House of Representatives

Second Reading Speech

Ms RISHWORTH (Kingston - Minister for Social Services)

I move:

That this bill be now read a second time.

Today I am introducing a bill to smooth the transition between income support and employment, and to give people more support to get into work.

At the Jobs and Skills Summit last year, there was a clear message and focus on inclusion, promoting equal opportunities and reducing barriers to employment. Our government took steps to address this, including introducing the temporary Work Bonus boost, the Carer Inclusive Workplace Initiative and partnering with the Business Council of Australia and the Australian Network on Disability to develop the Career Pathways Pilot for people with disability.

The next stage in this process was to develop the employment white paper, which the government released in September. This sets out a road map to ensure that more Australians can make the most of the big shifts underway in the economy and in our society.

It presented our vision for a dynamic and inclusive labour market in which everyone has the opportunity for secure, fairly paid work, and where people, business and communities can be the primary beneficiaries of change to thrive.

The white paper is a commitment to work together to deliver sustained and inclusive full employment, and to promote job security and strong, sustainable wage growth. The white paper signals ways we can reignite productivity growth, fill skills needs, build our future workforce, overcome barriers to employment and broaden opportunity.

The bill before you today, the Social Security and Other Legislation Amendment (Supporting the Transition to Work) Bill 2023 represents one of the immediate actions our government is taking to deliver on the objectives of the white paper.

The changes in the bill will permanently enhance the pension work bonus and extend the employment income nil rate period for those on income support.

The changes to the pension work bonus will enable older Australians who choose to work, if they are able to do so, to earn more income from working before their pension is affected.

This builds on the temporary work bonus measure the government announced at the Jobs and Skills Summit, which gave all eligible pensioners a one-off $4,000 upfront credit into their work bonus balance and increased their work bonus income bank balance from $7,800 to $11,800. This temporary measure is in place from 1 December 2022 to 31 December 2023.

This measure was warmly welcomed by pensioners, stakeholders and peak bodies representing senior Australians.

The bill before the House today will permanently extend these changes from 1 January 2024 to all eligible new recipients over pension age, who will commence with a work bonus balance of $4,000 from day one instead of starting with a balance of $0.

This will mean from the outset of commencing on the pension, new recipients will be able to earn $4,000 more before their pension rate is affected. Without this change, new entrants would have to build up their work bonus balance over time.

As a result, more than 195,000 senior Australians who commence on a pension each year will be given an added incentive to maintain a connection to the workforce, and continue to add their skills, knowledge and expertise to the Australian labour market. This accords with the evident trend of Australians approaching or at retirement age who may be looking to continue to seize on a little more opportunity for work.

In addition, through this bill we will also retain on a permanent basis the maximum income bank balance of $11,800 for all eligible pensioners and veterans to accrue in their work bonus income bank.

This means pensioners who are not working regularly are able to accrue credit to this higher maximum balance, allowing them to earn more if they do take up some work before their pension is affected. It also means that existing pensioners who haven't used their one-off $4,000 credit yet will be able to keep it in their income bank and use it at a later date.

These changes to the work bonus complement existing arrangements in place that enable age pensioners to earn an amount of income before their pension begins to be reduced. This includes the income-free area and the taper rate arrangements - which apply to all types of income - along with the work bonus, which is specifically designed to reward pensioners who are working. It provides incentives that mean pensioners with employment income can earn more before their pension is affected, and it is the best way to target additional support to pensioners to take on work.

Indeed, senior Australians have taken the time to write to me and others in the government directly to explain how the temporary changes to the work bonus have supported them to work more and made a real difference to their lives.

Recently, I heard from Dawn and Murray - working age pensioners from northern New South Wales, who do seasonal work. For them, continuing to do some work keeps them mentally and physically active, and their employer values them as mature workers because of their work ethic, commitment, life experience and availability. Dawn and Murray have told me how helpful the increase the work bonus has been for them, particularly with cost-of-living pressures, enabling them to earn more before their pension is affected.

We want to continue to ensure that older Australians have the option, should they wish to do so, to take up work or work a bit more. Together, the higher maximum income bank balance limit and the starting balance are targeted and effective changes that will deliver real benefits to those pensioners who want and are able to take up work.

These changes broaden their choices and increase flexibility, while also helping to break down the barriers faced by older Australians who wish to be in the workforce.

In addition to enhancing the work bonus, from 1 July 2024, this bill will also double the length of the employment income nil rate period from 12 to 24 weeks and extend access to people who start full-time work.

This change is designed to provide more support for people to get back into work, without the fear that the social safety net won't be there if they need it again.

The employment income nil rate period is available to recipients of a range of payments, including the JobSeeker payment, youth allowance, Austudy, Abstudy living allowance, parenting payment and pensions.

It enables income support recipients to be considered as still receiving their payment when their fortnightly rate is reduced to nil due to personal or partner income, for the purposes of qualifying for supplementary benefits, including:

•

Healthcare card or pensioner concession card

•

Child care subsidy

•

Commonwealth rent assistance,

•

Language literacy and numeracy supplement

•

Approval program of work supplement

•

Pensioner education supplement

•

Telephone allowance

Doubling the nil rate period will allow people to stay active in the system - and retain these benefits - when they first get back into work, for longer.

Our consultations during the white paper process recommended changes to social security settings to ensure recipients are not discouraged from taking up paid work. It is commonly reported that losing access to concession cards and supplementary benefits or having to reapply and wait for income support if things don't work out discourages people taking up work, particularly short-term or casual work.

We know that people who have some work are twice as likely to ultimately exit income support as those who don't. To improve employment outcomes and get more people off payment, it is critical that they are not dis-incentivised from taking on these short-term or ad hoc opportunities that could turn into longer term work. This measure is designed to address these concerns by doubling the period people are able to stay connected to the income support system and retain access to these benefits to almost six months.

The measures in this bill will also extend access to the nil rate period to JobSeeker and youth allowance (other) recipients who commence in full-time work. Currently, these recipients are ineligible for the employment income nil rate period altogether, so their payment cancels as soon as they commence full-time employment.

For example, Hannah is receiving JobSeeker payment and is offered a full-time, three-month job working in a supermarket over Christmas. Under current arrangements, if Hannah took up this job, she would not have access the nil rate period. She would lose access to her healthcare card, and supplementary payments, and possibly have to reapply for JobSeeker all over again when the job is over.

This may deter her from taking up this opportunity

Through the nil rate measure in this bill, Hannah is supported to get back into work again, with the confidence that the social safety net is there if she needs it - as it is for all Australians in need.

These changes to income nil rate period are expected to benefit around 138,000 people each year, particularly those receiving JobSeeker payment and youth allowance (other).

These measures complement our actions to improve the economic inclusion of people across Australia. With our measures to strengthen the safety net announced in 2023-24 Budget, the government is providing additional support to working-age and student payment recipients, as well as more support through Commonwealth rent assistance and expanded access to parenting payment (single).

These measures commenced on 20 September 2023. They provide practical assistance and mean more money in the pockets of those doing it toughest. This makes a difference.

And now, with the measures in this bill, the government is doing more to help Australians of all ages get into work, consistent with our objective remove barriers to employment and broaden opportunity for all Australians.

I commend the bill to the House.

Debate adjourned.