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Thursday, 31 May 2012
Page: 6467

Mr SHORTEN (MaribyrnongMinister for Financial Services and Superannuation and Minister for Employment and Workplace Relations) (09:31): I move:

That this bill now be read a second time.

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 fairer for all recipients of parenting payments.

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 payments 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 to ensure a fair and consistent set of parenting payment eligibility rules.

Under this government there have been better participation outcomes for individuals who have not been grandfathered under the Howard government's parenting payment single policy of 2006.

In practical terms the evidence shows us that while grandfathered parenting payment recipients do better than most job seekers, principal carer parents on Newstart do even better.

The Social Security and Other Legislation (Income Support and Other Measures) Bill 2012 was passed by parliament on 9 May 2012 and introduced changes to the existing transitional arrangements for parenting payment recipients. These changes reduced the age of the 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 or coming into the care of parents who have been receiving parenting payment since before July 2006 have not extended these parents' eligibility for payment.

This bill will continue the reforms to the 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 (partnered parents) or eight (single parents) years of age, the same as other parenting payment recipients.

This removes the inequity and inconsistency that currently exists for parenting payment recipients by ensuring that all parents are assessed the same, regardless of when they first claimed income support.

To ensure that individuals and families, particularly those affected by the parenting payment changes, are not disadvantaged when transitioning to new parent payment arrangements, the government has already made amendments to the Social Security Act 1991, to reform the income test that applies to single principal carer parents on Newstart allowance.

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.

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 for single parents through employment service providers.

This will assist single parents to improve their skills and also plan effectively for a transition into the workforce when they move off parenting payment.

Also as part of the changes, single parents who are studying an approved course and are receiving the pensioner education supplement when they transfer from parenting payment to Newstart allowance or youth allowance (other) will remain eligible for the pensioner education supplement until they complete the course they are studying.

Additionally, the government is providing additional funding to support increased demand and better target the Jobs, Education and Training Child Care Fee Assistance Program.

This will assist parents on eligible income support payments, predominantly sole parents, to enhance their skills by undertaking work, study or job search activities to enable them to enter or re-enter the workforce, without the cost of child care being a barrier.

The government believes that together these changes provide parents with the right balance of support and incentives to make the most of the employment opportunities available, to find meaningful work and provide themselves and their families with a better future.

Unemployment is not something Australian workers plan for and reducing a person's modest savings before they can access income support makes it even harder for them to restructure their budget and handle the bills that they have already accrued for the period of unemployment.

This bill amends the liquid assets waiting period to allow newly unemployed Australians and new students to hold onto more of their savings and better adjust to their new circumstances. This bill doubles the amount of cash or other liquid assets an unemployed person or student may hold without having to wait to start receiving income support.

From 1 July 2013, the maximum reserve amount for a person who is single will be doubled from $2,500 to $5,000 and for a person who is partnered or has a dependent child will be doubled from $5,000 to $10,000. These new maximum reserve amounts will reduce waiting times by up to five weeks for unemployed Australians and students with modest savings or liquid assets.

A previous temporary doubling of the liquid assets waiting period threshold, which was included as an element of the 2009 Jobs and Training Compact response to the global recession, ceased on 31 March 2011. The government is now in a position where it can afford to reinstate these thresholds permanently. This bill also introduces a technical amendment to the definition of termination payment for the purposes of the income maintenance period. This will clarify the longstanding policy that any payments made to an employee in respect of the termination of their employment are included in determining the income maintenance period.

The income maintenance period ensures that people who receive a lump sum termination payment use that payment to support themselves for a period before turning to the social security system for assistance. The inclusion of the new provision will clarify the definition by including other types of payments connected with the termination of the person's employment. This will ensure that people are treated the same under the act, regardless of the type of termination payment they receive.

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.

Debate adjourned.