Mr SWAN (4:53 AM) —It is not newfound knowledge; it is knowledge delivered at an hour which is simply unacceptable, in a way which is unacceptable, in a procedure which is unacceptable, in circumstances which are unacceptable. But I am delighted to hear unequivocally that you have accepted our amendments in the area of sole parents and mature age unemployed, because you should have and I am pleased you have. That brings us to the area which is of contention, the battleground, as you described. I guess that battleground comes down to really four areas or possibly five, and I want to talk about them briefly.

The first one is the area of the reduction in breach penalty periods from a maximum of 26 weeks to eight weeks. The second one relates to that as well, because we have to balance the reduction in breach penalty periods, with an increase in penalties that would apply each fortnight: from 16 per cent to 20 per cent for a administrative breaches, from 18 per cent to 20 per cent for a first activity breach and from 24 to 25 per cent for a second breach.

The third area relates to restoration of payments on compliance—that is, when they remedy their error their payments are restored. This measure is particularly important. This is a measure which encourages participation and rewards people who do the right thing. The fourth area relates to the reduction of the accumulation period, where breach penalties may compound, from two years to one year.

We have put forward what we regard as a fair and balanced package. It has its origins in the independent report by Professor Pearce. It is a package of changes that are certainly more than affordable in a $50 billion welfare system. They are changes that encourage participation, they are changes that encourage compliance and they are changes that in many ways, along with the working credit, reward work over welfare. It should not be forgotten that involved in this bill is the working credit, already delayed by this government by nine months—a measure which Labor had as its policy when it was in government and which was abolished by this government seven years ago. It is absolutely essential to encouraging people to move from welfare to work by rewarding that effort, in contrast to the situation at the moment where unemployed people who work part time, casually, are taxed 80c in every additional dollar earned over the threshold. If that was the tax rate applying at the top end of town or in middle Australia there would be a riot. Six years ago the government put that in place. I will not go into the detail of that—we have debated it on many occasions. But all of these measures need to be set in that context.

We are pretty keen to pursue the amendments that I have outlined in those four areas. But, having said that, Labor is mindful of the need for progress on this bill. We do not want to see a situation where this bill is stalled or there is a deadlock. So, in the Senate, Labor will not necessarily be insisting on every single amendment that we have moved. We do have a core package which will deliver fairness to the people who really deserve it: those who are being unfairly penalised, breached and punished by this government. We will not be party to insisting upon Democrat amendments relating to Austudy, numbered 44, 46, 48, 51, 53 and 55, as these amendments are not consistent with the package which Labor is pursuing. Labor will not pursue amendments relating to the accumulation period. (Extension of time granted) This leaves the remainder of the amendments which, unless there is a breakthrough, we will insist upon in the Senate when the bill returns to that place shortly. They seek to have a reduction in the breach period from 26 weeks to eight weeks, coupled with an increase in the breach rate from 16 per cent to 20 per cent, 18 per cent to 20 per cent and 24 per cent to 25 per cent for those various periods that I described before. The other key group of amendments relate to the waiver of the remaining portion of the breach periods when a job seeker remedies their error.

In summary, the amendments we will be insisting upon are (22), (24), (39), (40), (63), (64), (18), (43), (61), (65), (75), (77), (74), (76), (37) and (42). We believe that these measures are essential—essential to encourage participation, essential to reward work over welfare, essential to integrity and essential to protect people who should not be unnecessarily punished in this system which is meant to be a safety net. Unfortunately, the safety net for too many people has had huge holes cut in it in recent times. We are keen for the government to keep this bill alive, to see whether we can reach agreement on some component of the Pearce amendments and to progress the working credit. The ball is now in the government's court.

Question put: