House of Representatives

Social Services Legislation Amendment (Welfare Reform) Bill 2017

Second Reading Speech

Authority moving the reading of the bill

I move:

That this bill be now read a second time.

Mr Porter (Minister for Social Services)

With this bill, the Social Services Legislation Amendment (Welfare Reform) Bill 2017, the government is embarking on a comprehensive reform of Australia's working-age welfare payments; making the system simpler, more sustainable, and focussed on supporting people from welfare into employment.


The bill introduces a new, single jobseeker payment, which will replace or consolidate seven existing payments in order to simplify the working-age payment system. It will also strengthen welfare conditionality for jobseekers with drug and alcohol abuse issues and better encourage and support them to pursue treatment.

The bill also sees a streamlining of administrative processes and the introduction of a new targeted compliance framework which will better identify and support vulnerable people and ensure that wilfully noncompliant jobseekers face appropriate penalties.

The bill demonstrates that the government is completely committed to improving the integrity of the welfare system and ensuring that recipients receive the necessary support and incentives to address barriers to employment, to look for work and to take a suitable job when it is available. This will benefit not just the jobseekers themselves but also their families, the wider community and the Australian economy.

Jobseeker payment measures

From 20 March 2020, this bill will introduce a new, single jobseeker payment, which will replace seven existing payments as the main payment for people of working age.

Newstart allowance, sickness allowance, wife pension, bereavement allowance, and widow B pension will cease from 20 March 2020. Existing bereavement allowance recipients will continue to receive bereavement allowance for the remainder of their bereavement period following 20 March 2020, but there will be no new grants of bereavement allowance from 20 March 2020.

Widow allowance will close to new entrants from 1 January 2018 and will cease on 1 January 2022, when all recipients have moved to the age pension.

Partner allowance will also cease on 1 January 2022 when all recipients have moved to the age pension.

These multiple working-age payments are a product of many years of ad hoc changes and dated policy decisions, which have created a system that is difficult to understand, navigate and administer.

Creating a new jobseeker payment will ensure a single set of rules and rates for people of working age with the capacity to work. It will also firmly entrench long-term employment as the desired outcome for working-age Australians who receive income support.

Under these changes, approximately 800,000 existing Newstart allowance recipients are expected to transfer to the new jobseeker payment in 2020. A further 20,000 recipients of other working-age income support payments are expected to progressively transition to the jobseeker payment, or other payments such as the age pension or carer payment where eligible.

The eligibility rules and payment rates for the jobseeker payment will be based primarily on the existing rules and rates for Newstart allowance. Eligibility will be broadened to include access for people who are temporarily sick or injured and unable to return to their work or study, rather than having to shift onto a different payment.

Bereavement provisions will also apply within the new jobseeker payment for people who would have otherwise claimed a bereavement allowance. Bereaved jobseeker payment recipients and claimants will receive a triple upfront payment, acknowledging the high upfront costs associated with losing a partner or spouse. Recipients will also receive temporary exemptions from mutual obligations requirements during their time of grief. Bereaved people will also be exempt from a number of conditions that would normally apply to jobseekers; ensuring that they get access to the payment when they need it the most.

Transitional arrangements will be put in place for wife pension recipients who move to the jobseeker payment to ensure that their nominal rate of payment is not reduced as result of these changes.

Replacing seven existing payments with one working-age payment is a critical step in reforming our welfare system and will firmly entrench long-term employment as the desired outcome for Australians who enter the welfare system in a moment of need.

The simplification of working-age payments is based on the blueprint provided by Patrick McClure after the significant work done by him and his reference group on welfare reform.

Amend the activity test for persons aged 55 to 59

This bill will also strengthen the employment focus of mutual obligations and better connect mature age jobseekers with the labour market, while still recognising that volunteering can be a valuable stepping stone into paid work.

Changes will be made to current activity test arrangements, to help ensure Newstart allowance and special benefit recipients aged 55 to 59 years experience greater workforce participation and increase their chances of finding work.

Presently, Newstart allowance and special benefit recipients aged 55 or over can satisfy the activity test and meet their annual activity requirements through 30 hours per fortnight of approved voluntary work, paid work or a combination of both.

Whilst volunteering obviously has a range of benefits, participation in paid work and reduced reliance on income support should be the ultimate goal for jobseekers.

Under this measure, from 20 September 2018, Newstart allowance and special benefit recipients aged between 55 and 59 years of age will have satisfied the activity test if they are engaged in at least 30 hours per fortnight of paid work, or a combination of paid work and up to a maximum of 15 hours of voluntary work.

The 2017-18 budget included changes to mutual obligations requirements for jobseekers in other age groups. This includes aligning activity requirements for jobseekers aged between 30 and 49 years of age with those for jobseekers aged under 30 and introducing annual activity requirements for jobseekers aged between 60 and the age pension age.

Changes to participation requirements for these other age groups can be achieved through jobactive guidelines alone. No legislative amendment is required.

The Australian government is also complementing these changes by investing over $100 million to increase the skills and experience of mature age jobseekers from 1 July 2018.

Faster connection to employment services

The bill also supports the introduction of the Work First: faster connection to employment services measure.

This measure makes changes to the RapidConnect arrangements to encourage jobseekers to connect more quickly with employment service providers (like jobactive and Transition to Work).

From 1 January 2018, jobseekers subject to RapidConnect will have their Newstart allowance or youth allowance (other) payment commence from the date they attended their initial appointment with their employment service provider, instead of the date the recipient first contacted the Department of Human Services or lodged their claim.

Transition to Work and jobactive providers will continue to be contractually required to have appointment times available for people to attend within two business days. If an appointment is not available or the jobseeker misses an appointment due to a reasonable cause, they will not be penalised.

Connecting jobseekers more quickly with employment services will improve the jobseeker's chances of finding work faster.

Removing intent to claim

Through this bill, social security claimants will receive payments from the date they provide all material necessary for them to claim and to be assessed that is within their control, rather than from the date of first contact with the Department of Human Services.

This measure will encourage social security claimants to provide the information required for their claim in a timely manner, in line with government and community expectations that individuals take personal responsibility for their own affairs.

The measure will apply to all new claims for social security payments. It will not affect current recipients, unless they claim another payment.

Substance misuse measures

In addition, this bill introduces three measures designed to strengthen requirements for jobseekers who may have substance abuse issues and to provide improved pathways for them to pursue appropriate treatment.

The community has a right to expect that taxpayer-funded welfare payments are not being used to fund drug and alcohol addiction and that jobseekers do all that they can reasonably do to find a job, including addressing any barriers which have prevented them from doing so.

Data shows us that substance abuse is a more significant problem for people on welfare payments and is directly impacting the ability of many jobseekers to undertake activities to get them into employment:

In 2013 the Australian Institute of Health and Welfare found that those who were unemployed were 2.4 times more likely to use drugs such as crystal methamphetamine than those who were employed.
Last year there were 4,325 occasions when someone gave drug or alcohol dependency as a reason for not meeting their mutual obligation requirements.
In September 2016, around 5,250 people were temporarily exempt from all mutual obligations due to a drug or alcohol dependency.

While there are some existing mechanisms in place for identifying jobseekers with substance abuse issues and assisting them to seek treatment, the data clearly shows that much more needs to be done to help these individuals.

The measures in this bill will provide better pathways for jobseekers who are having difficulties meeting their mutual obligation requirements because of drug or alcohol misuse so that they can pursue the treatment they need.

Importantly, the measures in this bill are complemented by other measures that do not require legislation. This includes, for the first time, ensuring that all jobseekers are able to undertake drug or alcohol treatment as an approved activity in their job plan.

This bill will also establish a modest two-year trial of drug testing for 5,000 recipients of Newstart allowance and youth allowance (other) from 1 January 2018.

While drug testing is currently used in Australia by many employers and, of course, by police and law enforcement, and it has also been used overseas in relation to welfare recipients, there is little comparable evidence available to tell us whether this sort of intervention would be effective in the Australian welfare context.

That is why this measure has been specifically designed as a trial to build that evidence base and assess the value of drug testing as a way of identifying those for whom drug misuse is a barrier to work, and as a means of supporting them to undertake treatment.

The trial will operate in three locations. The selection of these locations will be based on evidence and data about drug use in Australia to ensure the trial is targeted at supporting regions with a high incidence of drug use. The availability of treatment services and the ability to apply a welfare quarantining mechanism will also be key factors in determining trial locations.

Under this trial, from 1 January 2018, people claiming Newstart allowance or youth allowance (other) in the trial locations will be required to acknowledge that they may be subject to drug testing as part of the claim process.

Drug testing will coincide with Department of Human Services appointments and will be administered by a contracted third party drug-testing provider.

There will be comprehensive rules set out in a legislative instrument relating to the trial locations, the illicit drugs tested for and the protocols for conducting the drug tests, including safeguards to ensure that testing is conducted appropriately and in accordance with relevant standards. This legislative instrument will provide the flexibility to ensure that the expert advice of the contracted testing provider and the drug and alcohol sector can be taken into account in developing these protocols and safeguards.

There will be appropriate consequences for people who deliberately miss an appointment without a reasonable excuse or for people who refuse a drug test in order to avoid a possible positive result.

Jobseekers who test positive to a drug test will have their payments placed on income management for 24 months. This is designed to restrict their access to cash and, therefore, limit their ability to use payments to fund further harmful drug use. Jobseekers who test positive will also be subject to a second drug test within 25 working days and may also be subject to further subsequent tests. This will help to identify those for whom drug misuse is an ongoing problem which may require treatment and which is creating a barrier to employment.

Jobseekers who test positive to more than one drug test during the trial will be referred to a Department of Human Services contracted medical professional with experience in drug and alcohol treatment who will assess their particular circumstances and identify appropriate treatment or support options.

If the report from the medical professional recommends treatment, the jobseeker will be required to participate in one or more treatment activities to address their substance abuse as part of their job plan. This could include, for example, activities such as rehabilitation, counselling or case management.

This trial is not about penalising jobseekers with drug abuse issues. It is about finding new and better ways of identifying these jobseekers and ensuring they are referred to the support and treatment they need.

This bill will also make changes to mutual obligation exemptions to better support and encourage jobseekers with substance misuse issues to remain actively engaged and pursue treatment.

Currently, jobseekers can be granted an exemption on the basis of temporary incapacity due to drug or alcohol dependency. Exemptions can also be granted in other circumstances that may be related to drug or alcohol abuse.

This allows jobseekers to be exempt from all mutual obligation requirements with no expectation that they will undertake appropriate activities to address the underlying problem their substance abuse.

This is why, from 1 January 2018, jobseekers will no longer be able to be exempt from their mutual obligation or participation requirements if the circumstances affecting their ability to meet their requirements is primarily due to drug or alcohol dependency or misuse.

This measure reflects that jobseekers who do have substance dependency or misuse issues that prevent them from looking for work should be taking active steps to address their issues rather than being exempt from all requirements.

It is estimated that around 11,000 exemptions per year will no longer be granted under this measure, noting that some jobseekers may currently get more than one exemption in a year related to their substance misuse.

Jobseekers who are no longer eligible for an exemption will instead remain connected to their employment service provider and actively engaged in appropriate activities tailored to their particular circumstances and barriers to work, including their substance misuse issues.

The government is investing $28.8 million to ensure that jobseekers receive this tailored support from their provider during the period they would previously have been exempt.

This bill will also tighten the reasonable-excuse rules to provide an incentive for jobseekers who are having difficulty meeting their requirements due to drug or alcohol dependency to undertake treatment as part of their mutual obligation requirements.

Jobseekers on income support negotiate a job plan with their employment service provider. It is based on their individual circumstances and capacity and is designed to help the jobseeker move towards supporting themselves through paid work.

If jobseekers do not undertake the mutual obligations that are agreed to in their job plan, they can face financial penalties. To avoid unfairly penalising recipients, a penalty cannot legally be applied if the jobseeker has a reasonable excuse for failing to meet their requirements that is, if jobseekers miss an appointment or cannot attend an activity for reasons beyond their control.

Currently, though, there are rules which allow jobseekers to repeatedly use drug or alcohol dependency as a reasonable excuse without making any effort to address their circumstances.

From 1 January 2018, the government will amend the reasonable excuse criteria so that jobseekers will not be able to repeatedly use drug or alcohol dependency as a reasonable excuse unless they are seeking treatment, if it is available and appropriate. This measure targets those who are unable to meet their mutual obligation requirements due to drug or alcohol related reasons and will encourage those recipients into available treatment.

Following a first instance of noncompliance due to drug or alcohol dependency, jobseekers will face no penalty but will be given the option of voluntarily undertaking treatment for their dependency (if that treatment is appropriate and available) or continuing with their normal mutual obligation requirements as managed by their employment services provider.

For jobseekers who choose treatment, participating in this treatment will reduce or, in some circumstances, fully meet their mutual obligation requirements.

If a jobseeker refuses to participate in available and appropriate treatment, they will no longer be able to continue to use their drug and alcohol conditions as a reasonable excuse for future noncompliance. If they again fail to meet their requirements due to drug or alcohol use, they may then face a financial penalty.

This measure will provide stronger incentives and better support for jobseekers to pursue the treatment they need to overcome their substance dependency and move towards supporting themselves through paid work.

Together, these measures recognise that supporting jobseekers to address their substance abuse issues through appropriate treatment is a critical first step on the path to employment.

Targeted compliance framework

This bill will create a simpler, fairer, more targeted and certainly more effective jobseeker compliance framework to ensure that all jobseekers are meeting their mutual obligation requirements.

We know that almost two thirds of jobseekers attend all appointments or miss only one, at most, in any six-month period, and that payment suspension is sufficient to ensure re-engagement in the majority of cases.

At the other extreme, there is a small core of jobseekers who appear to be gaming the system by only attending appointments which reactivate suspended income support payments. Those jobseekers have no underlying reason for their persistent noncompliance.

The current framework does not differentiate between these groups of jobseekers and, critically, it does not always provide the support necessary to those who need help to meet their requirements.

The new targeted framework is designed to change the behaviour of non-genuine jobseekers, while supporting the majority of jobseekers who are absolutely genuine in their efforts to find work.

Jobseekers who wilfully and repeatedly fail to comply with their agreed job plan requirements, with no underlying cause, will face real penalties, with graduated loss of income support payments, culminating in payment cancellation and a four-week non-payment period for the most recalcitrant jobseekers.

Under the new framework, all jobseekers will commence in a demerits phase. Every time a jobseeker misses a requirement, their payment will be suspended then back paid when they re-engage. They will also accrue a demerit if they do not have a valid reason for their failure.

If a jobseeker accrues four demerits within six months they will enter the three-strikes phase, where they will face stronger penalties, beginning with the loss of half their fortnightly payment the first time they miss a requirement without a reasonable excuse. They will lose all of their fortnightly payment the second time they do not meet a requirement and after a third failure they will face payment cancellation for four weeks.

To ensure that genuine jobseekers who are simply having difficulty meeting their requirements do not enter the three-strikes phase, their provider will assess their capability and requirements after their third demerit and the Department of Human Services will also do so after their fourth. At either point, if a jobseeker is found to be unable to meet their requirements because of some underlying capability issue, those requirements will be adjusted, their demerits reset, and they will remain in the demerits phase.

Once a jobseeker is in the three-strikes phase, they can still avoid any penalties by simply meeting all their requirements. Those who remain fully compliant for three months will return to the demerits phase and have their demerits reset to zero. This will provide a strong incentive for jobseekers to change their behaviour and to comply with their requirements.

Jobseekers in either phase who refuse an offer of suitable work or fail to start in a suitable job without a reasonable excuse will have their payment cancelled and will then face a four week non-payment period before they can receive payment. This penalty is identical to that imposed on jobseekers who have reached three strikes. It recognises the seriousness of refusing work and the importance of reducing reliance on welfare whenever reasonably possible.

Jobseekers who voluntarily leave a suitable job or are dismissed due to misconduct will also face a four week non-payment period.

Waivers will no longer be available for refusing or failing to accept an offer of suitable employment, so that jobseekers who have proven time and again that they are unwilling to meet their requirements or accept work will actually serve a penalty. However, the penalty for these failures is reduced from eight weeks to four weeks to reflect the detrimental impact that long periods without payment can have.

The new compliance framework will be considerably simpler than the current system. This will make it easier for jobseekers to understand the consequences of noncompliance and will reduce unnecessary red tape and administration for providers.

No penalty will be applied to any jobseeker if they have a reasonable excuse for any failure to observe a mutual obligation.

Before a jobseeker enters the three strikes phase, they will be subject to capability interviews and assessments to identify any underlying issues that may be preventing them from meeting their requirements.

Only those jobseekers who wilfully and systematically do not comply with requirements will reach the point of having their income support payments cancelled.

A jobseeker can request that the Department of Human Services review a decision to apply a financial penalty and, if they are unhappy with any outcome, they can appeal to the Administrative Appeals Tribunal.

Jobseekers will not be paid pending the outcome of the appeal and will be back paid in full if the appeal is successful.

Streamline tax file number collection

Under current arrangements, claimants for social security payments have 28 days to provide a tax file number to the Department of Human Services after a claim has been made. This bill will streamline administrative processes in the Department of Human Services by requiring individuals who make a claim for payment to provide their tax file number, and relevant third-party tax file numbers, as part of their claim. Applicants who do not have their tax file number on hand can choose to have the Department of Human Services obtain it from the Australian Taxation Office directly on their behalf.

Information management

From 1 January 2018, the requirement for the Department of Human Services to obtain information twice (once for administrative purposes, like raising a social welfare payment debt, and then again to pursue criminal prosecution) will be streamlined under this bill to reduce the administrative burden of welfare fraud prosecution referrals.

The need for the Department of Human Services to obtain admissible material by search warrants pursuant to section 3E of theCrimes Act 1914, will be significantly reduced. The Department of Human Services currently requests around 1,000 of these warrants annually.

These amendments will reduce the significant burden not only on the Department of Human Services and the Australian Federal Police but also on the parties subject to the search warrants and the courts.

Aligning social security and disability discrimination law

The government fully supports the vital role the Disability Discrimination Act 1992 plays in protecting people with disability from unfair treatment and promoting equal rights, opportunity and access.

Certain pieces of Commonwealth legislation are exempt from coverage of the Disability Discrimination Act. This includes the Social Security Act 1991, the Veterans' Entitlements Act 1986 and the Military Rehabilitation and Compensation Act 2004. The exemption of these acts enables pensions, allowances and benefits for people with disability to be appropriately targeted according to the purpose of the payment.

The Social Security Act has been exempt since the Disability Discrimination Act was first introduced in 1992. At that time, the Social Security Act included a range of provisions that are now included in separate pieces of legislation the Social Security (Administration) Act 1999 and the Social Security (International Arrangements) Act 1999. When the social security law was split into three separate acts, however, the Disability Discrimination Act was not updated to reflect this.

This bill will address this inconsistency by also including the Social Security (Administration) Act and the Social Security (International Agreements) Act and relevant legislative instruments made under the Social Security Act 1991 and the Social Security (Administration) Act 1999 in the list of exempt legislation for the Disability Discrimination Act.

This will ensure consistent treatment across social security law and similar legislation relating to pensions and allowances. Importantly, these changes will not affect the broader protections that the Disability Discrimination Act provides to people with disability.


The government is committed to building a fairer, more efficient and more effective welfare system that is focused on employment outcomes.

This bill will deliver a simpler system for people receiving working age payments; provide more encouragement for people transitioning to work; provide greater support for people along the path to employment; and provide stricter compliance to ensure the integrity of our welfare system is appropriately maintained.

These changes will make the income support system stronger and more sustainable over the long term and will ensure that the welfare system continues to be supported by the broader community.

I commend the bill to the House.

Debate adjourned.