Xenophon deal to help Coalition swing its welfare reforms

The Turnbull government has clinched a critical welfare reform deal with the Nick Xenophon Team.

NXT MP Rebekha Sharkie. Picture: Kym Smith

A welfare overhaul that cracks down on people gaming the system and streamlines Centrelink payments is on the verge of passing the Senate after the Turnbull government clinched a critical deal with the Nick Xenophon Team.

The key minor party will vote for most of the bill’s measures when parliament resumes next month in exchange for a funding package that will deliver $40 million to rehabilitation services and provide specialist training in drug and alcohol addiction to regional doctors.

The agreement is a significant win for the Coalition, which has had to remove random drug testing trials of welfare recipients from the bill in order to gain enough crossbench support and salvage other measures.

The overhaul will introduce a new compliance framework based on a “demerit points” system, where jobseekers can lose welfare payments for up to a month if they repeatedly fail to meet mutual obligation requirements, such as applying for jobs, training or studying.

The bill has been stuck in the Senate since September but several amendments have already been agreed to, with the revised legislation expected to save the government $370m over the forward estimates.

Seven payments including Newstart and the wife pension, sickness and partner allowances will be scrapped or consolidated and replaced with one “jobseeker” payment from 2020, though the government insists no Newstart recipient “will be worse off” as a result. Some cessation of payments will be grandfathered.

Those on government benefits will be unable to repeatedly use drug or alcohol abuse or ­dependency as a “reasonable ­excuse” for missing relevant ­mutual obligation activities.

“We are implementing the most comprehensive reforms of our welfare system in decades,” Acting Social Services Minister Mathias Cormann said.

 

“These reforms are designed to help more Australians off welfare and back into work, and they help ensure our welfare system remains affordable and financially sustainable for future generations. The reforms in this legislation will deliver a simpler system which provides greater encouragement and support for people to find work.”

Without the support of Labor or the Greens, the government needs to win over 10 of the 12 Senate crossbenchers to legislate the overhaul, making the blocs of NXT and One Nation senators crucial to the bill’s success.

The NXT emerged as the major hurdle to driving the budget promise through parliament but Rebekha Sharkie, the party’s social services spokeswoman, said yesterday negotiations were now “90 per cent there” and the government had agreed to the $40m deal in writing.

“(The deal) strikes a good balance. I think taxpayers quite rightly expect people to look for work or address barriers to look for work,” Mr Sharkie said. “But if somebody does have an addiction and puts their hand up and says ‘I need some support’, we’re a country that has the capacity to provide that support.”

Ms Sharkie also wants several safeguards added to the bill, including a review to the demerit points system within the next two years, exemptions for jobseekers in remote areas and concessions for older jobseekers once they have searched for a job for 12 months.

The NXT’s support was contingent on the drug tests being excluded from the legislation.

One Nation’s spokesman said the party was still in talks with the government but Pauline Hanson’s party and Australian Conservatives senator Cory Bernardi were the only crossbenchers to support the original drug test trials.

The minimal support for the trials in the Senate contrasted with an October Newspoll that found three out of four voters backed the measure.

Liberal Democrat senator David Leyonhjelm said the government had the numbers to pass the welfare reforms in the final parliamentary sitting week last month but crossbenchers did not want to stay late on the last day. “If (former social services minister Christian) Porter had worked a bit harder to get us to agree that it was important and we should do it before we knocked off on Thursday, maybe we might have stuck around to do it,” he said.

“His approach certainly to me and I suspect to other crossbenchers was extremely casual at best. I didn’t feel any obligation to help him out. If they (the government) bring it on in February, I expect they’ll get it through.”

Just over one-third of all budget spending is expected to go ­towards welfare this financial year, with taxpayers to cover $164.1 billion.

Under the budget proposal, hundreds of thousands of working-age jobseekers will have to meet a stronger activity test and those over the age of 60 will be required to volunteer for at least 10 hours a fortnight to qualify for payments.