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Thursday, 9 February 2012
Page: 552

Mr SHORTEN (Maribyrnong—Minister for Financial Services and Superannuation and Minister for Employment and Workplace Relations) (10:21): I move:

That this bill be now read a second time.

The Social Security and other Legislation Amendment (Income Support and Other Measures) Bill will give effect to important reforms contained in the Building Australia's Future Workforce package announced in the 2011-12 budget. These measures will provide greater incentives and support for young Australians to engage in education, training and employment and will reward single parents who re-engage in the workforce.

Around 320,000 Australians, or 10 per cent of the Australians aged between 15 and 24, are not in education, training or employment and many young people face challenges entering the workforce. Australia's strong economic fundamentals and balanced approach to the challenges of the past four years have seen the economy grow steadily. With the unemployment rate expected to stay reasonably low, there is an opportunity for many more young people to find work given the right encouragement and support. The Australian government wants to ensure that our young people get the best possible start to their adult life. A good education and a connection with the workforce are critical to achieving this goal. Census data shows that people of prime working age who have competed year 11 or 12 have an unemployment rate less than those whose highest educational level was year 10 or less. That is why the Australian government is introducing changes to Youth Allowance and Newstart Allowance that will provide greater incentives for young Australians to engage in study or paid work, and reduce their reliance on welfare.

Under the Building Australia’s Future Workforce reforms 21-year-old job seekers will receive youth allowance from 1 July 2012. Currently these young people may be eligible for newstart allowance. This means that the same rate of income support payment will apply to 21-year-olds whether they are unemployed, training or a student.

The Earn or Learn participation requirements will also be extended to include 21-year-olds on youth allowance who do not have a year 12 or equivalent qualification. This will mean that they will have to participate in a combination of education, training or other approved activity, such as paid work (usually for 25 hours per week) until they turn 22.

Through other measures announced in the 2011-12 budget, the government is assisting young people to strengthen their foundation skills, through Transition Support for Early School Leavers and more places in the Language, Literacy and Numeracy Program, as well as to take up career opportunities in the trades.

From 1 January 2012, more generous family tax benefit A assistance provides support for eligible families with children in their final years of school. These changes will provide greater opportunities for these young people through education and training and remove the incentive to stop studying and instead receive unemployment benefits.

Young people who take up work will be rewarded more for their efforts. From 1 July 2012 job seekers receiving youth allowance will be able to earn more and still retain their payment. The income-free level will be increased from $62 a fortnight to $143 a fortnight and the working credit limit will be increased three-and-a-half fold from $1,000 to $3,500. This means that young job seekers will be able to earn more than twice as much before their income support payments are affected. To ensure that all young people under similar circumstances are in receipt of the same income support payment, changes will also be made to the age requirements for sickness allowance, the youth disability supplement and the longer term income support rate for students.

The Building Australia’s Future Workforce Package also includes important changes to income support payments for parents to provide greater incentives and opportunities for parents, particularly single parents, to re engage in the workforce and share in the benefits that work brings. With around 520,000 dependent children in jobless families at risk of the social and economic disadvantage that is associated with joblessness, this is more critical than ever.

The government is making a number of changes to parenting payment to encourage parents with school-age children to re-enter the workforce sooner and to ensure greater consistency in the parenting payment eligibility rules. Since 1 July 2011, children born to or coming into the care of parents who have been receiving parenting payment since before July 2006 have not extended these parent’s eligibility for payment. From 1 January 2013, these parents will cease to qualify for parenting payment when their youngest eligible child turns 12 or 13 in 2013, or 12 in subsequent years, rather than the current 16. Current recipients whose youngest eligible child was born before 1 January 2000 will be exempt from this change.

We need to act now to ensure that these parents have the opportunity to benefit from our growing economy, to increase their self-sufficiency and achieve greater financial security, and to provide their families with good working role models. This is why the government is reforming the income test that applies to single principal carer parents on newstart allowance. The introduction of a more generous income test will allow these parents to earn over $400 more per fortnight before they lose eligibility for payment. This will provide stronger incentives for parents to undertake paid work by allowing parents to retain more of their income support as their employment income rises.

To ensure that individuals and families, particularly those affected by the parenting payment changes, are not disadvantaged when transitioning to new payment arrangements, the government is streamlining the claim provisions that apply to newstart allowance. This change will enable claims for newstart allowance to be lodged up to 13 weeks prior to the day on which the person will become qualified, in line with the rules that apply to other income support payments. This will not change the date from which newstart allowance is paid; it will however provide a smoother claim process for those transferring to newstart allowance.

In recognition that affected 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. This includes additional training places and community based support for single parents as well as access to professional career advice through Job Services Australia providers. 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.

An important element in the way that support is provided to job seekers is the job seeker participation requirements and compliance arrangements. These arrangements help job seekers move off income support and into paid employment by reinforcing education, vocational training, and work experience opportunities. To simplify the compliance framework and reinforce the requirement that job seekers move towards gaining a skill and getting a job, the different daily penalty amounts for short-term financial penalties will be aligned at one-tenth of a job seeker’s participation payment. This will simplify the compliance framework and ensure job seekers are not penalised because a weekend happens to fall before they can re-engage.

The bill also makes a minor technical amendment to a cross reference in a rate calculator in the Social Security Act.

Finally this bill will amend the Indigenous Education Targeted Assistance Act 2000 to provide the appropriation to fund the 12 months extension of the Student Education Trusts measure as part of the extension of the Cape York Welfare Reform Trials announced by the Minister for Families, Community Services and Indigenous Affairs in 2011. The Student Education Trusts are a financial management service which supports and encourages parents and care-givers from the remote Indigenous communities of Aurukun, Coen, Hope Vale and Mossman Gorge on Cape York in Far North Queensland to save for their children’s education costs from the early years through to tertiary education. The trusts are an important part of the Closing the Gap strategy in Indigenous education in Far North Queensland.

The changes in this bill form an important part of the income support reforms included in the government’s Building Australia’s Future Workforce Package. These reforms will encourage more Australians to participate in and share in the benefits of paid work, equip them with the necessary skills to improve their future employment prospects and will result in more consistent treatment of income support recipients and better support and assistance to parents and job seekers.

Debate adjourned