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2013-2014
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
THE HOUSE OF REPRESENTATIVES
SOCIAL SECURITY LEGISLATION AMENDMENT (STRONGER
PENALTIES FOR SERIOUS FAILURES) BILL 2014
EXPLANATORY MEMORANDUM
(Circulated by authority of the Assistant Minister for Employment, the
Honourable Luke Hartsuyker MP)
SOCIAL SECURITY LEGISLATION AMENDMENT (STRONGER
PENALTIES FOR SERIOUS FAILURES) BILL 2014
GENERAL OUTLINE
This Bill amends the Social Security (Administration) Act 1999 to introduce a
stronger compliance framework for job seekers. The Bill introduces a more
rigorous approach to the application of penalties to job seekers who refuse a
job offer, including by failing to commence the job, or who are persistently
non-compliant.
Job seekers who incur an eight week non-payment penalty for refusing or
failing to commence work without good reason will no longer be able to have
the penalty waived under any circumstance but will instead be required to
serve the eight week non-payment penalty in full. Job seekers who incur eight
week non-payment penalties for persistently failing to meet their participation
requirements will only be able to have their eight week non-payment penalty
waived once while in receipt of an activity tested income support payment.
FINANCIAL IMPACT STATEMENT
The Bill will have the following financial impact, with administered savings for
the Social Services portfolio resulting in net savings:
Year Expense ($ million)
2013-14 0.3
2014-15 -3.3
2015-16 -5.7
2016-17 -5.9
2017-18 -5.9
TOTAL: -20.5
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STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
The statement of compatibility with human rights appears at the end of this
explanatory memorandum.
3
Social Security Legislation Amendment (Stronger Penalties for Serious
Failures) Bill 2014
Clause 1 - Short Title
This clause provides that the new Act may be cited as the Social Security
Legislation Amendment (Stronger Penalties for Serious Failures) Act 2014.
Clause 2 - Commencement
This clause provides that the Act commences on 15 September 2014. This
commencement date has been chosen so that the Act commences following
system upgrades by the Department of Human Services scheduled for
release on 13-14 September 2014.
Clause 3 - Schedule(s)
This clause provides that each Act that is specified in a Schedule is amended
or repealed as set out in that Schedule, and that any other item in a Schedule
has effect according to its terms.
Abbreviations used in this explanatory memorandum
Administration Act means the Social Security (Administration) Act 1999.
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Schedule 1 - Amendments
Summary
Under current job seeker compliance provisions in Division 3A of Part 3 of the
Administration Act, job seekers in receipt of a participation payment may incur
an eight week non-payment penalty for serious failures, consisting either of
refusal of suitable work, or of persistent non-compliance with their
participation obligations.
Schedule 1 of the Administration Act defines `participation payment' as
newstart allowance and, for some people, youth allowance, parenting
payment and special benefit.
Currently, such a non-payment penalty may be waived if the job seeker
begins to comply with a `serious failure requirement', for example Work for the
Dole, job search training or undertaking more intensive job searches. The
non-payment period may also currently be waived if the job seeker does not
have the capacity to comply with any such requirement and would be in
serious financial hardship if the non-payment period was not ended.
Schedule 1 would strengthen the job seeker compliance framework by
providing that:
job seekers who incur an eight week non-payment penalty for refusing
suitable work will no longer have the penalty waived; and
job seekers who persistently fail to comply with participation obligations
will only be able to have the penalty waived once (and then only if they
begin to comply with a serious failure requirement or are unable to
comply with any such requirement and would be in severe financial
hardship if the non-payment period was not ended), during each period
of continuous receipt of their participation payment.
Detailed explanation
Social Security (Administration) Act 1991
Item 1
The effect of item 1 is that the requirement for the Secretary to determine that
section 42NC applies, unless satisfied that the person does not have the
capacity to undertake any serious failure requirement and that serving the
serious failure period would cause the person to be in severe financial
hardship, would not apply in relation to a serious failure consisting of refusing
an offer of suitable employment under section 42N.
5
Currently:
there are two types of serious failures. The first is a serious failure for
persistent non-compliance with participation obligations - see section
42M. The second type involves refusing or failing to accept an offer of
suitable employment (section 42N);
if the Secretary determines that a person commits a serious failure and
has determined that section 42NC applies, a participation payment is
not payable to the person during the person's serious failure period
(section 42P). A serious failure period is 8 weeks unless the Secretary
ends the period earlier under current section 42Q;
section 42NC applies if the Secretary determines that a person
commits a serious failure unless the Secretary is satisfied that the
person does not have the capacity to undertake any serious failure
requirement and that serving the serious failure period would cause the
person to be in severe financial hardship; and
subsection section 42Q(1) provides that the Secretary may end a
person's serious failure period if the person begins to comply with a
serious failure requirement imposed on the person, or the Secretary
determines that the person does not have the capacity to undertake
any serious failure requirement and that serving the serious failure
period would cause the person to be in severe financial hardship.
The purpose of current section 42NC is so serious failure periods will not
commence until a determination has been made regarding financial hardship.
If there is a delay in the Department of Human Services assessing financial
hardship, current section 42NC will prevent a serious failure period from
commencing until that assessment has been completed. This ensures that job
seekers are not penalised due to administrative delays that are beyond their
control.
As noted above, the effect of item 1 would be that section 42NC would not
apply in relation to a serious failure, under section 42N, consisting of refusing
an offer of suitable employment.
Item 2
Item 2 would replace existing subsection 42P(1) to reflect the amendment
made by item 1.
New paragraph 42P(1)(a) would provide that a participation payment is not
payable to a person during the person's serious failure period where the
Secretary has determined that:
the person has committed a serious failure for persistent non-
compliance under subsection 42M(1); and
section 42NC applies (i.e. the Secretary is satisfied that the person
has the capacity to undertake a serious failure requirement and that
serving the serious failure period would not cause the person to be
in severe financial hardship).
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New paragraph 42P(1)(b) would provide that a participation payment is not
payable to a person during the person's serious failure period where that
period has been imposed under subsection 42N(1) for refusing or failing to
accept an offer of suitable employment.
Note 1 to subsection 42P(1) makes it clear that for determinations under
subsection 42M(1), the Secretary may end a serious failure period under
section 42Q or determine that a participation payment is payable under
section 42R.
Note 2 to subsection 42P(1) makes it clear that the Secretary may continue
the participation payment pending the outcome of an application for review in
accordance with sections 131 and 145 of the Administration Act.
Item 3
Item 3 would insert new subsections 42Q(4), (5) and(6).
Under new subsection 42Q(4), the Secretary's power to end a person's
serious failure period under subsection 42Q(1) would no longer apply to
serious failure periods arising from a person's refusal of, or failure to accept,
an offer of suitable employment.
New subsection 42Q(5) would provide that if:
the Secretary determines under subsection 42M(1) that a person
commits a serious failure through persistent non-compliance; and
the Secretary ends the resultant serious failure period under subsection
42Q(1); and
the Secretary makes another determination under subsection 42M(1) in
relation to the person; and
the person has continuously received participation payments in the
period between the end of the serious failure period resulting from the
first determination under subsection 42M(1) and the second
determination under subsection 42M(1);
then subsection 42Q(1) does not apply in relation to the person's serious
failure period that arose as a result of the second determination under
subsection 42M(1). The effect is that the Secretary may only end a serious
failure period under subsection 42Q(1) once in relation to a continuous period
in respect of which a person receives participation payments, regardless of
the number of serious failures under subsection 42M(1) in the continuous
period.
New subsection 42Q(6) provides that for the purpose of new subsection
42Q(5), section 38B of the Social Security Act 1991 applies, and does so as if
the reference in that section were a reference to a participation payment.
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Section 38B provides that in certain circumstances a person may be treated
as having received an income support payment in respect of a continuous
period even though the person did not actually receive such a payment during
part of the period.
For example, for the purposes of section 38B, a person is taken to have
continued to receive an income support payment if the period was a
compliance penalty period that applied to the person in respect of the income
support payment - see section 38B(6)(b). A compliance penalty period
includes a serious failure period under subsection 42P(1).
Item 4
Item 4 inserts a new subsection 42R(4).
Current subsection 42R(1) allows the Secretary to determine that, despite a
person's serious failure period, a participation payment is payable to a person
during the period that is mentioned in current subsection 42R(2) if the person
informs the Secretary that they intend to comply with a serious failure
requirement.
The effect of new subsection 42R(4) would be that subsection 42R(1) will not
apply to serious failures for refusing or failing to accept suitable work under
section 42N.
Item 5
Item 5 is an application provision.
Subitem 5(1) would provide that section 42NC and subsection 42P(1), as in
force before 15 September 2014, continue to apply from 15 September in
relation to a determination made under subsection 42N(1) before, on or after
15 September 2014, where the refusal or failure to accept an offer of suitable
employment occurred before 15 September 2014.
Subitem 5(2) would provide that new paragraph 42P(1)(a) applies to a
determination made by the Secretary under subsection 42M(1) before, on or
after 15 September 2014. This subitem is included for completeness and does
not effect any change to the law.
Subitem 5(3) would provide that for a determination made by the Secretary
under subsection 42N(1) where the refusal or failure to accept a suitable offer
of employment occurred on or after 15 September 2014, new paragraph
42P(1)(b) and new subsections 42Q(4) and 42R(4) will apply.
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Subitem 5(4) would provide that for any determination made by the Secretary
under subsection 42M(1) on or after 15 September 2014, new paragraph
42Q(5)(a) will apply, where the comprehensive compliance assessment
began to be conducted on or after 15 September 2014. Current section 42NA
relates to comprehensive compliance assessments and provides that before
the Secretary determines that a person has committed a serious failure under
section 42M, the Secretary must conduct a comprehensive compliance
assessment in relation to the person.
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Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011
Social Security Legislation Amendment (Stronger Penalties for Serious
Failures) Bill 2014 (the Bill)
Overview of the Bill
The Bill amends the Social Security (Administration) Act 1999 (the
Administration Act).
Currently, participation payments will not be payable for up to 8 weeks if a
job seeker commits a `serious failure'. These periods are `serious failure
periods' (section 42P(2)). The participation payments are newstart
allowance and, for some people, youth allowance, parenting payment and
special benefit.
There are two types of serious failures. The first is a serious failure for
persistent non-compliance with participation obligations, such as obligations to
attend compulsory activities or interviews included in an Employment Pathway
Plan (see s 42M). The second is where a job seeker fails to accept, without
reasonable excuse, an offer of suitable employment (see s 42N).
Current subsection 42Q(1) provides that the Secretary may end a person's
serious failure period, before the expiry of 8 weeks, if the person begins to
comply with a serious failure requirement imposed on the person (paragraph
42Q(1)(a)).
A serious failure requirement is a requirement to undertake a particular
intensive activity for eight weeks in lieu of serving the eight week serious
failure period.1 Activities which could fulfil a serious failure requirement
include Work for the Dole, part-time work, work experience, approved training
or intensive job search.
Current subsection 42Q(1) also provides that the Secretary may end a
person's serious failure period if the Secretary determines that the person
does not have the capacity to undertake any serious failure requirement and
that serving the non-payment period would cause the person to be in severe
financial hardship (paragraph 42Q(1)(b)).2
1
Payment is restored from the day the job seeker commences complying with the requirement (current paragraph
42Q(2)(a)).
2
Payment is restored from the day the Secretary makes the determination or, if the person requested the Secretary
to make such a determination, from the day that request was made (current paragraphs 42Q(2)(b) and (c)).
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Under the Bill a serious failure period arising from the refusal of suitable work
would no longer be able to be waived, and a serious failure period arising from
persistent non-compliance would only be able to be waived once for each
period of continuous receipt of a participation payment.
Human rights implications
The Bill engages the right to work, the right to social security, and the right to
an adequate standard of living.
Right to work
Article 6 of the International Covenant on Economic, Social and Cultural
Rights (ICESCR) recognises the right to work. This includes the right to the
opportunity to gain a living by work which the person freely chooses or
accepts, and is considered an inherent part of human dignity.3
To enable people to realise their right to work, States are required, among
other things, to assist and support individuals in order to enable them to
identify and find available employment, and to protect people's right to just
and favourable conditions of employment.4
The Bill encourages participation payment recipients to engage with their right
to work by providing a stronger incentive to accept an offer of suitable work.
Under the social security law work will not be suitable for a person if, for
example, the person lacks the skills to do the work and no training will be
provided by the employer; there is medical evidence that the work would
aggravate a medical condition of the person; the work is unsafe; or for any
other reason the work is not suitable.5
By providing such an incentive the Bill would mean that more job seekers
experience the benefits of employment, for example greater social and
economic inclusion. The measure is also compatible with the protection of
just and favourable conditions of employment, as work which provides terms
and conditions less generous than the applicable statutory conditions is not
taken to be suitable work for the purposes of social security law.6
The imposition of an eight week non-payment for refusing an offer of suitable
work does not unreasonably restrict the right to freely choose or accept work.
The fact that a person incurs such a failure means that the person is
employable and they are likely to have other choices as to what work they do.
While the Bill provides a stronger incentive to accept an offer of suitable work,
it does not force a person to do so.
3
Committee on Economic, Social and Cultural Rights, General Comment 18, paragraphs 1 and 2.
4
Committee on Economic, Social and Cultural Rights, General Comment 18, paragraph 12.
5
See, for example, section 601(2A) in relation to Newstart Allowance.
6
See, for example, section 601(2A) in relation to Newstart Allowance.
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Further, it is reasonable for the Government to temporarily cease to pay
income support to those who refuse an offer of suitable work. Doing so helps
to maintain the integrity of the social security system, and to ensure finite
resources are equitably allocated to genuine job seekers.
Similarly, the Bill would also encourage recipients of a participation payment
to engage with their right to work by reducing the number of times a penalty
for persistent non-compliance can be waived. Job seekers are
consequentially more likely to take active steps to satisfy their participation
requirements, and thereby increase their chances of moving off welfare
payments and of becoming a productive participant in the work force.
Right to social security and right to an adequate standard of living
Article 9 of the International Covenant on Economic, Social and Cultural
Rights (ICESCR) recognises the right of everyone to social security. Article
11 of the ICESCR recognises the right of everyone to an adequate standard
of living and to the continuous improvement of living conditions.
To the extent that the Bill may limit the right to social security and the right to
an adequate standard of living, there is a reasonable justification as outlined
below.
Around 70 per cent of job seekers meet their participation requirements and
are never reported to the Department of Human Services by their employment
services providers. However, there is a cohort of job seekers who repeatedly
fail to meet their requirements. At 31 December 2013, around 11 per cent of
job seekers had been reported three or more times during the last 12 months,
accounting for 71 per cent of all reports of non-compliance. This suggests that
there are grounds for tightening the system to provide stronger deterrents to
persistent non-compliance, and that this can be achieved with no adverse
impact on the majority of job seekers.
In the 2012-13 financial year, there were 1,718 serious failure periods applied
for refusing work, of which 1,174 (68%) were waived. In that year there were
also 25,286 serious failure periods imposed for persistent non-compliance, of
which 18,488 (73%) were waived. Of those waived, 12,699 were the job
seeker's first waiver and 5,789 of them were the job seeker's second or
subsequent waiver.
Job seekers who refuse suitable employment without a good reason currently
incur an eight week non-payment penalty, but are able to have this penalty
waived by agreeing to undertake a more intensive level of activity for the
period of the penalty. The current waiver provisions (in section 42Q) do not
ensure that job seekers who refuse or fail to commence a suitable job without
a reasonable excuse receive a meaningful penalty. This Bill will provide a
stronger deterrent to this type of behaviour and will encourage job seekers to
accept suitable employment.
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The amendments in relation to persistent non-compliance are consistent with
the original intention of the waiver provisions, introduced by the Social
Security Legislation Amendment (Employment Services Reform) Act 2009,
which was to encourage non-compliant job seekers to show that they are
genuinely seeking work through re-engaging with their provider and
undertaking a period of intensive activity.
Allowing only one such waiver will stop the potential exploitation of the waiver
provisions by job seekers who can currently persist in their non-compliant
behaviour knowing that if they get another penalty they can, in effect, elect to
have it waived if they do not wish to serve the penalty.
Prior to 2009, eight week penalties for serious failures had existed for a
number of years without the potential for those penalties to be waived. The
introduction of waiver provisions significantly reduced the deterrent effect such
penalties were intended to create - for example there were 644 penalties
applied for refusing work in 2008-09, compared to 1,718 in 2012-13.
Job seekers who incur penalties for refusing work are demonstrably
employable and can be expected to find work. Those who incur penalties for
persistent non-compliance will still have one opportunity to waive a penalty. It
is reasonable to expect the job seeker to take some responsibility for avoiding
any further penalties.
The financial impact of the full 8 week non-payment period is illustrated by the
following table:
Financial impact of the non-payment
Maximum base
period if waiver provisions are not
fortnightly rate
available
NSA
$510.50 $2042.00
Single, 22 or over, no children
NSA
Single, with children $552.40 $2,209.60
NSA partnered (each) $460.90 $1843.60
Parenting Payment Single (youngest
$713.20 $2,852.80
child 6-7)
Youth Allowance at home $226.80 $907.20
Youth Allowance - Independent $414.40 $1,657.60
The Bill will not impact on job seekers who cannot get work despite their best
efforts but rather targets those who refuse an offer of suitable work without
reasonable excuse. The Bill will also not impact on job seekers who do not
engage in persistent non-compliance with their participation obligations.
Job seekers would be informed in person of the Bill's impact at routine
contacts with employment services providers and with the Department of
Human Services so that they understand the consequences of refusing
suitable work or of persistent non-compliance.
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In practice, before deciding whether to impose a serious failure period for
refusing work, the Department of Human Services (DHS) would talk to the job
seeker, the job seeker's employment service provider, and the employer
which offered the work. This is to enable DHS to check whether the job that
was refused was suitable work, in light of provisions in the social security law
about the suitability of work for a person, and that the job seeker did not have
valid reasons for refusing it.
In relation to both refusal of suitable work and persistent non-compliance,
failures for which the person has a reasonable excuse will not be taken into
account for the purpose of determining whether a serious failure has
occurred.7
Also, before a decision maker determines that a person has committed a
serious failure due to persistent non-compliance, the decision-maker must
conduct a Comprehensive Compliance Assessment to assess whether other
factors account for the persistent non-compliance. (s 42NA).
Comprehensive Compliance Assessments are normally done by a senior or
specialist officer, for example a social worker. Such assessments are
intended to ensure that the job seeker has no previously undisclosed barriers
to participation that may warrant an alternative servicing arrangement rather
than the imposition of a serious failure period.
The Minister must make a legislative instrument to determine a non-
exhaustive list of matters which decision makers must consider in applying the
persistent non-compliance test (subsections 42M(4), (5) and (6)).
The Minister has made such an instrument - the Social Security
(Administration) (Persistent Non-compliance) (DEEWR) Determination 2009
(No.1). In summary, this instrument provides that the Secretary must take into
account, in deciding whether a person persistently failed to comply with their
participation obligations, the findings of the most recent Comprehensive
Compliance Assessment, whether a person has committed three or more
failures during certain six month periods, and in some cases whether the
failures demonstrate a pattern of non-compliance or should be viewed as a
single instance of non-compliance.
Currently, the DHS conducts a hardship assessment and offers the job seeker
a waiver at the same time as they determine the serious failure.8 This would
still occur under the Bill, though only for those job seekers who are facing a
penalty for persistent non-compliance and who have not previously had a
waiver in the same period of continuous receipt of participation payments.
7
See section 42N(2)(a) and section 42U.
8
Pursuant to section 42NC as outlined above in this Explanatory Memorandum.
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A person who has a non-payment period imposed on them, or who is subject
to a decision not to end their non-payment period, will be able to seek internal
review of those decisions by DHS. If not satisfied with the outcome of the
internal review, the person will be able to appeal to a tribunal. The person
would also be able to appeal, on questions of law, to courts.
The start date of a serious failure period is subject to the payment pending
review provisions. Job seekers who commit serious failures will have their
serious failure periods commence on the first day of the instalment period
after the decision maker determines the serious failure was committed (as
opposed to after the serious failure was actually committed). Because
instalments are usually fortnightly and paid in arrears, this rule generally
enables job seekers at least two weeks before being subject to the impact of a
serious failure period.
Conclusion
The Bill is compatible with human rights. To the extent that it may have an
adverse impact on human rights, the impact is reasonable and for legitimate
reasons.
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