Peter Costello

Media Releases

Welfare to Work Package

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

10 May 2005

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