More than 140,000 job seekers will be worse off every year as the Morrison government prepares to crack down on income support under an overhaul of work for the dole.

In Tuesday night’s federal budget, the government forecast another $352 million in welfare cuts under plans to scrap the Jobactive program and replace it with a much cheaper employment services model for JobSeeker recipients from July 1, 2022.

The new scheme will allow many job seekers to “self-manage” their path into employment through a digital services platform that offers assistance with relocation and lighter-touch training courses compared to work for the dole.

But there’s a catch.

Under the new scheme, about 144,000 jobless Australians every year will no longer have their JobSeeker payments backdated to when they make their claims.

Instead, those using digital services will have to complete a job plan first – saving the government an estimated $191.6 million over four years.

That equates to about $83 per affected job seeker, based on an average two-day delay between filing a claim and submitting a job plan.

It’s insult to injury for JobSeeker recipients.

They were plunged back below the poverty line after the government unveiled a meagre $3.5-a-day increase to unemployment benefits in February.

The government has argued the technical change is needed to address inequity in the system, as people currently directed to Jobactive providers don’t receive payments until their first appointment is finished.

But Kristin O’Connell, spokesperson for the Unemployed Workers Union, labelled the change “inhumane”, saying job seekers shouldn’t be punished for failing to immediately complete such administrative tasks.

She said employees in the private sector wouldn’t be financially penalised for taking two days to respond to an email.

“These processes, for many people, are confusing and new,” Ms O’Connell told The New Daily on Tuesday.

“The government systems are not easy to use. To punish someone for not being able to complete these pointless processes in a few days is completely inhumane.”

Full steam ahead with work for the dole cuts

The payment crackdown will require legislative change, setting the stage for a battle in the Senate as the government moves ahead with a massive overhaul of employment services that will cement two main tiers of job seekers: Those in digital services and those in “enhanced services”.

Although some job seekers will soon be allowed to self-manage their return to the workforce, others deemed at higher risk of long-term unemployment will receive “intensive case management”, including mutual obligation requirements like work for the dole much sooner.

The government will decide whether to place people in the tougher or more lenient side of the scheme based on their responses to an existing job snapshot questionnaire to work out how “job ready” they are.

Those placed into self-managed digital services will require less face-to-face engagement, helping the government save an estimated $860.4 million over the next four years.

That comes after $651.4 million of employment service cuts were forecast in the budget last year.

The latest budget does include $699 million worth of new investments into employment services.

But the total costing for the new employment services model is $352 million lower overall over four years.

Australian Council of Social Service CEO Dr Cassandra Goldie said she was “deeply troubled” by the employment services cuts in the budget.

“The budget lifts essential services, but leaves too many stranded,” she said on Tuesday.

“It does nothing to address the severe shortage of social housing or raise social security payments above the poverty line.”

Work for the dole crackdown

The new enhanced system will force job seekers into mutual obligations like work for the dole within six months instead of the current 12.

But the work for the dole program will now only last two months instead of six in a push to improve the quality of mutual obligation requirements.

This “strengthened” work for the dole program will allow job seekers to obtain micro-credentials in relevant fields while receiving JobSeeker.

Those accessing the digital services stream – which will require training courses instead of work for the dole – will be moved into the tougher stream after 12 months if they haven’t found a job.

The work for the dole crackdown will bring the employment services system into line with enhanced mutual obligation requirements unveiled in February alongside the $50-a-fortnight JobSeeker increase.

Mutual obligations will also now be run on a “points-based system”, designed to reward recipients for controlled activities like applying for jobs and attending interviews, with more points for intensive activities.

The government has been testing the scheme in small-scale trials over the past two years and will soon roll out the program to the broader population.