Senate debates

Tuesday, 9 October 2012


Social Security Legislation Amendment (Fair Incentives to Work) Bill 2012; Second Reading

1:50 pm

Photo of Bob CarrBob Carr (NSW, Australian Labor Party, Minister for Foreign Affairs) Share this | Hansard source

The Social Security Legislation Amendment (Fair Incentives to Work) Bill will give effect to further reforms to parenting payment and build upon the changes this parliament passed on 9 May 2012 to make the system more equitable for all recipients of parenting payment. The bill will also introduce two other amendments: one relating to the liquid assets waiting period, announced as part of the 2012-13 budget; and another change relating to the income maintenance period.

The reforms to parenting payment are an extension of the broader reforms already introduced as part of the Building Australia's Future Workforce package announced in 2011. These important changes to income support payments for parents continue this government's focus on providing greater incentives and opportunities, particularly for single parents, to re-engage in the workforce and share in the benefits that work brings. The removal of grandfathering arrangements will provide greater equity and consistency in the parenting payment eligibility rules by ensuring that all parents are assessed the same, regardless of when they first claimed income support. The changes to parenting payment will encourage parents with school-age children to re-enter the workforce sooner and ensure a fair and consistent set of parenting payment eligibility rules where all parents receiving parenting payment will be treated the same.

Under this government there have been better participation outcomes for individuals who have not been grandfathered under the Howard government's parenting payment policy of 2006. In practical terms the evidence has shown us that, while grandfathered parenting payment recipients do better than most job seekers, principal carer parents on Newstart allowance do even better. The Social Security and Other Legislation Amendment (Income Support and Other Measures) Bill 2012 was passed by parliament on 9 May and introduced changes to the existing transitional payments for parenting payment recipients. These changes reduced the age of eligibility of the youngest child from 16 years to 12 years. The current transitional arrangements are available to parenting payment recipients who have been continually receiving payments prior to 1 July 2006. Since 1 July 2011, children born to or coming into the care of parents who have been receiving parenting payments since before July 2006 have not extended these parents' eligibility for payment.

This bill will continue the reforms to parenting payment so that from 1 January 2013 transitional arrangements will be removed for these parents and they will in the future cease to qualify for parenting payment when their youngest eligible child turns six, for partnered parents, or turns eight, for single parents—the same as other parenting payment recipients. Under these amendments, all parents will have participation requirements when their youngest child turns six, completing the alignment of the parenting payment provisions. There are no other changes to participation requirements. This removes the inequity and inconsistency that currently exists for parenting payment recipients by ensuring that all parents are assessed the same.

To ensure that individuals and families, particularly those affected by the parenting payment changes, are not disadvantaged when making the transition to new parenting payment arrangements, the government has already made amendments to the Social Security Act 1991 to reform the income test. The introduction of a more generous income test, from 1 January 2013, allows these parents to earn over $400 more per fortnight before they lose eligibility for payment. This provides stronger incentives for parents to undertake paid work by allowing parents to retain more of their income support as their employment income rises.

It is not easy for parents to take up or return to work, and the government considers that the range of training, employment services, child care and career advice assistance that we put in place will reduce those barriers and will greatly assist these parents to find and keep a job. In recognition that these parents are likely to have spent significant periods on income support and out of the workforce, the government is also providing additional support for these parents to ease their transition back into the workforce. As well as additional training places and community based support for single parents announced under the Building Australia's Future Workforce package, the government has provided additional funding in the 2012-13 budget for professional career advisory services.

Additionally, the government is providing additional funding to support increased demand and to better target the Jobs, Education and Training Child Care Fee Assistance Program. The government also understands that parents need to balance their family and caring responsibilities with their participation obligations, and parents will continue to have access to the more flexible arrangements to balance part-time work, study or training. The government believes that, all together, these changes provide parents with the right balance of support and incentives.

The bill amends the liquid assets waiting period to allow newly-unemployed Australians and new students to hold on to more of their savings and better adjust to their new circumstances. From 1 July 2013, the maximum reserve amount for a person who is single will be doubled. A previous temporary doubling of the liquid assets waiting period threshold ceased on 31 March 2011.

This bill also introduces a technical amendment to the definition of termination payment for the purpose of income maintenance period. To help with some of the cost of living pressures that are affecting low- and middle-income Australians and their families, the government is investing $1.1 billion to create a new income support bonus that will be paid to recipients of Newstart allowance and similar payments. The changes in this bill form an important part of the income support reforms announced in the budget.

The government is now in a position where it can afford to reinstate those thresholds permanently. The amendments proposed by Senator Siewert in relation to the liquid assets waiting period would not affect the calculation of waiting periods and, on this basis, it is more appropriate and practical for the government to continue to periodically review the thresholds in line with the current economic situation.

The changes in this bill form an important part of the income support reforms announced in the 2012-13 budget. These reforms will support more Australians when they are going through tough times and encourage more Australians to participate in and share in the benefits of paid work. The changes will result in fairer and more consistent treatment of income support recipients. I thank senators for their contributions and I commend the bill to the chamber.


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