Document Sample

                            SECOND READING SPEECH


The Government’s $3.6 billion Welfare to Work package recognises that every
Australian of working age has the right, and deserves the opportunity, to participate in the
nation’s prosperity.

The best way for people to do this is by having a job and engaging in the economic and
social life of our nation.

The economic record of the last decade is an impressive one. Australia’s prosperity is no
accident. Unemployment has been reduced to 5.1% and due to the creation of more than
1.7 million new jobs, employment is at a record high with more than 7 million
Australians in full time work.

The spectre of unemployment has given away in many places to labour shortages,
especially of skilled labour. The unemployment queues of the early 1990s have
diminished, but the ranks of the disabled pensioners and sole parent beneficiaries have
grown rapidly. Too many children still grow up in jobless households.

At a time of sustained economic growth and unemployment at 29 year lows, it is
unacceptable to have 2.5 million or 20% of working age Australians on income support.
Of these, more than 1.3 million people are in receipt Parenting Payment or the Disability
Support Pension and have few, if any, participation requirements.

It is also unacceptable to have 700,000 children growing up in jobless households, in
which 2 or 3 generations of Australians may not know what it is like to have a job, let
alone steady employment and regular income.

No one denies the fact that a government must preserve a well-targeted social safety net,
while at the same time encouraging working-age people to find jobs and remain
employed. These welfare reforms demonstrate the government’s strong commitment to
this principle.

At the same time, people on welfare deserve more support and it is vital for Australia’s
continuing prosperity that they be given every assistance and opportunity in which to
achieve better outcomes.

Increasing economic participation

The Bill meets with community standards about the need for a balance of assistance,
incentives and obligations to increase participation and reduce welfare dependence
amongst working age Australians.

Moving from welfare to work helps people achieve higher incomes and a better standard
of living, participate in mainstream social and economic life and achieve a better future
for their families. It also reduces the obligation on taxpayers, creating a positive cycle of
work, higher incomes and more sustainable and better targeted welfare expenditure.

At a cost of $3.2 billion, the Welfare to Work measures covered by this Bill focus on
assisting parents, people with disabilities, the mature aged and the very long term

This Bill will respond to our twin challenges; the imperatives to increase participation for
these groups and reduce their level and incidence of welfare dependence.

Newstart Allowance will be enhanced, additional employment assistance will be
provided, compliance arrangements will be improved to encourage and reward
participation and job seekers will be able to connect more quickly with the workforce
through RapidConnect.

Parents – availability to work

Parents out of the workforce for long periods of time are in danger of losing the skills and
self confidence necessary for them to return to work. Single parents spend around 12
years on average on income support. It is not surprising that some parents find it difficult
to transfer back into work after extended periods out of the labour force.

Under the measures the core requirement for principal carer parents on income support
payments will be to look for part-time work, if they have the capacity and availability to
do so, generally when their youngest child turns six and is ready for school.

If they are unable to find work they will continue to keep their income support. In many
cases parents meeting their requirements through part-time work will retain part rate
income support.

These reforms are in line with community expectations and are modest by international

From 1 July 2006 new applicants will be eligible for Parenting Payment Single when
their youngest child is aged less than 8. For Parenting Payment Partnered applicants this

will apply when their youngest child is less than 6. Once their youngest child either turns
6 (for Parenting Payment Partnered recipients) or turns 8 (for Parenting Payment Single
recipients) they will typically go on to Newstart. Single principal carer parents in receipt
of Newstart Allowance will also have access to the Pensioner Concession Card, the
Pharmaceutical Allowance and the Telephone Allowance.

Principal carers on Newstart or Youth Allowance (Other than full-time students or new
apprentices) will have a requirement to look for paid work of 15 hours a week or more.
Parents qualifying for Parenting Payment Single from 1 July 2006 will have a job search
requirement when their youngest child turns 6.

Parents on Parenting Payment Single or Partnered on 30 June 2006 can stay on that
payment, under current eligibility provisions, until their youngest child turns 16.
However, they will have a job search requirement from the latter of 1 July 2007 or when
their youngest child turns 7.

The Australian Government has no intention of placing requirements on parents that
could inhibit their ability to care for their children. Parents’ individual circumstances will
be taken into account when determining their participation requirements.

Special family circumstances

The Government also recognises that some principal carer parents – for example
registered and active foster carers, distance educators, and home schoolers, or who have
large families or a disabled child – may be unavailable for work because of the need to
focus fully on their caring responsibilities.

If a parent has special family circumstances such as these, they will be taken into account
when determining their participation requirements under the Welfare to Work changes,
and the parent may be eligible for a temporary exemption.

Circumstances where the parent has multiple caring responsibilities or cannot find
suitable child care will also be taken into consideration.

Income supplement

All principal carer parents who are registered and active foster carers, home educators or
distance educators will be exempt from participation requirements for a period of up to
12 months at a time and will receive a new rate that tops up their income support
payment to the equivalent of the Parenting Payment Single rate. This applies for the
period of the exemption and is reviewable.

The new rate will be indexed from 1 July 2006 so that it will continue to cover any
difference between Parenting Payment Single and Newstart Allowance.

To support these changes, from 1 July 2006, more parents who have children with very
challenging physical, intellectual, psychological or behavioural disabilities, will qualify
for an expanded Carer Payment. This will be provided for in a separate Bill.

Victims of domestic violence

Principal carer parents who are subject to family breakdown associated with domestic
violence will be temporarily exempted from participation requirements. Others who have
been subjected to domestic violence will be temporarily exempted from participation
requirements under current, more general, exemption provisions.

Additionally, principal carer parents who have undergone a highly stressful family
breakdown may be eligible for a period of stabilisation before participation requirements
commence. This will give them time to adjust before looking for work.

Improved child care provisions will assist parents returning to the workforce. The
measures will provide the additional outside school hours child care necessary to reduce
barriers parents face in moving from welfare to work, as well as addressing the current
high demand for places. Principal carer parents with part-time work requirements will
not be expected to take up work if it occurs outside school hours and no suitable child
care is available, or the cost of care would result in a very low or negative financial gain
from working.

The Government recognises that some parents may have barriers to overcome as they
enter or re-enter the workforce and is committed to providing assistance to those with
obligations to seek work and will provide additional employment focussed services to
help jobless parents find work.

Extra Employment Services

A new Employment Preparation service will be available through Job Network to assist
parents with school age children to find work and overcome barriers to employment by
equipping them with skills to re-enter the workforce.

The Government will also provide additional employment related services to parents with
special needs. Parents who have significant non-vocational barriers, such as substance
abuse or homelessness, to overcome before looking for work will be referred to the
Personal Support Programme.

Parents with a part-time requirement who are not working may be required to undertake
an annual Mutual Obligation activity, including part-time Work for the Dole.

People with a disability – capacity to work

The Government is committed to maintaining a sustainable and adequate safety net for
people with disabilities who are unable to work. At the same time, the Government
believes long-term dependence on the Disability Support Pension is not the best option
for people who have the ability to work reasonable hours, without ongoing support, in the
open labour market.

Australian Government spending on the Disability Support Pension alone will exceed $8
billion in 2004/05. In 1980, 2.3% of working-age people were claiming the Disability
Support Pension (DSP). By June 2005 this proportion had more than doubled to over 5%
or 705,000 people.

Only around 10 per cent of DSP recipients are in the paid workforce in Australia while
the average among OECD countries is around 30 per cent. The changes to income
support arrangements and the increased funding for employment services and the
Workplace Modifications Scheme are designed to encourage and assist people with
disabilities to test their capacity to work.

From 1 July 2006 the focus will shift to the capacity people have to work – not their
incapacity or their inability to work. If people with a disability have the capacity to work
between 15 and up to 30 hours per week, without ongoing support in the open labour
market then they will not be eligible to claim the Disability Support Pension. They will
need to apply for another payment, typically Newstart or Youth Allowance (Other) and
will be required to look for work. A person’s work capacity will be assessed by the new
Comprehensive Work Capacity Assessment service. People who were receiving the
Disability Support Pension on 10 May 2005 will not be affected by these changes.

Access to other benefits and support

People with disabilities will have access to the full range of vocational and pre-vocational
programmes to help them with job preparation and job search activities. Places in
vocational rehabilitation and employment services will be guaranteed for Newstart and
Youth Allowance (Other) recipients with disabilities who have part-time work capacity.

These people will also get the Pensioner Concession Card, Pharmaceutical Allowance,
the Telephone Allowance and other concessions available to card holders. Job seekers
with a disability and a part-time requirement will also be eligible for a $312 Employment
Entry Payment.

Mobility Allowance will be increased to $100 per fortnight for people on Newstart
Allowance or Youth Allowance (other) with an assessed work capacity of at least
15 hours per week and for those people on the Disability Support Pension being assisted
by an employment services provider. If these people increase their hours of work and
move off income support and continue to work, they will retain eligibility for this
Mobility Allowance.

People with disabilities and a part-time requirement who are not working may also be
required to undertake an annual Mutual Obligation activity, including part-time Work for
the Dole.

Mature age job seekers

Although the participation rate in the labour market has been rising steadily among
mature age Australians, too many mature age people often experience difficulties finding

Newstart recipients aged 50 to 64 will be required to seek full-time work – the same
requirements applying to younger job seekers. People aged 60 or over will not be
required to participate in Work for the Dole. Nor will people aged 50 or over unless they
are not genuine in their effort to find work. However, job seekers aged 55 or over will be
able to fully meet their activity requirements through part-time work and/or voluntary
work totalling at least 15 hours a week.

Mature age job seekers will be supported by increased employment assistance. They will
also benefit from the new Employment Preparation service, which will be able to assist
mature age people to update their skills and prepare them for the modern labour market.

Getting the very long term unemployed back into work

The Welfare to Work measures will also increase the assistance currently provided under
the Job Network Active Participation Model to very long-term unemployment benefit

The new Wage Assist measure will provide additional incentives to employers to take on
very long term unemployed job seekers into full-time, ongoing employment.

To help develop the work habits needed to enter the labour market job seekers who are
not genuine in their efforts to find work may be required to participate in full-time Work
for the Dole for 25 hours per week.

Very long term unemployed job seekers with major employment barriers can also be
referred to a Comprehensive Work Capacity Assessment to identify if another payment,

such as the Disability Support Pension, or a specialist programme such as vocational
rehabilitation or disability open employment services, is appropriate.

More generous taper rates for Newstart Allowance

Many people moving from welfare to work, or increasing their earnings, will benefit
from the enhanced allowance income test to be introduced under this Bill.

Under the current Newstart personal income test, there is no payment reduction for the
first $62 of income per fortnight, payment is reduced by 50 cents in the dollar for income
between $62 and $142 per fortnight, and 70 cents in the dollar thereafter.

The new income test is more generous. The $62 per fortnight free area is unchanged, but
the income range over which the 50 cents in the dollar reduction applies will be increased
from $142 to $250 per fortnight, with payment being reduced by 60 cents in the dollar
thereafter. The rate at which someone’s income affects their partner’s allowance has also
been reduced from 70 cents in the dollar to 60 cents in the dollar. These changes will
improve rewards from part-time work and help people move from welfare to work.

Youth Allowance (other than full-time students or new apprentices), Widow Allowance,
Partner Allowance, Mature Age Allowance and Sickness Allowance will also be changed
in line with the changes for Newstart Allowance.

A fair but firm compliance regime

This Bill abolishes the current breaching regime, under which job seekers can incur
long-lasting financial penalties regardless of any subsequent efforts to meet their

The new compliance framework included in this Bill will more clearly link participation
to payment and will reward those who are willing to re-engage quickly. A job seeker
without a record of repeated non-compliance who commits a participation failure, such as
missing an interview with an employment service provider, will be given the opportunity
to avoid any financial penalty by quickly re-engaging with that provider.

Job seekers who persist with their non-compliance, despite being warned, will lose their
payments. As a deterrent to repeated participation failures or more serious failures, such
as refusing a job offer, an eight week non-payment period will apply. This Bill also
introduces a more equitable means of deterring income support recipients from
deliberately failing to declare or under-declare their earnings, in the form of a recovery
fee set at 10 per cent of the debt incurred.

There will be special arrangements for vulnerable people, such as dependent children,
under the new compliance framework, including case management and limited financial
assistance where vulnerable people and third parties may be unduly affected by non-
payment periods. Vulnerable clients, such as people with intellectual disabilities, will
also be clearly flagged so that their circumstances are taken into account in cases of non-

Current legislative safeguards relating to the imposition of penalties, such as the need for
requirements to be reasonable and the need to consider a job seeker’s reasons for non-
compliance, will continue to apply for both vulnerable and non-vulnerable job seekers.
In addition, the current review and appeals system will be retained. This allows any job
seeker to ask Centrelink to review any adverse decision and, if not satisfied with the
outcome of the review, to appeal the matter to an external tribunal.

Work First approach

RapidConnect is a ‘work first’ approach designed to provide assistance to job seekers as
soon as possible. Connecting job seekers to their Job Network member quickly should
reduce frictional unemployment and improve job seekers’ chances of finding a job.

Under RapidConnect, a job seeker who contacts Centrelink to enquire about Newstart or
Youth Allowance will be referred directly to Job Network. Job seekers who do not
connect with their Job Network member may experience an impact on their income
support. This ‘work first’ approach is at the cornerstone of the Government’s welfare to
work reforms.


The Government firmly believes that the best form of welfare is a job. As Tony Blair,
the current Prime Minister of the United Kingdom, has said, “Fairness starts with the
chance of a job”.

I note that there has been little support from the Opposition for the Government’s
reforms. They refuse to acknowledge that people on welfare have the same aspirations as
other Australians.

The Opposition will claim that they support the notion that it is important to assist
unemployed people into work, however they do not support the movement of people
from pensions to unemployment benefits which contain mutual obligation requirements.

The challenge of implementing welfare reform is to get the right balance between
obligations and support. This must be accompanied by appropriate incentives and
support mechanisms to ensure that job seekers continue to be provided with services.
The Government believes that its reforms strike this balance.

The majority of Australians would agree that it is not unreasonable to expect those people
who are available and capable of work to participate in the workforce. The economic and
social arguments for such reform are both compelling and necessary.

With this legislation, we face important choices: the choice between accepting growing
numbers of people on welfare or doing something to help them get a job; the choice
between recognising people’s abilities and capacities or continuing to focus on their
disabilities and incapacities; the choice between tackling unemployment, or accepting
joblessness as the cost of modern society; the choice between the dignity and value that
comes from participation in the workforce or the despair and poverty that results from
long term welfare.

The Government has made its choice to pursue the necessary reforms responsibly,
mindful that these measures are directed at securing the future prosperity of Australia,
and providing the opportunity for all Australians to participate in that prosperity.