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2010-2011-2012-2013
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
THE HOUSE OF REPRESENTATIVES
SOCIAL SECURITY AMENDMENT (SUPPORTING MORE AUSTRALIANS INTO
WORK) BILL 2013
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Employment and Workplace Relations)
SOCIAL SECURITY AMENDMENT (SUPPORTING MORE AUSTRALIANS
INTO WORK) BILL 2013
GENERAL OUTLINE
The Bill amends the Social Security Act 1991 to implement policy announced as part
of the 2013-14 Budget to support the participation of unemployed Australians, young
people and principal carer parents. This is in line with recommendations of the
Education, Employment and Workplace Relations Senate References Committee's
Inquiry into the adequacy of the allowance payment system for jobseekers and others,
the appropriateness of the allowance payment system as a support into work and the
impact of the changing labour market. The amendments provide support to single
parents who are transitioning to work or undertaking study to improve their
opportunities for employment. The amendments also provide unemployed Australians
the opportunity to earn more before their income support payment is affected.
The Bill includes three principal measures.
The first measure will increase the income free area that applies for recipients of
Newstart Allowance, Widow Allowance, Partner Allowance, Parenting Payment
(Partnered) and Sickness Allowance. The income free area is the amount of ordinary
income that an income support recipient is able to earn in a fortnight before their rate
of payment is affected.
The income free area for these payments will increase from $62 to $100 per fortnight.
This will allow recipients the opportunity to earn more income before their payment
rate is affected.
The change to the income free area will take effect from 20 March 2014 to allow
sufficient time for changes to administrative systems and communications for the
large number of people on these payments.
Its value will also be maintained by annual indexation according to movements in the
Consumer Price Index, starting from 1 July 2015. The implementation date ensures
the income free area remains constant over a financial year. It also ensures these
payments' income free areas are indexed on the same day as the income free area for
pension payments - 1 July.
The second measure assists single parents undertaking education and training to meet
the cost of their study by extending eligibility for the Pensioner Education
Supplement (PES) to single principal carer parents receiving Newstart Allowance
payments.
PES aims to assist certain recipients of social security payments with some of the
ongoing costs associated with study and so to improve their later employment
prospects.
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This extension will begin on 1 January 2014 and will be available to eligible single
principal carer parents undertaking approved educational and training courses.
The PES is paid at the current full-rate of $62.40 per fortnight or the current
concessional rate of $31.20 per fortnight depending on a person's study load.
The third measure will provide a 12 week extension of eligibility for the Pensioner
Concession Card (PCC) to single parents who are no longer qualified for Parenting
Payment (Single) because their youngest child has turned 8 years of age and who do
not qualify for another income support payment due to earnings from employment.
The PCC provides a range of concessions to holders for services at Commonwealth,
State and local government level, including for medical services, transport, telephone,
utilities and rates.
Consistent with current arrangements, a person would remain qualified for the PCC
until the extension period of 12 weeks expired, the person died or moved permanently
overseas, or until they started to receive an income support payment for which a PCC
is available.
The measure will commence from 1 January 2014.
The Bill also makes amendments of a minor technical nature.
FINANCIAL IMPACT STATEMENT
These measures will have the following budgetary implications:
Year Expense ($ million)
2012-13 0.1
2013-14 29.7
2014-15 89.2
2015-16 88.4
2016-17 92.6
TOTAL: 299.9
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NOTES ON CLAUSES
The notes on clauses refer to the following terms:
Pensioner Education Supplement (PES)
Pensioner Concession Card (PCC)
Clause 1 - Short Title
This clause identifies the legislation as the Social Security Amendment (Supporting
More Australians into Work) Bill 2013.
Clause 2 - Commencement
This clause provides that the Act will commence as follows:
(a) sections 1 to 3 will commence on Royal Assent
(b) schedule 1 will commence on 20 March 2014
(c) schedule 2 will commence on 1 January 2014
(d) schedule 3 will commence on 1 July 2013
Clause 3 - Schedule(s)
This clause provides that each Act that is specified in a Schedule to this Bill is
amended or repealed as set out in applicable items of the Schedule concerned, and any
other item in a Schedule to the Bill has effect according to its terms.
SCHEDULE 1 - INCOME FREE AREAS
Schedule 1 amends the Social Security Act 1991
Item 1
Item 1 amends the income free area in point 1068-G12 of Benefit Rate Calculator B
by increasing the income free area amount from $62.00 to $100.00. Benefit Rate
Calculator B applies to Newstart Allowance, Widow Allowance, Partner Allowance,
and Sickness Allowance.
Item 2
Item 2 repeals and substitutes the note to point 1068-G12 to provide that the amount
specified is subject to indexation in line with CPI increases and that the income free
area is used in the ordinary income test in relation to fortnightly income.
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Item 3
Item 3 amends the range reduction amounts in points 1068-G15 and 1068-G16 by
reducing the amount from $188.00 to $150.00. The range reduction amounts are used
as part of calculations for recipients' payment rates. The amendment will maintain
the status quo for recipients in light of increases to the income free area.
The current income reduction range amount is $188. Income below this amount
attracts a 50% taper while income above the income reduction range amount attracts a
60% taper. This means that income above $250 ($62 income free area plus $188
income reduction range) attracts the 60% taper. To maintain the threshold where
recipients' income would attract the 60% taper ($250), the income reduction range is
reduced from $188 to $150.
Item 4
Item 4 amends the income free area for the Benefit Parenting Payment (Partnered)
Rate Calculator in the same way as Benefit Rate Calculator B is amended by item 1.
In particular, Item 4 amends point 1068B-D27 by increasing the amount of income
free area from $62.00 to $100.00.
Item 5
Item 5 includes a note at the end of point 1068B-D27 to provide that the amount
specified in point 1068B-D27 is indexed in line with CPI increases and that the
income free area is used in the ordinary income test in relation to fortnightly income.
Item 6
Item 6 amends the range reductions areas for the Benefit Parenting Payment
(Partnered) Rate Calculator in the same way as Benefit Rate Calculator B is amended
by item 3. In particular, item 6 amends points 1068B-D30 and 1068B-D31 by
reducing the amount from $188.00 to $150.00.
Item 7
This item amends section 1190 to add new item 20AAA to the table. This includes
the ordinary income free areas in points 1068-G12 and 1068B-D27 as amounts to be
indexed.
Item 8
This items amends sub-section 1191(1) to add a new item 14AAA in the table. It also
sets out the indexation day, the reference quarter, base quarter and rounding base for
indexation of the ordinary income free areas.
Item 9
This item adds a new section 1192(4AB) and provides that the first indexation of the
ordinary income free areas will take place on 1 July 2015.
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Item 10
This item is an application provision in relation to the amendment made by items 1, 3,
4 and 6 which makes clear that the application of these amendments shall only apply
in relation to working out rates of social security payments for days on or after 20
March 2014.
SCHEDULE 2 - PENSIONER EDUCATION SUPPLEMENT AND
PENSIONER CONCESSION CARD
Schedule 2 amends the Social Security Act 1991
Item 1
Eligibility for PES is set out in subsection 1061PJ(2) and includes recipients of
Newstart Allowance, but only if they satisfy the requirements of subsection
1061PJ(2B).
This item repeals the existing subsection 1061PJ(2B) and replaces it with new
subsections 1061PJ(2B), 1061PJ(2BA) and 1061PJ(2BB). Redrafting of subsection
1061PJ(2B) was necessary as a result of the amendments in order to give effect to the
second measure described in the General Outline relating to PES.
Proposed subsection 1061PJ(2BA) replaces the current provisions of subsection
1061PJ(2B) as it relates to some disability support pension recipients. There are no
substantive changes to the law but redrafting of the section was needed as a
consequence of the amendments to implement the measure relating to PES.
Proposed subsection 1061PJ(2BB) gives effect to the measure relating to PES and
provides that the subsection applies if the person receiving Newstart Allowance is the
principal carer of at least one child and is not a member of a couple.
Item 2
This item is a technical amendment which updates the cross-references in subsection
1061PJ(2C).
Item 3
This item adds a new extended qualification rule for PCC eligibility by adding a new
subsection 1061ZDA to give effect to the third measure described in the General
Outline above, relating to PCC extended eligibility for some Parenting Payment
(Single) recipients.
Eligibility for Parenting Payment (Single) ceases when the recipient's youngest child
turns 8. If, after a recipient's youngest child turns 8, the person does not qualify for
another income support payment because of employment income, the proposed
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subsection provides that the person will continue to be eligible for a PCC for a period
of 12 weeks after the youngest child turned 8.
Consistent with other extended qualification provisions in the Act, eligibility under
the new extended qualification rule will cease if the person moves permanently
overseas, or until they start to receive an income support payment for which a PCC is
available.
Items 4 and 5
These items are technical amendments which update the cross-references in sections
1061ZEA(1) and 1061ZUC(1)(a)(i) to include the proposed new section 1061ZDA.
Item 6
This item is an application provision in relation to the amendment made by items 1 to
5 which make clear that the application of:
the amendments made by items 1 and 2 apply for the purposes of working out
a person's qualification for a PES in respect of days on or after 1 January
2014
The amendments made by items 3 to 5 apply for the purposes of working out
a person's qualification for a PCC in respect of days on or after 1 January
2014.
SCHEDULE 3 - OTHER AMENDMENTS
Schedule 3 amends the Social Security Act 1991
Item 1
This item removes a redundant cross-reference from section 667(3)(e).
Item 2
On 1 July 2012, the maximum age for youth allowance for non-students increased
from 21 to 22 years. As a consequence, the ages referred to in various sections of the
Act relating to payments, supplements and payment calculators were changed to align
with the age changes for youth allowance. This technical amendment removes a
reference to age 21 in section 667(4)(a) and replaces it with 22.
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Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011
Social Security Amendment (Supporting More Australians into Work) Act 2013
This Bill is compatible with the human rights and freedoms recognised or declared in
the international instruments listed in section 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011.
Overview of the Bill
The Social Security Amendment (Supporting More Australians into Work) Bill 2013
(the Bill) contains a package of reforms which seek to address specific issues that
arose from the recommendations of the Education, Employment and Workplace
Relations Senate Committee's Inquiry into the adequacy of the allowance payment
system. The Bill seeks to enhance workforce participation of unemployed Australians
and single principal carers by providing Australians receiving income support with
greater incentives to find work, increasing the amount they are able to earn and keep,
and providing extra assistance to undertake study and training.
Increase the Income Free Area of Newstart Allowance and similar allowances
The Bill amends sections 1068 and 1068B of the Social Security Act 1991 (the Act) to
increase the income free area of Newstart Allowance and similar allowances (Widow
Allowance, Sickness Allowance, Partner Allowance and Parenting Payment
(Partnered)) from $62 to $100 per fortnight, commencing 20 March 2014. This means
recipients will have the opportunity to earn more income before their payment rate is
affected. The increase to the income free area will improve financial incentives to
undertake paid work and transition into employment.
The Bill also amends Divisions 1 and 2, Part 3.16 of the Act to index the income free
area annually by movements in the Consumer Price Index (CPI) starting from 1 July
2015. This will ensure the effectiveness of the income free area as a financial
incentive to work is retained over time.
Extend the Pensioner Education Supplement to all Newstart Allowance single
principal carers
The Pensioner Education Supplement (PES) aims to assist certain recipients of social
security payments with some of the ongoing costs associated with study and so to
improve their later employment prospects.
Amendments to section 1061PJ of the Act will extend PES to all Newstart Allowance
single principal carer parents from 1 January 2014. Currently, PES is only available to
single principal carer parents on Newstart Allowance if they have transferred directly
from Parenting Payment and were receiving PES at the time of the transfer, and only
for the duration of the current course of study.
This amendment will extend eligibility for PES to all single principal carer parents on
Newstart Allowance in addition to those who are currently entitled, and will
encourage recipients to acquire relevant skills and education to make them more
competitive in the labour market, and transition into the workforce.
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Extend eligibility for the Pensioner Concession Card for single principal carers no
longer eligible for Parenting Payment
The Pensioner Concession Card (PCC) provides a range of concessions to holders for
services at Commonwealth, State and local government level, including for medical
services, transport, telephone, utilities and rates.
The Bill will amend Division 1, Part 2A.1 of the Act by inserting a new section,
section 1061ZDA, to provide a 12 week extension of eligibility for the PCC for single
parents who are no longer eligible for Parenting Payment (Single) because their
youngest child has turned 8 years of age and they do not qualify for another income
support payment due to earnings from employment, starting from 1 January 2014.
Parenting Payment (Single) is available for single principal carers of a child under 8
years of age. Recipients of Parenting Payment (Single) qualify for a PCC while they
are receiving that payment. If, as a result only of employment income, a Parenting
Payment (Single) recipient ceases to qualify for Parenting Payment (Single), the Act
operates to extend the time that they are able to keep their PCC by 12 weeks.
When a recipient's youngest child turns 8 he or she may transition to another income
support payment and, if so, will remain eligible for a PCC. For example, if a recipient
of Parenting Payment (Single) moves onto Newstart Allowance when his or her
youngest child turns 8 and subsequently ceases to qualify for Newstart Allowance as a
result of employment income, he or she is eligible for the 12 week extension.
On the other hand, a Parenting Payment (Single) recipient who loses their eligibility
for Parenting Payment (Single) because their youngest child turns 8 and who is not
eligible for another income support payment due to their income, is not eligible for
the 12 week extension. This is an anomaly in the law which will be fixed by the
proposed new section 1061ZDA. Benefits available under the concession card will be
useful to single parents as they make the move into work, easing the transition for
single parents moving from income support to employment. The benefits include
access to:
Extended Medicare Safety Net, which pays 80% of a person's out-of-pocket
costs for out-of hospital services for the remainder of the calendar year once a
threshold of $598.80 (in 2012) is reached. There is a benefit cap on some
items.
Pharmaceutical Benefits Scheme (PBS) medicines available at a concessional
rate ($5.80 instead of $35.40 in 2012), and usually free above the PBS Safety
Net ($348 in 2012).
Bulk-billed General Practitioner appointments (at the discretion of the doctor).
Hearing Services Voucher, providing free hearing assessments and hearing
rehabilitation (including the supply and fitting of free hearing aids and low-
cost maintenance).
50% discount on mail redirection services provided by Australia Post.
Concessions from State and Territory governments and local councils, eg,
discounted public transport fares and motor vehicle registration, reduced
property and water rates, reduced electricity and telephone costs, reduced
school fees and education costs.
Human rights implications
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The Bill engages the following human rights as contained in the International
Covenant on Economic, Social and Cultural Rights (ICESCR):
the right to work and rights in work
the right to social security and the right to an adequate standard of living
the right to physical and mental health
the right to education
The Bill also engages the rights of the child as contained in the Convention on the
Rights of the Child (CRC).
Overview
These reforms' key objectives are to provide financial incentives and support for
vulnerable groups in the community to support the transition into employment and
education. These reforms should be considered in line with Article 2 of the ICESCR
which recognises that States have an obligation to realise these rights over time with a
view to achieving progressively their full realisation within the maximum of available
resources.
The package of reform measures in the Bill supports the promotion and protection of
these rights and is targeted at vulnerable groups in the community that have been
identified as those most in need - principal carers and unemployed Australians.
Right to work
The Bill engages and promotes the right to work recognised in Article 6 of the
ICESCR.
Article 6(1) of the ICESCR recognises the right to work, which includes the right of
everyone to the opportunity to gain their living by work which they freely choose or
accept. Article 6(2) provides that steps to be taken by a State Party to the ICESCR to
achieve the full realisation of this right shall include technical and vocational
guidance and training programmes, policies and techniques to achieve steady
economic, social and cultural development and full and productive employment under
conditions safeguarding fundamental political and economic freedoms to the
individual.
The Bill provides for an increase to the income free area to assist income support
recipients' transition into the workforce. The increase of the income free area will
encourage recipients to increase the number of hours that they can work and will also
encourage recipients to take up work without their earnings affecting their social
security payments to a certain extent. This measure encourages unemployed and
under-employed income support recipients to undertake work and is consistent with
Article 6 of the ICESCR.
In addition, the extension of the PES will encourage recipients to acquire relevant
skills and education to make them more competitive in the labour market, and
transition into the workforce, thus also supporting the realisation of the right to work.
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In addition, the extension of the eligibility for the PCC for single principal carers no
longer eligible for Parenting Payment (Single) because of employment income will
also assist in the transition into employment for these single principal carer parents by
providing concessions on household expenses during the transition to work.
The measures in the Bill are compatible with and promote the right to work.
Right to social security and an adequate standard of living
The Bill also engages and promotes the right to social security as recognised in
Article 9 of the ICESCR and the right to an adequate standard of living in Article 11
of ICESCR
Article 9 recognises the right of everyone to social security, including social
insurance. Article 11 recognises the right of everyone to an adequate standard of
living, including adequate food, clothing and housing, and to the continuous
improvement of living conditions.
An increase in the income free area for Newstart Allowance and other similar
payments helps to promote the right to social security, under Article 9 of the ICESCR
and also helps to realise the right to an adequate standard of living as recognised in
article 11 of the ICESCR.
Indexing the income free area by the CPI also helps to promote the right to social
security and an adequate standard of living under Articles 9 and 11 of the ICESCR,
respectively. It helps maintain the effectiveness of the income free area and is
consistent with the views of the Committee on Economic, Social and Cultural Right's
General Comment No 19 that social security measures should be periodically revised
to fully realise the right to social security and an adequate standard of living.
Right to physical and mental health
The Bill also engages and promotes the right to physical and mental health as
recognised in article 12 of the ICESCR.
Article 12 of the ICESCR recognises the right to physical and mental health and that
steps taken by State Parties to achieve full realisation of this right include creation of
conditions which would assure access to medical service and medical attention in the
event of sickness.
The Pensioner Concession Card includes access to free or discounted medical
services. Extending eligibility for the Pensioner Concession Card for single principal
carers no longer eligible for Parenting Payment (Single) because of employment
income will assist these parents to meet their medical costs in the transition into
employment.
Right to education
The Bill engages and promotes the right to education as recognised in Article 13 of
the ICESCR.
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Article 13 of the ICESCR recognises the right of everyone to education. This right
includes secondary education in its different forms, including technical and vocational
secondary education, and higher education on the basis of capacity.
By extending the PES (which is available for both secondary and tertiary study) to all
Newstart Allowance single principal carers, the Bill promotes the right of everyone to
education, in particular a group identified as vulnerable in the community.
Rights of children
The Bill also engages and promotes the rights of children as recognised in Article 3(1)
and 27 of the CRC.
Article 3(1) provides that in all actions concerning children, whether undertaken by
public or private social welfare institutions, courts of law, administrative authorities or
legislative bodies, the best interests of the child shall be a primary consideration.
Article 27 recognises the right of every child to a standard of living adequate for the
child's physical, mental, spiritual, moral and social development and that State Parties
shall take appropriate measures to assist parents and others responsible for the child to
implement this right and shall in case of need provide material assistance and support
programs.
The measures in the Bill provide support for an identified vulnerable group in the
community (single principal carers and the unemployed) which aims to encourage and
support such persons into the workforce. This is intended to have a beneficial effect
on the realisation of the rights of children in such families and is expected to improve
the overall standard of living for children in these families.
To the extent that Article 3(1) is engaged, the right is promoted as it is intended to
have a positive outcome for children. The measures in the Bill promote the rights
protected in Article 27 of the CRC by providing assistance to parents who are
responsible for a child or children to achieve improvements in their standards of
living.
Conclusion
The Bill is compatible with human rights as it helps to promote the protection of
human rights by promoting rights to work, social security, an adequate standard of
living, physical and mental health, education and the rights of children.
The Hon Bill Shorten, Minister for Employment and Workplace Relations
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