Posted 22/03/2017 by Michael Klapdor
The Government has announced that it will discharge the Social Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill 2017 (Omnibus Bill) from the notice paper, if it can secure passage of a new social services savings Bill and an older Bill which provides for the same child care reforms. The new savings Bill, the Social Services Legislation Amendment Bill 2017 (Social Services Bill), contains three measures from the Omnibus Bill and a different measure, first proposed in the 2014–15 Budget by the Abbott Government.
The Social Services Bill is expected to provide savings of $1.67 billion in savings over the forward estimates (2016–17 to 2019–20). This is close to the estimated $1.66 billion cost of the Jobs for Families Package over the forward estimates.
The main savings measure in the Social Services Bill is a two-year pause on the indexation of Family Tax Benefit payment rates. It is expected to save $1.38 billion over the forward estimates. A similar measure was announced in the 2014–15 Budget but was dropped in October 2015 after two different attempts to legislate the measure were stalled in the Senate and the Government announced different Family Tax Benefit savings measures.
Family Tax Benefit rates are usually adjusted on 1 July of each year in accordance with movements in the Consumer Price Index (CPI) in the previous calendar year. This is to maintain the real value of the payments over time. Initial Parliamentary Library estimates (based on the assumption of similar CPI growth in 2017 as in 2016) suggest the indexation pause would mean that the Family Tax Benefit Part A rate for children under 12 would be around $140–150 per annum lower than otherwise in 2018–19; and the rate for teenage children would be around $185–195 per annum lower than otherwise in 2018–19. Family Tax Benefit Part B rates for children under-five could be around $120–130 lower than otherwise; and rates for children aged five and above could be around $80–90 lower than otherwise.
The three measures in the Social Services Bill that were contained in the Omnibus Bill are:
- a three year pause on the indexation of income test thresholds for allowance payments (such as Newstart Allowance and Sickness Allowance) and Parenting Payment Single; and a three year pause on the indexation of income test and other means test thresholds for student payments, including student income bank limits
- the automation of income stream reviews by allowing the Department of Human Services to automatically collect data from income stream providers (such as superannuation funds) and
- an extension of the the ordinary waiting period (the one-week waiting period) to new recipients of Parenting Payment and Youth Allowance (Other) and the application of a more stringent test for waiving this waiting period.
The mean test indexation and waiting period measures were 2014–15 Budget measures and the Government has attempted to legislate for them in multiple Bills without success. The income stream measure is more recent and was announced in the Mid-Year Economic and Fiscal Outlook.
The Omnibus Bill contained a number of contentious measures. The Government has stated that one measure, an increase in fortnightly Family Tax Benefit Part A rates, will no longer proceed. This measure was intended to offset the impact of another measure in the Omnibus Bill—the phasing out of Family Tax Benefit end-of-year supplements. The Government has not stated whether it will still proceed with the supplement measures or with other contentious measures in the Omnibus Bill such as a four-week waiting period for new Youth Allowance claimants; an increase in the eligibility age for Newstart Allowance from 22 to 25 years; closing the Energy Supplement to new recipients of income support and veterans payments; the abolition of the Pensioner Education Supplement and the Education Entry Payment; and, changes to the paid parental leave scheme. The Minister for Finance, Mathias Cormann, and Minister of Social Services, Christian Porter, stated that ‘the Government will keep working with all parties represented in the Senate, to keep making progress on budget repair by passing more of the governments remaining savings measures’.
Many of the remaining measures in the Omnibus Bill are also proposed in other Bills before the Parliament. See the Bills Digest for the Omnibus Bill for further details of their background and status.