Christian Porter (Pearce, Liberal Party, Minister for Social Services) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

This bill reintroduces four measures previously introduced in the Social Services Legislation Amendment (Youth Employment) Bill 2015, which lapsed due to the prorogation of parliament on 15 April 2016.

The measures in this bill are designed to encourage personal responsibility, self-reliance and greater participation in work or study, particularly for young Australians.

Youth unemployment is more than twice as high as the general unemployment rate, at 13.2 per cent compared to 5.8 per cent as at June 2016. In addition, there are more than 100,000 young unemployed Australians who have never worked before.

It is imperative that the income support system provides the right structural incentives for young people to find work as quickly as possible and be self-sufficient where they are able, or, indeed, to undertake further education or training to increase their employability. The measures in this bill are designed to achieve this end.

One - week ordinary waiting period

From 1 January 2017, this bill will make a number of changes to the existing one-week ordinary waiting period to ensure the more consistent, targeted and effective operation of this waiting period.

Waiting periods, including the one-week ordinary waiting period, are applied to ensure that people support themselves in the first instance where they are able to before receiving income support payments. The ordinary waiting period is also designed to discourage people from seeking taxpayer funded support for very short periods—for example, when they are temporarily between jobs.

This one week waiting period is a longstanding feature of the income support payment system: however, it currently only applies to new claimants of Newstart allowance and sickness allowance. Under this measure, the one week ordinary waiting period will be extended to new claimants of youth allowance (other) and parenting payment.

This will ensure that the rules governing access to payment are consistent across similar payment types and better reflect the fundamental principle that people should support themselves before seeking government assistance.

Widow allowance will not be affected by this measure. This recognises that claimants of this payment are likely older women—those born before 1 July 1955—who are recently bereaved or separated and have no recent workforce experience and may have fewer resources to draw upon as a result.

There are a number of exemptions from the ordinary waiting period under current rules and these will continue to be available. Exemptions exist for:

These include:

There is also an exemption currently available for people in severe financial hardship. This exemption will be modified to apply to those who are experiencing a personal financial crisis. This will include people who have recently experienced domestic violence or are in severe financial hardship due to reasonable or unavoidable expenditure. This will better target the exemption to those who are most vulnerable and most in need of immediate assistance.

The measure will also ensure that the ordinary waiting period is served after any other waiting periods. This already occurs in many cases, for example, the ordinary waiting period is currently served after the end of a person's liquid assets waiting period. This change will ensure that the ordinary waiting period operates more consistently and effectively in conjunction with all other waiting periods.

Under the changes in this bill, around 270,000 additional ordinary waiting periods will be served by people claiming Newstart allowance, sickness allowance, youth allowance (other) and parenting payment. The changes will only affect new claimants. Existing recipients will not have their current payments reduced or otherwise affected by this measure.

In respect to increase the age of eligibility for Newstart allowance and sickness allowance from 22 to 25 years this bill contains a key measure designed to encourage more young people to pursue further education or training as a pathway to long-term, sustainable employment.

To be at the forefront of innovation, Australia needs a highly educated and skilled workforce. It is important that income support settings incentivise young people to become more skilled, gain new qualifications and be more competitive in the labour market.

From 1 January 2017, the minimum qualifying age for Newstart allowance and sickness allowance will increase from 22 to 25 years. Young people aged between 22 to 24 years will be able to apply for and receive youth allowance (other) instead.

This will align the age qualification requirements for youth allowance (other) with youth allowance (student) and will ensure that young people receive the same rates of payment, irrespective of whether they are studying full time or looking for work. This will remove any perception that there is financial advantage in continuing to receiving unemployment payments rather than pursuing study or training.

Youth allowance provides broader financial incentives for young people to take up paid work where they can. Youth allowance (other) has a more generous income-free area than Newstart allowance or sickness allowance which allows them to retain more of their payment if they are working casually or part time while they look for full-time work.

Youth allowance (student) has an even higher income-free area as well as a student income bank of $10,000 which can offset the student's income, allowing them to benefit from increasing their working hours during holiday and semester breaks. These arrangements provide further incentives for young people to take up study and to work part time and gain experience while they are studying.

It is important to note that the changes will only affect young people claiming payment on or after 1 January 2017. Those aged 22 to 24 and already receiving Newstart allowance or sickness allowance on 31 December 2016 will be grandfathered and will remain on these payments. This will ensure that existing recipients do not have their current payments reduced or otherwise affected under this measure. Around 23,000 young people will be grandfathered while up to around 70,000 will be affected at any one point in time.

This measure will also ensure that young people with a disability aged 22 to 24 years continue to receive additional support through the youth disability supplement. The youth disability supplement of $121.70 per fortnight is currently paid to youth allowance (other) recipients aged under 22 years who have been assessed as having a partial capacity to work. It recognises the additional costs associated with having a physical, intellectual or psychiatric disability.

The maximum payment rate of youth allowance (other) plus youth disability supplement is set at the basic rate of the Newstart allowance. This means that young people with disability aged 22 to 24 years and on youth allowance (other) will continue to receive a rate similar to what they would have received on Newstart allowance.

With respect to the four-week waiting period for youth income support, from 1 July 2017, this bill will introduce a new four-week waiting period for job-ready young people aged under 25 years who are claiming youth allowance (other) or special benefit.

This measure is intended to set clear expectations that young people who are job ready should make every effort to look for work and maximise their chances of finding work before receiving income support. Critically, young people will have access to tailored support from their jobactive provider during the waiting period to assist them to look for, find and transition into work.

This measure is targeted to those who have been assessed as having no significant barriers to work and who have consequently been placed in stream (a) of jobactive. Stream (a) job seekers are the most job ready—they are therefore more competitive in the jobs market and more able to readily find and support themselves through work. Typically they have fewer barriers to employment; for example, they may have reasonable language, literacy and numeracy skills, recent work experience and educational qualifications.

Young people who have previously served a four-week waiting period in the past six months and those transferring to youth allowance (other) or special benefit from a non-student income support payment will not be subject to the waiting period. In addition, young people claiming or transferring to a student payment such as youth allowance (student) or ABSTUDY will not be subject to the waiting period for that claim. Young people already serving the waiting period who subsequently take up study or training to build their skills and improve their employment prospects will cease to be subject to the waiting period.

In addition, an extensive range of exemptions will apply to job seekers who are not job ready or who face additional barriers to work or who are in particularly vulnerable circumstances.

For example, some of these exemptions are specified in the bill and include:

those assessed as being less job ready and placed in stream B or C of jobactive,

young people with disability participating in disability employment services, and

those in remote areas undertaking the Community Development Program.

Also exempted would be:

Also exempted would be:

Also exempted would be:

people experiencing a temporary illness or incapacity,

pregnant women the six weeks before birth,

people testing their eligibility for disability support pension and receiving youth allowance (other) pending the outcome of their claim,

people with temporary caring responsibilities, or

those experiencing a major personal crisis, such as domestic violence or homelessness.

The bill provides for additional exemption categories to be specified in a legislative instrument. As previously announced, these additional exemption categories will include:

Together the exemption categories to the four-week waiting period specified in the bill and in the legislative instrument would cover around 83,000 exempted young people—that is, more people would be exempted than would be subject to the four-week waiting period itself. Around 85,000 waiting periods are estimated to be served by 75,000 job-ready young Australians.

The impact of the measure on affected young people will be subject to ongoing monitoring. The government is also providing around $5 million in additional funding to comprehensively evaluate the measure in order to assess its impact and allow for any unintended consequences to be identified and addressed.

It is recognised that some job-ready young people who are serving a waiting period may find themselves in financial hardship. These young people may be eligible to access emergency relief funding through the government's network of emergency relief providers. The government is contributing $8.1 million in additional emergency relief funding to support any young people who may find themselves in hardship.

Together, the extensive range of exemptions and the additional emergency relief funding ensure that this measure is targeted only at those who are job ready and able to support themselves through work while providing some safeguard for those who find themselves in hardship.

Imp lement the rapid activation of you ng job seekers subject to the four-week waiting period

With respect to the implementation of the rapid activation of young jobseekers subject to the four-week waiting period, under the final measure in this bill, a new program called RapidConnect Plus will apply to job ready young people serving the four-week waiting period. RapidConnect Plus will require such young people to undertake pre-benefit activities during the four-week waiting period. This will include:

After the four-week waiting period, and subject to the successful completion of RapidConnect Plus activities, income support payments would then commence.

If a young person subject to RapidConnect Plus does not complete their pre-benefit activities within the four-week waiting period without a reasonable excuse, their claim for income support would lapse. This is designed to maximise the opportunities for eligible jobseekers to find a job during the four-week waiting period so that they do not become reliant on income support and avoid slipping into long-term unemployment and welfare dependency, which we know is a statistically high risk.

Once a young person becomes long-term unemployed their chances of successfully finding employment decline drastically. Young long-term unemployed people are only half as likely to get a job as the average young jobseeker.

Requiring jobseekers to undertake activities before they are paid can be effective in preventing people from moving onto income support. New Zealand also has a system of pre-benefit activities which jobseekers must complete before receiving payment. Evidence from New Zealand's Ministry of Social Development shows that in 2012-13 around 40 per cent of jobseekers undertaking pre-benefit activities did not go on to receive the appropriate welfare payments.

RapidConnect Plus will only apply to young people who are subject to the four-week waiting period—that is, job-ready young people who have been assessed as job ready and do not have significant barriers to work.

All the exemption categories that apply to the waiting period for young people who are less job ready or in vulnerable circumstances will also apply to the RapidConnect Plus requirements.

Importantly, young people undertaking RapidConnect Plus pre-benefit activities will receive tailored support from their jobactive provider to assist them to complete these activities and transition successfully into work.

RapidConnect Plus complements the government's measures to create jobs through a strong economy and ensure our young people have the skills, support and incentives to take such jobs.

These measures include the Youth Employment Strategy announced in the 2015-16 budget that includes the Transition to Work service to help young jobseekers to build their employability skills and the Empowering YOUth initiatives to trial projects to help vulnerable young people.

More recently, of course, the government announced as part of the 2016-17 budget that it will invest more than $840 million over four years in the Youth Employment Package to assist up to 120,000 young people to get a job.

At the heart of this package is the Youth Jobs PaTH (Prepare, Trial, Hire) program that will help young jobseekers under 25 to move off welfare and into employment by giving them the employability skills and real work experience they need to get and keep a job, and by providing incentives for employers to take them on.

Broader initiatives to support young people into work

With respect to broader initiatives to support young people into work, the measures in this bill are only one part of a broader strategy to incentivise and support young people to transition into sustainable employment.

The strategy also includes a range of new programs and initiatives designed to provide additional targeted support to vulnerable cohorts of young people, including disengaged youth, early school leavers, young parents, young people with mental illness and vulnerable young refugees and migrants.

This includes the new Transition to Work program, Empowering YOUth initiatives, ParentsNext, as well as trials for young people with mental illness through disability employment services and Individual Placement and Support models.

The Try, Test and Learn Fund announced in the 2016-17 budget as part of the Australian Priority Investment Approach to Welfare reform will allow for the design and implementation of new, bold and innovative policies to increase the chances of sustained employment and self-reliance.

These measures are also complemented, of course, by the new Youth Jobs PaTH budget measure, to which I have already made reference. That will provide young people with employability skills training, opportunities to gain valuable work experience through internships and wage subsidies.

Together, the measures in this bill and the broader range of targeted programs and services from the coalition are designed to encourage job-ready young people to seek and find work rather than relying at first instance on welfare payments, and they are designed to provide additional intensive supports for those who are not yet job ready to enable them to become so.

Conclusion

These changes are expected to generate savings of more than $900 million over four years (which is, of course, dependent on the start date). This will help guarantee the long-term sustainability of the payments system, while ensuring Australia has a targeted, means-tested income support system that provides financial assistance to those most in need, while encouraging self-provision.

Reintroducing the amendments in this new bill reflects the government's ongoing commitment to the measures. All of the changes in this bill are important measures to support the sustainability of the social security system and the nation's budget.

Each of the measures contained in this bill were clearly proposed by the government in the 2014-15 and 2015-16 budgets and were previously presented to the parliament.

These measures formed an important, open and transparent part of the government's election costings which were supported by the Australian people. In the best interest of Australia's finances and of future generations of taxpayers, I seek the support of the parliament for the passing of this bill.

Debate adjourned.