NO.042

WELFARE TO WORK PACKAGE

The 2005-06 Budget incorporates a comprehensive rebalancing of Australia’s

welfare system to make it more sustainable and to encourage increased workforce

participation for those with the capacity to work. The package — totalling

$3.6 billion over four years — recognises the importance of paid employment,

whether full-time or part-time, to Australia’s prosperity and each individual’s

own wellbeing.

Parents receiving Parenting Payment prior to 1 July 2006 will be able to remain

on that payment under the current entitlement; that is, until their youngest

child turns 16. This group of parents will have a year to seek work voluntarily

from the later of 1 July 2006 or when their youngest child turns six. After

that they will become subject to an obligation to seek part-time work of at

least 15hours per week.

Parents applying for Parenting Payment on or after 1 July 2006 will receive

Parenting Payment while their youngest child is less than six years old. When

their youngest child turns six, this group of parents will receive enhanced

Newstart and be subject to an obligation to seek part-time work of at least

15 hours per week.

People in receipt of the Disability Support Pension (DSP) prior to 1 July 2006

will remain on that payment with no part time work obligation. They will be

subject to the normal review process for DSP which will apply the existing eligibility

criteria (broadly whether that person is capable of 30hours work per week at

award wages).

People seeking to go on DSP on or after 1 July 2006 will face new eligibility

criteria. They will receive DSP if they are assessed as being incapable of 15hours

work a week at award wages. If they are assessed as being capable of 15-29 hours

work per week at award wages they will receive enhanced Newstart and be subject

to an obligation to seek part-time work of at least 15 hours perweek.

People applying for DSP between 11 May 2005 and 30June 2006 will be assessed

for eligibility under the existing test; that is whether they are able to work

30 hours perweek at award wages. However, their ongoing eligibility will be

reassessed in periodic reviews (usually every two or five years) against the

new, 15-29hours per week at award wages, test after 1July 2006. If they are

assessed as being capable of 15 hours work per week at award wages they will

have an obligation to seek part-time work and will receive enhanced Newstart.

From 1 July 2006 the Government will increase mobility allowance from $69.70

to $100perfortnight for people with disabilities who have a part-time obligation

to look for work. DSP recipients who are working 15or more hoursper week may

also be eligible.

The Government will also enhance Newstart Allowance. This will support increased

participation by improving the returns to part-time work. The maximum withdrawal

rate will be reduced from 70to 60 cents in the dollar. In addition, the income

at which this rate commences will be increased to $250 per fortnight, up from

$142 for Newstart currently. Both these changes will benefit recipients of Newstart

Allowance, as well as Youth Allowance(Other), Mature Age Allowance, Widow Allowance,

Sickness Allowance, and Partner Allowance. Recipients of Youth Allowance (Student),

Austudy and Abstudy will benefit from a reduction in the withdrawal rate from

70cents to 60 cents in the dollar.

New and expanded services to help people get jobs

The Government will ensure that those who are obliged to look for work receive

appropriate assistance to help them find work. This Budget includes over $2

billion in new and expanded services to help people get jobs.

• Parents will benefit from a new $48 million Employment Preparation service,

  which will allow Job Network providers to purchase skills training and assessments.

  Employment Preparation will replace the current Transition to Work Programme.

• People with disabilities will benefit from a new $80 million Pre-Vocational

  Participation Account to provide limited short interventions that allow them

  to become job-ready quickly. Services that this will fund include pain management,

  work conditioning and short-term mental health interventions.

• A new Wage Assist Programme will allow Job Network providers to provide

  wage subsidies to employers who hire long-term unemployed people who have

  been making a genuine effort to find work. Wage assistance will be payable

  for between 13 and 26 weeks.

• A comprehensive work capacity assessment will assess all new Disability

  Support Pension applicants to determine whether they can work between 15 and

  29hoursperweek at award wages.

• An extra $266 million over four years to increase the number of child care

  places, including 84,300 Outside School Hours Child Care places.

• Other existing services will also expand. The Government will provide additional

  funding of: $170 million over three years for the Disability Open Employment

  Service programme; $178million over three years for rehabilitation services;

  and $43 million over three years for additional Vocational Education and Training

  places.

A new compliance framework

The new obligations to look for work will be supported by an improved compliance

framework incorporating payment suspension, rather than payment reduction. This

will provide greater incentives for people to meet their obligations.

Helping employers

A number of strategies will be adopted to promote employer demand to help people

with the transition from welfare to work. The Government will work with industry

groups and employers to promote better matching of job seekers to employment

opportunities.

Contact: David Alexander

(02) 6277 7340