The federal government will scrap the "polarising" ParentsNext welfare scheme after a series of parliamentary inquiries found the mutual obligations element of the program to be punitive and "akin to coercive control".
The targeted program applies to about 98,700 Parenting Payment recipients who have children aged nine months to six years, and who have not worked for six months. About 96 per cent of participants are women.
It aims to prepare parents for future employment or study once their children start school, with providers paid per participant.
Parents are required to negotiate a participation plan, complete activities and report their income to Centrelink each fortnight.
Finance Minister Katy Gallagher said this Tuesday's budget would scrap the program, with work to begin on a replacement that removes the punitive mutual obligations.
"If they're on this program and they don't meet some of the requirements under the mutual obligations they lose their pay cheque essentially," Senator Gallagher said.
"We don't want people living in fear that they're going to have their financial supports taken away.
"There's a better way to do this and part of that is stopping ParentsNext and moving to a program that we can co-design with stakeholders to achieve the same outcomes but without taking money from people who desperately need it."
The national program has been the subject of three parliamentary reviews since it was rolled out by the Coalition in 2018, the latest this month recommending it be abolished and replaced with a new pre-vocational service that incorporates the positive elements of the scheme, but scraps problematic mutual obligations.
Program 'akin to coercive control'
Senator Gallagher said mutual obligations would be scrapped "relatively soon" with the new program to begin when existing contracts end on July 1 next year.
"There is no doubt that for some participants the getting ready for work, access to training is really important," she said.
"We want to keep the good sides of the programs but not the harsher side which had such devastating impact on a lot of people.
"We know that about 20 per cent of participants are breached at one point, some more than once and that can be the difference for a lot of families about keeping their head above water."
Shadow Minister for Employment Michaelia Cash said the government was slowly dismantling the system of mutual obligations.
"The program helps participants develop skills, undertake training or work experience, and can help arrange financial support for job preparation skills, training and other work-related expenses," Senator Cash said.
"By abolishing ParentsNext, the Albanese Government is punishing some of Australia's most vulnerable people and will destroy their connection to the workforce.
"It is disappointing that Labor is giving up on helping these young Australians find work and consigning many of them to a lifetime of welfare."
An interim report from the parliamentary Select Committee on Workforce Australia Employment Services, released on Monday, heard while many praised the program for building confidence and connecting them with paid work, others labelled it close to evil and "akin to coercive control".
It found the positive experiences to be overshadowed by evidence of harm because of onerous participation requirements and a harsh compliance regime.
In its report the committee said parents should be entitled to choose to stay home with young children and that opportunity should not be reserved for the wealthy.
Alongside recommending the scheme be abolished, the committee's 30 recommendations included making significant changes to the compliance regime, supporting parents to access other support services and that the replacement program be designed in consultation with parents, advocates and First Nations communities.
Senator Gallagher said the change would not result in a budget saving.
"We're going to do a stack of work in the next 12 months to redesign and we're not taking a save from this in the budget," she said.
"We want to work with stakeholders about what a future program will look like that has the same goal of getting people into work, getting people into education but doesn't have them worried that they're not going to have any money to pay for their children's food or medicines."
Previous reviews found the national rollout was not informed by the evaluation of experiences in trial sites and there was confusion about the program's objectives.
