I - WELFARE TO WORK

The major changes that came in on July 1, 2006 are summarised as follows:

1. Single parents when their youngest child turns 8; partnered parents when their youngest child turns 6 will no longer receive parenting payments, but will have to instead survive on the less generous Newstart Allowance (NSA). They will be expected to abandon their child-rearing work (previously agreed by everyone to be essential) and undertake between 15-25 hours of paid work each week. If unable to find paid work, they will have to undertake 150 hours of unpaid work.  Single parents with a child over 8 will receive $222 per week instead of the previous parenting payment of $250 per week. Those who are studying full-time will be $63 worse off under the new rules. It is estimated that 86,200 over three years will receive lower Newstart allowances. The introduction of these changes will be staggered over three years.

2. Disability Support Pension (DSP) will only be paid to those who are unable to work 15 or more hours per week (replacing the previous 30 hours per week threshold). Those affected will receive $205 per week under NSA, a reduction of $45 per week. Those studying full-time will be $166 per week worse off under the new rules. It is estimated that around 75,700 disabled people will be pushed onto lower allowances. As with single parents, existing pensioners will not immediately feel the full force of the changes, and those who claim ed their pension before 10 May 2005 have not been included- yet. The purpose of these staggered introductions is certainly to avoid immediate chaos and the resulting public outcry.

3. Harsher income and assets tests will accompany the benefit reductions. For example, a pensioner previously could earn up to $62 per week before their payments are reduced whereas under NSA can only earn $31 per week before encountering payment reductions. Additional earnings beyond this threshold are more harshly taxed under NSA than under the previously existing pension entitlements. Allowances for having to rear children are made in the ‘free income zone’ under the pension schemes but are non existent under NSA The net result of these harsh income rules for Newstart Allowance means that many people will lose eligibility for any Social Security payment and the Pensioner Concession Card much sooner than if they had remained eligible for a pension.

4. Activity tests have been made harsher. Rather than stipulate a minimum hourly rate of pay that should determine the quality of a job, the rules instead stipulate that a parent has to accept any job that makes them $25 per week better off after all extra costs are taken into account (childcare, transport, tax etc). No such rules apply to the disabled who have to accept any ‘suitable’ job offer and who may find themselves in worse financial circumstances than before.

5. Mutual obligation compliance rules have been made harsher under the new policy. Any long-term unemployed person who is considered to be not willing to work will be compelled to work in Work for the Dole activities for 25 hours per week for up to 10 months a year while still maintaining activity test compliance.

6. The controversial breaching provisions have been replaced by a new penalty scheme. While the Government has been sensitive to the criticisms it received over its breaching regime, the new rules allow for a harsh 8-week no payment period for three-time offenders of the activity test in addition to anyone who, for example, refuses a suitable job offer; refuses to participate in full-time Work for the Dole; misbehaves in the workplace and is made redundant; or leaves a job without a satisfactory explanation. The penalties now also apply to single parents and the disabled.

7. The Government has reacted to the criticism that these penalties will be extremely harsh on parents with children, for example, by introducing an oppressive and paternalistic case management scheme. So-called exceptionally vulnerable recipients, such as parents with dependent children who are denied their NSA after failing the harsh activity test will be ‘case managed’ by a private provider. The case managed person will have expenses up to the total benefit paid for by the manager, who will receive $650 for regulating each of these unfortunate people's lives.

8. The new legislation reduces the capacity of single parents and persons with disabilities to engage in further education because under NSA such activity is highly restricted to short courses. Further, the $31 pensioner education allowances are unavailable under NSA.

9. Waiting periods for benefits are required for those with extant personal savings. The Government has established an assets test to determine the length of delay applicable up to a maximum of 13 weeks.

10. Previous promises (in the 2005 Budget) that a person already on a single parent’s payment would remain on that payment until their child turned 16 irrespective of periods they spent ‘off payment’ (say during a period of employment) have been scrapped in the final legislation. If a person spends more than 12 weeks off payment and have a child over 8, then they have to go on the lower NSA. This will particularly affect women with children who attempt but fail to reconcile with their previous partners. DEWR estimates suggest around 45,000 people will be affected by this aspect of the policy. The same provisions do not apply to those with disabilities.