Senate

Revised Explanatory Memorandum

(Circulated by the authority of the Minister for Social Services, the Hon Christian Porter MP)

Schedule 1 - Creation of the Jobseeker Payment

Summary

This Schedule will cease Newstart Allowance, and create a new Jobseeker Payment commencing 20 March 2020.

Background

The new Jobseeker Payment will be the main working age payment, consolidating seven current working age payments, and creating a single payment for those of working age with capacity to work now or in the near future. From 20 March 2020, Newstart Allowance, Sickness Allowance, Wife Pension, Bereavement Allowance and Widow B Pension will cease and most recipients of these payments will transition to Jobseeker Payment, Age Pension or Carer Payment, depending on their circumstances. Widow Allowance and Partner Allowance will cease from 1 January 2022 and all remaining recipients will transition to Age Pension. These payments are ceased by other Schedules of this Bill.

The Jobseeker Payment will simplify the income support system and treat people in similar circumstances consistently. The payment will have the same basic qualification, payability and rate as existing Newstart Allowance, however, the payment will be broader in scope than Newstart Allowance, and will include access for persons who have temporarily stopped working or studying to recover from illness or injury. The Jobseeker Payment will also provide bereavement assistance for persons who have recently experienced the death of their partner. Underlying qualification and payability will be broadened by other Schedules of this Bill where a payment is ceasing, and persons affected would not come within existing Newstart Allowance qualification and payability. No Newstart Allowance recipient who transitions to Jobseeker Payment will be worse off as a result.

Explanation of the changes

Part 1 - Main amendments

The main changes to create Jobseeker Payment and cease Newstart Allowance are made to the Social Security Act. Consequential changes to a range of Acts are also required.

Family Assistance Act

Item 1 consequentially amends the Family Assistance Act to substitute a reference to Jobseeker Payment for one reference to Newstart Allowance.

Farm Household Support Act

Items 2 to 11 consequentially amend the Farm Household Support Act to substitute reference to Jobseeker Payment for all references to Newstart Allowance.

Income Tax Assessment Act 1936

Items 12 and 13 consequentially amend the Income Tax Assessment Act 1936 to substitute reference to Jobseeker Payment for references to Newstart Allowance.

Income Tax Assessment Act 1997

Item 14 inserts a reference to Jobseeker Payment into section 52-10 of the Income Tax Assessment Act 1997 to provide the income tax treatment of Jobseeker Payment.

Items 15 and 16 amend section 52-10 to repeal existing references to Newstart Allowance, and substitute where appropriate reference to Jobseeker Payment, to ensure the payment is tax exempt.

Items 17 and 18 amend section 52-15 to repeal references to Newstart Allowance and insert reference to Jobseeker Payment to identify the supplementary amount of a social security payment for tax purposes.

Items 19 to 21 amend subsection 52-30(1) to repeal references to Newstart Allowance and insert reference to Jobseeker Payment to identify the tax-free amount of various bereavement lump sum payments.

Items 22 and 23 remove from section 52-40 references to Newstart Allowance and insert reference to Jobseeker Payment as a relevant provision of the social security Act under which social security payments are made that are wholly or partly exempt from income tax.

Social Security Act

Items 24 to 64 amend various provisions of the Social Security Act, including definitions, which currently refer to Newstart Allowance, to substitute reference to Jobseeker Payment.

Items 65 to 84 amend the provisions of existing Subdivision A of Division 1 of Part 2.12 which provides the basic qualification criteria for Newstart Allowance. The amendments made by these items substitute references to Newstart Allowance with reference to Jobseeker Payment. The amendments made by these items will ensure the basic qualification criteria for Jobseeker Payment are the same as those for the existing Newstart Allowance.

Items 85 to 96 amend the provisions of existing Subdivisions B and BA of Division 1 of Part 2.12 regarding Newstart Allowance activity testing. The amendments made by these items substitute references to Newstart Allowance with reference to Jobseeker Payment, retaining the Newstart Allowance activity test rules for the new Jobseeker Payment.

Items 97 to 123 amend the provisions of existing Subdivision C of Division 1 of Part 2.12 which provide for newstart employment pathway plans. The amendments made by these items substitute references to Newstart Allowance with reference to Jobseeker Payment, retaining newstart employment pathway plans rules for the new Jobseeker Payment.

Items 124 to 161 amend the provisions of existing Subdivisions D, E, G, GA and H of Division 1 of Part 2.12 which provide for situations where Newstart Allowance is not payable. The amendments made by these items substitute references to Newstart Allowance with reference to Jobseeker Payment, retaining the rules providing when Newstart Allowance is not payable for the purposes of the new Jobseeker Payment.

Items 162 to 166 amend the provisions of existing Division 4 of Part 2.12 which provides for the rate of Newstart Allowance. As the rate of the new Jobseeker Payment will be the same as Newstart Allowance, the amendments made by these items substitute references to Newstart Allowance with reference to Jobseeker Payment.

Items 167 to 177 amend the provisions of existing Division 9 of Part 2.12 which provides for bereavement payments in relation to Newstart Allowance. The amendments made by these items substitute references to Newstart Allowance with reference to Jobseeker Payment, as the new Jobseeker Payment will retain the same bereavement payment rules as existing Newstart Allowance.

Items 178 to 248 amend various provisions of the Social Security Act, including definitions, which currently refer to Newstart Allowance, to substitute reference to Jobseeker Payment. This will ensure that the rates or eligibility for other payments that include a reference to Newstart Allowance will include a reference to Jobseeker Payment from commencement.

Items 249 to 274 amend various provisions of the Social Security Act rate calculators which currently refer to Newstart Allowance to substitute reference to Jobseeker Payment.

Items 275 to 307 amend various provisions of the Social Security Act, including definitions, which currently refer to Newstart Allowance to substitute reference to Jobseeker Payment.

Social Security Administration Act

Items 308 to 336 amend various provisions of the Social Security Administration Act, dealing with administration of payments which currently refer to Newstart Allowance, to substitute reference to Jobseeker Payment. These amendments will ensure, for example, that claims for Jobseeker Payment and decisions about payment suspension or cancellation will operate in the same way as they do for Newstart Allowance.

Veterans' Entitlements Act

Items 337 to 341 make consequential amendments to various provisions of the Veterans' Entitlements Act which currently refer to Newstart Allowance, to substitute reference to Jobseeker Payment.

Transitional and savings provisions

Items 342 to 354 provide transitional and savings provisions for the introduction of the new Jobseeker Payment.

Item 342 introduces a number of transitional provisions.

Subitem 342(1) maintains in force notices, determinations or other instruments relating to Newstart Allowance made before commencement as if they were made or given in relation to Jobseeker Payment.

Subitem 342(2) provides that any claim lodged for Newstart Allowance before commencement which was not determined has effect as if it was a claim for newstart allowance in respect of days prior to commencement and a claim for Jobseeker Payment for days on or after commencement.

Subitem 342(3) provides that, if prior to commencement, a person was subject to a waiting or preclusion period in relation to newstart, after commencement of this Schedule the person is taken to be subject to that period in relation to Jobseeker Payment. Any newstart employment pathway plan in force in relation to a period immediately before commencement has effect on or after commencement as if it were a jobseeker employment pathway plan.

Item 343 provides a transitional provision for the Family Assistance Act, in relation to a provision to be inserted by the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Act 2017 from 2 July 2018, to consequentially substitute Jobseeker Payment for a reference to Newstart Allowance as a payment which may give rise to eligibility for the additional child care subsidy.

Item 344 provides a savings provision for the Farm Household Support Act to ensure that provisions of that Act as in force prior to commencement continue to apply on and after commencement in relation to working out the rate of farm household allowance for days prior to commencement of the amendments made by this Schedule.

Item 345 provides a savings provision for the tax treatment of Newstart Allowance which maintains that treatment even if the payment is made on or after commencement.

Item 346 provides saving provisions for various definitions within the Social Security Act, to provide that such definitions continue to apply on or after commencement in working out whether a person comes within the definition, despite amendments made by this Schedule.

Items 347 to 350 provide savings provisions for various qualification provisions within the Social Security Act, to provide that such provisions continue to apply on or after commencement in relation to working out whether a person was qualified for various payments and supplements, and their rate, in relation to days before commencement.

Item 351 provides saving provisions for various concession card provisions within the Social Security Act, to provide that such provisions continue to apply on or after commencement in working out a person's qualification for a concession card for days before commencement, despite amendments made by this Schedule.

Item 352 provides saving and transitional provisions for various other Social Security Act provisions relating to ancillary matters such as means testing and debt recovery, ensuring those provisions continue to apply in relation to days before commencement, despite amendments made by this Schedule.

Item 353 provides saving provisions for the Social Security Administration Act provisions relating to claims, payments and requirements made under that Act, ensuring those provisions continue to apply in relation to days before commencement, despite amendments made by this Schedule.

Item 354 provides saving provisions for the Veterans' Entitlements Act relating to payment calculated by reference to the rate of Newstart Allowance, or involving a payment of Newstart Allowance, ensuring the provisions continue to apply to a payment made before, on or after commencement, despite the amendments made by this Schedule.

Part 2 - Amendments relating to cessation of Widow Allowance

Social Security Act

Items 355 and 356 make consequential amendments to section 603AC, inserted from 1 January 2018 by item 3 of Schedule 6. That section refers to Newstart Allowance, but is amended by these items from 20 March 2020 to refer to Jobseeker Payment, before then being repealed from 1 January 2022 by item 18 of Schedule 6.

Part 3 - Amendments relating to start day for some participation payments

Social Security Administration Act

Items 357 to 360 make consequential amendments to provisions of the Social Security Administration Act inserted by Schedule 10 to this Bill relating to the start day for some participation payments. These amendments will be inserted from the later of 1 January 2018 and the day after Royal Assent. The items will be amended from 20 March 2020 to substitute reference to Jobseeker Payment for references to Newstart Allowance.

Part 4 - Amendments relating to drug testing trial

This Part makes amendments to provisions inserted by Schedule 12 to this Bill, establishing a drug testing trial. It is anticipated that Schedule 12 will commence prior to the commencement of this Schedule. From commencement of this Schedule, provisions inserted by Schedule 12 referring to Newstart Allowance will be substituted with reference to Jobseeker Payment.

Farm Household Support Act

Items 361 and 362 amend the Farm Household Support Act to substitute reference to Jobseeker Payment with reference to Newstart Allowance.

Social Security Act

Items 363 to 369 substitute references to Newstart Allowance, or the allowance, with reference to Jobseeker Payment, or the payment.

Social Security Administration Act

Items 370 and 371 amend references to Newstart Allowance, to substitute reference to Jobseeker Payment.

Item 372 inserts transitional provisions relating to the amendments made by this Part.

Subitem 372(1) maintains the operation of a Newstart Allowance drug test refusal waiting period after commencement, by providing that a person is taken to be subject to that period in relation to Jobseeker Payment.

Subitem 372(2) maintains the operation of a drug test repayment deficit in relation to a person, as if reference to a social security benefit after commencement included a reference to Newstart Allowance.

Part 5 - Amendments relating to targeted compliance framework

This Part makes amendments to provisions inserted by Schedule 15 to this Bill, setting up a targeted compliance framework. It is anticipated that Schedule 15 will commence prior to the commencement of this Schedule. From commencement of this Schedule, a provision inserted by Schedule 15 referring to Newstart Allowance will be substituted with reference to Jobseeker Payment by item 373.

Part 6 - Amendments relating to enhanced residency requirements for pensioners

This Part makes amendments to provisions which may be inserted by the Social Services Legislation Amendment (Payment Integrity) Act 2017 (the Payment Integrity Act), creating enhanced residency requirements for pensioners. The Payment Integrity Act will commence on 1 July 2018, or the first 1 January or 1 July after royal assent, and hence will likely commence prior to the commencement of this Schedule. From commencement of this Schedule, provisions inserted by the Payment Integrity Act referring to Newstart Allowance will be amended to insert reference to Jobseeker Payment by items 374 and 375.