A fairer welfare system that supports more people into work

The Turnbull Government is embarking on a comprehensive reform of Australia’s working-age welfare payments, guaranteeing the essential services that Australians rely on.

The reforms involve multiple, substantive and co-ordinated changes across the Social Services, Employment and Human Services portfolios.

These measures will deliver:

• A simpler system for people receiving working age payments;
• More encouragement in the system for people transitioning to work and greater support for people along the path to employment; and
• Stricter compliance to ensure people are following the rules.

A simpler system

The Government will introduce a new, single JobSeeker Payment, which will replace or consolidate seven existing payments and simplify an often confusing and complex welfare system. From 20 March 2020 the JobSeeker Payment will progressively replace the Newstart Allowance; Sickness Allowance; Wife Pension; Partner Allowance; Bereavement Allowance; Widow B Pension; and Widow Allowance.

Provisions will be made within the new payment structure for people who have a temporary incapacity to work such as ill-health or bereavement.

Over 99 per cent of people will have no change to their payment rates.

More encouragement and greater support

The Government is creating a clearer, more coherent set of mutual obligation requirements for working age payment recipients whilst increasing support available to help them find employment.

A new system of participation and mutual obligation rules will provide greater assurances that recipients have a responsibility to the taxpayer, themselves and their families to become increasingly financially independent through employment.

New Mutual Obligation Rules

Consistent participation and mutual obligations will be properly monitored and enforced. This will ensure more people prepare for, search for and accept suitable employment. It is a fairer system.

From 20 September 2018:

• Job seekers aged 30-49 years (approximately 270,000), will have activity requirements of 50 hours per fortnight, up from the current 30 hours.
• Job seekers 55 to 59 years (approximately 40,000) will no longer be able to meet 30 hours of activity requirements through volunteering alone– flexibility will exist for some recipients in areas of high unemployment.
• Job seekers 60 to Age Pension age (approximately 45,000) who currently have no activity requirements will be required to have 10 hours per fortnight of activity requirements which can all be met through volunteering.

To support working-age people in the welfare system achieve self-reliance, significant additional funding will also be directed to services to help them remain on a path towards employment.

• $263 million to help parents prepare for work through a national expansion of the ParentsNext program in jobactive regions across Australia from 1 July 2018; and
• $20.4 million to help increase the skills and experience of mature age job seekers. This includes the Career Transition Assistance Program, which from 1 July 2018, will provide more opportunities for mature age job seekers to retrain and reskill; an expansion of the National Work Experience Programme to provide more work experience opportunities and Pathway to Work Pilots to create additional job opportunities for job seekers, including mature age and people with disability.

Social Impact Investing Trials

The Government will invest $30 million to develop the social impact investment market and facilitate investment trials with State and Territory governments. Impact investing will harness private capital to support innovative approaches to solve complex social problems affecting the most vulnerable. This will include a focus on projects addressing youth homelessness and welfare dependence.

Support for people affected by drug and alcohol abuse

Further support is being provided for people who have drug and alcohol abuse issues with recognition that undertaking recovery or rehabilitation programs for substance abuse is a legitimate step towards employment and should therefore form part of a Job Plan.

These measures will be combined with a two-year trial of random drug testing new welfare recipients across three locations. Participants who fail a first test will be placed on welfare quarantining and job seekers who test positive to more than one test would be referred to a contracted medical professional for an assessment of their substance abuse issues and any appropriate treatment options.

Support for at-risk individuals and vulnerable communities

A commitment to reduce social harm in areas with high levels of welfare dependency will continue through the expansion of the Cashless Debit Card to two new locations and an extension of the Income Management program for a further two years to June 2019.

Self-reliance before welfare

To ensure job seekers remain self-reliant and focused on securing work before entering the welfare system, from 20 September 2018 the maximum Liquid Assets Waiting Period will increase from 13 to 26 weeks when a claimant’s liquid assets are equal to or exceed $18,000 for singles without dependants or $36,000 for couples and singles with dependants.

Stronger and fairer compliance

The Government will introduce a new approach to compliance for job seekers, which both provides more support for vulnerable people and ensures that wilfully non-compliant job seekers who are currently gaming the system will face appropriate penalties.

Two-thirds of job seekers do the right thing and rarely miss an appointment or other obligation. The Government, however, has identified approximately 100,000 people who continually fail in their obligations. Of these, around 40,000 people appear to be wilfully and systemically gaming the welfare system with no intention of working, but at present avoid any financial penalties. Last year, fewer than 10 per cent of those who committed a serious failure suffered any financial penalty at all.

Under a new approach, a demerits points Personal Responsibility Phase will be followed by a “three strikes” Intensive Compliance Phase to engage with welfare recipients early and prevent them from incurring financial penalties for not meeting their obligations.

In the first phase, job seekers will accrue demerit points for any mutual obligation failure. Once four demerit points are incurred over a six month period, they will be assessed to determine whether extra support is required or whether the person enters the Intensive Compliance Phase.

Once in the Intensive Compliance Phase there are escalating financial penalties for each additional failure;

• First strike:Loss of 50 per cent of a fortnightly payment.
• Second strike: Loss of 100 per cent of a fortnightly payment.
• Third strike:Cancellation of payment with a four week exclusion from re-applying.

Taxpayers rightly expect that Australia’s strong welfare system is provided to those who need it most and is not able to be manipulated by those who have little desire to work. The Turnbull Government will ensure that community expectations are met.

Stronger relationship verification

From 1 January 2018 a stronger relationship verification process for existing single parents will ensure people are not getting higher income support payments by claiming to be single when they are not. As of 20 September 2018 new claimants seeking Parenting Payment (Single) or single parents claiming Newstart Allowance will be required to have a third party sign a new form verifying that they are in fact single. Penalties of up to 12 months in prison may be applied to referees who provide a false declaration.

Tax File Numbers

From 1 January 2018, Tax File Numbers will be collected before income support payments are approved in order to streamline administration, provide legislative consistency and increase personal responsibility. Under the new arrangements claims will not be processed until a Tax File Number is provided.

Summary

Few countries provide the strong safety-net that we, in Australia, enjoy.

It is the responsibility of government to ensure our welfare system is sustainable into the future, and fair, so that it can continue to provide support to those most in need.

Taxpayers rightly expect that those that can work should work. The design of the welfare system and the very substantial spending on welfare must result in significant, long-term improvements in the outcomes for people most in need.

This year’s Budget represents a positive turning point for Australia’s welfare system to ensure it is focused on this key objective.

Consecutive governments have spoken about reforming Australia’s welfare system to ensure it is simpler and sustainable for taxpayers who are paying our welfare bill today, and for future generations who will also have to meet the cost of the system in the decades to come.

Under the Turnbull Government, this Budget turns words into action.