The Albanese government will relax some of the requirements imposed on job seekers as a condition for their income support, with changes expected to prevent about 1m welfare payment suspensions every year.
Changes to the mutual obligations scheme, contained in the federal budget, will ease the rules that govern when a person’s payments are suspended, meaning job seekers will have a five-day grace period – rather than 48 hours – to account for missing employment services appointments and other activities before their income support is cut off.
Welfare recipients who work 30 hours or more per fortnight will also be protected from having their payments suspended for failing to attend an appointment at an employment services provider – a change intended to prevent them from effectively being punished for having paid work.
Calls to overhaul the system have intensified after a damning parliamentary inquiry that found the mutual obligations regime was “ineffective, self-defeating, and requires reform”.
In the first 15 months of the current employment services regime – Workforce Australia, which began in July 2022 – 70.4% of participants had their payments suspended.
Guardian Australia revealed in October that those receiving jobseeker payments had their welfare payments suspended more than 450,000 times between July and September last year, with data showing the majority of payment suspensions were related to mutual obligations, including missing appointments with employment services agencies.
The budget papers reveal the government has also changed the rules for jobseekers who apply for a medical exemption from their mutual obligations, which can include attending meetings with a employment consultant, applying for jobs and taking part in training courses and other activities.
Under current rules, which advocates have long argued unfairly affected those with chronic illness, medical exemptions are capped at 13 weeks. The changes will remove the time limit and allow the duration to be based on medical advice.
A Department of Employment and Workplace Relations spokesperson told Guardian Australia the change would mean about 70,000 people would “no longer be required to provide multiple medical certificates for the same medical condition to receive an exemption for the full duration of their incapacity”.
The department estimated 1m income support payment suspensions will be prevented by the other changes.
Labor has framed the moves as enabling better recognition of the individual circumstances of welfare recipients and “strengthening the integrity of employment services”.
While welcoming some of the changes, advocates argued the announcements still fell short of what was required to fix what they viewed as a punitive and harmful system, which the parliamentary review likened to “using a nuclear bomb to kill a mosquito”.
The review, chaired by the Labor MP Julian Hill, was commissioned by the government and released in November.
Kate Allingham, the chief executive of Economic Justice Australia, said the changes flagged in the budget were “good steps that will help reduce some of the harms of employment services that fail to consider individual circumstances” but fell short of the “major systemic reform” recommended by the inquiry.
The extension of the grace period for a missed appointment “hopefully will get some people off the torturous merry-go-round of payment suspensions”, Allingham said. “However, the effect that the threat of payment suspension has on people’s wellbeing remains.”
While the removal of the time limit on medical exemptions would be “a relief for thousands of people who are in employment services with long-term health issues and disabilities”, Allingham warned that it would need to be handled carefully to avoid diverting or delaying eligible people from accessing the disability support pension.
Peter Davidson, the principal adviser at the Australian Council of Social Service, said more detail was needed before the changes could be judged.
“There’s still too much of this ‘shoot first, ask questions later’ approach,” Davidson said, noting that Acoss had been advocating for the removal of automation in payment suspensions and ensuring there was a built-in capacity for natural justice.
“Any penalty, including a payment suspension, should only be imposed by an authorised delegate at Centrelink, but also following a process where people’s circumstances are assessed and the decision-maker interrogates why they didn’t attend.”
The rollout of the changes will occur progressively over the next 12 months, with the extension of the grace period beginning in October this year, the time cap lifted on medical exemptions from January 2025 and the loosening of obligations for people working more than 30 hours per fortnight to begin in March 2025.
