject matter in different ways; overly lengthy provisions; and provisions which provide an exemption from the activity test but not from employment pathway plan requirements.[49]

Proposed section 40L consolidates what are currently described as special circumstances provisions.[50] It provides for the Secretary to make a determination that a job seeker is not required to satisfy the requirements of their EPP if the Secretary is satisfied that the job seeker is subject to circumstances that are beyond their control and that make it unreasonable to expect them to comply with their EPP requirements. Examples of relevant circumstances—which include, among other things, experiencing an emergency, disaster or public health crisis, such as the COVID-19 pandemic—are included at proposed subsection 40L(5).

With the removal of references to the activity test from the Social Security Act, exemptions are to be from all requirements contained in a job seeker’s EPP (that is, job search requirements and all other participation requirements).

As is currently the case, job seekers who are experiencing circumstances that are beyond their control but wholly or predominantly attributable to their misuse of alcohol or another drug will not be exempted from their EPP requirements unless they are declared program participants—that is, participating in the Community Development Program.[51]

Special circumstances exemptions are currently time limited (generally, not to exceed 13 weeks)[52] but under proposed subsection 40L(6) the Secretary may revoke a determination when he or she is ‘satisfied in all the circumstances that it is no longer appropriate for the determination to remain in effect’.

Proposed section 40L also contains a catch-all provision (proposed subsection 40L(3)) that allows for the Secretary to make a determination that a job seeker should not be required to satisfy their EPP requirements if the Secretary is ‘satisfied in all the circumstances’ that the job seeker should not be required to do so.

While the Bill includes provisions that detail specific circumstances under which job seekers may be excused from their EPP requirements, proposed subsection 40L(7) provides that these provisions do not limit subsection 40L and the Secretary’s ability to make a determination that a job seeker may be exempted from their EPP requirements due to circumstances beyond their control. Under proposed subsection 40L(6) the Secretary may end a job seeker’s exemption from EPP requirements where he or she is satisfied that it is no longer appropriate for the determination to remain in effect.

Proposed section 40L effectively expands the Secretary’s discretionary powers. In its submission to the inquiry into the Bill, the National Employment Services Association (NESA) expressed some reservations about this expansion, stating:

NESA holds concerns that without some substance to understand the intent which could include definitions or principles that there is a significant risk of inconsistency and inequity. In addition without some indication of how this protection may be called upon we have no indication if the process itself may be too difficult and thus will not be of no protection or remedy. To illustrate, an inability to purchase data to access OES [online employment services] and accept a Job Plan may be attributed to the individual’s budgetary decisions and therefore in their control. For example, it may be deemed they could have gone to Services Australia, McDonald's or the library to use computers/WiFi. In such a case, will the person have to prove they had insufficient funds? In NESA’s experience when such matters are not well outlined the outcome of processes are often dependent on the agency of the individual and their capacity to advocate for themselves.[53]

Proposed sections 40M to 40T set out specific circumstances in which job seekers may be exempt from their EPP requirements. Proposed section 40M concerns exemptions relating to the death of a job seeker’s partner. Job seekers may currently be exempted from activity test requirements or, for Parenting Payment recipients, participation requirements, following the death of their partner. Proposed section 40M essentially replicates and consolidates the relevant current provisions.

Currently a Parenting Payment recipient may be exempted from EPP requirements where the Secretary is satisfied that they have been subjected to domestic violence in the previous 26 weeks and makes a determination to this effect.[54] The same situation holds for Youth Allowance, Jobseeker Payment or Special Benefit recipients where they are the principal carer of one or more children.[55] The Secretary may also grant an exemption where ‘there are special circumstances relating to the person’s family that make it appropriate to make the determination’. The period of exemption must be the lesser of a period of 16 weeks or a period that the Secretary considers to be appropriate but may be either followed by further periods or ended earlier at the Secretary’s discretion.

Under proposed section 40N the provisions concerning exemptions relating to domestic violence have been changed and simplified.

The section provides that the Secretary must, rather than may, grant an exemption where he or she is satisfied that a job seeker has been subjected to domestic violence in the previous 26 weeks. The Secretary no longer has scope—under this section—to grant an exemption in the case of special circumstances relating to the job seeker’s family. Such circumstances may or may not result in an exemption being granted under proposed section 40L.

The proposed section also no longer includes a specific timeframe for the period of exemption. This will be at the discretion of the Secretary.

Job seekers with caring responsibilities may currently be exempted from participation, activity test and EPP requirements. Proposed section 40P provides for exemptions from EEP requirements due to caring responsibilities in substantively similar terms.

Pregnant women and women who give birth to a child are currently granted an exemption from participation requirements. In the case of pregnant women, this is for the period that starts six weeks before the expected date of confinement and ends on the day on which the woman gives birth to the child (whether or not the child is born alive). The post-natal exemption applies for six weeks from the day that the woman has given birth. [56] These exemptions are replicated under proposed section 40Q.

Job seekers who are aged 55 and over may currently be granted an exemption from participation, activity test and EPP requirements so long as they are participating in approved voluntary work or a combination of paid and voluntary work for a specified period.[57] Proposed section 40R duplicates these exemptions in relation to EPP requirements.

Currently, Jobseeker Payment recipients may be exempted from activity rest requirements if they are undertaking a rehabilitation program that is intended to enhance their ability to work.[58] Proposed subsection 40S replicates the existing provisions in the Social Security Act.

Proposed section 40T provides for the Secretary to make a determination specifying a class of persons that may be exempt from EPP requirements due to exceptional circumstances, such as an emergency, disaster or public health crisis. Details of the class of persons and exceptional circumstances must be published on the Employment Department’s website, as must details of the revocation of the exemption.

Proposed section 40V provides for the variation, cancellation and review of EPPs in broadly similar terms to existing provisions under the Social Security Act.[59]

Whereas currently the Social Security Act specifies that an EPP may be varied in negotiation with the job seeker, an EPP may, under proposed changed arrangements, be varied after discussion with the job seeker. The stated reasons for the shift from negotiation to discussion in relation to EPPs are outlined above. The proposed section also provides that the Secretary must make a decision on whether or not the plan is to be varied in response to a job seeker’s request and notify the job seeker of the variation or refusal to vary the plan.

The St Vincent de Paul Society has expressed some concerns with regard to the absence of specified timeframes for the review of EPP-related decisions in the Bill. The Bill would provide for job seekers who are self-servicing and dissatisfied with their EPP to vary it online and to have decisions about their plan reviewed by the Digital Services Contact Centre, then, if necessary, by an authorised review officer or the Administrative Appeals Tribunal or a court. However, until such time as the review process is complete, the St Vincent de Paul Society observes that the job seeker’s existing approved EPP will remain in place. As it sees it ‘this is unsatisfactory mainly because a plan that presents issues for a job seeker is likely to increase the risk of non-compliance and subsequent breaching’.[60]

The Social Security Act currently specifies a range of circumstances in which particular paid work is unsuitable for job seekers.[61] Broadly speaking, proposed section 40X reproduces the existing provisions. Proposed subsection 40X(6) clarifies that paid work is not unsuitable on the grounds that it is not the job seeker’s preferred type of work, commensurate with their qualifications or remunerated in line with a job seeker’s wishes or expectations. This is in line with current rules and practice, which require that a job seeker should take any paid work that is offered to them, as long as it is not unsuitable in the terms outlined in the Social Security Act.[62]

Schedule 2— Arrangements and grants relating to assisting persons to obtain and maintain paid work

Schedule 2 amends the Social Security Act to provide a legislative basis for Australian Government spending on employment services. Currently the Government relies on the Financial Framework (Supplementary Powers) Regulations 1997 for legislative authority.

In a Committee hearing on the Bill, the Department of Social Services explained the rationale for the schedule:

Currently we have a somewhat cumbersome process whereby, if there's a need for a new program—let's just say there's a large-scale redundancy or there's a cyclone or some other natural disaster—we have to go through a process of making a regulation in the financial supplementary powers regulations, which are the responsibility of the Minister for Finance. There are a series of steps that have to be followed in order to make that regulation, to ensure there's legislative authority for the expenditure on that program. What schedule 2 does is to make clear that expenditure in categories of employment programs has that legislative authority. In the unlikely event that there is a program that's not covered by those general categories, then there's an instrument-making power, which would sit within this portfolio rather than the finance portfolio, and would allow speedier implementation of such programs.[63]

The use of the Financial Framework (Supplementary Powers) Regulations 1997 to provide legislative authority for spending on employment services and other programs is relatively recent. Prior to 2012 the Australian Government assumed that it could develop and administer spending programs without the need for legislative authority.[64] This assumption was overturned by the High Court’s decision in Williams v Commonwealth (No 1).[65]

Proposed section 1062A introduces a list of services and activities in relation to which the Employment Secretary may, on behalf of the Commonwealth, make, vary or administer a grant of financial assistance. This list also includes the authority to fund additional activities by making an instrument (paragraph 1062A(1)(l)).

Proposed section 1062D requires the Employment Secretary to include information about activities funded under section 1062A in the Department’s annual report.

Schedule 3—Compliance with participation payment obligations

Division 3AA in Part 3 of the Administration Act contains the compliance framework which applies to recipients of participation payments other than declared program participants (namely job seekers participating in the Community Development Program).

There are three categories of compliance failure under the Administration Act, namely, mutual obligation failures, work refusal failures and unemployment failures.

A person who is receiving a participation payment commits a mutual obligation failure where they fail to comply with a range of obligations, including things like attending appointments, entering into an EPP, and undertaking adequate job search efforts.[66] A job seeker commits a work refusal failure where they refuse or fail to accept an offer of suitable employment.[67] A job seeker commits an unemployment failure where they become unemployed as a result of a voluntary act or misconduct.[68] If the voluntary act is found to have been reasonable, then a failure is not applied.[69]

Currently, if the Secretary determines that a job seeker has committed a mutual obligation failure or a work refusal failure then he or she must suspend the job seeker’s payment until they comply with a reconnection requirement (usually attending a rescheduled appointment or resuming a required activity—subsections 42AF(1) and 42AG(1) of the Administration Act).

If the job seeker is found to have had a reasonable excuse for not meeting the requirement or refusing work, then their payment is resumed and they receive back-pay for the payment suspension period after they have fulfilled their outstanding requirement.[70]

If the Secretary determines that a job seeker has committed persistent mutual obligation failures without reasonable excuse, he or she must either reduce an instalment of the job seeker’s payment and suspend the payment for a period, or cancel the payment—subsections 42AF(2)(c) and (d) of the Administration Act. Where the Secretary determines that a job seeker has committed a work refusal failure without reasonable excuse then he or she must cancel the job seeker’s payment (subsection 42AG(2) of the Administration Act). Under subsections 42AF(3A) and (3B) the Secretary has the discretion to waive penalties for mutual obligation failures under certain circumstances, but there is no scope for them to waive penalties for work refusal failures.

Where the Secretary determines that a job seeker has committed an unemployment failure, he or she is obliged to cancel their payment (subsections 42AH(1) and (2)). As is the case for work refusal failures without a reasonable excuse, the Secretary is unable to waive these penalties.

The main effect of items 1 to 13 in Schedule 3 is to allow for the Secretary to not impose penalties in relation to mutual obligation, work refusal, and unemployment failures, so long as the Secretary is satisfied that the job seeker had a reasonable excuse for the failure.

As the Explanatory Memorandum indicates, the Government has made a number of changes to the Targeted Compliance Framework recently.[71] These include: allowing job seekers with a valid excuse for not meeting a mutual obligation requirement to not have to meet the requirement in order to have their payment suspension lifted; and allowing job seekers two business days to contact their employment services provider before suspending their payments for participation failures. These changes have been made largely in response to the COVID-19 pandemic and the associated shift away from face-to-face servicing of job seekers.

The Explanatory Memorandum points out that the increased discretion allowed to the Secretary under the proposed changes in Schedule 3 may be necessary to ensure that job seekers are not unfairly penalised as a result of the introduction of the NESM:

The amendments made by Schedule 3 are related to the amendments to the social security law made by Schedule 1—for example where a person enters into an employment pathway plan using the streamlined processes but has trouble complying and decides to go back online to vary their plan but in the meantime commits a failure, Schedule 3 makes clear that there is no requirement for a payment suspension to occur.[72]

Schedule 4— Amounts not counted as income

The purpose of Schedule 4 is to ensure that payments and benefits from Australian Government and state and territory government employment-related programs are not treated as income for the purpose of social security law.

Currently subsection 8(8) of the Social Security Act provides that certain payments or benefits are not income for the purposes of the Act. This means that they are not factored into income tests affecting payability or rates of pensions and benefits under the Act. Item 2 inserts proposed subsection 8(8AC) with the effect of allowing the Employment Secretary to make a notifiable instrument determining that payments made by Commonwealth programs (proposed paragraph 8(8)(zv)) or state and territory programs (proposed paragraph 8(8)(zw)) are not income for the purpose of the Social Security Act.

Schedule 5—Approved programs of work for income support payment

All job seekers have mutual obligation requirements—these are the things that job seekers must do on an ongoing basis in return for the receipt of income support payments. Following 12 months on payment, job seekers are required to undertake additional activities for six months of every year. This is described as an annual activity requirement.[73]

As a part of an eligible job seeker’s mutual obligation requirements they may be required to participate in a work-focused program delivered by a community or private enterprise organisation. This requirement is typically in addition to the requirement to attend appointments with employment service providers and other relevant third-party organisations and to undertake job search, among other things. Participants in an approved program of work may receive a supplement of $20.80 for each fortnight in which they participate in the program. This is to assist with the additional costs associated with program participation.

Job seekers who participate in approved programs of work are not taken to be employees 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.[74] The Department of Education, Skills and Employment purchases personal accident insurance and public and/or product liability insurance to cover job seekers while they undertake their placements in the National Work Experience Program or Work for the Dole (at present these are the only approved programs of work).[75] Host organisations are also required to ensure that ‘the workplace and the activity being carried out meets all work health and safety obligations under relevant legislation and program requirements, and must maintain insurances as outlined in their relevant Deed and understand the coverage available to them under their own insurance policies’.[76]

Currently, under subsection 28(1) of the Social Security Act, the Secretary may declare in writing that a particular program of work is an approved program of work for income support payment. Item 1 amends this subsection so that any declaration by the Secretary will be a legislative instrument. As a legislative instrument, the declaration would be subject to Parliamentary scrutiny and potential disallowance.[77]

Schedule 6—Activities that do not give rise to employment under certain industrial relations legislation

Social security law stipulates that job seekers who are required to participate in an approved program of work or undertake an activity (other than suitable paid work) as a condition for the receipt of income support are not taken to be a worker or employee of the Commonwealth for the purposes of certain Commonwealth industrial relations legislation (specified above).[78] The main effect of item 1—which inserts into the Social Security Act proposed section 40—is to add to the existing categories of job seekers not taken to be a worker or employee of the Commonwealth, participants in an employment program determined by the Secretary by notifiable instrument.

The Australian Council of Trade Unions (ACTU) is strongly opposed to the changes that would be enabled by Schedule 6 of the Bill. Its stated concerns are twofold.

Firstly, the ACTU has argued that the addition of the employment program category ‘further codifies a loss of rights for unemployed Australians when they are engaged in work as part of their unemployment mutual obligation requirements’.[79] As the ACTU sees it, it is unacceptable for job seekers, when engaged in work or work-like activities, and, in some cases, to the financial benefit of the organisations in which they work, to be denied access to basic workplace rights, minimum wages and the protection of occupational health and safety legislation.[80] While acknowledging that the Government does use insurance arrangements to provide occupational health and safety cover for job seekers engaged in work-like activities, the ACTU questions why tax payers should be required to foot the bill for this cover when it is often employers who are the main beneficiaries of job seeker participation in their organisations.[81]

Secondly, the ACTU is concerned that, by allowing the Secretary to declare through a notifiable instrument that programs are employment programs, the Bill would bypass the legislated restrictions that apply to approved programs of work[82] (see above) and EPP processes that provide some administrative restriction and enable some degree of job seeker choice around the institution of work-like activities.[83] In the ACTU’s view, the change would both make it easier for the Secretary to create programs that ‘do not provide job seekers with basic workplace protections’ and allow the Government to avoid parliamentary oversight.[84]

In the context of the Senate Standing Committee on Education and Employment inquiry into the Bill, Senator Rachel Siewert questioned why employment programs need to be determined by legislative instruments and not primary legislation.[85] The Department responded that this was necessary to accommodate the increased flexibility in meeting mutual obligation requirements that will be afforded to job seekers under the NESM and its Points Based Activation System.[86] Under this system, job seekers will be able to participate in work-like activities that are not entered into their EPPs, but nevertheless gain credit (points) for their participation in these activities. Hence, the Department argues:

Specifying employment programs in a notifiable instrument reflects the need to be able to vary what programs people undertake; to maintain flexibility in what job seekers may undertake as part of their mutual obligation requirements, while allowing flexibility for the activity not to be directly in a person’s Job Plan.[87]

The changes are to ensure that job seekers who participate in work-like activities that are not an approved program of work or an activity included in their EPP are similarly not to be taken as a worker or employee of the Commonwealth for the purposes of certain Commonwealth industrial relations legislation.

Schedule 7—Youth Allowance ordinary income free area

The amendments in Schedule 7 affect Youth Allowance recipients who are undertaking full-time study as a requirement of an EPP.

The amendments aim to prevent these recipients from benefiting from income testing arrangements that apply to Youth Allowance recipients who are deemed to be ‘undertaking full-time study’ for the purposes of the Social Security Act (the term ‘undertaking full-time study’ is defined in section 541B of that Act).

This problem does not arise for JobSeeker Payment because JobSeeker Payment does not have a separate set of income testing arrangements for recipients deemed to be ‘undertaking full-time study.’ People 25 or older who are deemed to be ‘undertaking full-time study’ are able to apply for a separate payment—Austudy.

A single payment administered as two separate payments

Youth Allowance is a single payment but the Government seeks to maintain a clear distinction between two groups of recipients. In administrative documents these two groups are referred to as ‘job seekers’ and ‘students and apprentices.’ According to the Explanatory Memorandum:

While administratively, and in long-standing policy, Youth Allowance paid to students, to apprentices and to job seekers are treated as separate payments, they are legally the same payment in social security law.[88]

This terminology can be confusing because some Youth Allowance recipients classed as ‘job seekers’ are undertaking full-time study and not all ‘job seekers’ are required to engage in job search.[89]

Youth Allowance was created in 1998 to replace five separate payments covering people who are unemployed, sick or studying. The new payment was designed to remove financial incentives for young people to choose to be unemployed rather than participating in education and training.[90]

While social security law treats Youth Allowance as a single payment, the Social Security Act applies different conditions to ‘students and apprentices’ and to ‘job seekers’. One example is income testing.

Income testing and the ordinary income free area

Like most other income support payments, Youth Allowance is income tested. Recipients can earn up to a certain amount (the ‘ordinary income free area’) without it affecting their payment. Any income their receive over this amount reduces their payment.

The income free area for job seekers is significantly lower than the income free area for full-time students and Australian apprentices. For job seekers, their payment is reduced when they earn over $150 a fortnight. For students and apprentices their payment is reduced when they earn over $437 a fortnight.[91]

The distinction between ‘job seekers’ and ‘full-time students’

To maintain this difference in treatment, the Government needs to maintain a clear distinction between ‘job seekers’ and ‘full-time students and apprentices’.

Youth Allowance paid to ‘students and apprentices’ is known as Youth Allowance (student) or Youth Allowance (full-time students and Australian Apprentices). Youth Allowance paid to ‘job seekers’ is known as Youth Allowance (other) or Youth Allowance (job seeker).

‘Students and apprentices’ are those ‘undertaking full-time study’ as this term is defined in the Act. The Social Security Act defines the term ‘undertaking full-time study’ in section 541B.[92] The definition excludes full-time study in courses that are not ‘determined, under Section 5D of the Student Assistance Act 1973, to be a secondary course or a tertiary course for the purposes of that Act.’ Section 5D allows the Minister to make this determination using an instrument. This is the Student Assistance (Education Institutions and Courses) Determination 2019. The term ‘job seeker’ is not defined in the Social Security Act.

In practice the distinction between the two groups of Youth Allowance recipients is usually clear. Apprentices and people who are intending to undertake full-time study in an approved course receive payment under the conditions for Youth Allowance (full-time students and Australian Apprentices).

Other claimants are paid under the conditions for Youth Allowance (other). When coming onto payment, claimants are normally required to engage with employment services before they can begin receiving payments. As part of engaging with employment services ‘job seekers’ are required to enter into an EPP which outlines their mutual obligation requirements.[93]

Under some circumstances a person’s EPP can include undertaking full-time study. However, the course can only be approved if it is less than 12 months in duration.[94]

Blurring the distinction

According to the Explanatory Memorandum, an increase in opportunities for ‘job seekers’ to engage in study risks blurring the distinction between ‘job seekers’ and those deemed to be ‘undertaking full-time study’:

Recent Government measures have also allowed greater flexibility for job seekers to undertake study and training as part of their mutual obligation requirements contained in their employment pathway plan. This increases the potential that these job seekers could be considered as full-time students and accessing policies designed for students who are undertaking longer qualifications, and who are not required to meet mutual obligation requirements.[95]

From September 2020 more flexible mutual obligation arrangements will operate to encourage study in high labour demand areas.[96]

What Schedule 7 does

The rules for calculating a Youth Allowance recipient’s rate of payment are set out in Part 3.5 of the Social Security Act (the Youth Allowance Rate Calculator).

The personal income test has three parts:

  • an income free area. This is the amount a recipient can earn before their payment is reduced. This is set by point 1067G-H29
  • a lower range reduction. For every dollar earned over the income free area and under the upper range, the person’s payment is reduced by 50c. This is set by point 1067G-H32
  • an upper range reduction. For every dollar earned over the lower range the person’s payment is reduced by 60c. This is set by point 1067G-H33.
Table 1: current income free area, lower range and upper range for Youth Allowance recipients
  Full-time study New apprentice Other
Income free area $437 $437 $150
Lower range $438–524 $438–524 $151–$250
Upper range $525 $525 $251

Source: Services Australia, A guide to Australian Government payments: 1 April to 30 June 2021, Australian Government, Canberra, 2021, pp. 36–37.

The amendments in Schedule 7 insert the words ‘other than in compliance with a requirement contained in an employment pathway plan that is in force in relation to the person’ into paragraphs 1067G-H29(a), 1067G-H32(a) and 1067G-H33(a). The effect of these amendments is to exclude ‘job seekers’ from the provisions that apply to recipients deemed to be ‘undertaking full time study’.

Schedule 8—Start day for Jobseeker Payment and Youth Allowance

Schedule 8 implements a savings measure announced in the 2021–22 Budget. This measure is part of the New Employment Services Model. The Government expects savings of $191.6 million over the forward estimates.[97]

The provisions in Schedule 8 make savings by delaying the payment start day for Jobseeker Payment and Youth Allowance (other) claimants receiving Digital Services. Instead of receiving a payment calculated from the date they claimed payment it will be calculated from the date they enter into an EPP online.

The Government argues this will make the income support system fairer because it will align the treatment of recipients in Digital Services with those in Enhanced Services. Under the current provisions, the start day for jobseekers receiving Enhanced Services will be either 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 the day that they are given notice of the requirement to attend.[98]

What is a ‘start day’?

Jobseeker Payment and Youth Allowance (other) are paid in arrears so Services Australia needs to work out the first day on which a person became entitled to a payment. This is the person’s start day. According to the Department of Social Service’s Social Security Guide: ‘The start day is the first day for which a social security payment is payable to a person, and hence the day from which the person is paid.’[99]

The rules for working out start days for payments and health care cards are set out in Schedule 2 of the Administration Act.

Historical background—RapidConnect

In 2005 the Government introduced RapidConnect, a policy designed to make sure job seekers engaged with an employment services provider before receiving income support.

Under the 2005 change, job seekers without an exemption from RapidConnect could not receive their first payment until they had an interview with an employment services provider. However, if they attended an interview within 14 days, their payment start day would be the day they made their claim (unless they were serving a waiting period). This meant that their payment would be backdated.[100]

The Social Services Legislation Amendment (Welfare Reform) Act 2018 changed the rules so that the person’s start day became the day they attended an interview with an employment services provider rather than the day they made their claim for income support.[101] This strengthened the incentive for job seekers to engage with employment services quickly as well as delivering savings.

Part of the rationale for RapidConnect was to divert people from the income support system—to push them into work before they received their first income support payment. According to a 2005 Department of Employment and Workplace Relations submission:

Directing people towards work and employment services prior to entering the income support system is critical because evidence has shown that once someone enters the welfare system, they are far more likely to use the system again. Early intervention can be useful in two ways. It can help reduce the time people stay on welfare (duration of spells). It can also reduce the need for income support by motivating them to retain an existing job or finding a new one before applying for benefits.[102]

In response to COVID-19, the Government ceased operating RapidConnect in April 2020.[103]

The move to digital self-servicing

In 2018 the Government began trialling Online Employment Services.[104] The Government’s experience with online servicing informed the Digital Servicing component of the New Employment Services Trial.[105]

In April 2020 in response to COVID-19 the Government moved to Online Employment Services for new entrants into the employment services system.[106]

One of the consequences of the shift to online servicing was that the provisions of Administration Act that delayed a claimant’s start day until they had attended an interview with an employer no longer applied.[107] Participants in Online Employment Services complete their Employment Pathway Plan online and are not required to meet with a provider. This means their first payment can be backdated to the day they made their claim for income support.

Under the Act’s current provisions, participants in the New Employment Services Model’s Digital Services will be treated more favourably than participants in Enhanced Services. Because participants in Enhanced Services will be required to attend an interview with a provider their start day will be the day of the interview (or in some circumstances, the day they were notified that they were required to attend an interview). Their first payment will not be backdated to the day they made their claim.

Amendments

Amendments in Schedule 8 of the Bill are intended to treat participants in Online Employment Services and Digital Services in the same way as employment services participants who are required to attend an interview. To achieve this item 14 of Schedule 8 to the Bill inserts proposed clause 4B into Schedule 2 of the Administration Act.

For Jobseeker payment and Youth Allowance (other) recipients, clause 4B sets the person’s start day as the day they accepted their EPP online (subclause 4B(2)). However, under subclause 4B(3), if a person intended to enter a plan on a certain day and failed to so, and they satisfy the Secretary that the failure was due to circumstances beyond their control, then the person’s start date is either the date of notice to enter the EPP or the day they made the claim.

Schedule 9—Repeals of spent provisions

The amendments in Schedule 9 are uncontroversial. They repeal provisions relating to payments and programs that have ceased. These are:

  • the training supplement
  • Green Army Allowance
  • Green Army Programme and
  • National Green Jobs Corps program.

Schedule 10—Contingent amendments

Schedule 10 makes minor amendments to the Social Security Act that have no practical impact on recipients of income support. The amendments remove items that will become redundant due to the operation of amendments to the Act made by the Social Services Legislation Amendment (Welfare Reform) Act 2018 and this Bill.