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$900m welfare reform law to pass after breaching penalties reduced.

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Senator John Cherry Employment Spokesperson Australian Democrats

March 27 2003 MEDIA RELEASE 03/188

$900m Welfare reform law to pass after breaching penalties reduced The Australian Democrats have won major welfare concessions from the Government reducing most social security penalties from 26 weeks to 8 weeks .

As a result, the Democrats today have effectively broken a logjam on the Government’s landmark $900 million welfare reform bill.

Democrats Employment spokesperson Senator John Cherry said the changes to the breaching penalties were the first significant revision of the excessive social security penalties imposed by the Government six years ago.

“The Australian Council of Social Services, the Independent Pearce Inquiry and the Commonwealth Ombudsman were all critical of the Government’s breaching regime, which last financial year saw 270,000 people have their social security payments reduced for up to 26 weeks for ‘offences’ as minor as missing a Centrelink interview,” Senator Cherry said.

“Under the new system, a person being breached for the first time will have the opportunity to rectify their error and thus have their breach period reduced to from 26 weeks (or 13 weeks for an administrative breach) to 8 weeks.

“This reduces the financial penalty imposed on job seekers from a maximum of $889 to $273.

“This reduction will apply to first breaches - 65% all breaches - with limited exceptions such as job refusals, fraudulent non-reporting or under-reporting of income and voluntary unemployment.

“The Government has also agreed to a comprehensive auditing, quality assurance and review process for the breaching system. This will deal with concerns raised by the Pearce Report and the Commonwealth Ombudsman about the administration of the breaching system.

“A Breaches Review Taskforce will be established, with representation from ACOSS, the departments and the Social Security Appeals Tribunal, to review all policies, procedures and penalties in respect of breaching, and report back by April next year.

“The Democrats remain committed to further reform of the social security breaches and penalties system. These reforms are a major step in developing a fair and robust compliance system, but not the end of the process. The auditing and review mechanisms should deliver further improvements on the system.

“This agreement will allow the passage of the Australian Working Together Bill, the Government’s $900 million welfare reform bill,” Senator Cherry said.

The bill includes:

- $433 million Working Credits scheme, providing income concessions of up to $1000 for unemployed people prepared to take on casual or part-time work;

- $20 million in language literacy and numeracy allowances;

- $62 million for the Personal Support Program for the most disadvantaged job seekers;

- $251 million in new programs to help sole parents with teenage children into work;

- $146 million in new programs to help mature aged workers into work.

“The Democrats and Labor originally refused to pass the bill in December because the Government would not agree to reforms of the breaching regime. Imposing an unreformed breaching regime on mature aged workers and sole parents with teenage children for the first time simply could not be accommodated,” Senator Cherry said.

“The breaching regime reforms agreed to today will mean that the likelihood of sole parents and mature aged workers being breached at all are minimised .

“They build on the protections negotiated between Labor and the Government to improve the regime for parenting payments and mature aged workers agreed to last December.

“The Government has also agreed to wider exemptions for sole parents from being requiring into look for work. These exemptions will now cover parents of children with an illness, or subject to stressful personal circumstances.

“This bill is not perfect, but, on balance, represents a significant advance in welfare reform.

“The Democrats would like to thank ACOSS, Welfare Rights Centre and the Department for their assistance in working through these proposals, and reiterate our view that we will continue to push for further reforms of the breaches and penalties system,” he concluded.


- Where a social security beneficiary has been breached, and subsequently complies with the requirement, their breach period will be reduced to 8 weeks. (Currently, for an administrative breach, a person suffers a16% payment reduction for 13 weeks, and for an activity test breach, an 18% reduction for 26 weeks);

- This reduction will not apply to second or third breaches (65% of the 270,000 breaches in 2001/2 were first breaches), or to breaches involving failure to attend job interviews, failure to take up suitable employment, failure to disclose earnings with the intent to obtain a social security advantage, failure to complete a Job Seekers Diary, and voluntary unemployment. More generous reinstatement provisions will apply for sole parents and mature aged workers, with no penalty period needing to be served;

- A sample of all breaching decisions to be reviewed by senior officers to ensure compliance with law and policy. In addition, there will be a rolling quality assurance audit program by FaCS to monitor general administration;

- A Breaching Review Taskforce to be establish to review breaching data, implementation and to assess the fairness of breach penalties imposed. The Taskforce will have an independent chair, representative of FACS, DEWR and Centrelink, two reps from ACOSS and a senior member of the Social Security Appeals Tribunal.

- Changes to the administration of second breaches to prevent additional breaches being imposed out of the same set of circumstances;

- Special Benefit compliance regime aligned more generously to Newstart provisions, including over 50 year olds aligning with mature age Newstart allowance arrangements;

- Exemptions for single parents with teenage children being required to undertake labour market activities broaden to include illness of a child, or an accumulation of stressful circumstances. These are in addition to the significant exemptions agreed to by the Government in December covering children with disabilities and family and personal crises.