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2008
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
SOCIAL SECURITY LEGISLATION AMENDMENT (eMPLOYMENT SERVICES REFORM) BILL
2008
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Employment Participation,
the Honourable Brendan O'Connor MP)
SOCIAL SECURITY LEGISLATION AMENDMENT (eMPLOYMENT SERVICES REFORM) BILL
2008
OUTLINE
The Social Security Legislation Amendment (Employment Services Reform) Bill
2008 will amend the Social Security Act 1991 and the Social Security
(Administration) Act 1999 to give effect to measures announced in the 2008-
09 Budget to support the new Employment Services, in particular the
introduction of a new job seeker compliance system.
The new compliance framework will apply to newstart allowance, youth
allowance for persons who are not full-time students or new apprentices,
parenting payment for persons who have participation requirements and are
not new apprentices and special benefit for nominated visa holders.
A key feature of the new framework is the no show no pay failure. This new
failure will deter non-compliance and encourage re-engagement. It applies
to a job seeker who, without reasonable excuse, fails to attend an
activity, fails to attend a job interview or intentionally acts in a manner
that it is reasonably foreseeable may result in an offer of employment not
being made. The penalty for a no show no pay failure will be equivalent to
one work day of a job seeker's basic rate of payment and any approved
program of work supplement (normally 10% of a job seeker's 14 day
instalment).
A job seeker who fails, without reasonable excuse, to attend an appointment
with their employment service provider or to meet their job search
requirements under their Employment Pathway Plan will commit a connection
failure. Instead of an immediate penalty for a connection failure, the job
seeker may be required to comply with a reconnection requirement, which may
normally be to attend another appointment or, in the case of a job search-
related failure, to complete a Job Seeker Diary. If the job seeker fails,
without reasonable excuse, to comply with the reconnection requirement, a
reconnection failure period (the loss of the job seeker's basic rate of
payment and any approved program of work supplement) will apply until they
comply with a further reconnection requirement.
A job seeker will commit a serious failure if the job seeker has
intentionally, recklessly or negligently failed to meet their participation
obligations and has persistently failed to comply with those obligations,
or they fail to accept, without reasonable excuse, an offer of suitable
employment. The consequence of a serious failure is to be an eight-week
period of non-payment. In order to promote greater participation, a non-
payment period may be ceased if the job seeker commences a particular
serious failure requirement or if the job seeker does not have the capacity
to comply with a serious failure requirement and serving the penalty would
cause severe financial hardship.
A job seeker's participation payment will be not payable for a period of
eight weeks if they are unemployed due to a voluntary act (unless the
voluntary act is reasonable) or are dismissed from employment due to
misconduct (other than misconduct that would constitute minor
transgressions). The option of commencing an intensive activity to end
these non-payment periods will not be available; however, a non-payment
period can be ended if a person would be in severe financial hardship and
is in a class of persons specified by the Secretary in a legislative
instrument, for example a job seeker with dependent children.
The Bill will also amend the social security law to replace all references
to Activity Agreements with references to Employment Pathway Plans and to
allow for Employment Pathway Plans to have optional terms, for example
counselling.
The Bill removes references to the Personal Support Programme (PSP),
rehabilitation programs and labour market programs from the legislation,
while ensuring that participants in similar programs under the new
Employment Services do not lose the protections currently available to
participants of the discontinued programs.
Amendments will be made to ensure these persons undertaking work experience
activities under an Employment Pathway Plan are not treated as employees
under Commonwealth legislation, unless the activity they are undertaking is
paid work.
The Bill contains several minor technical amendments designed to clarify
and improve the operation of the current payment pending review provisions,
particularly in relation to the start date of penalties following the
affirmation of a decision to apply a penalty following a period of payment
pending review.
The Bill redrafts the notice provisions in sections 63 and 64 of the Social
Security (Administration) Act 1999 to resolve some overlapping between
those sections and correct drafting inconsistencies and shortfalls. The
Bill also contains other consequential amendments that do not reflect
policy changes, and various transitional provisions.
FINANCIAL IMPACT
The estimated financial impact associated with this Bill is:
Year Expense
2008-09 -
2009-10 $ 12.8m
2010-11 $ 13.7m
2011-12 $ 14.4m
Total $ 40.9 m
SOCIAL SECURITY LEGISLATION AMENDMENT (eMPLOYMENT SERVICES REFORM) BILL
2008
NOTES ON CLAUSES
Clause 1 sets out how the Act is to be cited, that is, the Social Security
Legislation Amendment (Employment Services Reform) Act 2008.
Clause 2 provides a table that sets out the commencement dates of the
various sections to the Act. All substantive measures in the Act commence
on 1 July 2009.
Clause 3 provides that each Act that is specified in a Schedule is amended
or repealed as set out in that Schedule.
For ease of description, this explanatory memorandum uses the following
abbreviations:
'Social Security Act' means the Social Security Act 1991; and
'Administration Act' means the Social Security (Administration) Act 1999;
and
'job seeker' means a person receiving a participation payment, as defined
by Item 43 of Schedule 1.
Schedule 1 - Compliance with obligations in relation to participation
payments
Explanation of changes
PART 1 - COMPLIANCE
Social Security (Administration) Act 1999
Item 1 inserts a new Division 3A in the Administration Act. The new
Division 3A provides for a new legislative framework for compliance
obligations and penalties for persons in receipt of newstart allowance,
parenting payment (for those subject to participation requirements), youth
allowance (for those who are not full-time students or new apprentices) and
special benefit (for nominated visa holders).
Previously, the Act contained different compliance provisions for these
four payments. The new provisions are consolidated for all four payments,
which are defined as participation payments. The existing compliance
provisions for austudy are retained, and Items 11-22 amend the existing
compliance provisions for youth allowance recipients who are full-time
students to remove all employment-related grounds for penalties (eg.
refusal of a suitable offer of employment).
Section 42A - Simplified outline
The new section 42A of the Administration Act is a simplified outline of
the operation of the new Division 3A.
Section 42B - Objects
The new section 42B sets out the objects of Division 3A. It is intended
that decision makers will have regard to these objects in interpreting and
applying Division 3A.
Section 42C - No show no pay failures
The new Section 42C provides for the Secretary to determine that a job
seeker has committed a no show no pay failure. No show no pay failures are
committed in respect of particular days.
The Secretary must determine that a job seeker has committed a no show no
pay failure if any of the grounds in section 42C are met.
Paragraph 42C(1)(b) provides that the Secretary may only determine that a
job seeker has committed a no show no pay failure if the job seeker
receives an instalment of a participation payment for the instalment period
in which the failure occurred (participation payment is defined by Item
44).
Paragraph 42C(1)(a) sets out the four grounds on which a no show no pay
failure is determined.
Subparagraph 42C(1)(a)(i) - Failure to participate in activity under
Employment Pathway Plan
The first ground (subparagraph 42C(1)(a)(i)) is where a job seeker fails to
participate in an activity in which they are required to participate by
their Employment Pathway Plan (Schedule 2 provides for Employment Pathway
Plans to replace Activity Agreements). Because of the use of the word
required, a job seeker will not commit a no show no pay failure by failing
to participate in an activity that their Employment Pathway Plan sets out
as being optional (Items 19, 69, 129 and 179 of Schedule 2 allow Employment
Pathway Plans to provide for optional terms).
The term activity is used in subparagraph 42C(1)(a)(i), while the failure
to comply with a requirement to attend an appointment under a job seeker's
Employment Pathway Plan may be a connection failure (see the new paragraph
42E(2)(c)). Accordingly, if a job seeker fails to comply with a requirement
of their Employment Pathway Plan, a decision maker must examine the
requirement to determine whether it is properly characterised as an
activity or an appointment, as the potential penalty will depend on that
characterisation. It is intended that Employment Pathway Plans will
explicitly describe requirements as being either activities or
appointments, in order to assist decision makers in this task. Activities
are intended to capture vocational or non-vocational tasks that a job
seeker is required to undertake, such as training, work experience or Work
for the Dole (eg. a failure to attend Work for the Dole on a particular day
will be a no show no pay failure). Appointments are intended to capture
requirements that relate to a job seeker's expected attendances at an
office of their employment service provider or Centrelink at stated times.
Subsection 42C(2) is intended to ensure that a 'failure to participate' for
the purposes of subparagraph 42C(1)(a)(i) includes both failures to attend
activities at all, and failures to attend punctually. For example, a job
seeker will still be subject to a no show no pay failure if they are
substantially late in their attendance at an activity, or they leave or
cease the activity before they are permitted. It is not intended that a no
show no pay failure would apply to inconsequential lateness to an activity.
Subparagraph 42C(1)(a)(ii) - Failure to comply with serious failure
requirement
The new section 42Q allows for a job seeker's serious failure period (an
eight week non-payment period) to be ended upon the commencement of a
serious failure requirement. If a job seeker commences complying with a
serious failure requirement, but then fails to comply with that requirement
on a particular day, subparagraph 42C(1)(a)(ii) provides for that failure
to be treated as a no show no pay failure. However, if a job seeker does
not commence a serious failure requirement at all, section 42Q will not
apply, so the job seeker's serious failure period will continue and the job
seeker would be not payable, rather than have no show no pay failures
applied.
Subparagraph 42C(1)(a)(iii) - Committing misconduct
Subparagraph 42C(1)(a)(iii) provides that a job seeker will also commit a
no show no pay failure if the job seeker attends an activity or purports to
comply with a serious failure requirement on a particular day, but the job
seeker commits misconduct whilst doing so. The legislation does not define
misconduct, intending to capture its ordinary meaning. It is intended that
in determining whether a job seeker commits misconduct, decision makers
will have reference to commonly expected standards of behaviour, and if
applicable, any expressly stated standards of conduct for participation in
a particular activity. It is intended that subparagraph 42C(1)(a)(iii)
should not be applied in circumstances where a job seeker's behaviour is
beyond their own control, but should apply to behaviour of a deliberate and
serious nature.
Subparagraph 42C(1)(a)(iv) - Failure to attend job interview etc.
The new subparagraph 42C(1)(a)(iv) is designed to address circumstances
where a job seeker intentionally acts in a manner where it is reasonably
foreseeable that acting in that manner could result in a job offer not
being made. The previous compliance provisions only had a specific penalty
for failing to attend job interviews, which made it possible for job
seekers to avoid penalties by attending job interviews but deliberately
behaving in a manner that would make it unlikely they would be offered
employment. The new subparagraph 42C(1)(a)(iv) is designed to address this
circumstance.
The new subparagraph 42C(1)(a)(iv) is intended to encompass any intentional
course of action that may result in an offer of employment not being made
to a job seeker. The consequence of a job offer not being made must have
been reasonably foreseeable. This ground will also apply to failures to
attend job interviews. The provision uses the test of 'could result in an
offer of employment not being made' in order to indicate that a course of
action does not definitely have to lead to an offer of employment not being
made. For example, if a job seeker is one of a number of candidates for a
job, their failure to attend a job interview would fall within subparagraph
42C(1)(a)(iv) even if there was no guarantee the job seeker would have been
offered the job had they attended the interview.
Recognising that some job seekers may fall within subparagraph
42C(1)(a)(iv) for reasons beyond their control (eg. a medical, psychiatric
or psychological impairment), a job seeker will not commit a no show no pay
failure under subparagraph 42C(1)(a)(iv) if their actions were not
intentional, or the job seeker had a reasonable excuse for their actions
(see paragraph 42C(4)(a)).
Subsection 42C(3) - more than one failure on a day
The new subsection 42C(3) is intended to give effect to the concept of 'no
show no pay'. This provision makes it impossible for the Secretary to
determine that a job seeker has committed more than one no show no pay
failure on a particular day. Not having this rule could result in a job
seeker committing multiple no show no pay failures, and having multiple
penalty amounts, in respect of failures committed on the one day.
However, it is intended that a job seeker may commit multiple no show no
pay failures within an instalment period, including no show no pay failures
in relation to the same activity.
Example: Sue is required by her Employment Pathway Plan to attend Work
Experience on the mornings of Monday, Tuesday and Wednesday each week.
She must also attend Job Search Training sessions on Monday
afternoons. One week, Sue fails to attend her Work Experience on
Monday, Tuesday or Wednesday, and also fails to attend Job Search
Training on Monday. Sue has no reasonable excuse for any of these
failures. Sue will have committed three no show no pay failures - one
on Monday, one on Tuesday and one on Wednesday - and will have three
penalty amounts. Even though Sue failed to attend two activities on
Monday, subsection 42C(3) provides that a decision maker may only
determine that she committed one no show no pay failure on that day.
Subsection 42C(4) - Reasonable excuse
Subsection 42C(4) precludes the Secretary from determining that a job
seeker commits a no show no pay failure under subparagraphs 42C(1)(a)(i),
(ii) or (iv) if the job seeker satisfies the Secretary they have a
reasonable excuse for the failure. This exception is directly replicated
from the reasonable excuse exceptions in the previous compliance framework
(eg. the previous subsection 624(2)). There is no intended change in policy
in the reasonable excuse exception, such that previous authorities on the
application of the exception should remain applicable (see for example
Secretary, Department of Employment and Workplace Relations v Real [2007]
FCA 988). The intent of this exception is that job seekers should not be
penalised for actions that are beyond their control.
The new section 42U provides the Secretary with the power to make a
legislative instrument setting out the matters that must be taken into
account in deciding whether a job seeker has a reasonable excuse. However,
these matters are not to be exhaustive (see subsection 42U(2)).
Subsection 42C(5) - Determination of an instalment period
Subsection 42C(5) requires a decision maker to determine the instalment
period in which a penalty amount for a no show no pay failure is to apply
to a job seeker's participation payment.
Section 42D - Deducting penalty amounts
Section 42D sets out the consequence of committing a no show no pay
failure: a job seeker will have a penalty amount deducted from their
instalment for the instalment period determined under subsection 42C(5).
The legislative instrument made under the new section 42T will provide for
the method for calculating and deducting a penalty amount. Because of
section 42V, there may be circumstances where a penalty amount is deducted
from multiple instalments, notwithstanding section 42D.
Section 42E - Connection failures
The new section 42E provides for the Secretary to determine that a job
seeker has committed a connection failure. There is no immediate penalty
applicable for a connection failure; instead, the commission of a
connection failure will result in a reconnection failure period if a job
seeker is required, and fails, to comply with a reconnection requirement
(see the new sections 42G-42J).
The Secretary must determine that a job seeker has committed a connection
failure if the grounds in section 42E are met.
Paragraph 42E(1)(b) provides that the Secretary may only determine that a
job seeker has committed a connection failure if the job seeker receives an
instalment of a participation payment for the instalment period in which
the failure occurred (participation payment is defined by Item 44).
Subsection 42E(3) clarifies that a job seeker may commit multiple
connection failures on a particular day (in contrast to the rule for no
show no pay failures in subsection 42C(3)).
Subsection 42E(2) sets out the grounds on which a connection failure is
determined.
Paragraph 42E(2)(a) - failure to comply with section 63 requirements
Section 63 of the Administration Act (as amended by Item 11 of Schedule 4)
provides the Secretary with the power to require certain persons to do
certain things (eg. attending appointments with service providers). The
consequence of failing to comply with such a requirement is that a person's
payment is not payable (see the new section 64).
However, it is intended to retain the existing legislative policy that for
persons in receipt of activity tested payments or payments with
participation requirements, failures to comply with some requirements
notified under section 63 or its precursors should not be dealt with under
section 63 or its precursors, but as part of the compliance framework
applicable to the particular payments.
The new paragraph 42E(2)(a) provides that where a job seeker is issued with
a requirement under the new section 63, a failure to comply with that
requirement is a connection failure if the notice of the requirement did
not inform the job seeker that their payment might not be payable if they
fail to comply with the requirement.
As there are no direct punitive consequences for committing a connection
failure, notices under section 63 that may trigger connection failures will
not be required to set out that there may be consequences for failing to
comply. However, there are provisions relating to the validity of notices
of reconnection requirements and further reconnection requirements (see
section 42K).
Paragraph 42E(2)(b) - Failure to enter Employment Pathway Plan
The new paragraph 42E(2)(b) provides that a job seeker commits a connection
failure if they fail to comply with a requirement to enter an Employment
Pathway Plan. There are specific provisions regarding requirements to enter
Employment Pathway Plans (see for example section 605 of the Social
Security Act, as amended by Schedule 2). Ordinarily, if a job seeker is
required to attend a particular place at a particular time to negotiate an
Employment Pathway Plan, they will fail to enter the plan if they do not
enter the plan at that place and time.
However, paragraphs 42E(4)(b) and (c) provide for exceptions to paragraph
42E(2)(b) where sections 547AA or 615 of the Social Security Act apply.
Sections 547AA and 615 of the Social Security Act (as amended by Items 87
and 146 of Schedule 2) provide that youth allowance and newstart allowance
are not payable to new claimants for those payments who fail to comply with
requirements to enter Employment Pathway Plans. It is intended that where
sections 547AA and 615 apply, they should override paragraph 42E(2)(b),
maintaining the operation of sections 547AA and 615.
Paragraph 42E(2)(c) - Failure to attend appointment under Employment
Pathway Plan
The new paragraph 42E(2)(c) provides that a job seeker will commit a
connection failure by failing to attend an appointment they are required to
attend by their Employment Pathway Plan.
The word appointment is used in paragraph 42E(2)(c), while the failure to
comply with an activity under a job seeker's Employment Pathway Plan is a
no show no pay failure (see the new subparagraph 42C(1)(a)(i)).
Accordingly, if a job seeker fails to comply with a requirement of their
Employment Pathway Plan, a decision maker must examine the requirement to
determine whether it is properly characterised as an activity or an
appointment, as the potential penalty will depend on that characterisation.
It is intended that Employment Pathway Plans will explicitly describe
requirements as being either activities or appointments, in order to assist
decision makers in this task. Activities are intended to capture vocational
or non-vocational tasks that a job seeker is required to undertake, such as
training, work experience or Work for the Dole. Appointments are intended
to capture requirements that relate to a job seeker's expected attendances
at an office of their employment service provider or Centrelink at stated
times.
Paragraphs 42E(2)(d)-(g) - Job search-related failures
Paragraphs 42E(d)-(g) set out grounds for a connection failure relating to
job search requirements. There are three potentially relevant sources of a
requirement to undertake job searches: a standard provision in an
Employment Pathway Plan to undertake a certain number of job searches per
fortnight (paragraph 42E(2)(f) refers); a provision in an Employment
Pathway Plan relating to the maintenance of a job seeker diary (paragraph
42E(2)(g) refers); and a requirement issued under the new section 42F
relating to applying for job vacancies (paragraphs 42E(2)(d) and (e)
refer).
Failure to comply with any of these requirements at first instance will be
a connection failure (unless one of those requirements has been imposed as
a reconnection requirement or further reconnection requirement in relation
to an earlier connection failure).
A connection failure may not be imposed under any of the job search grounds
for parenting payment recipients (see paragraph 42E(2)(e)). This continues
existing policy.
Paragraph 42E(4)(a) - Reasonable excuse
Paragraph 42E(4)(a) precludes the Secretary from determining that a job
seeker commits any connection failure if the job seeker satisfies the
Secretary they have a reasonable excuse for the failure. This exception is
directly replicated from the reasonable excuse exceptions in the previous
compliance framework (eg. the previous subsection 624(2)). There is no
intended change in policy in the reasonable excuse exception, such that
previous authorities on the application of the exception should remain
applicable (see for example Secretary, Department of Employment and
Workplace Relations v Real [2007] FCA 988). The intent of this exception is
that job seekers should not be penalised for actions that are beyond their
control.
The new section 42U provides the Secretary with the power to make a
legislative instrument setting out the matters that must be taken into
account in deciding whether a job seeker has a reasonable excuse. However,
these matters are not to be exhaustive (see the new subsection 42U(2)).
Section 42F - Requiring a person to apply for job vacancies
Section 42F directly replicates previous provisions in the Social Security
Act allowing the Secretary to require job seekers to apply for and report
on a certain number of job vacancies (see for example the previous section
625). Failure to comply with a requirement under section 42F to either
apply for or provide a statement on a certain number of job vacancies may
be a connection failure (see paragraphs 42E(2)(d) and (e)). A requirement
of the kind in section 42F could also be made as a reconnection requirement
or further reconnection requirement under section 42H or 42J).
Section 42G - Reconnection requirements
The new section 42G provides the Secretary with the power to issue a
reconnection requirement to a job seeker who has committed a connection
failure. The identification of an appropriate reconnection requirement is
within the discretion of the Secretary. In cases where a job seeker's
connection failure is the failure to attend an appointment, it may be
appropriate for a further appointment to be scheduled. Where a job seeker's
connection failure is the failure to enter an Employment Pathway Plan, it
may be appropriate for a further requirement to enter an Employment Pathway
Plan to be made (eg. under section 605 of the Social Security Act). Where a
job seeker's connection failure is related to unsatisfactory job searching,
it may be appropriate for a further job search requirement to be issued
(eg. in the form of a requirement to maintain and return a job seeker diary
or a requirement under section 42F).
The new section 42K sets out specific requirements for the notification of
reconnection requirements. In particular, the notice must inform the
recipient that failing to comply with the requirement may result in the
application of a penalty amount.
The failure to comply with a reconnection requirement may result in a
reconnection failure period (see the section 42H) and the issuing of a
further reconnection requirement (see the section 42J).
Section 42H - Reconnection failures
The new section 42H provides that the consequence of failing to comply with
a reconnection requirement (see section 42G) or a further reconnection
requirement (see section 42J) is a reconnection failure.
However, if the job seeker has a reasonable excuse for failing to comply
with a reconnection requirement or a further reconnection requirement, the
job seeker can not be determined to have committed a reconnection failure
(subsection 42H(3)). This exception is directly replicated from the
reasonable excuse exceptions in the previous compliance framework (eg. the
previous paragraph 626(2)(a)). There is no intended change in policy in the
reasonable excuse exception, such that previous authorities on the
application of the exception should remain applicable (see for example
Secretary, Department of Employment and Workplace Relations v Real [2007]
FCA 988). The intent of this exception is that job seekers should not be
penalised for actions that are beyond their control. The new section 42U
provides the Secretary with the power to make a legislative instrument
setting out the matters that must be taken into account in deciding whether
a job seeker has a reasonable excuse. However, these matters are not to be
exhaustive (see the new subsection 42U(2)).
The consequence of committing a reconnection failure is a reconnection
failure period (subsection 42H(4)). A reconnection failure period begins on
the day the job seeker commits a failure. It is intended that this day
would be the day on which a job seeker fails to attend an appointment, fail
to enter an Employment Pathway Plan, or the day at the end of the period in
which they are required to undertake or report on a particular number of
job searches. The reconnection failure period ends the day before the job
seeker complies with a further reconnection requirement (see section 42J).
Subparagraph 42H(4)(b)(ii) is a provision that did not exist in the
previous legislation, allowing a job seeker's reconnection failure period
to end if the job seeker has a reasonable excuse for failing to comply with
a further reconnection requirement. This provision ensures that job seekers
cannot be subject to a compliance penalty while they have had a reasonable
excuse for failing to comply with a requirement. However, while the
reconnection failure period may end in these circumstances, a further
reconnection requirement may still be issued (see subsection 42J(2)), which
may result in another reconnection failure period if the job seeker fails
to comply with that further reconnection requirement and does not have a
reasonable excuse for that failure.
Subsection 42H(5) requires a decision maker to determine the instalment
period in which a penalty amount for a reconnection failure period is to be
deducted from a job seeker's participation payment. Accordingly, unlike the
previous compliance framework (see sections 626-628 of the Social Security
Act), a payment is not automatically withheld from the time of a
reconnection failure. Section 42V also allows for unserved penalty amounts
to be carried forward.
Section 42J - Further reconnection requirements
Section 42J provides the Secretary with the power to issue a further
reconnection requirement to a job seeker who has committed a reconnection
failure, or has failed to comply with a reconnection requirement or further
reconnection requirement but had a reasonable excuse for doing so. The
identification of an appropriate further reconnection requirement is within
the discretion of the Secretary. In cases where a job seeker's connection
and reconnection failures related to attendance at appointments, it may be
appropriate for a further appointment to be scheduled. Where a job seeker's
connection and reconnection failures related to the entry into an
Employment Pathway Plan, it may be appropriate for a further requirement to
enter an Employment Pathway Plan to be made. Where a job seeker's
connection and reconnection failures related to unsatisfactory job
searching, it may be appropriate for a further job search requirement to be
issued (eg. in the form of a job seeker diary or a requirement under
section 42F).
The reasonable excuse exception ensures that a reconnection failure period
ceases if a job seeker has a reasonable excuse for failing to comply with a
reconnection requirement or further reconnection requirement. However, the
reconnection failure period may recommence if a further reconnection
requirement is then issued, and the job seeker has a reasonable excuse for
failing to comply with it.
Section 42K sets out requirements for the notification of reconnection
requirements.
The failure to comply with a further reconnection requirement may result in
a new reconnection failure period (see section 42H) and the issuing of
another further reconnection requirement.
Section 42K - Notification requirements
Section 42K contains requirements for the notice of reconnection
requirements and further reconnection requirements. It is intended that if
a notice does not comply with section 42K, it will not be valid and no
reconnection failure can be determined for a job seeker's failure to comply
with the purported requirement. However, it is intended that substantial,
rather than strict compliance, would be sufficient for the validity of a
notice under section 42K, consistent with the likelihood that many
requirements under section 42K will be issued orally and at short notice.
Section 42K is intended to ensure that if a job seeker is issued with a
reconnection requirement or further reconnection requirement, they are
informed in advance of the potential consequence of failing to comply with
that requirement (i.e. that a penalty amount may be deducted from the job
seeker's payment).
Subsection 42K(2) is intended to maintain the existing legislative policy
that notices of participation-related requirements do not have to be made
in writing.
Section 42L - Deduction of penalty amount
If a job seeker has committed a reconnection failure and a further
reconnection requirement is imposed, the job seeker is subject to a
reconnection failure period under subsection 42H(4). According to section
42L, the consequence of a reconnection failure period will be the deduction
of a penalty amount (calculated in accordance with the legislative
instrument to be made under section 42T). The penalty amount will relate to
the number of days in the reconnection failure period, and it is intended
the penalty amount will generally result in the deduction of the job
seeker's full amount of their basic rate of payment and any approved
program of work supplement for the reconnection failure period.
Section 42M - Serious failure for persistent non-compliance
Section 42M sets out the first of two grounds on which a serious failure
may be determined. The imposition of a serious failure under section 42M is
discretionary, in that a decision maker may determine that a serious
failure should not apply even if the conditions in section 42M have been
satisfied. However, the purpose of section 42M is to provide a deterrence
against persistent non-compliance, and there are specific rules to end
serious failure periods. Accordingly, it is intended there would have to be
good reason for a decision maker to not determine that a job seeker has
committed a serious failure despite the conditions in section 42M being
satisfied.
Paragraph 42M(1)(a) requires a decision maker to assess, at a point in
time, a job seeker's compliance until that point in time. The decision
maker is to determine whether the job seeker has persistently failed to
comply with their participation-related obligations. In practice, it is
intended that the decision maker will conduct a Comprehensive Compliance
Assessment to determine if the job seeker's compliance until that point in
time demonstrated persistent non-compliance. A decision maker may only make
a determination that a job seeker has committed a serious failure under
section 42M if the job seeker received an instalment of a participation
payment in the instalment period in which the determination is made
(paragraph 42M(1)(b)).
The particular failures listed in the parentheses in subsection 42M(1) are
not intended to be exclusive. To avoid doubt, failures that do not
constitute particular failures under the new compliance provisions may also
be taken into account in determining persistent non-compliance.
The term persistent is used in its ordinary meaning. The non-compliance
does not need to be total: a job seeker may be persistently non-compliant
over a period despite complying with some or even most of their obligations
during that period. The intention of the provision is to deter certain
patterns of behaviour. It is therefore intended that a decision maker under
paragraph 42M(1)(a) will look at a job seeker's recent compliance history
to determine whether the job seeker has been persistently non-compliant.
Subsection 42M(2) ensures that job seekers cannot commit serious failures
for behaviour beyond their control. The acts considered to determine
persistent non-compliance must be intentional, reckless or negligent. A
decision maker must be satisfied of the matters in subsection 42M(2) before
determining that a job seeker has committed a serious failure. However,
even if some of a job seekers individual failures have not satisfied
section 42M(2), the job seeker may nonetheless be persistently non-
compliant if there remain other failures that constitute persistent non-
compliance under subsection 42M(1) that also satisfy subsection 42M(2).
The phrase 'up to the day the Secretary makes the determination' in
paragraph 42M(1)(a) is intended to fix the focus of a decision maker to the
period of time before making their determination. Decision makers reviewing
determination under section 42M should not take into account a job seeker's
conduct after an original determination of persistent non-compliance has
been made.
Subsection 42M(3) precludes the Secretary from determining that a job
seeker has committed a serious failure under section 42M while the job
seeker is in a serious failure period for another failure under section
42M. This subsection does not extend to serious failures committed, or
serious failure periods being served, under section 42N (serious failures
not related to persistent non-compliance).
However, if a job seeker's serious failure period ends, either by expiry or
because of section 42Q, further serious failures may be imposed if a
decision maker is subsequently satisfied of further persistent non-
compliance.
Subsection 42M(4) requires the Minister to make a legislative instrument to
assist decision makers in applying the persistent non-compliance test.
Decision makers must take the matters listed in this instrument into
account (subsection 42M(5)), but that those matters are not exhaustive
(subsection 42M(6)). It is intended that such an instrument might deal with
matters such as the number and frequency of failures constituting
persistent non-compliance, and the wilfulness of a pattern of compliance.
Section 42N - Serious failure for refusing or failing to accept an offer of
suitable employment
Section 42N maintains the existing ground for a serious failure for
refusing offers of suitable employment. Paragraph 42N is drafted slightly
differently to its precursors (see for example paragraph 629(1)(d) of the
Social Security Act) by referring to offers of suitable employment rather
than suitable offers of employment. This drafting change is intended to
ensure that decision makers assess the suitability of the employment being
offered, not the suitability of the offer itself, and that decision makers
will be guided in this assessment by the kind of factors the Act recognises
as being relevant to the suitability of employment (see for example
subsection 601(2A) of the Social Security Act. Subsection 601(2A) sets out
nine factors relevant to the suitability of employment, including the terms
and conditions of work and the skills, experience, family and other
personal circumstances of an employee). It is intended that defects in the
nature of an offer of employment should not automatically result in no
serious failure being applied for a failure to accept the offer. However,
the unsuitability of an offer of employment may, depending on the
circumstances, be relevant to the question whether a job seeker has a
reasonable excuse for refusing or failing to accept the offer (see
subsection 42N(2)).
Subsection 42N(2) precludes the Secretary from determining that a job
seeker commits a serious failure for refusing or failing to accept an offer
of suitable employment if the job seeker satisfies the Secretary they have
a reasonable excuse for the failure. This exception is directly replicated
from the reasonable excuse exception in the previous compliance framework
(see the previous paragraph 629(1)(d)). There is no intended change in
policy in the reasonable excuse exception, such that previous authorities
on the application of the exception should remain applicable (see for
example Secretary, Department of Employment and Workplace Relations v Real
[2007] FCA 988). The new section 42U provides the Secretary with the power
to make a legislative instrument setting out the matters that must be taken
into account in deciding whether a job seeker has a reasonable excuse.
However, these matters are not to be exhaustive (see the new subsection
42U(2)).
Section 42P - Consequences of a serious failure
Serious failure periods
Subject to sections 42Q and 42R, section 42P provides for participation
payments to be not payable for a period of eight weeks if a job seeker
commits a serious failure. These periods are defined to be serious failure
periods.
Paragraph 42P(2)(a) sets the start dates for serious failure periods. The
start date of a serious failure period is subject to the payment pending
review provisions, as amended by Item 37 and 39. 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.
Section 42Y clarifies that if a decision is made on review, affirming an
original decision that a job seeker committed a failure, the 'day the
Secretary determines' for the purposes of paragraph 42P(2)(a) is the day of
the Secretary's original decision, not the day of the review decision.
However, the payment pending review provisions may in these circumstances
cause a deferral of the serious failure period (see the amendments in Item
37 and 39).
Serious failure requirements
Subsection 42P(3) provides the Secretary with the power to issue a serious
failure requirement. Section 42Q allows for serious failure periods to end
if a job seeker begins to comply with a serious failure requirement. The
amendment in Item 37 provides that a decision under subsection 42N(2)
relating to the imposition of a particular serious failure requirement is
not subject to review by the Social Security Appeals Tribunal (although a
decision that a job seeker has the capacity to undertake a serious failure
requirement would be).
It is intended that serious failure requirements will be requirements to
undertake a particular intensive activity over a period of time; and it is
intended that job seekers undertake eight weeks of an intensive activity,
in lieu of serving an eight week serious failure period. Failures to comply
with a serious failure requirement once a job seeker has commenced a
serious failure requirement will result in no show no pay failures in
respect of each day on which the requirement was failed (see subparagraph
42C(1)(a)(ii)).
Section 42Q - Ending serious failure periods
One of the principal purposes behind the new compliance provisions is to
facilitate re-engagement. In light of this purpose, section 42Q is designed
to enable job seekers to re-engage with their participation obligations by
undertaking certain activities in lieu of serving a serious failure period.
The ending of a serious failure period results in the restoration of a job
seeker's participation payment (assuming the job seeker remains qualified
and the payment remains payable) from the day after the serious failure
period ends.
Paragraph 42Q(1)(a) - Undertaking serious failure requirements
The first ground on which a serious failure period may be ended is if the
job seeker begins to comply with a serious failure requirement imposed
under subsection 42P(3). When this occurs, the serious failure period ends
on the day before the job seeker commenced complying with the requirement
(paragraph 42P(2)(a)). In other words, payment is restored on and from the
day the job seeker commences complying with the requirement. If the job
seeker begins to comply with a serious failure requirement and subsequently
fails to comply with the requirement, those failures will be treated as no
show no pay failures in relation to the days on which the failures to
comply occur (see subparagraph 42C(1)(a)(ii)).
Paragraph 42Q(1)(b) - Capacity and hardship
The second ground on which a serious failure period may be ended is if the
job seeker does not have the capacity to undertake any serious failure
requirement and serving the serious failure period would cause the job
seeker to be in severe financial hardship. The word any is used in
subparagraph 42Q(1)(b)(i) to make it clear that a job seeker must not have
the capacity to do any activity as a serious failure requirement, not
merely one particular activity or type of activity.
For a job seeker who is not a member of a couple, the term severe financial
hardship means where their liquid assets are below $2,500. A job seeker who
is a member of a couple is in severe financial hardship if their and their
partner's liquid assets are less than $5,000 (see Items 2-4).
Section 42R - Payment pending commencement of a serious failure requirement
Section 42R is intended to provide for a job seeker's payment to be paid
pending their commencement of a serious failure requirement. This provision
is designed to deal with circumstances in which there may be a delay
between a job seeker's agreement to commence a serious failure requirement,
and the commencement of their serious failure requirement.
Example: Centrelink has made a decision that Sabrina has committed a
serious failure, and her serious failure period will commence on 1
March. On 1 March, Centrelink imposes a serious failure requirement
for Sabrina to undertake work experience for eight weeks. However,
there is no work experience placement available until 15 March. On 1
March, Sabrina agrees to undertake the work experience activity to
have her serious failure period ended. Accordingly, Centrelink
determines Sabrina should be paid for the period 1 March to 14 March.
Sabrina then commences her placement on 15 March, such that her
serious failure period ended on 14 March. Sabrina therefore served
none of her serious failure period and was not disadvantaged by a
delay in the availability of a serious failure requirement.
Subsection 42R(3) provides that if a job seeker does not comply with a
serious failure requirement they had agreed to commence, the period of
payability under section 42R does not count towards the job seeker's
serious failure period.
Example: Geoff commits a serious failure, and his serious failure
period is due to commence on 1 January. On 1 January, Centrelink
imposes a serious failure requirement to undertake a work experience
placement, but the placement does not commence until 8 January. Geoff
agrees to commence the placement. He is therefore paid from 1 January
to 7 January. However, Geoff does not commence the placement on 8
January. Because of subsection 42R(3), he still has eight weeks of his
serious failure period to serve, commencing on 8 January.
Section 42S - Unemployment resulting from a voluntary act or misconduct
Section 42S maintains the existing provisions for participation payments to
be non-payable for a period of eight weeks for being unemployed due to a
voluntary act or misconduct as an employee (other than misconduct that
would constitute a minor transgression). There is intended to be no change
in policy from the existing provisions (see paragraphs 551(1)(b) and (c),
629(1)(b) and (c), and 745(1)(b) and (b) of the Social Security Act). The
difference between a non-payment period under section 42S and a serious
failure period is that the former cannot be ended prior to eight weeks
under section 42Q or 42R.
Subsection 42S(2) retains the exception that an eight week non-payment
period will not apply to a voluntary act that is reasonable.
Example: Alex resigns from his employment having been the subject of
bullying and harassment by a fellow employee. While Alex's resignation
is a voluntary act, his act is reasonable because it would not be
reasonable to expect Alex to remain in his employment in these
circumstances. Therefore, no penalty applies.
Subsection 42S(3) sets out the start dates for non-payment periods. If a
person is not receiving a participation payment when they become
unemployed, the eight weeks will start immediately from the day of
unemployment. This rule has a beneficial intention of allowing new
claimants for a participation payment to 'self-serve' part or all of their
non-payment period prior to making a claim. An eight week non-payment
period has the effect of being a waiting period for new claimants, because
of clause 5 of Schedule 2 to the Administration Act.
If a person is receiving a participation payment, paragraph 42S(3)(b)
affords a decision maker the discretion to commence the non-payment period
either on the date of the job seeker's unemployment, or the instalment
period following the decision maker's determination. This discretion is
also intended to be exercised beneficially, depending on a job seeker's
circumstances at the time.
Subsection 42S(4) allows non-payment periods to end at any time if the
Secretary determines the person would be in severe financial hardship by
serving a non-payment period, and is in a class of persons specified by the
Secretary. The Secretary is to make a legislative instrument under
subsection 42S(5) specifying classes of persons for the purposes of
subsection 42S(4). Examples of the classes specified might include parents
with dependent children, or persons who incur significant costs associated
with a medical condition.
Subsection 42T - Calculation of penalty amounts (legislative instrument)
Section 42T requires the Minister to make a legislative instrument setting
out, principally, the method by which penalty amounts for no show no pay
failures and reconnection failures are to be calculated. However, section
42T itself provides for significant restrictions on the method to be
determined in the legislative instrument.
No show no pay failures
Subsection 42T(2) provides for a maximum penalty amount for which the
legislative instrument can provide in respect of a no show no pay failure.
Most job seekers are paid on the basis of fortnightly instalments. The rule
in subsection 42T(2) would preclude a penalty amount for a job seeker from
being any more than 10% of their fortnightly instalment (an instalment
being the final amount paid to a job seeker). This restriction is intended
to give effect to the concept of 'no show no pay'; that is, the penalty
amount for a no show no pay failure should be no more than the amount paid
to a job seeker in respect of a day of an instalment period, in proportion
to the number of weekdays in that instalment period.
Paragraph 42T(4)(a) then provides that the penalty amount for a no show no
pay failure must relate to the amount of the participation payment paid to
the job seeker on the day of the failure. Subsection 42T(5) requires that
rent assistance, pharmaceutical allowance and youth disability supplement
(components of various rates of payment) must be unaffected by a penalty
amount for a no show no pay failure. Because of the restriction in
subsection 42T(5), a job seeker's penalty amount will ordinarily be less
than the maximum provided for in subsection 42T(2).
Reconnection failures
Subsection 42T(3) provides for a maximum penalty amount for which the
legislative instrument can provide in respect of a reconnection failure.
The penalty amount cannot be more than the aggregate of the daily rates of
payment to a job seeker in their reconnection failure period. For example
if a job seeker's reconnection failure period is two days in length, the
penalty amount may not be more than those two days of payment.
Paragraph 42T(4)(b) then provides that the penalty amount for a
reconnection failure must related to the amount of participation payment
paid to the job seeker during their reconnection failure period. Subsection
42T(5) requires that rent assistance, pharmaceutical allowance and youth
disability supplement (components of various rates of payment) must be
unaffected by a penalty amount for a reconnection failure.
Other matters
Subsection 42T(6) ensures that it is possible to have a penalty amount of
nil (eg. in circumstances where a job seeker's participation payment was
not payable for another reason on the day of a no show no pay failure or in
a reconnection failure period).
Subsection 42T(7) allows the legislative instrument to provide rules
relating to the quantum of a penalty amount that may be deducted from an
instalment. For example, the legislative instrument might provide that a
penalty amount can only be deducted from an instalment to the extent of the
maximum basic rate component of that instalment (i.e. so that supplements
such as rent assistance are not affected by either the calculation or
deduction of a penalty amount). If there is any part of a penalty amount
that is left over after a deduction, section 42V allows for such a balance
to be deducted from subsequent instalments.
Section 42U - Legislative instruments relating to reasonable excuse
Section 42U requires the Secretary to make a legislative instrument
determining the matters that decision makers must take into account for
determining whether a job seeker has a reasonable excuse for a no show no
pay failure, connection failure, reconnection failure or serious failure,
where a reasonable excuse exception is relevant to those failures.
Subsection 42U(2) retains the existing policy that legislative instruments
determining matters that must be taken into account in making decisions
relating to reasonable excuse are not exhaustive (see for example the
previous subsection 624(2B)).
Section 42V - Deductions from participation payments
There may be occasions in which the deduction of a penalty amount from an
instalment under section 42D (no show no pay failures) or section 42L
(reconnection failures) may not reduce that penalty amount to nil.
Primarily this will occur because the penalty amount is deducted from a
different instalment period to the instalment period in which the failure
occurred, and the instalment for that instalment period is smaller than the
outstanding penalty amount. In these cases, section 42V is designed to
allow for the deduction of any balance of a penalty amount from future
instalments of a job seeker's participation payment (paragraph 42V(a)) or
any other participation payment received by the job seeker (paragraph
42V(b)).
Example 1: Ian commits three no show no pay failures in an instalment
period, resulting in a penalty amount of $75. Centrelink determines
the penalty amount will be deducted from Ian's next instalment.
However, Ian earned income in the next instalment period, so his
instalment of newstart allowance was only $50. Accordingly, not all
the penalty amount can be deducted from this instalment. $50 is
deducted, reducing Ian's instalment to nil, and the remaining penalty
amount is deducted from Ian's subsequent instalment.
Example 2: Nasir incurs a penalty amount for a reconnection failure
period, totalling $60. The reconnection failure period extended across
two instalment periods. In the second of these instalment periods,
Nasir only received $25 in newstart allowance, because he earned
income in that instalment period. Centrelink determines that the $60
penalty amount should be deducted from the second instalment period;
however, the most that can be deducted is $25 as that is all the
newstart allowance Nasir received. Accordingly, section 42V will
provide that the balance of $35 should be deducted from Nasir's next
instalment periods until the balance is reduced to nil.
Because of 42V(b), a job seeker's penalty amount is not extinguished if
they cease receiving a particular participation payment. If the job seeker
transfers to another participation payment or later claims a new
participation payment, their penalty amount will be carried forward to the
new payment.
Section 42W - Penalty amount not a debt
Section 42W provides, to avoid doubt, that a penalty amount that has not
yet been deducted is not a debt under Part 5.2 of the Social Security Act.
Sections 42D, 42L and 42V provide specific rules for the deduction of
penalty amounts and the balance of penalty amounts that are not reduced to
nil. These rules apply to the deduction of penalty amounts, not the debt
recovery rules in Chapter 5 of the Social Security Act.
Section 42X - Payability
Section 42X is a deeming provision enabling job seeker's participation
payments to remain payable even if they are not actually receiving any
payment because of the deduction of a penalty amount for a no show no pay
failure or a reconnection failure.
Section 42Y - Day of determination
Section 42Y is intended to resolve a lack of clarity in the previous
compliance provision about the meaning of the 'day the Secretary
determines' in relation to the application of serious failures. Section 42Y
provides that for the purposes of the serious failure provisions, the day
the Secretary makes a determination is the day of an original
determination, rather than any decision on review of that original
determination under Part 4 of the Administration Act.
However, the amendments made to the payment pending review provisions of
the Administration Act set out in Items 37 and 39 mean that the
commencement of a serious failure period may be altered by a payment
pending review declaration.
Section 42Z - Relationship with section 80
Section 80 of the Administration Act provides a general power for the
Secretary to cancel or suspend a person's social security payment if the
person is not qualified for the payment or the payment is not payable.
There are circumstances in which a failure to comply with the terms of an
Employment Pathway Plan (previously an Activity Agreement) or the activity
test (where applicable) may result in a job seeker losing qualification for
a participation payment. The consequence of a loss of qualification is
suspension or cancellation under section 80 of the Administration Act.
Section 42Z explicitly maintains the existing position that section 80 of
the Administration Act may apply where appropriate (for examples of the
operation of section 80 in the context of activity test related
qualification requirement, see Secretary, Department of Education,
Employment and Workplace Relations and Ford [2008] AATA 232 and Secretary,
Department of Education, Employment and Workplace Relations and Linge
[2008] AATA 744).
PART 2 - CONSEQUENTIAL AMENDMENTS
The introduction of Item 1 requires a number of consequential amendments to
the social security law.
Social Security Act 1991
Repeal of old compliance provisions
The compliance provisions for parenting payment, newstart allowance and
special benefit are repealed by Items 10, 23 and 28. These compliance
provisions are replaced in full by the compliance provisions introduced by
Item 1.
Items 6, 7 and 9 repeal the definitions of newstart participation failure,
parenting payment participation failure and special benefit participation
failure in subsection 23(1) of the Social Security Act. These definitions
are redundant because of the repeal of the newstart allowance and parenting
payment compliance provisions by Items 10 and 23.
Youth allowance (students)
The compliance provisions for youth allowance are amended by Items 11-22.
Youth allowance for persons who are not full-time students or new
apprentices will be a participation payment to which the new compliance
provisions introduced by Item 1 will apply. Consequently, the existing
youth allowance compliance provisions in Subdivisions D and E of Division 2
of Part 2.11 of the Social Security Act are amended in two ways:
. to restrict the operation of the provisions to persons who are full-
time students; and
. to remove employment-related grounds for participation failures and
serious failures from the provisions, made redundant by the exhaustive
application of the new compliance provisions in Item 1 to youth
allowance recipients who are not full-time students or new
apprentices.
Compliance penalty periods
Item 5 is a consequential amendment replacing the definition of compliance
penalty period in subsection 23(1) of the Social Security Act. Compliance
penalty periods are referred to at various points in the social security
law and other legislation. Amongst other things, if a job seeker's payment
is not payable only because of a compliance penalty period, the job seeker:
. retains qualification for pensioner concession card (section 1061ZEC
of the Social Security Act); and
. retains qualification for a health care card (section 1061ZNA of the
Social Security Act).
The previous definition of compliance penalty period in subsection 23(1)
referred to any period in which parenting payment, youth allowance,
austudy, newstart allowance or special benefit was not payable to a person
because of particular penalty periods relating to compliance failures. As a
number of those penalty provisions are being repealed and replaced with the
new compliance framework in Item 1, a consequential amendment to the
definition of compliance penalty period is required.
The new definition of compliance penalty period encompasses any serious
failure period under the new subsection 42P(1) of the Administration Act,
any non-payment period under the new subsection 42S(1) of the
Administration Act, as well as any penalty period imposed under the
remaining austudy or youth allowance provisions of the Social Security Act.
The new definition does not encompass penalty amounts for no show no pay
failures or reconnection failures under Item 1 because the new section 42X
provides for participation payments to remain payable even if a payment is
reduced to nil due to the deduction of a penalty amount.
Other amendments
Items 2 to 4 are consequential amendments to section 14A of the Social
Security Act, to apply the definitions of liquid assets and maximum reserve
in that provision to the tests set out in the new section 42Q and 42S
relating to the ending of serious failure periods and unemployment non-
payment periods.
Item 8 is a consequential amendment to the definition of participation
failure instalment period in subsection 23(1) of the Social Security Act.
This term is not relevant to the new compliance provisions introduced by
Item 1; it is only relevant to the remaining compliance provisions for
austudy and youth allowance.
Items 24-27 are consequential amendments to the special benefit
qualification provisions (section 729 of the Social Security Act), to
ensure that special benefit does not become payable to a job seeker whose
participation payment is not payable because of a serious failure period or
unemployment non-payment period.
Items 29-33 include references to the new sections 42P and 42S of the
Administration Act for the purposes of continuation of mobility allowance.
Social Security (Administration) Act 1999
Items 34 and 35 are consequential amendments to paragraph 110A(b) of the
Administration Act, ensuring that determinations to resume participation
payments following serious failure periods or unemployment non-payment
periods take effect from the end of the serious failure period (whether by
expiration of because of the new section 42Q) or unemployment non-payment
period.
Item 36 is a consequential amendment to paragraph 118(12C)(b) of the
Administration Act, providing that decisions made to suspend a job seeker's
participation payment because of a serious failure period or unemployment
non-payment period take effect from the commencement of the job seeker's
serious failure period or unemployment non-payment period.
Items 37 and 39 amend the payment pending review provisions in the
Administration Act. The new section 42P provides for the start date of
serious failure periods; however, under sections 131 and 145 (as amended),
the Secretary has the ability to pay a job seeker pending review of a
serious failure or unemployment non-payment period. The legislation was
previously unclear as to the application of a non-payment period when a job
seeker was paid pending review of a non-payment period and the non-payment
period was then upheld. The new subsections 131(5A) and 145(4A) explicitly
provide that a job seeker's serious failure period, unemployment non-
payment period, or the balance thereof is to be served following the
cessation of the job seeker's payment pending review declaration under
subsection 131(5) or 145(5).
Example: Andrew refuses an offer of suitable employment, and a serious
failure period commences on 8 September 2009. Andrew seeks review of
this serious failure period on 15 September 2009, and he is paid
pending review from that date under section 131 of the Administration
Act. On 3 December 2009, an authorised review officer affirms the
serious failure period. Andrew must then serve the remaining seven
weeks of his serious failure period from 3 December 2009, but he would
not have to repay any of his payments from 15 September 2009 to 3
December 2009. Of course, Andrew's serious failure period may still be
ended on any of the grounds in the new section 42Q of the
Administration Act.
Item 38 provides that decisions to impose particular serious failure
requirements are not reviewable by the Social Security Appeals Tribunal
(and by extension, the Administrative Appeals Tribunal). If a job seeker
lacks the capacity to undertake a serious failure requirement, that matter
would be taken into account by tribunals in whether a serious failure
period should end under the new paragraph 42Q(1)(b) of the Administration
Act. However, it would not be appropriate for tribunals to make decisions
about the particular serious failure requirement a job seeker should
undertake, given that such decisions depend almost entirely on practical
concerns only apparent to a decision maker at the time the decision is
actually made (eg. the availability of particular programs and activities
that may constitute a serious failure requirement for a job seeker).
Item 40 amends section 192 of the Administration Act to ensure the
Secretary has the power to require the production of any information or
document relevant to the operation of the compliance provisions introduced
by Part 2 of Schedule 1. There are a number of decisions made under those
provisions that do not immediately relate to any of the matters currently
in section 192 of the Administration Act. Accordingly, this amendment is
intended to ensure decision makers can make those decisions with powers
available to them to obtain relevant material.
Items 41-52 add new definitions to the Dictionary to the Administration
Act, for particular terms introduced to the Administration Act by the new
compliance provisions in Part 2 of Schedule 1.
Item 54 amends the start date rule in clause 5 of Schedule 2 to the
Administration Act. The intention of the new subclause 5(1B) is to ensure
that if a job seeker is subject to a serious failure period or unemployment
non-payment period, their start date for any social security payment that
is not a participation payment (see Item 42) is not affected. In other
words, if a person claims a non-activity tested social security payment
during a serious failure period, their start date for that payment could be
before the end of that serious failure period.
Item 55 introduces a new clause 5A to Schedule 2 to preclude members of a
couple from transferring from a participation payment to parenting payment
(without participation requirements) in order to avoid the operation of
serious failure periods. Item 53 introduces a note to clause 5 to refer to
the new clause 5A.
PART 3 - APPLICATION PROVISION
Item 55 sets out the application provisions for the new compliance
framework. There are two essential elements to the application provisions:
. Failures committed under the previous legislation are saved (eg. non-
payment periods under the previous legislation would continue beyond
the commencement of the new provisions as if the new provisions were
not in force).
. Any eight week non-payment period incurred by a job seeker prior to
commencement for a reason other than unemployment due to misconduct or
a voluntary act continues after commencement; however the rule in
section 42Q relating to ending serious failure periods apply to those
non-payment periods as if they were serious failure periods.
Schedule 2 - Employment Pathway Plans
Explanation of changes
Social Security Act 1991 and Social Security (Administration) Act 1999
The items in Schedule 2 are generally designed to give effect to the
replacing of Activity Agreements with Employment Pathway Plans. Employment
Pathway Plans will be documents setting out things that a job seeker is
required to do. Employment Pathway Plans will be developed between a
delegate of the Secretary and a job seeker, and the requirements of a plan
will be approved by the delegate. Subject to the changes explained below,
there is intended to be no change in legislative provisions that were
previously applicable to Activity Agreements.
The amendments in Items 19, 69, 129 and 179 are designed to allow for terms
to be included in Employment Pathway Plans that a job seeker does not have
to comply with. These terms are defined by the new subsections 501(4B),
544B(1C), 606(1C) and 731M(2) of the Social Security Act to be optional
terms. Because optional terms of an Employment Pathway Plan do not have to
be complied with, the new compliance provisions introduced by Schedule 1
will not apply to those terms.
The amendments in Items 33, 81, 147 and 195 amend provisions in the Social
Security Act that ensure participants in approved programs of work cannot
be employees for certain Commonwealth legislation. The amended provisions
also apply to any job seeker participating in an activity under an
Employment Pathway Plan (unless that activity is actually suitable paid
work). These amendments are primarily designed to ensure that job seekers
can undertake certain work experience activities and placements that are
not approved programs of work (but are approved in the sense of being
approved as activities in an Employment Pathway Plan), without being
treated as employees.
Schedule 3 - exemptions in relation to youth allowance and newstart
allowance
Explanation of changes
As part of the new employment services model commencing on 1 July 2009, the
Personal Support Programme (PSP) will cease to exist as a separate
identifiable program.
The Items in Schedule 3 of the Bill are generally designed to remove all
references to the PSP from the social security law. Where participation in
PSP has legislative consequences, the social security law will be amended
to give the Secretary the power to make a legislative instrument setting
out the activities that will attract those consequences.
Social Security Act 1991
Item 1 repeals the definition of PSP from subsection 23(1) of the Social
Security Act.
Items 2 and 9 repeal subsections 541(1A) and 601(6A) of the Social Security
Act, which provide that job seekers satisfy the activity test by
participating in PSP. Items 3 and 8 are consequential to these amendments.
Items 4 and 7 amend the liquid assets test waiting period provisions for
youth allowance and newstart allowance. Those provisions previously
exempted persons from the liquid assets test waiting period who were
undertaking formal vocational training in a labour market program,
participating in the PSP, or undertaking an approved rehabilitation
program, and who had been exempted from the waiting period by a decision
maker. These references to specific programs are being removed, and
replaced with a power for the Secretary to specify particular activities in
a legislative instrument. It is intended that the Secretary would specify
the same kinds of activities previously referred to in the legislation, so
as not to disadvantage any job seeker.
Items 5 and 13 amend the moving to an area of lower employment prospects
non-payment period provisions for youth allowance and newstart allowance.
Those provisions previously exempted persons from the non-payment period
who were undertaking formal vocational training in a labour market program,
participating in the PSP, or undertaking an approved rehabilitation
program, and who had been exempted from the waiting period by a decision
maker. These references to specific programs are being removed, and
replaced with a power for the Secretary to specify particular activities in
a legislative instrument. It is intended that the Secretary would specify
the same kinds of activities previously referred to in the legislation, so
as not to disadvantage any job seeker.
Items 6 and 12 amend the seasonal work preclusion period provisions for
youth allowance and newstart allowance. Those provisions previously
exempted persons from the seasonal work preclusion period who were
undertaking formal vocational training in a labour market program,
participating in the PSP, or undertaking an approved rehabilitation
program, and who had been exempted from the waiting period by a decision
maker. These references to specific programs are being removed, and
replaced with a power for the Secretary to specify particular activities in
a legislative instrument. It is intended that the Secretary would specify
the same kinds of activities previously referred to in the legislation, so
as not to disadvantage any job seeker.
Item 11 amends the ordinary waiting period provisions for newstart
allowance. Subsection 620(2) of the Social Security Act previously exempted
persons from the ordinary waiting period who were undertaking formal
vocational training in a labour market program, participating in the PSP,
or undertaking an approved rehabilitation program, and who had been
exempted from the waiting period by a decision maker. These references to
specific programs are being removed, and replaced with a power for the
Secretary to specify particular activities in a legislative instrument. It
is intended that the Secretary would specify the same kinds of activities
previously referred to in the legislation, so as not to disadvantage any
job seeker.
Schedule 4 - Other amendments
Explanation of changes
Social Security Act 1991
Activity test
Items 2-5, 8 and 9 repeal provisions that automatically deemed any job
seeker who complied with the terms of an Activity Agreement to satisfy the
activity test. These provisions will be replaced with provisions that do
not automatically deem job seekers to satisfy the activity test by
complying with their Employment Pathway Plans. Instead, the Secretary will
have the ability to specify (by legislative instrument) classes of persons.
If a job seeker falls within a specified class and complies with the terms
of their Employment Pathway Plan, they will be deemed to satisfy the
activity test. Additionally, if a job seeker falls outside a specified
class, there will be a residual discretion to determine that the job seeker
should be deemed to satisfy the activity test. It is intended that the
specification of classes and the residual discretion would be exercised in
cases where it is inappropriate for job seekers to be expected to be
actively seeking and willing to undertake work in addition to complying
with the terms of their Employment Pathway Plans. This Bill does not affect
any of the existing provisions exempting certain persons from the activity
test (eg. on the grounds of temporary incapacity or special circumstances).
Amendments to section 1210
Item 10 corrects an incorrect cross-reference in subparagraph
1210(1)(b)(ii) of the Social Security Act. The provision now refers to rate
reductions because of section 1173, rather than section 1168, of the Social
Security Act. Section 1173 is the operative provision for reductions in a
person's rate of payment because of the receipt of compensation, not
section 1168.
Item 10 also amends the heading to section 1210 to remove the words 'for
income tax purposes'. There is no qualification in the body of section 1210
that would limit the rules in section 1210 to being for the purposes of
assessing income tax. As the calculation of penalty amounts for the new
compliance framework introduced by Schedule 1 will depend on the ordering
rules for the application of the income test in section 1210, to dissect
rent assistance, pharmaceutical allowance and youth disability supplement
from a job seeker's rate while also applying the income test. Accordingly,
amending the heading to section 1210 makes it clear that the ordering rule
for the application of the income test in that section can apply for
purposes other than income tax assessment, including the calculation of
penalty amounts for no show no pay failures or reconnection failures.
Social Security (Administration) Act 1999
New provisions relating to requirements
Item 11 introduces new sections 63 and 64 in the Administration Act in
place of the existing sections 63 and 64. The previous sections 63 and 64
were confusing in that there was substantial overlap between the two
provisions, and inconsistencies in the drafting. The new section 63
provides the Secretary with the power to make requirements. The new section
64 deals with the general consequences of failing to comply with those
requirements (unless there are consequences elsewhere in the social
security law, such as in the new compliance provisions introduced in
Schedule 1). There is minimal change in policy in the new provisions.
Subsections 63(1) and (2) apply to all social security payments and
concession cards. If a person is receiving or holding any social security
payment or concession card, claims any social security or concession card,
or contacts the Department in advance of a claim for newstart allowance or
youth allowance (job seeker), the Secretary may require the person to do
any of the four things set out in subsection 63(2).
Subsections 63(3) and (4) apply to the specific social security payments
set out in paragraph 63(3)(1)(a). These are the same social security
payments to which the previous section 64 of the Administration Act
applied. For recipients or claimants of these payments (including persons
who contact the Department in advance of a claim for newstart allowance or
youth allowance), the Secretary may issue a requirement to complete a
questionnaire or attend a medical, psychiatric or psychological
examination. The new paragraph 63(4)(b) provides clarification that the
medical, psychiatric or psychological examination may be at a stipulated
place (i.e. a person may be able to attend a specific appointment arranged
by Centrelink or a delegated provider).
Subsection 63(5) allows notice of requirements under subsections 63(2) or
(4) to be given in any manner, including by post. Accordingly, requirements
under subsections 63(2) or (4) may be notified orally.
Subsection 63(6) is a new provision. Paragraph 63(2)(c) allows the
Secretary to require persons to attend a particular place for a particular
purpose. Subsection 63(6) ensures that notices of these requirements are
not invalid merely because they do not describe the particular purpose for
which attendance is not required. This ensures changes in the purpose of
attendance at a notified activity do not affect the validity of the
underlying requirement to attend.
Subsection 63(7) provides that the consequences set out in section 64 for
failing to comply with a requirement made under section 63 do not apply if
the notice of the requirement did not inform the recipient of those
consequences (i.e. non-payability). Previously, sections 63 and 64 imposed
positive obligations on notices to inform persons of the consequences of
failing to comply. This is no longer workable as notices that do not inform
persons that failure to comply with a requirement may result in non-
payability may give rise to connection failures (see the new section 42K in
Schedule 1). Because connection failures have no immediate consequences,
there is no sense in requiring notices of requirements that may give rise
to connection failures to set out the consequences of non-compliance.
Subsection 64(1) sets out the consequences for a recipient of a social
security payment who fails to comply with a requirement made under section
63. The consequence is non-payability (i.e. the suspension or cancellation
of payment). The fundamental requirements for non-payability to arise where
a person fails to comply with a requirement are that the requirement was
reasonable, the recipient did not have a reasonable excuse for failing to
comply with the requirement, and that the Secretary is satisfied it is
reasonable for non-payability to apply to the person. Additionally,
subsection 63(7) requires that the notice of the requirement informed the
person of the effect of subsection 64(1) for subsection 64(1) to apply.
As youth allowance and austudy participation failures for students are
retained, subsections 64(2) and (3) ensure notices under section 63 to
students advising that a failure to comply with the requirement may
constitute a participation failure are not dealt with under subsection
64(1).
Subsection 64(4) is a new provision explicitly providing that a period of
non-payment under subsection 64(1) may end at a time determined by the
Secretary to be reasonable. Ordinarily, it would be expected that a period
of non-payability would end when the person ultimately complies with the
original requirement or another requirement made in its place. This
provision ensures that the legislation does not provide for indefinite
periods of non-payability (unless a person does not comply with a
requirement at all so it is reasonable for the non-payment to continue).
Subsection 64(5) provides similar consequences for concession card holders
to the rules in subsections 64(1) and (4).
Item 12 saves the previous sections 63 and 64 for notices given prior to 1
July 2009. If a notice is given prior to 1 July 2009, even for a
requirement to be satisfied after 1 July 2009, the previous sections 63 and
64 continue to apply to that requirement as if they had not been amended.
Items 1, 6 and 7 are consequential to the amendments to sections 63 and 64.
Payment pending review
Items 13 and 14 amend the payment pending review provisions in sections 131
and 145 of the Administration Act. Currently, subparagraphs 131(5)(b)(ii)
and 145(4)(b)(ii) stipulate that a payment pending review declaration
ceases to have effect if a decision is made on review upholding an adverse
decision. This leaves little time for a payment pending review declaration
to cease to have effect. For example, a person who is unsuccessful on a
review application before an authorised review officer or the Social
Security Appeals Tribunal would face the immediate implementation of an
adverse decision, without being afforded to the opportunity to consider
further appeal options. These amendments afford decision makers the
discretion to cease a payment pending review declaration at any time within
13 weeks of an adverse decision being made on review.