Michael Klapdor, Alex Grove and Lauren Cook
Key figures
Social security and welfare expenditure in 2019–20 is
estimated to be $180.1 billion, representing 36.0 per cent of the
Australian Government’s total expenditure.
This administrative category of expenditure consists of a
broad range of services and payments to individuals and families. It includes:
- most income support payments such as pensions and allowances (for
example, the Age Pension and Newstart Allowance)
- family payments such as Family Tax Benefit and the Child Care
Subsidy
-
Parental Leave Pay
-
funding for aged care services
- the National Disability Insurance Scheme (NDIS) and
- payments and services for veterans and their dependants.
While total expenditure on social security and welfare is
expected to increase from around $172.7 billion in 2018–19 to $200.2 billion in
2022–23, there are different trends within sub-categories of expenditure.
Figure 1 provides a breakdown of the social security and
welfare category showing key sub-categories including major payments and
services.
Figure 1: estimated Australian Government expenses on
social security and welfare
Source: Australian Government, Budget strategy and outlook: budget
paper no. 1: 2019–20, pp. 5-22–5-26.
Key drivers of expenditure
increases
Assistance to people with disability
The biggest driver of growth in social security and welfare
continues to be the NDIS. Total funding for the scheme is expected to grow from
$13.0 billion in 2018–19 to $24.8 billion in 2022–23. Just over half of the
total $88.1 billion in NDIS expenses from 2019–20 to 2022–23 is contributed by
the Australian Government ($45.7 billion) with states and territories
contributing the remaining funding. The Budget
notes that some of the Commonwealth expenditure on the NDIS will be counted
twice as National Disability specific purpose payments to the states and
territories cease—part of these payments are repaid to the Commonwealth and
then counted again as expenditure on the NDIS (p. 5-24).
The
full scheme was meant to be up and running nationally in 2019–20,
supporting 460,000
participants aged under 65. The Government notes that there has been a ‘slower
than expected transition of participants into the NDIS’ and as at December 2018
there were 244,653
people accessing the NDIS.[1] This has
reduced projected expenditure on the scheme since the Mid-Year Economic
and Fiscal Outlook 2018–19 by $1.6 billion over the forward
estimates (p. 3-22). The reduction in projected expenditure was expected to be
even higher until a
decision was made on 30 March 2019 to increase prices paid to service
providers.
The Budget
provides information on growth in expenses accounting for inflation—that is,
growth in real terms (pp. 5-22–5-24). The tables below provide information on
nominal expenditure.
Overall expenditure on assistance to people with disability is
expected to grow by 4.5 per cent in real terms from 2018–19 to 2019–20 and by
10.0 per cent in real terms from 2019–20 to 2022–23. Income support for people
with disability (primarily the Disability Support Pension (DSP)) is expected to
decrease by 2.3 per cent in real terms from 2019–20 to 2022–23. This decrease
has been primarily driven by a range of policy changes relating to eligibility
and assessment processes, implemented by both Labor and Coalition governments.
The government
administrative data shows that the number of DSP recipients has declined
from 832,024 people in December 2013 to 750,045 people in December 2018.
Table 1: expenses on assistance to
people with disabilities, $ million
| Component |
2018–19
(est.) |
2019–20
(est.) |
2020–21
(est.) |
2021–22
(proj.) |
2022–23
(proj.) |
| Income support for people with disability |
16
699 |
17
057 |
17
044 |
17
618 |
17
889 |
| National Disability Insurance
Scheme (NDIS)(a) |
12
989 |
17
524 |
22
253 |
23
523 |
24
806 |
| Income support for carers |
8
770 |
9
207 |
9
493 |
10
038 |
10
552 |
| Assistance to the states for disability
services |
958 |
173 |
- |
- |
- |
| Disability and carers |
1
012 |
1
084 |
1
085 |
1
095 |
1
112 |
| NDIS Transition Programme |
500 |
219 |
38 |
32 |
37 |
| National Partnership Payments –Assistance
to People with Disabilities |
3
151 |
1
742 |
1
295 |
1
336 |
1
104 |
| Total |
44
079 |
47
005 |
51
209 |
53
641 |
55
499 |
(a) Includes both Commonwealth and state contributions
to the NDIS through the National Disability Insurance Agency, a Commonwealth
agency.
Notes: Totals may not add due to rounding.
Source: Australian Government,
Budget strategy and outlook: budget paper no. 1:
2019–20, p. 5-24.
Assistance to the aged
The biggest component of social security and welfare
expenditure, the Age Pension and other income support for seniors will increase
from $46.7 billion in 2018–19 to $54.8 billion in 2022–23. Growth in Age
Pension expenditure is being partly restrained by the commencement in 2017 of a
Rudd
Government measure to gradually increase the pension age to 67 (pp. 17–22).
Expenditure on aged care is expected to increase by 11.2 per
cent in real terms from 2019–20 to 2022–23. Nominal expenditure will increase
from $20.0 billion in 2019–20 to $23.9 billion in 2022–23. This growth in
expenditure is primarily driven by demographic changes (an ageing population)
and the impact of the 2018–19 budget measure More
Choices for a Longer Life—healthy ageing and high quality care.
Table 2: expenses on assistance to
the aged, $ million
| Component |
2018–19
(est.) |
2019–20
(est.) |
2020–21
(est.) |
2021–22
(proj.) |
2022–23
(proj.) |
| Income Support for Seniors |
46
741 |
48
301 |
50
265 |
52
285 |
54
766 |
| Aged Care Services |
18
764 |
20
027 |
20
902 |
22
374 |
23
903 |
| Veterans’ Community Care and
Support |
1
202 |
1
130 |
1
136 |
1
109 |
1
025 |
| Access and information |
234 |
245 |
221 |
225 |
228 |
| Mature Age Income Support |
171 |
131 |
54 |
10 |
- |
| Aged Care Quality |
242 |
221 |
215 |
207 |
210 |
| Allowances concessions and
services for seniors |
92 |
83 |
75 |
68 |
61 |
| National Partnership Payments –
Assistance to the Aged |
3 |
13 |
15 |
15 |
21 |
| Total |
67 449 |
70 151 |
72 884 |
76 293 |
80 215 |
Notes: Totals may not add due to rounding; ‘‑’ means
zero.
Source: Australian Government,
Budget strategy and outlook: budget paper no. 1:
2019–20, p. 5-23.
Expenditure decreases
A number of areas are expected to see a decrease in expenses
(pp. 5-23–5-26):
- a decrease in the number of veterans and dependants accessing
residential aged care will see a 15.4 per cent decrease in real
expenditure on veterans’ community care and support from 2019–20 to 2022–23
- a decline in the population of veterans will see expenditure on
assistance to veterans and dependants decrease by 12.3 per cent in real terms
from 2019–20 to 2022–23 despite new spending on improving Department of
Veterans’ Affairs’ services through the Veteran Centric Reform
- expenditure on Family Tax Benefit is expected to decrease by 5.1
per cent in real terms from 2019–20 to 2022–23, reflecting the impact of changes
to the income tests, freezes on indexation of payment rates and freezes on
indexation of income test thresholds
- expenditure on assistance for Indigenous Australians not
elsewhere classified will decrease by 6.6 per cent in real terms from
2019–20 to 2022–23. The Budget
attributes this decline to a significant expenditure from the Aboriginals
Benefit Account in 2018–19 but decreased expenditure over the forward
estimates, and the 2019–20 budget measure, Single
National Mechanism for Commonwealth Legal Assistance, which will shift
where funding for Aboriginal and Torres Strait Islander legal services is
reported in the budget papers to the Courts and Legal Services sub-function of
the Public Order and Safety function (pp. 5-25–5.26).
Significant policy announcements
Social security
A change
to the way income is assessed for social security payments is expected to
provide $2.1 billion in savings over the forward estimates, the largest
single savings measure in the 2019–20 Budget (p. 33). Currently, income
support recipients with employment income need to calculate and report the
income they have earned in a payment fortnight; that is, the amount they should
be paid for the hours of work they have undertaken in that fortnight, not the
income they have actually receive in that fortnight. Under the change, income
support recipients will report the income they receive from their employer in a
relevant fortnight and the Department of Human Services will match the reported
income with the amount their employer has reported to the Australian Tax Office
through the single-touch payroll system to detect any discrepancy that would
affect their payment rate. The measure is expected to result in savings through
more accurate income reporting, and therefore fewer overpayments. As
overpayments are considered debts to the Commonwealth, the savings would not be
derived from reducing currently identified overpayments—rather, the measure
appears to be deriving savings from reducing overpayments that would not
previously have been identified.
The Budget includes a one-off Energy Assistance
Payment of $75 for singles or $125 for couples to be provided to pensioners
and certain veterans’ affairs payment recipients. In the initial announcement,
recipients of allowance payments such as Newstart Allowance and Youth Allowance
were not eligible for the payment. However, in tabling
the Bill for the payment, the Government reversed this position and
expanded eligibility to all allowance recipients. The measure announced in the Budget
was expected to
cost $284.4 million over two years (p. 159) while the expanded measure is
expected to cost $365.0 million over the forward estimates.
Existing trials of the
cashless debit card will be extended for one year, and the cashless debit card
will replace the BasicsCard system used for income management in other
locations around Australia, including the entire Northern Territory.[2]
The measures will
cost $128.8 million over the forward estimates (p. 157).
An additional $84.3
million will be allocated to the Integrated Carer Support Service (p. 162).
Under the measure, carers
will be able to access up to 5,000 financial packages worth up to $3,000
through a network of Regional Delivery Partners. Up to 25 per cent of all
packages will be reserved for young carers to support their continuing
participation in education or employment. Services available through the
packages can include transport and respite.
Aged care
The Budget includes $724.8 million over five years from
2018–19 for increased aged care funding and quality regulation, much of which
was announced
in February 2019. Some of the funding has already been included in the
forward estimates.
Residential aged care providers will receive a $320.0
million short-term increase in funding in the form of a 9.5
per cent temporary increase in the basic subsidy for residents from 20
March until 30 June 2019. The financial performance of residential aged care
providers has
been declining since 2016, when changes
to the basic subsidy were made. The Budget also includes $4.6 million to trial
an alternative residential aged care funding tool. If adopted more broadly,
this tool would change
the way that funding for residential aged care (including the basic subsidy) is
calculated.
The Budget provides 10,000
additional home care packages across all levels, at a cost of $282.4
million over five years from 2018–19. This is in addition to the 10,000
high-level packages announced in the Mid-Year Fiscal and Economic Outlook 2018–19. Home care packages are coordinated packages of care which assist older people to stay at home
rather than entering residential aged care. While providing a
significant increase in the number of packages available, this measure will not
be enough to clear the waiting list of around 128,500 people who are either
not receiving a package at all, or not receiving a package at their approved
level of care.
The Budget includes a number of measures to increase the
regulation of quality in both home and residential care. The largest of these
in dollar terms is $38.4 million over five years from 2018–19 to establish
a real-time information sharing system within the Aged Care Quality and
Safety Commission. The purpose of the system is to help the Commission quickly
identify and respond to poorly performing providers, while continuing regular
monitoring of all providers.
The Commonwealth
Home Support Programme (CHSP) will be extended
for two years to 30 June 2022 at a cost of $5.9 billion, which has already
been included in the forward estimates. The CHSP is the entry-level aged care
program and provides services such as social support, transport,
help with domestic chores, personal care, home maintenance, home modification,
nursing care, meals and allied health services. The CHSP was last extended in the 2017–18 Budget, and
current CHSP grant agreements with providers expire on 30 June 2020.
Disability
In the Budget, the
Government announced it would no longer proceed with a 2016–17 budget measure
to establish the National Disability Insurance Scheme Savings Fund (p. 8). The
fund was intended to be a special account that would capture savings from other
measures—such as the recently reversed 2016–17
budget measure to close access to the Energy Supplement to new income
support recipients—to be redirected to the NDIS. The Government has been unable
to pass
legislation to establish the fund and the budget papers state
that the ‘positive budget position means that future funding for the NDIS has
been secured’ (p. 8).
On 19 February 2019, a motion
passed the House of Representatives, which called on the Government to
establish a Royal
Commission to inquire into violence, abuse and neglect of people with a
disability. In the 2019–20 Budget,
the Government has provided $527.9 million over five years to support the work
of this Royal Commission (p. 54). This includes:
- $379.1 million in funding for the Attorney-General’s Department
to run the Royal Commission, to provide legal assistance to witnesses, and to
represent the Commonwealth in the proceedings (this funding is not considered
as social security and welfare expenditure) and
- $148.8 million over three years to the Department of Social
Services, the National Disability Insurance Agency and the National Disability
Insurance Scheme Quality and Safeguards Commission to provide counselling
services and other support to people with disability in connection with their
participation in the Royal Commission.
Preventing violence against women
and children
The Budget provides $328.0 million over four years from
2018–19 for projects and priorities under the Fourth Action Plan of the National
Plan to Prevent Violence Against Women and their Children 2010–2022.
The Fourth Action Plan, which will cover the period 2019 to 2022, is the final
action plan under the National Plan. This measure follows the Government’s announcement
of 5 March 2019. Detailed information on how the funding will be allocated can
be found in the document Our
Investment in Women’s Safety. Not all of the funding for this measure
is counted as social security and welfare expenditure.
[1].
Media commentary has suggested ‘dramatic delays in both the scheme
transition but also the signing of agreements for “full scheme” with the states
and territories’. R Morton, ‘NDIS
has $5bn in hand but costs are set to soar’, The Australian, 3 April
2019.
[2].
For an explanation of the differences between the two cards, see D
Arthur, ‘BasicsCard
and Cashless Debit Card: what’s the difference’, Parliamentary Library
blog, 23 June 2017.
All online articles accessed April 2019
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