Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
1996-97
THE PARLIAMENT OF THE
COMMONWEALTH OF AUSTRALIA
HOUSE OF
REPRESENTATIVES
SOCIAL SECURITY
LEGISLATION AMENDMENT
(WORK FOR THE DOLE) BILL
1997
EXPLANATORY
MEMORANDUM
(Circulated by
authority of the Minister for Schools, Vocational Education and Training, the
Hon David Kemp, MP and the Minister for Social Security, Senator, the Hon
Jocelyn Newman.)
80929 Cat. No. 96 7370 9 ISBN 0644
497823
SOCIAL SECURITY LEGISLATION AMENDMENT
(WORK FOR
THE DOLE) BILL 1997
OUTLINE AND FINANCIAL IMPACT
STATEMENT
The Bill amends the Social Security Act 1991 and the Data-matching
Program (Assistance and Tax) Act 1990 to provide for the framework to
implement the recently announced initiative to establish approved programs of
work for persons receiving unemployment payments.
The financial impact of
the measures in this Bill is estimated to be $13m in the 1997-98 year.
PRELIMINARY
Clause 1 of the Social Security Legislation Amendment (Work for the
Dole) Bill 1997 sets out how the Act is to be cited (that is, its short
title).
Clause 2 specifies that the Act is to commence on the day
on which it receives the Royal Assent.
Clause 3 provides that each
Act that is specified in a Schedule to the Social Security Legislation
Amendment (Work for the Dole) Bill 1997 is amended or repealed as set out in
those Schedules.
Clause 4 provides for the object of the Act which
is to reinforce the principle of mutual obligations applying to payments under
the Social Security Act 1991 in respect of unemployment by recognising
that it is fair and reasonable that persons in receipt of such payments
participate in approved programs of work in return for such payments and to set
out the means by which they may be enabled, or required, to undertake such
work.
SCHEDULE 1 - AMENDMENT OF THE SOCIAL SECURITY ACT
1991
1. Summary of proposed changes
Schedule 1 amends the activity test and Newstart Activity
Agreement provisions in the Social Security Act 1991 (the Social
Security Act) to enable a person to voluntarily participate in an approved
program of work in return for unemployment payment or to be required by the
Secretary to participate in such a program in order to remain entitled to
payment of newstart allowance (NSA).
An approved program of work for
unemployment payment may not require persons to work more than the maximum
specified hours in a fortnight: for persons under 21 this will be 24 hours; for
persons 21 or over this will be 30 hours.
Other features of the
initiative, provided for in Schedule 1, are as follows.
• A
payment of $20 per fortnight will be available to customers who participate in
an approved program of work for unemployment payment.
• If a person
fails to commence an approved program of work for unemployment payment if
required, or complete such a program without a reasonable excuse, or comply with
the conditions of such a program, then the person fails the activity test (the
penalty for which is currently the imposition of a non-payment period in
accordance with the activity test breach rules in the Social Security Act).
• Persons who begin to participate in an approved program of work
for unemployment payment while subject to an activity test or administrative
breach penalty period (non-payment or rate reduction as the case may be) will
have their penalty period waived. However, if they leave the program early they
may be subject to another penalty period.
• Persons who participate
in an approved program of work for unemployment payment will not be considered
employees for certain purposes.
2. Background
The Prime Minister recently announced the Government's intention to
introduce an initiative to assist young unemployed persons. In general terms,
under the initiative, participants would work on community assistance and
development projects, sponsored by community organisations, local or state
government organisations and firms. Projects would typically include
maintenance and improvement of community facilities and infrastructure, the
development of new facilities and infrastructure and programs of community care
and assistance (for example, home maintenance and care of the elderly).
Eligible young people may volunteer to participate in the initiative or
may be required to participate in the initiative as part of the activity test or
a Newstart Activity Agreement and in order to be entitled to payment of NSA.
The number of hours the person would be required to work under the
initiative has been standardised on the basis of the age of the person and
having regard to National Training Wage Award rates of pay. This would amount
to 2 days per week for 18 to 20 years olds (based upon a six hour day) or 2.5
days per week for persons aged 21 years or over. They would be required to
participate for a maximum of six months each.
The initiative would be
primarily (but not exclusively) targeted at young unemployed people aged between
18 and 24 who have been receiving unemployment allowances for longer than 6
months. There will be scope for participation by older job seekers in some
circumstances and in some localities.
3. Clauses involved in the changes
Schedule 1: Amends the Social Security Act to facilitate the
introduction of the work for unemployment payment initiative.
Item
1: Inserts two new entries into the index in section 3, that is, "approved
program of work for unemployment payment" and "approved program of work
supplement".
Items 2 and 3: Inserts definitions of "approved
program of work for unemployment payment" and " approved program of work
supplement " into subsection 23(1).
Item 4: Inserts new section 28
- approved programs of work for unemployment payment.
Item
5: Amends the activity test provision in subsection 601(2) to allow the
Secretary to require a person to participate in a program of work for
unemployment payment.
Item 6: Inserts new subsections 601(2E) and
(2F) that outline the situations in which a person cannot be required to
participate in a program of work for unemployment payment.
Item
7: Inserts new subsection 601A(3) that outlines the situations in which a
person who has been required to participate in a program of work for
unemployment payment fails the activity test.
Items 8 and 9: Amend
subsection 606(1) to allow participation in a program of work for unemployment
payment to be included in a person's Newstart Activity Agreement.
Item
10: Inserts new sections 631A and 631B to enable penalty periods to be
waived where a person commences participating in a program of work for
unemployment payment and new section 631C to ensure that participants are not
“employees” for certain purposes.
Item 11: Inserts new
section 644AAA that provides for the payment of an approved program of work
supplement for certain person's who participate in a program of work for
unemployment payment.
Items 12 to 14: Amends various elements in
subsection 1223(7) to ensure that where a person receives an approved program of
work supplement to which the person is not entitled, that amount is a
recoverable debt.
Items 15 and 16:Amend subsection 1239(2) and
paragraph 1240(2)(b) to ensure that decisions to approve a program of work for
unemployment payment are not subject to internal review.
Item
17: Amends subsection 1250(1) to ensure that decisions to approve a program
of work for unemployment payment are not decisions that can be reviewed by the
Social Security Appeals Tribunal.
Item 18: Inserts new subsection
1299(6) to allow the Employment Secretary to delegate his or her power to
approve a program of work for unemployment payment.
4. Explanation of the changes
Definitions
Part 1.2 of the Social Security Act provides
definitions for terms used throughout that Act.
Item 1 amends
section 3 of the Social Security Act which contains the index of definitions.
Two new entries are added into the index, ie, 'approved program of work for
unemployment payment' which is dealt with in new section 28 and “approved
program of work supplement” which is provided for in new section 644AAA of
the Social Security Act.
Items 2 and 3 amend subsection 23(1) of
the Social Security Act (General Definitions) by adding two new definitions.
The first, 'approved program of work for unemployment payment' is defined as
meaning a program of work for unemployment payment that is declared by the
Employment Secretary, under new section 28, to be an approved program of work
for unemployment payment. The second, “approved program of work
supplement” is defined as an amount payable under new section 644AAA of
the Social Security Act.
Item 4 inserts a new section 28 that
gives the Employment Secretary the power to declare, in writing, particular
programs of work to be approved programs of work for unemployment payment for
the purposes of the Social Security Act.
The Employment Secretary must
not declare a particular program to be an approved program of work for
unemployment payment if persons participating in the program would be required
to work:
• if the persons are under 21 - more than 24 hours in each
fortnight; and
• if the persons are not under 21 - more than 30 hours
in each fortnight.
The activity test and work for unemployment
payment
Section 601 of the Social Security Act outlines the
requirements of the activity test. The activity test comprises a work test
component (a person must be actively seeking and willing to undertake suitable
paid work) and an activity component under which the Secretary may require a
person to participate in various programs and vocational training and other
courses as specified in subsection 601(2) of the Social Security Act.
Participation in a program of work for unemployment payment is not currently an
activity that a person can be required to undertake under the activity
test.
Item 5 inserts a new subparagraph 601(2)(ia) into the Social
Security Act that would allow the Secretary to require a person to participate
in an approved program of work for unemployment payment as part of the activity
test.
Item 6 inserts a new subsection 601(2E) into the Social
Security Act that qualifies
paragraph 601(2D)(b) and also new subparagraph
601(2)(ia) indirectly. The effect of new subsection 601(2E) is that a person
cannot be required by the Secretary to participate in an approved program of
work for unemployment payment in order to comply with the activity test if -
• the person is receiving a reduced rate of NSA because of the
application of the income test in Module G of Benefit Rate Calculator B in
section 1068 of the Social Security Act; or
• in the opinion of the
Secretary:
- there is medical evidence that the person has an illness,
disability or injury that would be aggravated by the working conditions involved
in the work for unemployment payment;
or
- the working
conditions would constitute a risk to the person's health or safety or would
contravene an occupational health and safety law.
A new section 601(2F)
is also inserted to take account of the situation where new paragraphs
601(2E)(a) or (b) apply to the person during the course of the person's
participation in the program of work for unemployment payment. In this
situation, the Secretary may revoke, by notice in writing given to the person,
the requirement that the person participate in the program of work for
unemployment payment.
Item 7 inserts a new subsection 601A(3) into
the Social Security Act. This new provision outlines the circumstances in which
a person who is required to participate in an approved program of work for
unemployment payment under the activity test fails to satisfy the activity test.
The situations are where the person fails, without reasonable excuse -
• to commence or complete an approved program of work for
unemployment payment that the person is required to participate in under the
activity test; or
• to comply with the conditions of such a program
(such as attending at the required time or following reasonable directions by
the program sponsor or the sponsor's representative).
If a person fails
to satisfy the activity test, then section 624 of the Social Security Act would
apply to the person with the result that NSA would not payable to the person for
the activity test deferment period. The rules in Subdivision F of Division 1 of
the Social Security Act would then apply to set the duration, commencement etc
of the person's activity test deferment period.
A note at the end of
new subsection 601A(3) directs the reader to section 624 of the Social Security
Act that outlines the consequences of failing the activity
test.
Newstart Activity Agreements and work for unemployment
payment
A person can be required, under section 604 of the Social
Security Act, to enter into a Newstart Activity Agreement with the Commonwealth
Employment Service (CES) which specifies the measures to be undertaken by the
person to improve the prospect of their returning to employment. The terms that
can be included in an activity agreement are listed in subsection 606(1) of the
Social Security Act. Notably, paragraph 606(1)(e) allows a person's agreement
to include "measures designed to reduce any disadvantage the person has in the
labour market, not being measures compelling the person to work in return for
payment of newstart allowance".
Item 8 omits from paragraph
601(1)(e) the words "not being measures compelling the person to work in return
for payment of newstart allowance".
Item 9 inserts a new
paragraph 601(1)(ec) into the Social Security Act. The new provision includes
"an approved program of work for unemployment payment" as a measure that can be
included in a person's Newstart Activity Agreement.
The combined effect
of items 8 and 9 of Schedule 1 is to enable a person to participate in a
program of work for unemployment payment under the person's agreement. Such a
measure can be included in the person's agreement either on the initiative of
the person or the Secretary.
If the person's Newstart Activity Agreement
includes a term requiring the person to participate in a program of work for
unemployment payment and the person fails to comply with that term, then an
activity test breach penalty is applicable by operation of section 626 of the
Social Security Act.
Impact of participation in a program of
work for unemployment payment on penalty provisions
The
consequences of activity test breaches are outlined in Subdivision F of Division
1 of Part 2.12 of the Act. Under the current regime, a person will be subject
to a non-payment period, calculated by reference to the person's unemployment
duration and breaches
within the previous 3 years and commencing in
accordance with the rules set out in sections 630B and 630BA of the Social
Security Act.
From 20 March 1997, administrative breaches (set out in
sections 630C and 631 of the Social Security Act) will attract a rate reduction
period. Subdivision B of Division 4 of Part 1.12 provides the rules governing
the operation of rate reduction periods and calculation of the amount of the
reduction in a person's rate of NSA.
Under the current penalty period
system, multiple activity test deferment periods or administrative breach rate
reduction periods and any combination of activity test and administrative breach
penalty periods are served consecutively. Where a waiting period applies, any
other applicable activity test or administrative breach penalty period is
deferred until the end of the waiting period.
Item 10 inserts a
new Subdivision GA into Division 1 of Part 2.12 of the Social Security Act. The
new Subdivision will contain a number of definitions in new section 631A and new
sections 631B and 631C.
Under new section 631B, if a person is subject
to one or more penalty periods (as defined in new section 631A) and the person
starts participating in a program of work for unemployment payment whether under
the activity test or a Newstart Activity Agreement, then the penalty period/s
cease to apply. Under this new rule, where the person is subject to a number of
penalty periods that would otherwise be served concurrently, then all of those
breach penalty periods should be waived.
The new rule in section 631B
does not, however, apply to any penalty period/s incurred after starting a
program of work for unemployment payment. Any such penalties would apply under
the normal breach penalty rules.
New section 631A defines terms used in
new section 631B. "Penalty period", as used in new subsection 631B(1), is
defined as meaning an activity test penalty period or an administrative penalty
period. "Activity test penalty period" is defined as a period during which NSA
is payable at a reduced rate or not payable because of the operation of sections
624, 625, 626, 628, 629, 630 or 630AA in relation to an act or omission of the
person. "Administrative penalty period" is defined as a period during which NSA
is payable to a person at a reduced rate because of the operation of sections
630C or 631 in relation to an act or omission of the person.
New section
631C would ensure that a person is not taken to be an employee for the purposes
of certain Commonwealth enactments by reason only of the person's participation
in an approved program of work for unemployment payment (whether under the
activity test or a Newstart Activity Agreement). The relevant Acts are the
Workplace Relations Act 1996, section 9 of the Occupational
Health and Safety (Commonwealth Employees) Act 1991, section 5 of the
Safety, Rehabilitation and Compensation Act 1988 and the
Superannuation Guarantee (Administration) Act
1992.
Approved program of work
supplement
Item 11 inserts a new section 644AAA into the
Social Security Act that provides for the payment of an approved program of work
supplement. The supplement is an amount of $20 a fortnight which is added to a
person's rate of NSA and is available to persons who participate in a program of
work for unemployment payment, in respect of each fortnight of their
participation.
The supplement will not be available in respect of a
fortnight if the person participates in the program for only part of the
fortnight and ceases to participate in the program in circumstances that
constitute a failure of the activity test or failure to comply with the terms of
a Newstart Activity Agreement. This is to be distinguished from the situation
where the person's participation in a program of work for unemployment payment
starts or ends part way through a fortnightly period in which case the person
would be entitled to the full $20 supplement in respect of that
fortnight.
Debt recovery
Section 1223 of the Social
Security Act sets out the situations in which a debt arises under the Social
Security Act. Subsection 1223(7) deals with allowances or supplements that are
incorrectly added to a person's rate of payment (such as remote area allowance
and newstart training supplement).
Items 12, 13 and 14 amend
subsection 1223(7) of the Social Security Act to ensure that if an approved
program of work supplement is paid to a person in circumstances where it should
not have been paid, then the amount so paid is a debt due to the Commonwealth.
These amendments ensure that the approved program of work supplement is dealt
with in the same manner as other supplements payable under the Social Security
Act.
Item 12 inserts a new subparagraph 1223(7)(b)(iv) into the
Social Security Act providing for the situation where, if a person was receiving
NSA, the rate of the person's NSA was increased by an approved program of work
supplement when the rate should not have been so increased. Item 13
inserts a reference to the approved program of work supplement into subsection
1223(7) as new subparagraph (f). Item 14 makes a consequential amendment
to the note at the end of subsection 1223(7) of the Social Security Act by
inserting into the note a reference to approved program of work supplement and
the provision under which the supplement is paid (ie, new section
644AAA).
Review of decision to approve a program of work for
unemployment payment
A decision by the Employment Secretary under
new section 28 (inserted by item 4) to approve a program of work for
unemployment payment would not be subject to review or appeal. To achieve this
result, amendments are made to sections 1239, 1240 and 1250 of the Social
Security Act by items 15, 16 and 17. This is consistent with the
treatment of the approval of labour market and other programs.
Item 15
inserts a new paragraph (ba) into subsection 1239(2) that specifies a
decision under section 28 (approval of programs of work for unemployment
payment) as a decision that cannot be reviewed by the Secretary on his or her
own initiative. Item 16 amends subsection 1240(2) in a similar manner by
inserting a new subparagraph (b)(iia) that refers to a decision under section 28
as a decision that cannot be reviewed by the Secretary where a customer applies
for review.
Item 17 inserts a reference to a program of work for
unemployment payment into paragraph 1250(1)(ca). This amendment ensures that
the decision by the Employment Secretary to approve a program of work for
unemployment payment is not subject to review by the Social Security Appeals
Tribunal.
Delegation
The power of the Employment
Secretary to approve such programs would be delegable by virtue of the amendment
made by item 18.
Section 1299 of the Act allows powers and
functions under the Social Security Act to be delegated as required. Currently,
the Employment Secretary does not have such a power of delegation in respect of
his powers under the Social Security Act. Such a power is required in respect
of the power of the Employment Secretary to approve a program of work for
unemployment payment. Item 18 therefore inserts a new subsection 1299(6)
to allow the Employment Secretary to delegate this power to officers of the
Employment Department or Department of Social Security or to employees of the
new Commonwealth Services Delivery Agency.
SCHEDULE 2 - AMENDMENT OF THE DATA-MATCHING PROGRAM
(ASSISTANCE AND TAX) ACT 1990
1. Summary of proposed
changes
Schedule 2 amends the definition of "personal assistance" in the
Data-Matching Program (Assistance and Tax) Act 1990 (the
Data-Matching Act) to include within its ambit the approved program of work
supplement. The approved program of work supplement is an amount that can be
added to a person's rate of NSA under new section 644AA of the Social Security
Act (inserted by item 4 of this Bill). These amendments enable data
matching in accordance with the rules prescribed in the Data-Matching Act in
respect of person's who receive this form of assistance under the Social
Security Act.
2. Background
The amendment made by Schedule 2 to the Data-Matching Act takes
account of the introduction of the approved program of work supplement that can
be added to a person's rate of payment of NSA if the person is participating in
a program of work for unemployment payment. This new payment is part of the
“work for unemployment payment” initiative.
3. Clauses involved in the changes
Schedule 2: Amends the Data-Matching Act to take account of the
introduction of a new payment into the Social Security Act called the approved
program of work supplement.
Item 1: Includes the approved program
of work supplement as a form of "personal assistance".
4. Description of the changes
Subsection 3(1) of the Data-Matching Act defines "personal assistance".
Item 1 of Schedule 2 amends this definition to include within its ambit
the new approved program of work supplement available under new section 644AAA
of the Social Security Act to certain NSA customers who participate in a program
of work for unemployment payment.
5. Commencement
The amendments made by Schedules 1 and 2 commence on the day of Royal
Assent (clause 2 refers).