“Fair Incentives to Work” Legislation comes into force

The Social Security Legislation Amendment (Fair Incentives to Work) Act 2012 (No. 144 of 2012) received royal assent on 24 October 2012 with key provisions set to commence in January and July 2013.

The Act removes the “grandfathering” transitional arrangements from parenting payments with effect 1 January 2013. Recipients who have been continuously receiving parenting payment since before 1 July 2006 will be affected. Previously grandfathered recipients could receive parenting payment until their youngest child turned 16 years old provided that child was in their care before 1 July 2011.

Changes to the Social Security Act 1991 passed by Parliament in May 2012 reduced this age to 12 (or 13 in 2013) and will take effect on 1 January 2013 without the further changes introduced in this Act. From 1 January 2013, eligibility for parenting payments for all recipients, including those parents whose payments were grandfathered, will cease when their youngest child turns 6 years old for partnered recipients or 8 years old for single recipients.

As part of the removal of grandfathering from parenting payment, formerly grandfathered recipients will have participation requirements from when their youngest child turns 6 years old, instead of the previous 7 years old. These amendments will bring provisions relating to parents who have received parenting payment continuously since before 1 July 2006 in line with those of parents who have claimed income support since 1 July 2006.
The government claims the key objective of the changes is to encourage parents with school age children to re-engage with the workforce and provide strong working role models for their children.

More sceptical commentators including the federal opposition claim that the changes are directed more at achieving the government’s stated budget surplus objective by cutting welfare expenditure with the changes being estimated to save the government $728 million over four years.

Welfare groups and their supporters are furious the federal government has pushed ahead with the legislation which plans to shift 100,000 single mums off parenting payments and onto the dole despite two inquires recommending the plan be put on the backburner.
 

Other measures

Some benefits for students and unemployed with change to “Liquid Asset Waiting Period”

Where the current social security laws provide that people claiming Newstart Allowance, Youth Allowance, Sickness Allowance and Austudy payment having liquid assets above a maximum reserve amount of $2,500 (for single without dependants or $5,000 otherwise) they must generally serve a waiting period, called the Liquid Assets Waiting Period, before being able to access income support.

The amendment Act changes the Social Security Act 1991 to double the maximum reserve threshold for liquid assets to $5,000 for singles without dependants or $10,000 for others. The benefit being claimed by the government being that this will generally reduce the length of the Waiting Period for claimants with modest liquid assets and help newly unemployed and students keep more of their savings while looking for a job or studying. The new thresholds begin on 1 July 2013 and reduce waiting times by up to five weeks for unemployed Australians and students with modest savings or liquid assets. The government estimates that around 21,000 people each year will begin receiving payment up to five weeks earlier as aresult of the changes.

Definition of “termination payment” changed for purposes of Income Maintenance Period

Changes made by the amending legislation also provide for a replacement of the definition of “termination payment” for the purposes of the income maintenance period to include payments that are redundancy payments, leave payments relating to the person’s termination of employment and any other payments that are connected with the termination of a person’s employment. In effect a broadening of the definition.

TimeBase’s LawOne Service guarantees reliable, accurate and convenient access toAustralian Legislation from all 9 jurisdictions. Contact TimeBase for a free trial today.