Senate

Explanatory Memorandum

(Circulated by authority of the Minister for Social Services, the Hon Christian Porter MP)

Schedule 3 - Ordinary Waiting Periods

Summary

This Schedule makes amendments to extend and simplify the ordinary waiting period for working age payments.

Background

Currently, a person who is qualified for newstart allowance or sickness allowance under the Social Security Act must, subject to some exceptions, serve an ordinary waiting period of seven days before either of those allowances is payable. The exceptions include where the Secretary is satisfied that the person is in severe financial hardship. Depending on the circumstances, an ordinary waiting period may be served concurrently with other waiting periods and preclusion periods.

This Schedule creates a new ordinary waiting period for parenting payment, and for youth allowance for a person who is not undertaking full-time study and is not a new apprentice (in this Schedule, referred to as youth allowance (other)).

This Schedule also provides that the current exemption on the basis of severe financial hardship will only apply if the person is also experiencing a personal financial crisis. A person will be taken to be experiencing a personal financial crisis if they have been subjected to domestic violence, incurred unavoidable or reasonable expenditure or in the circumstances prescribed by the Secretary in a legislative instrument.

The Schedule further clarifies that an ordinary waiting period is to be served after certain other relevant waiting periods or preclusion periods have ended.

The amendments made by this Schedule commence on the first 1 January or 1 July to occur after the Royal Assent.

Explanation of the changes

Part 1 - Main amendments

Amendments to the Social Security Act

Items 1 and 2 amend the definition of unavoidable and reasonable expenditure so the definition can apply for the purpose of whether a person is experiencing a personal financial crisis. Item 5 inserts a new section 19DA to provide for when a person is experiencing a personal financial crisis. This is relevant for whether a person has an exemption from the ordinary waiting period. Under new subsection 19DA(3), a person is experiencing a personal financial crisis if the person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure.

Current subsection 19C(4) provides for the meaning of unavoidable or reasonable expenditure in relation to a person who is serving a liquid assets test waiting period, is subject to a seasonal work preclusion period, or a person to whom an income maintenance period applies.

Items 1 and 2 amend subsection 19C(4) to provide that, in relation to working out whether a person is subject to an ordinary waiting period, unavoidable or reasonable expenditure includes, but is not limited to, the reasonable costs of living, under subsection 19C(6) and (7) that the person has incurred in the four-week period before the person's claim for the relevant payment, if the person is qualified for the payment on the day of claim.

Current subsection 19C(5) provides that the reasonable costs of living of a person include, but are not limited to, the following costs:

•

food costs;

•

rent or mortgage payments;

•

regular medical expenses;

•

rates, water and sewerage payments;

•

gas, electricity and telephone bills;

•

costs of petrol for the person's vehicle;

•

public transport costs; and

•

any other cost that the Secretary determines is a reasonable cost of living in relation to a person.

Items 3 and 4 amend subsections 19C(6) and (7) to provide for the maximum amount of the reasonable costs of living that are taken to have been incurred for the purpose of subsection 19C(4). The amount of reasonable costs of living cannot exceed the amount of newstart allowance, youth allowance (other), sickness allowance or parenting payment (as the case may be) that would have been payable in the four-week period before the person's claim for that payment if the payment was payable, or in the case of a person who is a member of a couple, twice the amount of the payment that would have been payable in that period.

Item 5 inserts a new definition of experiencing a personal financial crisis.

There is currently an exemption to the ordinary waiting period for newstart allowance and sickness allowance for a person who is in severe financial hardship. Section 19C generally provides that a person is in severe financial hardship if the value of the person's liquid assets is less than the fortnightly amount at the maximum payment rate of the relevant social security payment. Other items in this Schedule replace this exemption with a new concept of experiencing a personal financial crisis.

A person will still need to be in severe financial hardship in order to be experiencing a personal financial crisis. However, the exemption will now apply only if, in addition to being in severe financial hardship, subsection 19DA(2), (3) or (4) applies to the person. Those subsections will apply if the person:

•

has been subjected to domestic violence in the four-week period before the person makes a claim for a relevant payment, if the person is qualified for the payment on the day of claim (subsection (2));

•

is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure in the four-week period before the person makes a claim for a relevant payment, if the person is qualified for the payment on the day of claim. Items 1 and 2 amend the definition of unavoidable and reasonable expenditure in section 19C so that it can apply for the purpose of determining whether a person has an exemption from an ordinary waiting period (subsection (3)); or

•

satisfies circumstances prescribed in a legislative instrument made by the Secretary (subsection (4)). Subsection 19DA(5) provides the Secretary with the power to prescribe circumstances for this purpose.

Subsection 19DA(6) clarifies that a person will not be taken to satisfy the circumstances in subsections 19DA(2), (3) or (4) unless he or she can produce evidence that demonstrates a reasonable possibility that he or she satisfies the circumstances. It is expected that a person will meet this evidence requirement by complying with the current evidentiary requirements of the Department of Human Services. It will not always be necessary for a person to provide written evidence. For example, a person may provide confirmation from a social worker that they have experienced domestic violence and this will likely satisfy the 'evidence requirement' in subsection 19DA(6).

Item 6 is consequential to the amendments made by item 5.

Items 7 and 8 amend the definitions of ordinary waiting period and waiting period in subsection 23(1) to refer to the new ordinary waiting periods for parenting payment and youth allowance (other). The definition of waiting period is also amended to refer to a newly arrived resident's waiting period. This is a waiting period that may currently apply under the Social Security Act but which has been inadvertently omitted from the definition of waiting period.

Item 9 amends subsection 23(10) to clarify when a person is taken to have served an ordinary waiting period.

Current subsection 23(10) refers to the ordinary waiting periods for newstart allowance and sickness allowance. The amendments made by this item replace the references to 'newstart allowance' and 'sickness allowance' with references to 'social security benefit' and 'social security pension' to cover all of the payments to which an ordinary waiting period may apply.

Items 10 and 12 provide for a new ordinary waiting period for parenting payment and youth allowance (other), and provide for the duration of those waiting periods.

New subsection 549CA(1) makes it clear that the new ordinary waiting period provisions for youth allowance apply only in relation to a person who is qualified for youth allowance (other) and not in relation to a person who is qualified for youth allowance on the basis of being a student or new apprentice.

Under new subsections 500WA(1) and 549CA(2), a person will be subject to the ordinary waiting period for parenting payment and youth allowance (other) unless:

•

the person was receiving an income support payment at some time in the 13 weeks immediately before the person made a claim for parenting payment or youth allowance (other); or

•

the Secretary is satisfied that the person is experiencing a personal financial crisis (as defined in new section 19DA, inserted by item 5); or

•

in relation to youth allowance (other), immediately before the person was qualified for that payment, the person was qualified for youth allowance on the basis of being a student or new apprentice. This means that a person transitioning from youth allowance on the basis of being a student or new apprentice to youth allowance (other) will not serve an ordinary waiting period.

Further, subsections 500WA(2) and 549CA(3) provide that an ordinary waiting period will not apply if the person is undertaking an activity specified in a legislative instrument. These provisions replicate a current exemption to the ordinary waiting period for newstart allowance and sickness allowance. The legislative instrument made for the purpose of those current provisions (the Social Security (Exemptions from Non-payment and Waiting Periods - Activities) Specification 2015 specifies the following activities:

•

an activity undertaken by a person as part of Stream C employment services provided to the person;

•

a rehabilitation programme; and

•

an activity undertaken by a person as part of the Remote Jobs and Communities Programme (subsequently renamed the Community Development Programme) in certain circumstances.

Subsections 500WA(3) and 549CA(4) allow the Secretary to specify these activities in a legislative instrument.

Subsections 500WB(1) and 549CB(1) provide that, subject to subsections (2) and (4) of those provisions, the ordinary waiting period is a period of seven days that starts on the day that parenting payment or youth allowance (other), as applicable, would have been payable but for the ordinary waiting period.

Subsection 500WB(2) provides for the start of an ordinary waiting period for parenting payment where the person is subject to a seasonal work preclusion period, a lump sum preclusion period or an income maintenance period, where the rate of parenting payment payable would be nil on the start day. Subsection 549CB(2) provides for the start of an ordinary waiting period for youth allowance (other) where a person is subject to one or more these preclusion periods, but also where the person is subject to a liquid assets test waiting period or a newly arrived resident's waiting period.

If a person is subject to one or more of the other waiting periods or preclusion periods, then the ordinary waiting period starts on the day after all the other waiting periods and preclusion periods have ended. The effect of this is that the ordinary waiting period cannot be served concurrently with other relevant waiting periods and preclusion periods.

Subsections 500WB(3) and 549CB(3) provide for circumstances in which a person is subject to an income maintenance period where the person's rate of parenting payment or youth allowance (other) is nil on the person's start day, but where the rate of payment subsequently would become payable at a rate greater than nil during the income maintenance period. In these circumstances, the effect of subsections 500WC(3) and 549CB(3) is that the income maintenance period is taken to have ended for the purpose of the ordinary waiting period provisions when the payment would have become payable at a rate greater than nil. This means that the person will serve the ordinary waiting period when their rate of parenting payment or youth allowance (other) would have become payable at a rate greater than nil.

Subsections 500WB(4) and 549CB(4) provide for the start of an ordinary waiting period for parenting payment or youth allowance (other) where:

•

a person is subject to an ordinary waiting period (the first ordinary waiting period) for any payment; and

•

during the first ordinary waiting period, the person ceases to be qualified for the payment to which the first ordinary waiting period relates; and

•

during the first ordinary waiting period, the person claims another payment which has an ordinary waiting period (the second ordinary waiting period).

In these circumstances, the second ordinary waiting period starts on the day that the first ordinary waiting period starts.

Item 11 inserts a reference to an ordinary waiting period in section 549.

Section 549 provides that a youth allowance is not payable to a person who is subject to a waiting period. Certain waiting periods are specified for the purpose of that provision, and it is appropriate to include a reference to an ordinary waiting period, given one of the effects of this Schedule is to create an ordinary waiting period for youth allowance (other).

Items 13, 14 and 15 make consequential amendments to section 549F. Section 549F makes it clear that a youth allowance is not payable until both the waiting periods mentioned in Subdivision C of Division 2 of Part 2.11 of the Social Security Act have ended. As this Schedule inserts a new ordinary waiting period for youth allowance (other), section 549F will now make it clear that a youth allowance is not payable until all of the waiting periods in Subdivision C, including an ordinary waiting period, have ended.

Items 16 and 21 amend paragraphs 620(1)(a) and 693(a). Current sections 620 and 693 provide for the ordinary waiting period for newstart allowance and sickness allowance. Paragraphs 620(1)(a) and 693(a) provide that a person is not subject to an ordinary waiting period for newstart allowance and sickness allowance if the person has received an income support payment in a 13-week period. The effect of these items is to make it clear that this 13-week period is the period before the person's start day, disregarding clause 5 of Schedule 2 to the Social Security Administration Act. This will generally be the 13 weeks before the person made a claim for newstart allowance or sickness allowance.

Items 17 and 22 are consequential to the amendments made by items 19 and 24.

Items 18 and 23 amend paragraphs 620(1)(g) and 693(f), the effect of which is that an ordinary waiting period for newstart allowance and sickness allowance will not apply if the person is experiencing a personal financial crisis, as defined in new section 19DA (inserted by item 5 of this Schedule).

Items 19 and 24 insert new notes that are consequential to the amendments made by this Schedule.

Items 20 and 25 substitute sections 621 and 694 with new provisions that provide for the duration of the ordinary waiting period for newstart allowance and sickness allowance.

The effect of subsections 621(1) and 694(1) is that, subject to subsections (3) and (5) of those provisions, the ordinary waiting period is a period of seven days starting on the day that newstart allowance or sickness allowance, as applicable, would have been payable but for the ordinary waiting period.

Subsections 621(2) and 694(2) provide for the start of an ordinary waiting period for newstart allowance and sickness allowance where the person is disqualified for those payments because of the liquid assets test. In these circumstances, the ordinary waiting period is the period of seven days that starts after the end of the liquid assets test waiting period.

Subsections 621(3) and 694(3) provide for the start of an ordinary waiting period for newstart allowance and sickness allowance where the person is subject to a newly arrived resident's waiting period, a seasonal work preclusion period, a lump sum preclusion period or an income maintenance period where the rate of newstart allowance or sickness allowance payable would be nil on the start day. If a person is subject to one or more of the other waiting periods or preclusion periods, then the ordinary waiting period starts on the day after all the other waiting periods and preclusion periods have ended. The effect of this is that the ordinary waiting period cannot be served concurrently with other relevant waiting periods and preclusion periods.

Subsections 621(4) and 694(4) provide for circumstances in which a person is subject to an income maintenance period where the person's rate of newstart allowance or sickness allowance is nil on the person's start day, but where the rate of payment subsequently would become payable at a rate greater than nil during the income maintenance period. In these circumstances, the effect of subsections 621(4) and 694(4) is that the income maintenance period is taken to have ended for the purpose of the ordinary waiting period provisions when the payment would have become payable at a rate greater than nil. This means that the person will serve the ordinary waiting period when their rate of newstart allowance or sickness allowance would have become payable at a rate greater than nil.

Subsections 621(5) and 694(5) provide for the start of an ordinary waiting period for newstart allowance and sickness allowance where:

•

a person is subject to an ordinary waiting period (the first ordinary waiting period) for any payment; and

•

during the first ordinary waiting period, the person ceases to be qualified for the payment to which the first ordinary waiting period relates; and

•

during the first ordinary waiting period, the person claims another payment which has an ordinary waiting period (the second ordinary waiting period).

In these circumstances, the second ordinary waiting period starts on the day that the first ordinary waiting period starts.

Item 26 provides that the amendments made by this Schedule apply in relation to a claim for a social security payment that is made on or after the commencement of this Schedule.