The welfare change that will save $2.1B
A SHAKE-UP of the welfare system - including dole, age pension, youth allowance and parenting payments - will claw back $2.1 billion in taxpayer funds for the embattled budget bottom line.
Under the proposal to be announced on Tuesday, a simplified system will require welfare recipients to report to Centrelink how much money they actually earn fortnightly, instead of having to estimate it.
The proposed changes, which will impact 1.2 million welfare recipients, will be put to Parliament when it resumes next week.
It is expected to crackdown on dole overpayments of up to $650 million a year and save $2.1 billion over the next four years.
Anyone on welfare can earn a certain amount of money from work before their payments are reduced.
Currently recipients must calculate what their earnings might be based on the number of shifts and hourly rates. But overtime and penalty rates can lead to significant under estimations.
Social Services Minister Anne Ruston said it would be a fair system.
"We want to make sure that Australians who need financial support are able to get the support that they are eligible for - no less and no more," Senator Ruston said.
"The current system of calculating earnings can be confusing and lead to misreporting especially when accounting for overtime or penalty rates.
"These changes will make accurate reporting much easier for people getting a social security payment."
Newstart, Youth Allowance, Austudy, Parenting Payment Single, and the Age Pension will be impacted by the proposed changes, which are anticipated to start from July 1.
It will not impact family tax benefits A and B, or the child care subsidy.
Recipients who report their earnings online will be able to pre-fill their information, similar to online tax returns.
Draft legislation is expected to before it goes to Parliament next week.
Someone on Newstart can earn up to $104 without impacting their welfare payment.
The payment is reduced by 50c for every dollar they earn above that.
Pensioners can earn up to $174 for singles or $304 for couples before payments begin to be reduced.
About 19 per cent of Newstart recipients declare income, compared to just 4.2 per cent of pensions and 33.4 per cent of people of Austudy recipients.