Newstart Allowance

Eligibility (ss7, 593, 596, 613)

To be eligible for Newstart Allowance, a person must be at least 21 and below age pension age. The person must:

• be unemployed (primarily concerned with finding full-time work, and not significantly engaged in setting up a business or some activity that interferes with their ability to look for, or take up, employment, e.g. study, voluntary work, housework, establishing a farm);
• be an Australian resident and in Australia;
• satisfy the “activity test” (or not be required to do so);
• be prepared to enter into an Employment Pathway Plan, and comply with an Agreement in force;
• not be involved in industrial action involving the person or their trade union;
• not reduce their job prospects by moving to an area of lower employment prospects; and
• not be enrolled as a full-time student.

The activity test is set out in section 601. The person must show that they are actively seeking and willing to undertake suitable paid work; and that they are complying with any directions from Centrelink or their Job Network Provider to undertake paid work or training. There are exemptions to the activity test (ss602C to 603F). These include:

• over 55 and engaged in at least 30 hours a week of approved unpaid voluntary work, or a combination of such work and part-time paid employment;
• attending a training camp for the Armed Forces Reserve (or similar);
• covered by a general special circumstances exemption, such as homelessness, major personal crisis, major disruption to their home, temporary caring responsibilities, newly-arrived refugees, etc;
• unfit for more than eight hours work due to temporary illness or injury, and unable to undertake another suitable activity;
• covered by an automatic 12-month maximum special family circumstances exemption, such as foster caring, home schooling, and caring for four or more children; or
• covered by special circumstances such as caring for a dependent child with a disability, being subject to domestic violence, extremely high stress due to recent relationship breakdown, the death of an immediate family member and caring responsibilities.

Increasingly, activity test requirements are being modified, rather than a complete exemption being allowed. In addition, peopledeemed to have a “partial capacity to work” (s16B) will be required to look for work of up to 25 hours per week, but will be deemed to fully meet the activity test if they undertake 15 hours work per week. This decision will be made following a Job Capacity Assessment (see: “Disability Support Pension”, above in “Pensions“).

Employment Pathway Plans

Employment Pathway Plans are written agreements “negotiated” between Centrelink and a recipient of activity-tested payments, in this case Newstart Allowance. They are negotiated with a Job Network Provider, but must be approved by Centrelink.

Employment Pathway Plans require the person to do things to improve their chances of obtaining employment. These include job training, paid work experience, unpaid voluntary work and applying for a certain number of jobs in a period. Newstart Allowance is usually not payable until a person signs an Employment Pathway Plan, and a participation failure may result if a person unreasonably fails to comply with the terms of the Employment Pathway Plan (see below).

Waiting Periods

Generally, a person must wait seven days from the date of claim before becoming eligible for Newstart Allowance, unless the person transfers from another income support payment within 13 weeks. The waiting period may be reduced or waived because of financial hardship.

In addition, where the person has liquid assets of more than $3,000 (single) or $6,000 (member of a couple, or with dependent children), they must serve a waiting period of up to 13 weeks, depending on the amount.

Migrants who entered Australia or became permanent residents after 4 March 1997 must serve a waiting period of 104 weeks, although Special Benefit may be available in some circumstances.

There are also waiting periods for people who get payouts of sick leave, annual leave, long service leave or maternity leave, or have done seasonal work earning more than “average weekly ordinary time earnings” in the six months prior to claim.

Participation Payment Failures

Participation Failures are set out in Division 3A of the SS (Administration) Act. The regime applies to Participation Payments (generally NewStart Allowance, but for some people Youth Allowance, Parenting Payment and Special Benefit).

There are now four possible types of failure:

• no show no pay failures (Subdiv B);
• connection failures (Subdiv C);
• reconnection failures (Subdiv C); and
• serious failures (Subdiv D).

Centrelink can also impose an unemployment non-payment period.

“No show no pay” failures

A person commits a no show no pay failure if they:

• fail to do something required by an Employment Pathway Plan, or commit misconduct while participating;
• fail to comply with a serious failure requirement, or commit misconduct while complying; or
• intentionally act in a way that could have the reasonable foreseeable result of a job offer not being made.

It is only possible to commit one no show no pay failure per day. The penalty for a failure is the loss of one-tenth of the person’s fortnightly payment. A failure only applies if the person has no reasonable excuse (unless the person commits misconduct), although rules as to what constitutes an “reasonable excuse” have been tightened – see: s42(UA).

Connection failures

A person commits a connection failure if (without reasonable excuse) they:

• fail to attend an appointment required by Centrelink notice or Employment Pathway Plan, or enter into an Employment Pathway Plan;
• failure to meet a job search requirement or comply with an Employment Pathway Plan requirement; or
• fail to keep or return a job seeker diary.

If a connection failure is committed, the person may be required to comply with a reconnection requirement (essentially an opportunity to fix the failure).

Reconnection failure

A person commits a reconnection failure if they fail to comply with a reconnection requirement without reasonable excuse.

The penalty for a reconnection failure is loss of one-tenth of the person’s fortnightly payment for each business day until the failure is fixed. Further reconnection requirements may be imposed even if the person had a reasonable excuse for committing an earlier reconnection failure.

Serious failure

A serious failure is committed if a person, without reasonable excuse, persistently fails to comply with his or her obligations, in relation to a participation payment. An eight-week non-payment period applies if a serious failure is committed.

Centrelink may require the person who has committed a serious failure to comply with a serious failure requirement. If the person begins to comply, Centrelink may end the non-payment period.

If Centrelink determines that the person would be in severe financial hardship if required to serve the non-payment period, the non-payment period can be ended early.

Comprehensive Compliance Assessment

Before determining that a person has committed a serious failure due to persistent non-compliance, Centrelink must conduct a Comprehensive Compliance Assessment to ascertain why the person has committed failures or failed to meet Centrelink requirements, whether the person has employment barriers, and whether the participation requirements are appropriate.

Three failures in any six-month period will trigger an Assessment. At an Assessment, a Centrelink officer will, among other things, consider whether the person would benefit from any additional assistance. Failure to attend an Assessment may result in a connection failure.

Unemployment non-payment period

If a person is unemployed due to misconduct, or an unreasonable voluntary act, an eight-week non-payment period applies. This can be ended early if the person is in severe financial hardship, and is in a specified class of persons (e.g. has an impairment, is homeless, or has a dependent child).

Other Penalties and non-payment periods

Centrelink may impose a deferment period on a seasonal worker who is “between jobs” (s633). The length of the period will depend on how long the person worked and how much they earned.

A deferment of 26 weeks may be imposed if a person reduces their own employment prospects by moving to a new place of residence without sufficient reason. There is only “sufficient reason” when the person has moved to join a family member, for treatment of illness, to undertake approved rehabilitation or training, or for an “extreme circumstance” (e.g. domestic violence) (s634).

Rate of Allowance (ss643, 1068)

The rate of Newstart Allowance varies according to whether the recipient:

• is single;
• is a member of a couple;
• has dependent children; or
• is aged over 60.

Work for the Dole participants may be eligible for an additional $20.80 per fortnight.

A person on Newstart Allowance may also be eligible for Rent Assistance (see: “Rent assistance”).

The rates are reduced if the recipient (or their partner) has income that brings the recipient above the income threshold. There is also an assets test for Newstart Allowance. (See: “Income and assets tests for Sickness, Youth, Newstart and Parenting Payment (Partnered)“.)