Senate

Revised Explanatory Memorandum

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

Schedule 9 - Changes to activity tests for persons aged 55 to 59

Summary

This Schedule amends the Social Security Act to remove the ability of Newstart Allowance and certain Special Benefit recipients aged 55 - 59 ('relevant recipients') to be taken to satisfy the activity test by engaging in voluntary work for at least 30 hours per fortnight. The amendments will allow relevant recipients to be taken to satisfy the activity test if they are engaged, for at least 30 hours per fortnight, in a combination of approved unpaid voluntary work and suitable paid work, at least 15 hours of which must be in suitable paid work.

Background

Currently, job seekers on Newstart Allowance and Special Benefit - Nominated Visa Holders who are aged 55 or over are taken to satisfy the activity test if they are engaged in at least 30 hours per fortnight of approved voluntary work, paid work (including self-employment), or a combination of these in a fortnight - unless the Secretary considers that they should not be exempt from the activity test due to the opportunities for employment available to the person. The activity test is a requirement to actively look for, and be willing to undertake, any suitable paid work.

This means that if relevant recipients volunteer for 30 hours a fortnight, they do not have to actively seek or be willing to undertake any suitable paid work. This creates potential for job seekers aged 55 or over to remain indefinitely on income support while engaging in large amounts of volunteer work, while not necessarily improving their prospects of finding suitable paid work.

While volunteering has a range of benefits, participation in paid work and reduced reliance on income support should be the ultimate goal for job seekers. Work is the best pathway to a higher standard of living and delivers benefits to the individual, their family and the community. Further, planned increases to the Age Pension Age reflect a community expectation that years of working life are longer. It is expected that those in the 55-59 age bracket should actively engage in suitable paid work where possible.

Therefore, this Schedule amends the Social Security Act so that relevant recipients may only satisfy the activity test through at least 30 hours per fortnight of paid work or a combination of paid work and approved voluntary work, at least 15 hours of which must be in paid work. However, those 60 years of age and over will be unaffected by the amendments.

The intention of these amendments is to strengthen the employment focus of mutual obligation requirements, and better connect mature age job seekers aged 55 - 59 with the labour market, while still recognising that volunteering can be a valuable stepping stone into paid work. The amendments made by this Schedule will not affect the operation of current provisions relating to the circumstances in which, regardless of age, recipients who are principal carer parents, or have a partial capacity to work, may be taken to satisfy the activity test.

To complement these changes, the Australian Government is also investing over $100 million to increase the skills and experience of mature age job seekers from 1 July 2018.

The amendments made by this Schedule commence on 20 September 2018.

Explanation of the changes

Social Security Act

Item 1 inserts new subsection 603AA(1A). This provides that a Newstart Allowance recipient who is at least 55 and under 60 years of age is taken to satisfy the activity test in respect of a 2 week period if the person is engaged, for at least 30 hours in that period, in a combination of approved unpaid voluntary work and suitable paid work, at least 15 hours of which must be in suitable paid work.

Currently, under subsection 603AA(1), a Newstart Allowance recipient who is at least 55 years of age is taken to satisfy the activity test if they are engaged in at least 30 hours of approved unpaid voluntary work, suitable paid work, or any combination of these in a relevant period.

The effect of Item 1 is that a Newstart Allowance recipient aged 55 - 59 will no longer be taken to satisfy the activity test through 30 hours of approved unpaid voluntary work alone in a relevant period, or where approved unpaid voluntary work makes up more than 15 hours of the combined 30 hours of voluntary work and suitable paid work in a relevant period.

Item 2 amends subsection 603AA(1) of the Act by substituting the reference to '55 years' in subsection 603AA(1), with '60 years of age'.

Those 60 years of age and over will be unaffected by the amendments made by Schedule 9. Item 2 ensures that subsection 603AA(1) will continue to provide relief from the activity test for those 60 years and over in the circumstances set out in that subsection.

Item 3 amends subsection 603AA(1) of the Act by inserting the words 'of 2 weeks' after the words 'in respect of a period' in subsection 603AA(1).

This amendment clarifies that the 'relevant period' referred to in subsection 603AA(1) is a 2 week period. The 'relevant period' in subsection 603AA(1) has always been considered and administered as a 2 week (fortnightly) period; item 3 would simply spell this out for clarity.

The amendment also ensures consistency with subsection 731G(1), which specifically refers to a 2 week period as the 'relevant period' within which special benefit recipients aged 55 and over are taken to satisfy the activity test in the same circumstances.

Items 4 to 6 substitute the word 'period' with the words 'the relevant period' in paragraphs 603AA(1)(a), 603AA(1)(b) and 603AA(1)(c) of the Act.

This amendment corrects typographical errors in the current provisions and ensure consistency in the drafting of subsection 603AA(1). The word 'period' in paragraphs 603AA(1)(a), 603AA(1)(b) and 603AA(1)(c) should be 'relevant period,' because this is the phrase specified in subsection 603AA(1) to refer to the period within which approved unpaid voluntary work and/or suitable paid work should be carried out.

Item 7 substitutes the phrase 'approved voluntary unpaid work' with the phrase 'approved unpaid voluntary work' in paragraph 603AA(4)(a).

This amendment corrects a typographical error in the current provision. The relevant phrase in paragraph 603AA(4)(a) should be 'approved unpaid voluntary work' (not 'approved voluntary unpaid work') to reflect the same phrases used in paragraph 603AA(1)(a), subparagraph 603AA(1)(b)(i), and proposed new subparagraph 603AA(1A)(a)(i). Item 7 corrects this error by substituting 'approved voluntary unpaid work' with 'approved unpaid voluntary work'.

Item 8 inserts new subsection 731G(1A). This provides that a special benefit recipient (nominated visa holder) who is at least 55 and under 60 years of age is taken to satisfy the activity test in respect of a relevant period if the person is engaged, for at least 30 hours in that period, in a combination of approved unpaid voluntary work and suitable paid work, at least 15 hours of which must be in suitable paid work.

Currently, under subsection 731G(1), a special benefit recipient (nominated visa holder) who is at least 55 is taken to satisfy the activity test if they are engaged in at least 30 hours of approved voluntary work, suitable paid work, or a combination of these in a relevant period.

The effect of Item 8 is that a relevant special benefit recipient aged 55 - 59 will no longer be taken to satisfy the activity test through 30 hours of approved unpaid voluntary work alone in a relevant period, or where approved unpaid voluntary work makes up more than 15 hours of the combined 30 hours of voluntary work and suitable paid work in a relevant period.

Item 9 amends subsection 731G(1) of the Act by substituting the reference to '55 years' in subsection 731G(1), with '60 years of age'.

Those 60 years of age and over will be unaffected by the amendments made by Schedule 9. Item 9 ensures that subsection 731G(1) will continue to provide relief from the activity test for those 60 years and over in the circumstances set out in that subsection.

Item 10 substitutes the word 'period' with the phrase 'relevant period' in paragraph 731G(1)(c).

This amendment corrects a typographical error and ensures consistency in the drafting of subsection 731G(1). The word 'period' in paragraph 731G(1)(c) should be 'relevant period,' because this is the phrase specified in subsection 731G(1) to refer to the 2 week period in which approved unpaid voluntary work and/or suitable paid work should be carried out.

Item 11 inserts a new definition into subsection 731G(4). This is the definition of 'approved unpaid voluntary work'. 'Approved unpaid voluntary work' would mean work that is either full-time or otherwise, and which has been approved by the Secretary for the purposes of section 731G.

This amendment corrects a typographical error in the current provision. The relevant definition in subsection 731G(4) should be of 'approved unpaid voluntary work' (not of 'approved voluntary unpaid work') to reflect the same phrases used in paragraph 731G(1)(a), subparagraph 731G(1)(b)(i), and proposed new subparagraph 731G(1A)(a)(i). Item 11 and item 12 (below), correct this error.

Item 12 removes the definition of 'approved voluntary unpaid work' in subsection 731G(4).

This amendment corrects a typographical error in the current provision. The definition of 'approved voluntary unpaid work' in subsection 731G(4) is not required as there is no other reference to 'approved voluntary unpaid work' in section 731G.

Item 13 is an application provision and provides that the amendments made by Schedule 9 apply in relation to relevant periods beginning on or after the commencement of item 13, i.e. on or after 20 September 2018.

The effect of item 13 is that the amendments made by Schedule 9 apply to all new and existing Newstart Allowance and applicable special benefit recipients, from the first relevant period beginning on or after 20 September 2018.