14 November 2023

I'm really pleased to rise to speak to the Social Security and Other Legislation Amendment (Supporting the Transition to Work) Bill 2023 because it is going to make a difference on the one hand to pensioners, and on the other hand to a whole lot of welfare recipients who get caught in this in-between place when they're finding their first bit of work and still trying to keep themselves afloat. It really tackles some of the issues that makes life difficult for people transitioning into work and for pensioners who might decide that doing a bit of work would be great for them, whether it's because they need the stimulation or they need the money. Either way, this is really dealing with some issues that have been outstanding.

Let me talk through a couple of the things that are really important and why this bill needs to get through this
place. I'll talk about pensioners first. This bill means that pensioners wishing to return to the workforce can do so with much less fear of losing access to their other income support measures if they take up some work. From 1 January—and that assumes this legislation passes the parliament—it means that all new age pension and veteran pension entrants will be able to start with a work bonus in their income bank balance of $4,000 rather than no dollars.

Why this matters is that that allows you to earn a certain amount of money. But, when you first go on to pension, you can't actually get it immediately. So that's one of the changes that we're making. It's an upfront credit of $4,000 to all new pension entrants, and, as I've said, that means people on the age pension or veterans.

The other part of it is the permanent increase in the maximum work bonus income balance you can have from
$7,800 to $11,800. That's where it currently sits. A year or so ago we recognised that that would be a measure that would help get some older workers back into the workforce. Whether there's a skills shortage in a particular area or whether it's for things like a referendum, where the AEC is looking for a whole lot of extra workers, doing those small amounts of work can undermine their access to the pension. What we've found is that this is an effective way to do it, and we want to make this move from $7,800 to $11,800 permanent. It's about giving older Australians more choice and flexibility to participate in the workforce, and that's why we're going to permanently enhance the pension work bonus.

How it works is that existing pensioners will continue to benefit from that elevated maximum work bonus balance, with the new entrants starting with a balance of $4,000 rather than a balance of zero. We want to continue to ensure that the option to take up work is open to people. I know that in my electorate, Macquarie, particularly in the Blue Mountains, there are a large number of retired people who not only are on a pension or part pension but also are really keen to contribute. This is the sort of thing that will potentially make a real difference to the way they plan their next few years.

We recognise that there are not only substantial benefits for older Australians in continuing to work but also
benefits to the entire community, particularly where we have skills shortages. They've got a wealth of experience and they're highly skilled in the things that they have done. When I think about my electorate, where we are short of tradespeople, the place we turn to is the Hawkesbury, where there are so many skilled and trained tradespeople. If this is an incentive to get some of them to move back into the workforce, it is well worth it, particularly if they are able to contribute, if they're keen to do so and if the only thing stopping them is that they'll have a disadvantage financially.

All of these changes will take effect from 1 January, pending the passage of the legislation. That will mean that there's no gap between the existing temporary measures that we put in place and the commencement of these new ongoing provisions.

It's worth pointing out that the work bonus measure also includes some safeguards just to ensure that individuals can't game the system by cycling on and off payments so that they receive multiple new-entrant bonuses of $4,000. We have thought that through to ensure there aren't incentives or, as we might say, unintended consequences of people doing that.

There is a cost to this measure, and that cost is potentially $42.4 million over the forward estimates from 2023-24, for the next few years. But it's worth remembering that the costs for this measure are only realised if pensioners do take up the work. If this doesn't get taken up, the costs will obviously be lower.

I'm really keen to hear from people about this. I know I've had conversations in the last few months talking to people about the ability to work in things like the referendum. We also had a state election in New South Wales, and I know that there are a lot of pensioners who really enjoy being part of that democratic process. For those pensioners who aren't working, we know that it's often due to a whole range of factors. Sometimes it's because of the type of work that's available or a desire to be retired.

But this is here as an option. It's not a requirement, it's an option. It is about giving flexibility to older people.

The second part of this targets a completely different group of people, and that is the other benefit recipients:
people on JobSeeker payment, youth allowance, Abstudy, Austudy, parenting payment, disability support pension and carer payment. It includes the age pension, but it is clearly much broader than that. This is the change we're making around what's called the employment nil rate period. This gives some flexibility so that as people are transitioning from unemployment into employment, or from a particular situation but they're in a position now to take up work, it takes away the fear by making sure that the social security support—the safety net—will still be there for them as they're working through the transition to employment.

It's very easy to think that one day someone's unemployed and the next day they get a job and off they go, but it isn't always a smooth journey. That would apply to students, to people on youth allowance and to people on the disability support pension. It would certainly apply to people on parenting payments where, even with all the very best of intentions of moving into work, things may happen that mean they still need to rely for a short time on that social safety net that we in Australia are so proud to provide people with.

The measure, the employment nil rate period, extends that period of time for income support payments from the six fortnights to 12 fortnights. So, we're going from 12 weeks to 26 weeks—from three months to six months— and it expands access to the nil rate period to those who enter full employment. It allows people to stay active in the system. They can retain supplementary benefits—such as concession cards, childcare subsidies and other supplementary payments—for longer when they first get back into work. That is the safety net that's now going to be in place.

The measure really addresses concerns about losing access to those benefits or having to reapply if things don't work out in your employment. Having to reapply and wait for income support if things didn't go the way people had hoped acts as a real discouragement for people to take up work, particularly short-term work. There's not much incentive in taking up an initial couple of months contract if you know that, at the end of it, there is total uncertainty and you've forgone the supports that you had. It also acts as a real disincentive for casual work and gig economy work. So, this is about giving people a bit more confidence to know that they can move forward without completely burning their bridges behind them.

We know that people who have some work are twice as likely to ultimately exit income supports as those who
don't, so getting those first bits of work are really important. Therefore, to improve employment outcomes, it
is critical that people are not disincentivised from taking on these short-term, sometimes ad hoc, opportunities. We want to make the transition from income support to employment as smooth as possible. This reduces the barriers for payment recipients so they can take up work, by extending the period they're accessing those supplementary benefits that remain payable during the nil rate period, with their payment automatically restored if their circumstances change. These changes will come in from 1 July 2024, pending the passage of this legislation.

Neither of these is anything other than a sensible step to genuinely support people, particularly as they're moving into employment, and, for pensioners, to allow them to continue employment. I think we should be very proud of these changes. I really hope that they are promptly passed through the House, and I want to touch on that point.

As I say, we brought some of these things in as temporary measures. The maximum work bonus income bank
measures were increased a year ago, from 1 December. The current temporary work bonus measure is due to
end after 31 December. That means that, from 1 January, the work bonus income bank balance of 2.3 million
pensioners will be reduced from the high it is at now, back down to the standard level of $7,800. That means
there's a big gap, a big lag. If we get this legislation through—and I'd urge the parliament to support it—it will
make this a seamless process for pensioners, who really deserve to have their lives made as straightforward as possible, not tied up in some sort of parliamentary red tape.

I commend the bill to the house, and I'm very proud of these very sensible measures, which we hope will improve employment opportunities for everyone.

View this speech being read in Parliament here.