Major welfare reforms to protect children and strengthen families

As part of major reforms to the welfare system, the Australian Government will introduce a new income management scheme to protect children and families and help disengaged individuals.

The Government is committed to progressively reforming the welfare and family payment system to foster responsibility and to provide a platform for people to move up and out of welfare dependence.

The reforms will help fight passive welfare and mean that more money goes to food, clothes, rent and less money goes to buying alcohol and gambling.

These reforms deliver on the Government's commitment to a welfare system based on the principles of engagement, participation and responsibility.

Income management is a key tool in the Government's broader welfare reforms to promote responsibility and strengthen families by ensuring that welfare is spent where it is intended - on the essentials of life and in the interests of children.

Income management is delivering key benefits. People are spending more on food, including fresh fruit and vegetables.

From 1 July 2010, a new income management scheme will begin to be rolled out in vulnerable regions, targeted at individuals at risk.

The new scheme will commence across the Northern Territory - in urban, regional and remote areas - as a first step in a national roll out of income management in disadvantaged regions. The Northern Territory has the highest proportion of severely disadvantaged locations in Australia.

The changes are part of a range of welfare conditionality reforms that the Government has already implemented, including the Cape York Welfare Reform trial, child protection income management in Western Australia, 'Learn or Earn'- Youth Participation Requirements, and the School Enrolment and Attendance Measure in Queensland and the Northern Territory.

Participants of the new income management scheme will include:

• people aged 15 to 24 who have been in receipt of specified welfare payments for more than three of the last 6 months;
• people aged 25 and above on specified welfare payments such as Newstart Allowance and Parenting Payment for more than one year in the last two years;
• people referred for income management by child protection authorities; and
• people assessed by Centrelink social workers as requiring income management due to vulnerability to financial crisis, domestic violence or economic abuse.

The new scheme will apply to any individual who meets one of these criteria. It is expected that the roll out across the NT will take around six months.

A person will have 50 per cent of their regular payments, and 100 per cent of lump sum payments, income managed. These funds will be able to be spent on priority items by using the BasicsCard, Centrepay or similar arrangements through Centrelink.

Around 20,000 individuals are expected to be covered by income management in the Northern Territory when it is fully implemented.

The scheme will promote personal responsibility and positive social norms by providing for evidence-based special exemptions.

Requests for exemptions will be assessed on the individual's demonstrated record of responsible parenting, or participation in employment or study, including for example:

• A young person - if they are in full time study or training, or engaging in paid work;
• A parent - who demonstrates responsibility as shown by their children attending school regularly and are up to date with immunisation; or
• A long term Newstart recipient - who has a history of engaging in work, even if this is not permanent.

Individuals will also be able to voluntarily participate in income management, and will be eligible for an incentive of $250 every six months that they remain on voluntary income management.

New matched savings incentives will also be introduced for those on compulsory income management to help them budget and save.

An individual on compulsory income management, who completes an approved money management course and has a pattern of savings over at least 13 weeks, will receive a matched saving contribution from the Government of up to $500 and no more than 50% of the costs of household items, such as whitegoods.

This new scheme of income management will be supported with financial counselling and money management services, totalling $53 million over four years.

Existing provisions for income management in prescribed Northern Territory Indigenous communities will be repealed.

The operation of the new scheme of income management will be carefully evaluated. The first evaluation progress report is expected in 2011/12.

The other income management trials currently underway in Western Australia and Queensland will also continue to be evaluated.

Future roll out elsewhere in Australia will be informed by the evidence gained from this evaluation activity.

Future implementation will also be informed by other criteria including evidence of disadvantage in Australia and consideration of where income management could benefit individuals and families.

The new scheme of income management in the Northern Territory will cost $350 million over four years.

Trigger payments - individuals need to be receiving one of these payments to be subject to income management

Disengaged youth ('under 25s')

• Youth Allowance
• Newstart Allowance
• Special Benefit
• Parenting Payment (Single)
• Parenting Payment (Partnered)

Long-term welfare payment recipient ('over 25s')

• Youth Allowance
• Newstart Allowance
• Special Benefit
• Parenting Payment (Single)
• Parenting Payment (Partnered)

Child Protection and social worker referral

• Youth Allowance
• Newstart Allowance
• Parenting Payment (Partnered)
• Parenting Payment (Single)
• Sickness Allowance
• Special Benefit
• Partner Allowance
• Austudy Payment
• Mature age Allowance
• Parenting Allowance
• Widow Allowance
• Widow B Pension
• ABSTUDY that includes an amount identified as Living Allowance
• Age Pension
• Disability Support Pension
• Wife pension
• Carer Payment
• Bereavement Allowance
• Special Needs Pension
• DVA Service Pension or Income Support Supplement
• Defence Force Income Support Allowance (DFISA)

Payments to be income managed - once a person is subject to income management, the following payments will be subject to income management:

• All trigger payments listed above
• Family Tax Benefit
• Baby Bonus
• Maternity Immunisation Allowance
• Carer Allowance
• Child Disability Allowance
• Mobility Allowance
• Pensioner Education Supplement
• Double Orphan Pension
• Social Security Telephone Allowance
• Telephone Allowance
• Utilities Allowance
• a payment under the Assistance for Isolated Children Scheme relating to Homelands Learning Centre students
• ABSTUDY that includes an amount identified as Pensioner Education Supplement
• Bereavement Payment
• NT CDEP transition Payment
• Advance payments of most social security benefits, pensions and allowances, and some DVA service or income support payments and supplements.