Senate rejects financial crackdown on wayward jobseekers

TOUGHER penalties the Abbott government had planned for jobseekers who "don't do the right thing" were roundly rejected by the Senate on Wednesday.

A bill to freeze welfare payments for jobseekers who failed to turn up for interviews or follow the advice of Centrelink was debated and voted down.

Employment Minister Senator Eric Abetz said the legislation was based on the Coalition's principle of "mutual obligation".

He said senators' arguments against the government's agenda were better put to the Fair Work Commission, as the government and "other taxpayers expected jobseekers to do their bit".

"It's not fair to get something for nothing when you can and should be doing something and are capable of doing so," Senator Abetz said.

Senator Abetz said some 98% of jobseekers did the right thing, but it was not fair for all taxpayers to bear the cost of those not adhering to the system.

He also clarified that while the bill would enforce the original Labor reforms, which the previous government backtracked from, it would allow a "one-off" warning before payments were removed.

Palmer United Party Senate leader Glenn Lazarus spoke out against the reforms - one of the key measures of the government's wider social security reforms.

The non-payment period, Senator Lazarus said, would only drive more young people to crime or violence and away from gainful employment, which the PUP could not support.

In a speech quoting Mahatma Gandhi, Senator Lazarus said the key crossbench party was also unlikely to support the government's wider social services agenda.

Labor, The Greens and Independent Senator Nick Xenophon also helped vote the bill down on Wednesday.

While Senator Xenophon said he was prepared to support some measures of the bill, the penalty measures would only have a greater impact on young South Australians already suffering in a weak economy.

The debate comes as a Senate committee is examining two major government bills on welfare. The report of that inquiry is expected to be delayed until next week.

Those bills, including a raft of measures designed to limit welfare spending in a government bid for budget sustainability, have been endorsed by business but criticised by social groups.