Bills Digest no. 76,
2016–17
PDF version [1171KB]
Don Arthur, Anna Dunkley, Michael Klapdor, Matthew
Thomas
Social Policy Section
22
March 2017
Contents
Glossary
The Bills Digest at a glance
Scrutiny of Omnibus Bills
Purpose of the Bill
Committee consideration
Views on the Bill
Financial implications
Statement of Compatibility with Human
Rights
Parliamentary Joint Committee on
Human Rights
Schedules 1–3—Family payment measures
Purpose of the Schedules
Commencement
Background
Previous committee consideration
Policy position of non-government
parties/independents
Position of major interest groups
Financial implications
Key issues and provisions
Concluding comments
Schedule 4—Jobs for Families Child
Care Package
Purpose of the Schedule
Commencement
Background
Key elements of the Jobs for Families
package
Impact of the changes
Stakeholder issues
Changed financial implications
Schedules 5–8—Proportional payment of
pensions outside Australia, cease pensioner education supplement, cease
education entry payment, indexation
History
Background
Previous committee consideration
Policy position of non-government
parties/independents
Position of major interest groups
Key issues and provisions
Schedule 9—Closing energy supplement
to new welfare recipients
Background
Rationale for closing off carbon tax
compensation
Previous committee consideration
Policy position of non-government
parties/independents
Position of major interest groups
Financial implications
Key issues and provisions
Schedule 10—stopping the payment of
pension supplement after 6 weeks overseas
Purpose and background
Policy position of non-government
parties/independents
Position of major interest groups
Financial implications
Key issues and provisions
Schedule 11—automation of income
stream review processes
Purpose and background
Policy position of non-government
parties/independent
Position of major interest groups
Financial implications
Key issues and provisions
Schedule 12—Seasonal horticultural
work income exemption
Commencement
Background
Policy position of non-government
parties/independents
Position of major interest groups
Financial implications
Key issues and provisions
Schedules 13–16—ordinary waiting
periods, age requirements for various Commonwealth payments, income support
waiting periods and other waiting period amendments (Rapid Activation of young
job seekers)
Schedule 13—ordinary waiting periods
Schedule 14—age requirements for
various Commonwealth payments
Schedule 15—income support waiting
periods
Schedule 16—other
waiting period amendments (Rapid Activation of young job seekers)
Date introduced: 8
February 2017
House: House of
Representatives
Portfolio: Social
Services
Commencement: Various
dates as set out in the table as clause 2 of the Bill (see also the analysis
of each Schedule in this Bills Digest)
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent,
they become Acts, which can be found at the Federal Register of Legislation
website.
All hyperlinks in this Bills Digest are correct as
at March 2017.
Glossary
| ACCS |
Additional Child-Care Subsidy |
| ACOSS |
Australian Council of Social Service |
| ATI |
Adjusted taxable income |
| ATO |
Australian Taxation Office |
| AWLR |
Australian Working Life Residence |
| CCB |
Child Care Benefit |
| CCR |
Child Care Rebate |
| CCS |
Child Care Subsidy |
| CPI |
Consumer Price Index |
| DHS |
Department of Human Services |
| DVA |
Department of Veterans’ Affairs |
| ECEC |
Early Childhood Education and Care |
| FA Act |
A New Tax System (Family Assistance) Act 1999 |
| FA Admin Act |
A New Tax System (Family Assistance) (Administration) Act
1999 |
| FTB-A |
Family Tax Benefit Part A |
| FTB-B |
Family Tax Benefit Part B |
| Gold Card |
Repatriation Health Card—For All Conditions |
| Greens |
Australian Greens |
| ITAA 1936 |
Income Tax Assessment Act 1936 |
| ITAA 1997 |
Income Tax Assessment Act 1997 |
| Labor |
Australian Labor Party |
| MRC Act |
Military Compensation and Rehabilitation Act 2004 |
| MTAWE |
Male Total Average Weekly Earnings |
| MYEFO |
Mid-Year Economic and Fiscal Outlook |
| NSSRN |
National Social Security Rights Network |
| NXT |
Nick Xenophon Team |
| PBLCI |
Pensioner and Beneficiary Living Cost Index |
| PES |
Pensioner Education Supplement |
| SS Act |
Social Security Act 1991 |
| SS Admin Act |
Social Security (Administration) Act 1999 |
| SWPP |
Seasonal Worker Preclusion Period |
| TA Act |
Taxation Administration Act 1953 |
| VE Act |
Veterans Entitlements Act 1986 |
The Bills Digest at a glance
The Social
Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill
2017 (the Bill) passed the House of Representatives on 1 March 2017.
The Bill contains
18 schedules across the Social Services, Education and Training, and Employment
portfolios. Most of the measures proposed are framed as budget savings measures
with some of the intended savings intended to fund the child care measures
proposed in Schedule 4.
This Bills Digest
provides background and analysis for each of the Schedules separately. Where
there are no significant changes from previously proposed provisions, the Bills
Digest provides references to previous Bills Digests or analysis in other
Parliamentary Library publications. Due to timing pressures related to
Parliamentary debate of the Bill, Schedules 17 and 18 are not analysed in this
Digest. It is intended that an updated Bills Digest that includes those schedules
will be provided shortly.
As shown in the
Table 1, many of the measures have been previously introduced to Parliament and
many are currently proposed in other Bills before the Parliament. Table 1 sets
out each of the Schedules and the most recent Bill in which the measures have
been proposed.
Table 1:
Schedules previously introduced
| Schedule |
Previously introduced (most recent Bill only) |
| 1—Payment rates |
Revised version of measures in the Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill 2016, currently before the House of
Representatives. |
| 2—Family tax benefit Part B rate |
Revised version of measures in the Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill 2016, currently before the House of
Representatives. |
| 3—Family tax benefit supplements |
Part of the Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill 2016, currently before the House of
Representatives. |
| 4—Jobs for families child care package |
Family
Assistance Legislation Amendment (Jobs for Families Child Care Package) Bill
2016 currently before the House of
Representatives. |
| 5—Proportional payment of pensions outside Australia |
Part of the Social
Services Legislation Amendment (Budget Repair) Bill 2016, currently
before the House of Representatives. |
| 6—Pensioner education supplement |
Part of the Social
Services Legislation Amendment (Budget Repair) Bill 2016, currently
before the House of Representatives. |
| 7—Education entry payment |
Part of the Social
Services Legislation Amendment (Budget Repair) Bill 2016, currently
before the House of Representatives. |
| 8—Indexation |
Part of the Social
Services Legislation Amendment (Budget Repair) Bill 2016, currently
before the House of Representatives. |
| 9—Closing energy supplement to new welfare recipients |
Part of the Budget
Savings (Omnibus) Bill 2016, which passed both Houses on 15 September
2016 following Government amendments which removed these measures. |
| 10—Stopping the payment of pension supplement after 6
weeks overseas |
Not previously introduced to Parliament (announced in the Mid-Year
Economic and Fiscal Outlook 2016–17, p. 194). |
| 11—Automation of income stream review processes |
Not previously introduced to Parliament (announced in the Mid-Year Economic
and Fiscal Outlook 2016–17, p. 192). |
| 12—Seasonal horticultural work income exemption |
Not previously introduced to Parliament (announced in the Mid-Year Economic
and Fiscal Outlook 2016–17, p. 195). |
| 13—Ordinary waiting periods |
Part of the Social
Services Legislation Amendment (Youth Employment) Bill 2016, currently
before the House of Representatives. |
| 14—Age requirements for various Commonwealth payments |
Part of the Social
Services Legislation Amendment (Youth Employment) Bill 2016, currently
before the House of Representatives. |
| 15 –Income support waiting periods |
Part of the Social
Services Legislation Amendment (Youth Employment) Bill 2016, currently
before the House of Representatives. |
| 16—Other waiting period amendments |
Part of the Social
Services Legislation Amendment (Youth Employment) Bill 2016, currently
before the House of Representatives |
| 17—Adjustment of parental leave pay for primary carer pay
and other amendments |
An earlier version of this measure was part of the Fairer
Paid Parental Leave Bill 2016 currently before the House of Representatives. |
| 18—Removal of parental leave pay mandatory employer role |
Part of the Fairer
Paid Parental Leave Bill 2016 currently before the House of
Representatives. |
The measures proposed in Schedules 1, 2, 3, 6, 7, 8, 13,
14 and 15 have their origin in the 2014–15 Budget. Schedules 4, 5, 16 and 17
have their origin in the 2015–16 Budget. Schedule 9 was included in the 2016–17
Budget and Schedules 10, 11 and 12 were announced in the 2016–17 Mid-Year
Economic and Fiscal Outlook. The Coalition has attempted to introduce a measure
similar to that proposed in Schedule 18 a number of times including whilst it
was in Opposition in 2010.[1]
Scrutiny of Omnibus Bills
The Bill proposes a wide range of amendments to various
statutes in the Social Services, Education and Training, and Employment
portfolios. Many of these amendments are complex. The measures proposed in
Schedule 4 are the most significant changes to child care fee assistance
arrangements in more than 16 years. The Bill bundles complicated, unrelated and
wide-ranging measures together. This may reduce the ability of the Parliament
to properly scrutinise and assess the proposed amendments.
While some of the measures have been proposed and
scrutinised previously, many of these have been revised and others are
completely new measures. Details of any revisions to previously proposed
provisions have not been explicitly identified in the Explanatory Memorandum or
in the joint departmental submission to the Senate Community Affairs
Legislation Committee’s inquiry into the Bill.[2]
The Senate Scrutiny of Bills Committee has previously
recommended that the Explanatory Memorandum to an Omnibus Bill should identify
whether measures are new or whether they reflect a measure as it has been
previously introduced on the grounds that ‘this would enable Senators and
others with an interest in the matters covered in the Bill to quickly identify
which measures are completely new and have not yet been considered by the
Parliament’.[3]
The Explanatory Memorandum to this Omnibus Bill does not provide such
information.
Purpose of the Bill
The purpose of the Social Services Legislation Amendment
(Omnibus Savings and Child Care Reform) Bill 2017 (the Bill) is to amend
various Acts to:
- from 1 July 2018, increase the standard fortnightly rate of
Family Tax Benefit Part A (FTB-A) by $20.02 per child, and increase the rate of
Youth Allowance and Disability Support Pension for those aged under 18 years
and living at home by $19.37 (Schedule 1)
- from 1 July 2017, remove eligibility for Family Tax Benefit Part
B (FTB-B) for single parents from 1 January of the calendar year in which their
youngest child turns 17 (with parents aged 60 years or more and
grandparent/great-grandparent carers exempt) (Schedule 2)
- from 1 July 2016, phase out the FTB-A and FTB-B end-of-year
supplement amounts:
- the
FTB-A supplement will be reduced from $726.35 to $602.25 for the 2016–17
financial year; to $302.95 for the 2017–18 year; and abolished from 1 July 2018
- the
FTB-B supplement will be reduced from $354.05 to $302.95 for the 2016–17
financial year; to $153.30 for the 2017–18 year; and abolished from 1 July 2018
(Schedule 3)
- to introduce the following elements of the Government’s Jobs for
Families Child Care Package:
- a
new child care fee assistance payment, the Child Care Subsidy (CCS), replacing
two current payments: Child Care Benefit (CCB) and Child Care Rebate (CCR)
- a
new supplementary payment, the Additional Child Care Subsidy (ACCS), which
provides additional financial assistance for children at risk of abuse or
neglect, families experiencing temporary financial hardship, families
transitioning to work from income support, grandparent carers on income
support, and low income families in certain circumstances. The ACCS partly
replaces a number of current payments including Special Child Care Benefit,
Grandparent Child Care Benefit and the Jobs, Education and Training Child Care
Fee Assistance payment
- an
enhanced compliance framework.
The new payments are to commence
from July 2018, while some aspects of the new compliance framework will be
introduced from Royal Assent (Schedule 4)
- reduce the period a pensioner can spend overseas before their payment
may be reduced under the Australian Working Life Residence proportionality rules
from 26 weeks to six weeks (Schedule 5)
- cease payment of the Pensioner Education Supplement (Schedule
6)
- cease payment of the Education Entry Payment (Schedule 7)
- pause the indexation of income free areas for all working age
allowances (other than student payments) and for parenting payment single; and
pause the indexation of income free areas and other means test thresholds for
student payments, including the student income bank limits (Schedule 8)
- close off the Energy Supplement to new recipients of affected
payments from 20 September 2017, and cease payment of the Energy Supplement on
20 September 2017 for those who first received the Energy Supplement on or
after 20 September 2016. Those in receipt of the Energy Supplement prior to 20 September
2016 who continue to satisfy eligibility criteria will still receive the
payment after 20 September 2017 (Schedule 9)
- cease payment of the pension supplement once a pensioner has been
outside Australia continuously for six weeks, or when they leave Australia
if departing permanently (Schedule 10)
- allow the Department of Human Services to automatically collect
certain information from income stream providers on a regular basis in order to
conduct income reviews (Schedule 11)
- provide for a trial of an income test incentive aimed at
encouraging job seekers on income support to undertake seasonal horticultural
work and payment of a $300 travel allowance if they undertake horticultural work
that is more than 120 kilometres from their home (Schedule 12)
-
make the following changes to the ordinary waiting period
requirements:
- extend
the ordinary waiting period of seven days to recipients of Parenting Payment
and Youth Allowance (Other)
- provide
for the current exception to the ordinary waiting period to apply on the basis
that a person is in severe financial hardship and that
the person is experiencing a personal financial crisis, making it a more
stringent test and
- clarify
that the ordinary waiting period is to be served after certain other relevant
waiting periods or preclusions have ended (Schedule 13)
- raise, from 22 to 25 years, the eligibility age for Newstart Allowance
and Sickness Allowance (Schedule 14)
-
introduce a four-week waiting period for new claimants of Youth
Allowance (Other) and Special Benefit who are under 25 years of age (Schedule
15)
-
require people subject to the four-week waiting period to
participate in a RapidConnect Plus rapid activation strategy (Schedule 16)
- reduce or remove access to government-funded parental leave pay
for workers who receive paid primary carer leave from their employer (Schedule
17) and
-
remove any requirement for employers to administer
government-funded parental leave pay (Schedule 18).
Committee consideration
On 9 February 2017, the Bill was referred by the Senate to
the Senate Community Affairs Legislation Committee for inquiry and report by 20 March
2017. The Committee was granted an extension and reported on 21 March 2017.[4]
Details of the inquiry are available from the inquiry
homepage.[5]
The Senate
Scrutiny of Bills Committee reported on some elements of the Bill,
specifically Schedules 3, 4, 9 and 13.[6]
In particular, the Committee reiterated previous concerns and comments it had
made in regards to elements of the child care changes in Schedule 4.[7]
Views on the Bill
Public debate on the Bill has largely focused on particular
Schedules, rather than the Bill as a whole. Information on the policy positions
of non-government parties, independents and major stakeholders relating to
particular measures is provided in the discussion of each Schedule.
Financial implications
Table 2 sets out the estimated impact of each measure on the
fiscal balance as detailed in the Explanatory
Memorandum to the Bill.
Table 2: financial impact of the
Bill over the forward estimates, 2016–17 to 2019–20 ($ million)
| Schedule |
Title |
Indicative
Financials |
| 1 |
Payment rates |
-2,373.5 |
| 2 |
Family tax benefit Part B rate |
440.6 |
| 3 |
Family tax benefit supplements |
4,653.0 |
| 4 |
Jobs for families child care package* |
-1,290.9 |
| 5 |
Proportional payment of pensions outside Australia |
213.9 |
| 6 |
Pensioner education supplement |
201.0 |
| 7 |
Education entry payment |
42.3 |
| 8 |
Indexation |
69.0 |
| 9 |
Closing energy supplement to new welfare recipients |
933.4 |
| 10 |
Stopping the payment of pension supplement after 6 weeks
overseas |
123.6 |
| 11 |
Automation of income stream review processes |
38.1 |
| 12 |
Seasonal horticultural work income exemption |
-27.5 |
| 13 |
Ordinary waiting periods |
189.4 |
| 14 |
Age requirements for various Commonwealth payments |
431.3 |
| 15 |
Income support waiting periods |
169.5 |
| 16 |
Other waiting period amendments |
-0.8 |
| 17 |
Adjustment of parental leave pay for primary carer pay and
other amendments |
491.2 |
| 18 |
Removal of parental leave pay mandatory employer role |
*Including measures not requiring legislation, the Jobs for
Families Child Care Package totals -$1,663.5.
Source: Explanatory
Memorandum, Social Services Legislation Amendment (Omnibus Savings and Child
Care Reform) Bill 2017, p. 6.
Information on the financial implications of particular
measures is provided in the discussion of each Schedule.
Statement of Compatibility with Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed
the Bill’s compatibility with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[8]
Information on the human rights implications of particular measures may be
provided in the discussion of each Schedule.
Parliamentary Joint Committee on Human Rights
At the time of writing, the Parliamentary Joint Committee
on Human Rights had not reported on the Bill.[9]
Schedules 1–3—Family payment measures
Purpose of the Schedules
Schedules 1–3 propose amendments to the A New Tax System
(Family Assistance) Act 1999 (the FA Act), the A New Tax System
(Family Assistance) (Administration) Act 1999 (the FA Admin Act),
the Social
Security Act 1991 (the SS Act) and the Social Services
Legislation Amendment (Family Assistance Alignment and Other Measures) Act 2016
to implement the following measures:
- from 1 July 2018, increase the standard fortnightly rate of
Family Tax Benefit Part A (FTB-A) by $20.02 per child in the family aged up to
19, and increase the rate of Youth Allowance and Disability Support Pension for
those aged under 18 years and living at home by $19.37 (Schedule 1)
-
from 1 July 2017, remove eligibility for Family Tax Benefit Part
B (FTB-B) for single parents from 1 January of the calendar year in which their
youngest child turns 17 (with parents aged 60 years or more and
grandparent/great-grandparent carers exempt) (Schedule 2)
- from 1 July 2016, phase out the FTB-A and FTB-B end-of-year
supplement amounts:
- the
FTB-A supplement will be reduced from $726.35 to $602.25 for the 2016–17
financial year; reduced further to $302.95 for the 2017–18 year; and abolished
from 1 July 2018
- the
FTB-B supplement will be reduced from $354.05 to $302.95 for the 2016–17
financial year; reduced further to $153.30 for the 2017–18 year; and abolished
from 1 July 2018 (Schedule 3).
Commencement
Schedule 1 commences on 1 July 2018.
Schedule 2 commences on 1 July 2017.
Part 1 of Schedule 3 commences on 1 July 2016, Part 2 on 1
July 2017, Part 3 on 1 July 2018 and Part 4 on Royal Assent.
Background
FTB-A and FTB-B are the two main forms of direct financial
assistance the Commonwealth provides to families with children. Both payments
are means tested to target assistance at lower-income families. FTB-A is
available to all families who meet the care, residence and income test requirements.[10]
Different income test requirements for FTB-B restrict the payment to single
parent families and couple families where one parent has a low income or is not
in paid employment.[11]
Coalition
has been attempting to implement savings measures since 2014
Since the Coalition won Government in 2013, it has proposed
a range of savings measures targeting the Family Tax Benefit program. Some have
passed, others have been revised, and some have stalled in the Parliament. In
the 2015–16 Budget, the Government linked proposed Family Tax Benefit savings
measures from the 2014–15 Budget with its Jobs for Families Child Care Package.[12]
2014–15
budget measures
In the 2014–15 Budget, the Abbott Government proposed a
range of savings measures targeting Family Tax Benefit Part A (FTB-A) and
Family Tax Benefit Part B (FTB-B). These included:
- lowering the income cut-off point for FTB-B for single parents
and primary earners in a couple from $150,000 per annum down to $100,000 per
annum
-
limiting FTB-B to families with a child under six years
- introducing a new FTB allowance for single parents on maximum
rate of FTB-A who have a child aged six to twelve years, worth $750 per child,
to partially makeup for the loss of access to FTB-B
-
limiting the FTB-A Large Family Supplement to families with four
or more children (increased from three or more children)
-
maintaining FTB payments for two years, that is, they would not
be indexed
-
not indexing some of the FTB-A and FTB-B income test thresholds
for three years
- removing the FTB-A ‘per child add-on’, a component of the FTB
income test which reduced the payment withdrawal rate for those with more than
one child and
-
reducing the FTB-A and FTB-B supplements to their 2004 values
($600 per FTB-A child and $300 per FTB-B family).[13]
The Government attempted to enact these measures, together
with a range of other social security measures, in two Omnibus Bills: the
Social Services and Other Legislation Amendment (2014 Budget Measures No. 1)
Bill 2014 (the No. 1 Bill) and the Social Services and Other Legislation
Amendment (2014 Budget Measures No. 2) Bill 2014.[14]
Neither of these Bills proceeded beyond the second reading stage in the Senate,
most likely because the Government was unable to secure their passage due to
opposition to various measures from the Australian Labor Party (Labor), the
Australian Greens (the Greens), minor parties and independent senators. Both
Bills were discharged from the Notice Paper in the Senate on 28 October 2014.
On 2 October 2014, the Government reintroduced the
measures in four new Bills. The family payments measures were contained in the
Social Services and Other Legislation Amendment (2014 Budget Measures No. 4)
Bill 2014 (the No. 4 Bill) and the Social Services and Other Legislation
Amendment (2014 Budget Measures No. 6) Bill 2014 (the No. 6 Bill).[15]
The No. 6 Bill contained the measures that the Opposition had offered to
support. The No. 6 Bill passed both Houses on 17 November 2014. The family
payment measures it included were:
- the limit on the Large Family Supplement to families with four or
more children
- the removal of the FTB-A per child add-on and
- the lowering of the income cut-off point for FTB-B for single
parents and primary earners in a couple from $150,000 per annum down to
$100,000 per annum.
The remaining measures were included in the No. 4 Bill.
2015–16
Budget—measures linked to child care package
In its 2015–16 Budget, the Abbott Government included its
stalled measures and announced that it would move to abolish the Large Family
Supplement altogether.[16]
The Government also linked the savings from the 2014–15 family payment budget
measures with funding for its Jobs for Families Child Care Package.[17]
Measures
were revised at the same time as the child care package was revised
In October 2015, the proposed FTB savings measures were
revised, together with a revision of the proposed child care package. In
introducing the Bill containing the revised FTB measures, the Social Services
Legislation Amendment (Family Payments Structural Reform and Participation
Measures) Bill 2015, the Minister for Social Services, Christian Porter, stated
that it would ‘supersede measures’ that had stalled in the Senate (the
remaining 2014–15 budget measures).[18]
The savings from the measures proposed in the Bill were
again linked with the 2015–16 Budget’s childcare measures.[19]
The revised FTB savings measures, as proposed in the Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill 2015 were:
-
from 1 July 2018, increase the maximum fortnightly rate of FTB-A
by $10.08 and increase by $10.44 per fortnight the rate of Youth Allowance for
those aged under 18 and living at home, and the rates of Disability Support
Pension (DSP) paid to a single recipient aged under 18 who is living in their
parent’s home due to a medical condition
- from 1 July 2016:
- increase
the standard rate of FTB-B by $1,000.10 per year for families whose youngest
child is aged under one
- reduce
the rate of FTB-B for single parents with a youngest child aged 13–16 to $1,000.10
per annum (from the 2015–16 rate of $2,784.95 per annum) and remove FTB-B in
respect of children aged 17–18
- reduce
the rate of FTB-B for grandparent carer couples with a youngest child in their
care aged 13–16 to $1,000.10 per annum and remove FTB-B in respect of children
17–18 and
- remove
FTB-B for couple families (other than grandparent carers) with a youngest child
aged 13 or over
- phase out the FTB-A and FTB-B supplements by:
- reducing
the FTB-A supplement from the 2015–16 rate of $726.35 per child to $602.25 for
2016–17, to $302.95 for 2017–18 and removing the supplement from 1 July 2018
- reducing
the FTB-B supplement from the 2015–16 rate of $354.05 per family to $302.95 for
2016–17, to $153.30 for 2017–18 and removing the supplement from 1 July 2018.[20]
One measure
was passed with Labor support
After negotiations with Labor, the Social Services
Legislation Amendment (Family Payments Structural Reform and Participation
Measures) Bill 2015 was amended to remove all of the measures except the
measure to remove FTB-B for couple families whose youngest child was aged 13
years or above (with grandparent and great-grandparent carers exempt).[21]
The amended Bill was passed on 30 November 2015 and the resulting Act received
Royal Assent on 11 December 2015.[22]
Remaining
measures stalled
On 2 December 2015, the measures were reintroduced with some
small amendments, in the Social Services Legislation Amendment (Family Payments
Structural Reform and Participation Measures) Bill (No. 2) 2015 (2015 No. 2
Bill).[23]
This Bill exempted single parents aged 60 years or over and grandparent carer
couple families from the FTB-B rate reduction measures (and allowed these
recipients to continue receiving FTB-B for children aged 17 or 18).
The 2015 No. 2 Bill passed the House of Representatives on 10 February
2016 and was introduced into the Senate on 22 February 2016. The No. 2
Bill was not debated in the Senate and lapsed on 17 April 2016, at prorogation
of the Parliament prior to the 2016 Federal election.
2016 Bill
On 1 September 2016, a new Bill, the Social Services
Legislation Amendment (Family Payments Structural Reform and Participation
Measures) Bill 2016 (the 2016 Bill), was introduced into the Parliament.[24]
The 2016 Bill contained similar provisions to the 2015 No. 2 Bill except that
the commencement date was pushed back from 1 July 2016 to 1 July
2017.
This Bill has not been debated and remains before the House
of Representatives.
Budget
Savings (Omnibus) Act 2016 changes
As part of an agreement between the Government and Labor to
secure passage of the Budget Savings (Omnibus) Bill 2016, an income limit of
$80,000 was placed on the FTB-A supplement commencing 1 July 2016.[25]
This means that only families with adjusted taxable income below $80,000 are
eligible to receive the FTB-A supplement.
The Government stated that despite this new limit, it would
proceed with the proposal to phase out the supplements altogether via the Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill 2016.[26]
Another element of the agreement to secure passage of the
Budget Savings (Omnibus) Bill 2016 was that the Government would not proceed
with the increase in FTB-B rates for families whose youngest child is aged less
than one year. This measure had been described as a new ‘baby bonus’.[27]
New
measures
The measures
proposed in Schedules 1–3 of the Social Services Legislation Amendment (Omnibus
Savings and Child Care Reform) Bill 2017 were announced on the day the Bill was
introduced. When compared with the 2016 Bill, the proposed measures essentially
double the fortnightly rate increase for FTB-A, remove the reduction in FTB-B
for single parents whose youngest child is aged 13–16, and no longer include
the increase in FTB-B for families whose youngest child is aged under one.
While the measures in the 2016 Bill were expected to save around $5.8 billion
over the forward estimates, the measures in Schedules 1–3 of this Bill are
expected to save around $2.7 billion.[28]
A significant part of the reduction in the fiscal impact between the two Bills
is due to the income limit on the FTB-A supplement that was introduced by the Budget Savings
(Omnibus) Act 2016 (which reduced the number of families eligible for
the supplement and which was expected to provide savings of $1.6 billion over
the forward estimates).[29]
The other major reason for the reduction in savings is the additional increase
in the maximum fortnightly FTB-A rate.
Previous committee consideration
The 2016 Bill, together with the Family Assistance
Legislation Amendment (Jobs for Families Child Care Package) Bill 2016, was
referred to the Senate Education and Employment Legislation Committee for
inquiry. The Committee tabled its report on 10 October 2016.[30]
The report of the Committee noted the earlier inquiries
into the Social Services Legislation Amendment (Family Payments Structural
Reform and Participation Measures) Bill 2015 and the Social Services Legislation
Amendment (Family Payments Structural Reform and Participation Measures) Bill
(No. 2) 2015 by the Senate Community Affairs Committee and that the key issues
held by stakeholders had been established by these inquiries.[31]
The Committee noted the concerns raised by stakeholders over the coupling of
the savings measures in the 2016 Bill with the additional funding for the Jobs
for Families Child Care Package but considered that this was justified.[32]
The Committee recommended both Bills be passed without amendment. Labor and
Greens Senators dissented from the majority report.[33]
The Bills Digest to the 2016 Bill provides a summary of
the previous committee inquiries into the related Bills.[34]
Policy position of non-government parties/independents
Labor has stated that it is opposed to the measures in
Schedules 1–3. Shadow Minister for Families and Social Services, Jenny Macklin
stated:
Labor will not support these cuts to family tax benefits, we
think that the Government is going to hurt millions of Australian families with
these cuts. These cuts will see some of the poorest families in Australia lose
more money. If you’re a family on Family Tax Benefit Part A it will mean that
you are around $200 a year per child worse off. If you’re receiving Family Tax
Benefit Part B you’ll be around $350 a year worse off as a family. These are
real cuts to families. It will leave a million families worse off as a result
of these cuts.[35]
The Greens have made critical comments on the measures in
Schedules 1–3 but have not stated their position on the Bill per se.
Greens spokesperson on Community Services, Senator Rachel Siewert stated:
... the Government is claiming those on FTB A will get an
increase to their payment, that is not true. If you would have received the
full FTB A supplement, you lose out on $8 a fortnight.
Those on FTB B may also miss out, potentially losing up to
$13 a fortnight. To struggling families I would say: don’t let the Government
fool you.
The Government is unrelentingly going after young families,
and those relying on our social security safety net.
We will continue to scrutinise this legislation when it comes
through the Senate.[36]
The Greens made commitments in the 2016 Election to oppose
Coalition ‘cuts to family payments’ and to actually reverse cuts that had
already been made.[37] In
their Dissenting report to the Senate Education and Employment Committee’s
inquiry into the 2016 Bill, Greens Senators recommended that the 2016 Bill be
rejected.[38]
It is unclear what the position of the other crossbench
Senators is in regards to Schedules 1–3. Senators Xenophon and Lambie have both
stated concerns with the Bill in general.[39]
Position of major interest groups
The Australian Council of Social Service (ACOSS) has stated
that it is opposed to the Bill. In regards to the Family Tax Benefit measures,
ACOSS Chief Executive Officer (CEO) Cassandra Goldie stated:
The so-called concessions the Government has made will be
wiped out by other changes in the Bill, leaving many low-income people worse
off.
Of course we all want greater support for families to get
better quality childcare but it cannot be funded on the backs of some of the
most disadvantaged people in our country.
This is not the way to build a strong community – caring for
each other through all stages of our lives has served our nation well. This new
Bill risks weakening our social fabric.
The increase to the Family Tax Benefit Part A for families
with children by $10 a week does not make up for cuts to the supplements. A
sole parent with two children aged 13 and 15 will still lose between $14 and
$20 per week, or around $1,000 a year.
Although this is less of a hit than under the previous
proposal, it will still severely impact single parents, most of whom are
struggling to keep a roof over their heads and feed their children as well as
provide for them in the new school year.[40]
The National Social Security Rights Network (NSSRN) stated
that it was opposed to the measures:
The net impact of these changes is to reduce payments to
families. Although there is an increase to the fortnightly rate of FTB-A of
about $20 per fortnight for the majority of families, this is more than offset
by the loss of the FTB-A supplement from 1 July 2018, currently $726 per child
per year.
Single parents and single income families with pre-school and
primary school age children will lose more, as they also lose the FTB-B
supplement, currently $354 per year per family. Single parent families with
older children in year 11 or year 12 (depending on the child’s age) will lose
even more, as they lose eligibility for FTB-B entirely from the end of the year
their child turns 16.
For the majority of families receiving FTB, who have
household incomes under $80,000, this is a loss of income support of at least
$200 per year per child, more if they are a single parent. If this Bill
proceeds, the impact will be even harsher because other measures in it will
further cut the incomes of the poorest families in our community.
Close to half of all families receiving FTB also receive an
income support payment (such as parenting payment, carer payment or disability
support pension). The closure of the energy supplement to new social security
recipients will further cut the income of those households by between $228 and
$366 per year (at current rates).
The NSSRN opposes these cuts. They are harsh and unfair and
affect the poorest families in our community. Cuts of this kind need a very
strong rationale, which the Government has not provided.[41]
Other community sector groups have also criticised the measures.
Benevolent Society CEO, Jo Toohey, stated:
For those relying on the aged pension [referring to other
Schedules in the Bill] and family supports as their sole source of income,
these cuts will hurt. They will drive older people further into poverty and
will continue to entrench the disadvantage of Australia’s most vulnerable
families.[42]
Ms Toohey described the Bill as ‘appalling’ as it ‘pits
different groups in the community against each other’.
Financial implications
According to the Explanatory Memorandum to the Bill, the
amendments in Schedules 1–3 will provide net savings of $2.7 billion over the
forward estimates 2016–17 to 2019–20.[43]
The measures will see increased expenditure of $2.4 billion for the increase in
the FTB-A standard rate and the related Youth Allowance/Disability Support
Pension rates. This will be offset by savings of $440.6 million for the FTB-B
eligibility changes, and $4.7 billion from the phasing out of the FTB-A
and FTB-B supplements.[44]
Key issues and provisions
While the measures in Schedules 1–3 are modified versions of
those previously proposed in the three ‘Family Payments Structural Reform and
Participation Measures’ Bills, the key issues remain the same as those
discussed in the Bills Digest for the Social Services Legislation Amendment
(Family Payments Structural Reform and Participation Measures) Bill 2015.[45]
The key issues are:
- the measures will see rate reductions for FTB-A and FTB-B
recipients, as the abolition of the end-of-year supplements more than offsets
the proposed fortnightly rate increases
-
it is unclear if the new income reporting system will make the
end-of-year supplements redundant and
- the measures will further complicate the family assistance
payment system, despite one of the rationales being the simplification of the
system.
Rate
reduction
All FTB-A recipients with family income under $80,000 and
all FTB-B recipients will, over time, receive reduced payments. This is because
the increase in maximum FTB-A rates (proposed by Schedule 1) are more than offset
by the soon-to-be-phased out FTB-A supplements (and the FTB-B supplement
withdrawal is not being offset by any rate increase). FTB-A recipients with
income over $80,000 have already lost eligibility for the FTB-A supplement as a
result of amendments by the Budget Savings (Omnibus) Bill 2016.
The increase in fortnightly rates is equivalent to around
$522 per child per annum if in receipt of the maximum rate. The FTB-A
supplement is currently worth $726.35 per child per annum. This will mean a
rate reduction of around $204 per child for those receiving the maximum rate.
FTB-B recipients (single parents and couple families with
one low-income earner) will lose the full amount of the FTB-B supplement. Most
FTB-B recipients also receive FTB-A so the impact of these measures on their
income will be compounded. Single parents whose youngest child is turning 17
will also lose eligibility for the payment altogether. Based on current rates,
this would amount to a loss of $3,186.45 in FTB-B for the financial year (including
the end-of-year supplement). The design of the measure means that single
parents would lose eligibility for FTB-B from 1 January of the year in
which their youngest child turns 17, even if the child’s birthday is on 31
December of that year.
The role of
the end-of-year supplements in minimising debts
The supplements were not included in the FTB program
introduced in 2000. They were introduced later (the FTB-A supplement in 2004
and the FTB-B supplement in 2005).[46]
While described at the time as an increase in the rates of FTB, the design of
the supplements as lump-sums paid at the end of the financial year was mainly
in response to the large number of FTB recipients who ended up with small
debts. Debts arose as the vast majority of FTB recipients choose to be paid by
way of fortnightly instalments during the year, rather than claiming a lump-sum
at the end of the year when they lodge their tax return. When an FTB recipient
is paid by instalment, they are required to estimate their adjusted taxable income
(ATI) for the year of payment and the rate of FTB paid is based on their
estimate. Once the financial year finishes and they lodge their tax return,
their actual ATI (as assessed) is reconciled against the FTB paid to them for
the year. As it is often difficult to estimate ATI over the year ahead, many
families end up either underpaid (and then paid their arrears) or overpaid
(thereby creating a recoverable debt).
While the supplements are included in an individual’s
total FTB entitlement calculation, the value of the supplement is not paid
until after the reconciliation process. As such, it can be used to offset any
debts (partly or in full). Tax return payments from the Australian Taxation
Office (ATO) can also be withheld to offset any debts. If any debt amount
remains, fortnightly payment rates for the following year can be reduced to
recover the outstanding amount (or other debt recovery actions can be taken if
the person is no longer entitled to FTB). If the reconciliation process finds
that a person has been underpaid, then any supplement entitlement will be added
to the amount outstanding and paid as a top-up payment.[47]
The Government holds that such debts will not be an issue
in the future as the ATO is introducing a ‘single touch payroll system’.[48]
This system is intended to automatically report payroll information to the ATO
that can be shared in ‘real-time’ with the Department of Human Services (DHS),
allowing DHS to make adjustments to an individuals’ FTB entitlements if there
are any discrepancies with the individual’s income estimate for the year. The
system is intended to be implemented from 1 July 2017, with employers with 20
employees or more required to use the system from 1 July 2018.[49]
There is an element of risk involved in removing the supplements
before it is clear that the system will work as intended to minimise debts.
Also, not all employers will be required to use the single touch payroll system
meaning that many families will still be reliant on the current arrangements.
Complicated
rate structure
In his second reading speech to the Bill, the Minister for
Social Services, Christian Porter, stated: ‘While the changes to family
payments in this Bill will pay for the Jobs for Families Child Care Package,
they will also simplify the Family Tax Benefit system ... ’.[50]
While removing the FTB supplements does simplify the system, the proposed
changes to FTB-B rates and the changes made via the Social Services
Legislation Amendment (Family Payment Structural Reform and Participation
Measures) Act 2015 and the Budget Savings
(Omnibus) Act 2016 will add complexity to the rate structure and
eligibility conditions for family assistance payments:
- In 2015–16 there were two different FTB-B rates available to
eligible families, with a different income test applying to single parent and
couple families but with other eligibility conditions the same. As a result of
recent changes, there are now different eligibility conditions for couple
families and for single parent, grandparent and great-grandparent families:
couple families who are not grandparent or great-grandparent carers are no
longer eligible for FTB-B if their child is aged 13 or over.
-
As a result of the Budget Savings (Omnibus) Act 2016,
different payment rates are payable for FTB-A and FTB‑B depending on when
a person commenced receiving the payments. Those eligible for FTB-A or FTB-B on
19 September 2016 can receive the Energy Supplement and can continue to
receive it if they remain eligible for their FTB payment. Those who became
eligible for FTB-A or FTB-B between 20 September 2016 and 19 March 2017
are eligible to receive the Energy Supplement up to 19 March 2017—they will no
longer receive the Energy Supplement from 20 March 2017. Those who become
eligible for FTB from 20 March 2017 will not receive an Energy Supplement.
- Also as a result of the Budget Savings (Omnibus) Act 2016,
those in receipt of FTB-A with family income over $80,000 per annum will not be
entitled to the FTB-A supplement. This can mean a family with income just over
$80,000 can have an FTB-A entitlement hundreds (and potentially thousands) of
dollars less per annum than a family with income just under $80,000.
- The proposed changes in the Bill will add another eligibility
category so that couples, single parents and grandparent/great-grandparents and
those aged 60+ will each have different eligibility criteria based on the age
of their youngest child.
Key
provisions of Schedule 1—Payment rates
A New Tax
System (Family Assistance) Act 1999
Item 1 inserts proposed clause 7 at
Part 2 of Schedule 4 of the FA Act to provide for a one-off increase in
the standard per child rates of FTB-A of $521.95 (there are two rates: one for
an FTB child aged under 13 years and one for an FTB child who has reached 13
years). This will increase the maximum annual rate of FTB-A for 2018-19 on top
of the usual indexation to this rate that occurs on 1 July 2018 and is
equivalent to an additional increase of $20.02 per fortnight.
The standard rate is the maximum rate of FTB-A. The
increase does not apply to other FTB-A rates such as the base rate.
Social
Security Act 1991
Items 3 and 4 substitute the annual and fortnightly
maximum basic rates of Disability Support Pension (DSP) for recipients aged
under-18, with no dependent children, considered not independent and living at
home, currently set out in table item 1 of the table at Point 1066A-B1 of the SS
Act with references to ‘annual linked rate’ and ‘fortnightly linked rate’
respectively. The definitions of the linked rates are inserted by item 6
as proposed points 1066A-B2 and 1066A-B3. The annual linked rate
is the maximum FTB-A rate for an FTB child aged over 13 years (the amount
specified in column 2 of table item 2 in clause 7 of Schedule 1 of the FA
Act). The fortnightly linked rate is worked out by dividing the annual rate
by 365 and multiplying the result by 14. Currently, the DSP rate for those aged
under-18, not independent and living at home is $239.50 per fortnight compared
to the FTB-A rate for children over 13 years of $237.86 per fortnight.[51]
The amendments align the rates of the two payments to ensure these DSP
recipients also benefit from the proposed FTB-A rate increase.
Items 7–10 make similar amendments at point
1066B-B1 for blind DSP recipients aged under-18 in the same circumstances as
the above child, to link the DSP rate for these recipients with the FTB-A rate
for children over 13 years.
Items 11–16 make similar amendments at point
1067G-B2 and 1067G-B3 to link the Youth Allowance rates for those aged
under-18, not considered independent and still living at home and for those
aged under-18, considered independent and living in supported state care, with
the FTB-A rate for children over 13 years. These Youth Allowance rates are
currently the same as the rate for DSP recipients aged under-18, not
independent and living at home ($239.50).
Key
provisions of Schedule 2—Family Tax Benefit Part B rate
A New Tax
System (Family Assistance) Act 1999
Item 1 inserts proposed subparagraphs
22B(1)(a)(ia) and (ib) into the FA Act so that FTB-B will no longer
be payable for secondary school children of single parents in the calendar year
these children turn 17. Single parents aged 60 years or more, and grandparent
or great-grandparent carers of the relevant child are exempt from this
restriction and can continue to receive FTB-B for secondary school children
aged 16, 17 or 18.
Currently, for a parent/carer to be eligible for FTB-B in
respect of a child aged 16 or over, the child must meet the definition of senior
secondary school child at section 22B of the FA Act. This
definition currently allows FTB-B to be paid in respect of children aged 16, 17
or 18 (where the calendar year in which the child turned 18 has not ended) if
they meet the schooling requirements (also set out at section 22B). The new
subparagraphs will amend the definition of secondary school child so that it
refers to the different payment rate categories to be set out in clause 30 of
Schedule 1 to the FA Act (amended by item 7). These rate
categories will distinguish parents/carers of eligible children aged 13 years
or over who are not members of a couple and are aged at least 60 years of age
or are a grandparent/great-grandparent of the child, and parents/carers of
eligible children aged 13 years or over who do not fit these criteria. Proposed
subparagraphs 22B(1)(a)(ia) and (ib) will set different age limits for
the definition of secondary school child depending on whether the child is
under the care of a person aged at least 60 years or a
grandparent/great-grandparent, and those under the care of a single parent who
does not meet these criteria.
Item 7 substitutes proposed clause 30 into
Schedule 1 of the FA Act setting out the different rate categories for
FTB-B. There will be two different rates (one for children aged less than five
years and one for older children) and four family situations which can
determine eligibility for the rates:
1. family
with youngest child aged under five years
2. family
with youngest child aged at least five years but less than 13 years
3. single
parent/carer family with youngest child aged at least 13 years and the
parent/carer is aged 60 years or more; or, single/couple family where the carer
is a grandparent/great-grandparent of that youngest child
4. single
parent/carer family with youngest child aged at least 13 years but less than
17 years where none of the criteria in (3) apply.
Key
provisions of Schedule 3—Family Tax Benefit supplements
Schedule 3 contains four Parts, the amendments in which
will operate to gradually reduce the FTB-A and FTB-B supplements over two years
before abolishing the supplements from 1 July 2018. Items 1–9 make
amendments to the FTB-B supplement amount set out at subclause 31A(2) of
Schedule 1 to the FA Act and the FTB‑A supplement amount
at subclause 38A(3) of Schedule 1 of the FA Act,
and related provisions, to:
- reduce the FTB-B supplement from the current per family rate of
$354.05 to $302.95 on 1 July 2016 (the same rate as when it was introduced),
and then further reduce to $153.30 from 1 July 2017[52]
- reduce the FTB-A supplement from the current per child rate of
$726.35 to $602.25 on 1 July 2016, and then further reduce to $302.95 on
1 July 2017.[53]
From 1 July 2018, items 14 and 17 remove
references to the FTB-A supplement in the method statements at clauses 3 and 25
of Schedule 1 of the FA Act which are used to calculate an individual’s
FTB-A rate. Items 18–20 remove references to the FTB-B supplement
in the rules for calculating an individual’s FTB-B rates at clauses 29 and 29A
of Schedule 1. Items 15 and 16 remove references to the FTB-A supplement
used for calculating an individual’s maintenance income test ceiling, by
repealing a method statement step at clause 24N of Schedule 1 and repealing
clause 24R of Schedule 1. The maintenance income test ceiling is part of the
calculation of how child support payments affect an individual’s FTB rate where
there are both child support and non-child support children in the family, or
where the individual has two or more child support cases.[54] The
maintenance income test ceiling ensures that any child support received only
reduces the above base-rate amounts of FTB-A paid for the child support
children.[55]
Concluding comments
Schedules 1–3 are another attempt at presenting a more
palatable range of FTB savings measures than those previously proposed by the
Government, and those currently before the Parliament in a separate Bill.
Rather than reducing the rate of FTB-B for single parents
with children aged 13 or over by more than $2,000 per annum (as previously
proposed), the measures in Schedules 2 and 3 will allow these parents to
continue to receive the standard FTB-B rate (minus the supplement) until the
year in which their youngest child turns 17. This will still mean that these
single parents may lose eligibility for FTB-B in the final one or two years of
their youngest child’s schooling, but the cuts are smaller than those previously
proposed.
The increase in FTB-A rates proposed in Schedule 1 (double
those previously proposed) will partially offset the impact of phase out of the
end-of-year supplements (in Schedule 3) for many FTB-A recipients. Not all
FTB-A recipients will receive a benefit from the increase: those receiving less
than the base rate will not receive an increase.
Phasing out the supplements carries an element of risk due
to the uncertainty as to whether the ATO’s new income reporting system will
significantly reduce the number of debts that arise in the reconciliation
process.
Overall, the measures deliver significant savings to the
Government but further complicate the family assistance system.
Schedule 4—Jobs for Families Child Care Package
The Bills Digests for the Family Assistance Legislation
Amendment (Jobs for Families Child Care Package) Bill 2015 and the Family
Assistance Legislation Amendment (Jobs for Families Child Care Package) Bill
2016 provide a detailed background and analysis of the measures proposed in
Schedule 4.[56]
There are no significant differences between the provisions in Schedule 4 and
those proposed in the Family Assistance Legislation Amendment (Jobs for
Families Child Care Package) Bill 2016.
This section of this Bills Digest will only provide a
brief summary of the measures, the legislative history, and a note on the
changed financial implications of the measures.
Purpose of the Schedule
Schedule 4 proposes amendments to the A New Tax System
(Family Assistance) Act 1999 (the FA Act), the A New Tax System
(Family Assistance) (Administration) Act 1999 (the FA Admin Act),
the A New Tax
System (Goods and Services Tax) Act 1999, the Fringe Benefits
Tax Assessment Act 1986 and the Income Tax
Assessment Act 1997 (ITAA 1997) to introduce the following
elements of the Government’s Jobs for Families child care package:
- a new child care fee assistance payment, the Child Care Subsidy
(CCS), replacing two current payments: Child Care Benefit (CCB) and Child Care
Rebate (CCR)
- a new supplementary payment, the Additional Child Care Subsidy
(ACCS), which provides additional financial assistance for children at risk of
abuse or neglect, families experiencing temporary financial hardship, families
transitioning to work from income support, grandparent carers on income
support, and low income families in certain circumstances. The ACCS partly
replaces a number of current payments including Special Child Care Benefit,
Grandparent Child Care Benefit and the Jobs, Education and Training Child Care
Fee Assistance payment
- an enhanced compliance framework.
Commencement
The new payments are to commence from July 2018, while
some aspects of the new compliance framework will commence on the day after
Royal Assent.
Background
The Family Assistance Legislation Amendment (Jobs for
Families Child Care Package) Bill 2015 was not debated following its
introduction in the House of Representatives on 2 December 2015 and lapsed when
the Parliament was prorogued on 15 April 2016. The Family Assistance
Legislation Amendment (Jobs for Families Child Care Package) Bill 2016, introduced
on 1 September 2016, has also not been debated.
The Jobs for Families Package was announced in the 2015–16
Budget and is based on recommendations from the Productivity Commission’s
inquiry into childcare and early childhood learning.[57]
The package, when announced, included an additional $3.5 billion in expenditure
on child care assistance over five years.[58]
In December 2015, the Turnbull Government announced that it had revised the
package following consultation with parents and stakeholders and following difficulties
in passing savings measures from the Family Tax Benefit program in the
Parliament (see Background to Schedules 1–3 above).[59]
Key elements of the Jobs for Families package
The new CCS payment provides a subsidy rate based on a
percentage of the actual fee or an hourly benchmark price (whichever is lower).
The benchmark price is different for each service type. The percentage covered
is determined by family income with a subsidy rate of 85 per cent of the
benchmark price or actual fee for families with incomes at or below $65,710 per
annum. This rate tapers by one percentage point for every $3,000 in income over
this threshold to 50 per cent for family incomes at $170,710. A flat subsidy
rate of 50 per cent applies for family incomes between $170,710 and $250,000
and then tapers for incomes over $250,000 until it reaches the base rate of 20
per cent of the benchmark price (for incomes at, or above, $340,000 per annum).
Families with incomes over $185,000 will have their CCS entitlement capped at
$10,000 per child per year.
A three-part activity test determines the number of hours
that can be subsidised:
- 8–16 hours per fortnight of approved activities provides up to 36
hours of CCS per fortnight
- 17–48 hours provides up to 72 hours of CCS and
- more than 49 hours of approved activities provides up to 100
hours of CCS.
For couple families, the partner with the lower number of
hours of activity determines the CCS entitlement. Approved activities include
work, training, study or certain other recognised activities such as
volunteering, as well as participation requirements for income support
payments. Families with incomes of up to $65,000, who do not meet the activity
test, will be eligible to receive up to 24 hours of CCS per fortnight under a
separate program known as the Child Care Safety Net.
The Child Care Safety Net will replace existing funding
programs for service providers and also includes the ACCS. The ACCS will
provide a top-up payment to the CCS for disadvantaged and vulnerable families.
Impact of the changes
The Government estimates that around 815,600 families will
receive a higher level of fee assistance under the changes compared to the
current funding model; around 140,500 families will receive around the same
level of assistance and around 183,900 families will receive a lower level of
assistance.[60]
Alternative modelling by the Australian National University’s Centre for Social
Research and Methods estimated 582,000 families will be better off, around
330,000 families will be worse off and 126,000 families will receive around the
same level of subsidy.[61]
Stakeholder issues
Providers, academics and interest groups are concerned
that the activity test is too complex and will exclude many children from Early
Childhood Education and Care (ECEC). There are also concerns at the new
administrative requirements for providing assistance to children at risk of
abuse and neglect. The design of the CCS payment may also lead to a decline in
the real value of assistance provided to families over time, and significant
child care fee increases will need to be borne by families without additional
assistance from government.[62]
The key recommendation from child care stakeholders has
been an increase in the minimum number of hours of subsidised care available to
lower income families (families who would not meet the activity test
requirements) from the 12 hours per week (as proposed in Schedule 4) to 15
hours per week.[63]
While the Government had previously been opposed to this recommendation, its
responses to the Senate committee inquiries into the 2015 and 2016 Bills (both
provided in February 2017) and the Department of Social Services’ and
Department of Employment and Training’s submission to the Senate Community
Affairs inquiry into the Bill all state that ‘the Government is considering
this proposal as part of its negotiations and deliberations in preparation for
Parliamentary debate’.[64]
This may indicate that the Government is willing to amend one of the more
contentious elements of Schedule 4.
Changed financial implications
The Explanatory Memorandum to the Bill states that Schedule
4 will cost $1.29 billion over the forward estimates, with a note stating that
the total Jobs for Families Child Care Package (including measures not
requiring legislation) will cost $1.66 billion over the forward estimates.[65]
This is a significant reduction in costs from the previous
Jobs for Families Bills. The Explanatory Memorandum to the Family Assistance
Legislation Amendment (Jobs for Families Child Care Package) Bill 2016 stated that
$3 billion in additional expenditure would be provided to support the
implementation of the package.[66]
The package, when announced, included an additional $3.5 billion in expenditure
on child care assistance over the forward estimates.[67]
Each of these expenditure estimates includes a two-year period of the CCS.
Much of this reduction appears to be based on revised
parameters and other variations. The 2016–17 Mid-Year Economic and Fiscal
Outlook (MYEFO) stated that payments related to CCB, CCR and CCS are expected
to decrease by $724 million in 2016–17 and $7.6 billion over the four
years to 2019–20.[68]
The Government’s submission to the Senate Committee inquiry into the Bill
states the downward ‘variation’ included:
- the impact of child care compliance measures that have been implemented
in the past 18 months (notably the Family Day Care child swapping measure);
- a one-off major correction following a complete overhaul of the child
care forward estimates model; and
- using new projection methodologies for growth in child care usage and
fees, rather than a ten year rolling average.[69]
Schedules 5–8—Proportional payment of pensions outside
Australia, cease pensioner education supplement, cease education entry payment,
indexation
The measures in Schedules 5–8 were previously introduced in Social
Services Legislation Amendment (Budget Repair) Bill 2016. The measures in this
Bill are equivalent to those in the earlier Bill.
History
The Government announced the first measure, earlier
proportional payment of pensions outside Australia (Schedule 5), in the 2015–16
Budget.[70]
The remaining three measures were first announced in the 2014–15 Budget. These
are:
- cease pensioner education supplement (Schedule 6)[71]
- cease education entry payment (Schedule 7)[72]
and
- pausing indexation for three years of:
- the
income free areas for all working age allowances (other than student payments)
and for parenting payment single and
- the
income free areas and other means test thresholds for student payments,
including student income bank limits (Schedule 8).[73]
Table 3 sets out previous Bills the measures in Schedules
5–8 have been proposed in.
Table 3:
List of measures and previous Bills where the measure has appeared
Background
Proportional
payment of pensions outside Australia
An income support payment is ‘portable’ when a recipient can
continue to receive the payment when they are overseas. Portability varies by
payment type and the recipient’s circumstances. For most payments portability
is temporary (usually limited to six weeks). However, in most circumstances,
recipients of the Age Pension can continue to receive payment indefinitely.
This is known as unlimited portability.[76]
A limited number of recipients of Wife Pension, Widow B Pension and Disability
Support Pension also have unlimited portability.[77]
While income support recipients with unlimited portability
can continue to receive a payment indefinitely while overseas, those who have
not resided in Australia for at least 35 years (between the age of 16 and
pension age) currently receive a reduced amount after they have been overseas
for more than 26 weeks.
The reduction in payment is based on the period of time
the person has resided in Australia between the age of 16 and pension age. This
is known as their Australian Working Life Residence (AWLR). The payment rate is
calculated by dividing the AWLR by 35. For example, a person who has resided in
Australia for 10 years between 16 and age pension age will usually receive
10/35ths of the full means tested rate.[78]
This reduction in payments is known as ‘proportionality’.
Pensioner
Education Supplement and Education Entry Payment
Pensioner
Education Supplement
The Pensioner Education Supplement (PES) helps eligible
income support recipients meet some of the ongoing costs associated with study.
The rationale for making the payment is to improve recipients’ later employment
prospects.[79]
PES is not means tested and is non-taxable. Depending on
their study load, eligible students receive $62.40 or $31.20 per fortnight.[80]
It is available to recipients of Parenting Payment (single), Disability Support
Pension, Carer Payment, Widow B Pension, Widow Allowance, Wife Pension, and
certain other groups of income support recipients (including recipients of some
Veterans’ Affairs payments).[81]
There is a separate ABSTUDY Pensioner Education Supplement
available to Indigenous income support recipients.[82]
As the ABSTUDY Pensioner Education Supplement is not administered under the SS
Act it is not affected by this measure (ABSTUDY is governed by the ABSTUDY
Policy Manual).[83]
The National Commission of Audit noted that recipients of
the PES received the payment during vacation periods as well as during study
terms or semesters. The Commission recommended ‘that the Supplement only be
provided to recipients during study terms or semesters.’[84]
As at September 2016, there were 37,717 PES recipients.[85]
Education
Entry Payment
The Education Entry Payment is a taxable lump sum payment of
$208 to help recipients meet the up-front costs of education and training. It
is paid once a year.[86]
The National Commission of Audit recommended that the
Education Entry Payment be abolished, partly on the grounds that it duplicated
the assistance available through the PES.[87]
In 2015–16, there were 68,967 recipients of the Education
Entry Payment.[88]
Pause
indexation for three years of income free areas
Indexation of income free areas was explained in the Bills
Digest for the Social Services and Other Legislation Amendment (2014 Budget
Measures No. 1) Bill 2014:
Currently, the income test free area for a single person for
most of the working age income support allowance payments is $100 per
fortnight. The free area is $200 a fortnight (combined) for partnered persons.
Once income is in excess of these free areas in a fortnight, the maximum rate
payable is reduced by 50 cents for each dollar of income over the free area.
Income over $250 in a fortnight reduces the rate by 60 cents in each dollar.
These income test free areas are indexed once a year on 1 July to increases in
the [Consumer Price Index] CPI. The working age income support allowance
payments that use this income test are Newstart Allowance, Widow Allowance,
Partner Allowance and Sickness Allowance.[89]
Since that Bills Digest was published the income free areas
have been indexed. The current income test free area is $104 per fortnight;
payments are reduced by 50 cents for each dollar between $104 and $254, and $75
plus 60 cents for each dollar over $254.[90]
Further background about the indexation of income free areas is available in
the Bills Digest for the Social Services and Other Legislation Amendment (2014
Budget Measures
No. 1) Bill 2014.[91]
Previous committee consideration
Senate
Community Affairs Legislation Committee
On 15 September 2016, the Senate referred the Social
Services Legislation Amendment (Budget Repair) Bill 2016 to the Senate
Community Affairs Legislation Committee for inquiry and report. The Committee
reported in October 2016.[92]
The Committee made two recommendations, that the Bill be
passed and that it be amended to include transitional arrangements for current
recipients of the Pensioner Education Supplement, to enable them to complete
their education or training course.[93]
In their Dissenting report, Labor Senators rejected the
majority report’s recommendations and recommended that the Senate reject the
Bill.[94]
Greens Senators also recommended that the Bill not be passed.[95]
Senate
Standing Committee for the Scrutiny of Bills
The Senate Standing Committee for the Scrutiny of Bills had
no comment on the measures proposed in the 2016 Bill or the 2015 Bill. [96]
The Committee had no comment on Schedules 5 to 8 of the current Bill.[97]
Policy position of non-government parties/independents
In their dissenting reports on the Social Services
Legislation Amendment (Budget Repair) Bill 2016 to the Senate Community Affairs
Legislation Committee, Labor and Greens Senators recommended that the Senate
reject the Bill.
Position of major interest groups
All of the measures in these schedules are savings measures.
Much of the criticism from interest groups relates to the idea that the savings
should come at the expense of people who are on low incomes.
As these measures have all been introduced in earlier Bills,
interest groups have outlined their positions in previous submissions. A number
of interest groups made submissions on the Social Services Legislation
Amendment (Budget Repair) Bill 2016 Bill.[98]
None of the interest groups making a submission on the 2016 Bill indicated
support for any of the measures in their current form.
Key issues and provisions
Schedule
5—Proportional payment of pensions outside Australia
This measure was outlined in the Parliamentary Library’s
Budget Review 2015–16:
While most income support payments can only be paid for a
limited period of time if a recipient is overseas (known as the portability of
the payment), the Age Pension, Widow B Pension, Wife Pension and the Disability
Support Pension (in special circumstances) can continue to be paid while a
person is overseas indefinitely and even where an eligible pensioner chooses to
reside in another country. However, if a pensioner is overseas for a period
longer than 26 weeks, their payment rate may be reduced to a proportion of the
time they spent in Australia between the age of 16 years and the age pension
age. This period is known as their Australian Working Life Residence (AWLR).
Those with less than 35 years AWLR will, after 26 weeks overseas, have their
payment reduced to a rate equivalent to the proportion of 35 years their AWLR
represents. For example, a person with 16 years of AWLR will receive 46 per
cent of the rate otherwise payable if they resided in Australia. Those with 35
years or more AWLR residence will not have their payment reduced.
The Budget proposes to commence payment of the
proportionalised rate earlier—after six weeks overseas rather than 26 weeks ...
Pensioners overseas at the time of the measure’s commencement will not be
affected unless they return to Australia and make another trip overseas. The
measure follows on from an increase in the AWLR required to receive a full
pension rate from 25 years to 35 years which commenced on 1 July 2014.[99]
The measure achieves savings by reducing the period of time
some pensioners can receive the full means tested rate of payment while they
are overseas from 26 weeks to six weeks. It affects recipients of the Age
Pension and a limited number of recipients of Widow B Pension, Wife Pension,
and Disability Support Pension who have unlimited portability and who have
resided in Australia for less than 35 years between the age of 16 and age
pension age.
Amendments
to the Social Security Act 1991
Items 1–4 of Schedule 5 of the Bill
apply the measure by omitting references to ‘26 weeks’ and substituting references
to ‘6 weeks’ in sections referring to proportionality (see Table 4). Item
5 is an application provision which provides that the amendments only apply
to periods of absence from Australia starting on or after the
Schedule commences.
Table 4:
Amendments to the Social Security Act 1991
| Item 1: Subsection 1214(1) (note 2) |
Payments that are portable with no time limit—a
consequential amendment is made to Note 2 to change the time period to
‘6 weeks’. |
| Item 2: Paragraph 1220A(a) |
Proportionality—age pension rate |
| Item 3: Paragraph 1220B(1)(a) |
Proportionality—Disability Support Pension rate for a
severely disabled person |
| Item 4: Paragraph 1221(1)(a) |
Proportionality—wife pension and widow B pension rate for
entitled persons |
Schedule
6—Cease pensioner education supplement
Under Schedule 6 of the Bill, the Pensioner Education
Supplement will cease. Schedule 6 amends the SS Act, the Social Security
(Administration) Act 1999 (the SS Admin Act), the FA Act,
the Farm
Household Support Act 2014 and the ITAA 1997. Item 17 of
Schedule 6 repeals Part 2.24A of the SS Act which regulates the
Pensioner Education Supplement.
Schedule
7—Cease Education Entry payment
Under Schedule 7 of the Bill the Education Entry
Payment will cease. The Schedule amends the SS Act, the SS Admin Act,
the Veterans’
Entitlements Act 1986 (VE Act), the Farm Household
Support Act, the Income Tax
Assessment Act 1936 (ITAA 1936), the ITAA 1997 and the Taxation
Administration Act 1953.
Item 3 of Schedule 7 of the Bill repeals Part
2.13A of the SS Act which currently regulates the education entry
payment.
Other than the delayed commencement of the measure, there
are no differences between the amendments proposed by Schedules 6 and 7 of this
Bill and Schedules 6 and 7 of the Social Services and Other Legislation
Amendment (2014 Budget Measures No. 2) Bill 2014. According to the Bills Digest
for that earlier Bill:
Since its introduction, the [Education Entry Payment] has
been aimed at aiding people on income support to meet the one-off costs of
commencing an education course such as entry fees, transport costs and books.
The removal of the [Education Entry Payment] will make it financially harder
for recipients of an income support payment to commence study. Study has been
regarded as a desirable activity for income support recipients as it is
considered to enhance their capacity to self support. The cancellation of the
[Education Entry Payment] will save money, but, as with the cessation of the
PES, it may also see some income support recipients ceasing their study or
choosing not to undertake study.[100]
Schedule
8—Indexation
Schedule 8 of the Bill amends the SS Act to:
- pause the indexation of income free areas for all working age
allowances (other than student payments) and for parenting payment single; and
- pause the indexation of income free areas and other means test
thresholds for student payments, including the student income bank limits.
This measure was previously introduced as part of the
Social Services Legislation Amendment (Youth Employment and Other Measures)
Bill 2015.[101]
As the Bills Digest for that Bill explained:
These means test levels are usually adjusted once a year (on
either 1 January or 1 July) in line with movements in the CPI. Pausing
indexation (that is, not adjusting the amounts) is a simple way of finding
budget savings without directly cutting benefits or limiting eligibility. The
threshold amounts will decline in real value over time and savings arise as
payment rates are reduced as recipients’ income and assets gradually increase
beyond the relevant thresholds.[102]
This measure is explained in the Bills Digests for the
Social Services and Other Legislation Amendment (2014 Budget Measures No. 1)
Bill 2014 and the Social Services and Other Legislation Amendment (2014 Budget
Measures No. 2) Bill 2014.[103]
Schedule 9—Closing energy supplement to new welfare
recipients
Schedule 9 proposes amendments to the Social Security Act
1991 (the SS Act), the Farm Household Support Act 2014, the Veterans’
Entitlements Act 1986 (the VE Act), the Military
Rehabilitation and Compensation Act 2004 (the MRC Act) and the Budget
Savings (Omnibus) Act 2016 to:
- close off entitlement to the Energy Supplement to new recipients
of affected payments from 20 September 2017 and
- cease payment of the Energy Supplement on 20 September 2017 for
those who first received the Energy Supplement on or after 20 September 2016.
Those in receipt of the Energy Supplement prior to 20
September 2016 who continue to satisfy eligibility criteria will still receive
the payment after 20 September 2017.
This measure was announced in the 2016–17 Budget with the
savings intended to be directed towards funding the National Disability
Insurance Scheme (NDIS).[104]
The measure was previously included in the Budget Savings (Omnibus) Bill 2016.[105]
That Bill was amended before it was passed so that the amendment applied only
to new Family Tax Benefit recipients and new Commonwealth Seniors Health Card
holders. The Bills Digest to the Budget Savings (Omnibus) Bill 2016 provides
background and analysis of the measures as introduced.[106]
Background
Energy
Supplement
The Energy Supplement is paid to all recipients of social
security income support payments (such as the Age Pension and Newstart Allowance),
to recipients of Family Tax Benefit, to recipients of veterans’ payments (such
as the Service Pension, Disability Pension and War Widow/Widower’s Pension), to
recipients of the Farm Household Support Allowance and to holders of a
Commonwealth Seniors Health Card and some holders of a Department of Veterans’
Affairs (DVA) Repatriation Health Card – For All Conditions (Gold Card). Rates
of the Energy Supplement are based on the payment to which it is attached and
range from $91.25 per annum for Family Tax Benefit Part A (child under 13
years) to $559.00 per annum for veterans receiving the Special Rate of
Disability Pension. The Energy Supplement is generally paid fortnightly with
the attached payment.
The Energy Supplement was introduced from 2013 as part of
the Clean Energy Household Assistance Package—a package of payments and
supports intended to offset the impact of the carbon price on welfare
recipients and those on low incomes.[107]
Most other households received compensation at the same time through income tax
changes.[108]
Welfare recipients initially received a one-off lump sum payment, called the
Clean Energy Advance, in May or June 2012, prior to the carbon pricing scheme
commencing on 1 July 2012.[109]
The Clean Energy Supplement, as it was originally named, was intended as
ongoing support for increased costs arising from the carbon price. Then
Minister for Families, Housing, Community Services and Indigenous Affairs,
Jenny Macklin, stated the Government was ‘directing revenue raised from putting
a price on carbon to Australian families and pensioners through an increase to
their payments’.[110]
The increase in payments was intended to be ‘permanent and indexed, so that
payments keep pace with the cost of living now and into the future’, and ‘...
greater than the average expected price increase from putting a price on
carbon’.[111]
The value of the Clean Energy Supplement was set
at around 1.7 per cent of the basic rate of the payment to which it was
attached (the expected price impact of the carbon price—a 0.7 per cent
increase—plus an additional one per cent). As most welfare payments are
adjusted regularly in line with price movements, as measured by the Consumer
Price Index (CPI), special provisions were put in place for the adjustments
that took place immediately after the Clean Energy Supplement was introduced.[112]
These provisions effectively removed the expected impact of the carbon price (a
0.7 per cent increase in the CPI) from any CPI adjustment of the payments the
Clean Energy Supplement was attached to. This meant that this 0.7 per cent CPI
impact of the carbon price was to be delivered via the Clean Energy Supplement,
not through the indexation of the attached payments. Taking this adjustment
into account, the Clean Energy Supplement was a 1.0 per cent real increase in
the value of most payment rates.
Abbott Government changes
During the 2013 election, the Coalition
committed to abolishing the carbon price while keeping the compensation
measures that formed part of the Household Assistance package.[113] However, after
winning the election and repealing the carbon price in 2014, the Government
made a number of changes to the package, including renaming the Clean Energy
Supplement the ‘Energy Supplement’, ceasing indexation of the payment and
abolishing some minor supplementary payments.[114]
Payment of
the Energy Supplement
The Energy Supplement is generally paid together with the
regular payment it is attached to (usually fortnightly). However, pensioners,
allowance recipients and Family Tax Benefit recipients can elect to receive the
payment on a quarterly basis.[115]
Payments of the Energy Supplement to Commonwealth Seniors Health Card holders
and veterans’ Gold Card holders can only be made quarterly. Family Tax Benefit
recipients who choose to receive their payment as an annual lump sum will
receive the Energy Supplement on an annual basis.
For means tested payments such as pensions, allowances and
Family Tax Benefit, it is included in the rate that can be reduced under any applicable
income or assets test.
Rationale for closing off carbon tax compensation
In his second reading speech for the Bill the Minister for
Social Services, Christian Porter, stated:
The carbon tax was repealed from 1 July 2014. The Government
does not consider that it is reasonable to continue to compensate people in the
form of the Energy Supplement for a tax that no longer exists, particularly
people who only started receiving income support after the carbon tax was
abolished.[116]
In his media release on the budget measure, the Minister stated:
The
carbon tax compensation measures were introduced to make up for the expected
cost on individuals and to mitigate what would otherwise have been long-term
electricity price increases under Labor's carbon tax which has since been
abolished. The compensation for long-term electricity price increases is no
longer necessary for new entrants to the welfare system.[117]
The Minister has not explained why current recipients would
continue to receive the compensation payments, or why other components of the
compensation package would remain (such as the income tax cuts).
This measure also runs counter to the Coalition’s 2013
Election commitment to keep the compensation measures, despite removing the
carbon price.[118]
Previous committee consideration
The Senate Economics Legislation Committee (Economics
Committee) conducted an inquiry into the Budget Savings (Omnibus) Bill 2016.[119]
In regards to the Energy Supplement measure, the Economics Committee report
noted concerns that had been raised around all of the welfare measures in that
Bill and was ’cognisant that these measures will adversely affect the welfare
benefits that some people may receive in the future’.[120]
However, the Economics Committee supported all of the measures, including the
Energy Supplement measures, stating: ‘the committee considers that these
measures will contribute to greater consistency across different welfare
entitlements and improve the sustainability of the welfare system in the longer
term’.[121]
Policy position of non-government parties/independents
Labor has stated that it is opposed to the Bill. In regards
to Schedule 9, Shadow Minister for Families and Social Services Jenny Macklin
stated:
The Turnbull government also wants to abolish the energy
supplement ... That is a cut of $1 billion that will come out of the pockets of
pensioners, people with disability, carers and Newstart recipients. This cut
was first announced in the 2016 budget, so the Prime Minister cannot actually
blame the member for Warringah for this one. If the Prime Minister gets his way,
single pensioners will be $14.10 a fortnight worse off as a result of these
cuts to the energy supplement. That is around $365 a year worse off. Couple
pensioners will be $21.20 a fortnight worse off—that is around $550 a year
worse off. This supplement was designed to help pensioners and other social
security recipients with the cost of electricity and gas. Now the Turnbull
government wants to scrap it.
...
Let us be clear: this cut will have a big impact on the most
vulnerable members of our community—Australians on Newstart. Labor believes
that Newstart is already too low. The Newstart payment for a single person is
equivalent to just 28 per cent of the average wage. If the energy supplement is
abolished, someone on Newstart will be $4.40 a week or $220 a year worse off.
ANU's David Plunkett estimates that new recipients of Newstart will be around
$3.60 a week worse off than had the energy supplement not been introduced in
the first place. To put it another way, the Turnbull government is actually
proposing a cut in real terms to Newstart. That is what everyone over there is
going to be voting for. If you vote this, you are cutting Newstart in real
terms. That is what this legislation means.[122]
The Greens have stated that they will oppose the Bill in its
entirety. In their Dissenting Report to the Budget Savings (Omnibus) Bill 2016,
Greens Senators stated that the Energy Supplement measure was an ‘unfair cut
that will hurt the most vulnerable’.[123]
They were also concerned about the impact on Newstart Allowance recipients
stating: ‘The tragically low rate of Newstart is a disgrace. Further attempts
to cut income support reflect a complete disregard for the real needs of
vulnerable Australians, and the importance of a social safety net to our
society’.[124]
It is unclear what the position of the Nick Xenophon Team is
on the measures in Schedule 9. In regards to the measure in the Budget Savings
(Omnibus) Bill 2016, Nick Xenophon Team MP Rebekha Sharkie stated:
Admittedly, according to simple logic, if there is no longer
a carbon tax then the carbon tax compensation—the energy supplement and single
income family supplement—should eventually be phased out. However, this simple
logic ignores the effect that the removal of these supplement payments would
have on our most disadvantaged communities. In addition to the basic social
compassion there are also good economic arguments for ensuring that income
supplement payments keep Australians out of poverty. Income and wealth
inequality is rising in Australia, which is putting pressure on the demand side
of the economy. The poorest in our society must by necessity spend a greater
proportion of their incomes on goods and services than the richer end of the
income distribution.
Businesses also require consumers to purchase their products
in order to prosper. Given the continued uncertainty and weakness of global
demand, it would seem a highly inauspicious time to be placing more pressure
upon Australian businesses by deliberately cutting social security to the
poorest and thus domestic demand.[125]
Senator Lambie previously opposed the Budget Savings
(Omnibus) Bill 2016.[126]
Senator Leyonhjelm has indicated that he supports all of the
savings measures in the Bill.[127]
It is unclear what the position of Pauline Hanson’s One
Nation Party is on Schedule 9.
Position of major interest groups
The Australian Council of Social Service (ACOSS) is opposed
to the measure stating that it will ‘cut between $4-$7 a week from people on
the lowest incomes, including pensioners, students, families, and people locked
out of paid work’.[128]
The Benevolent Society is also opposed to the measure with
CEO Jo Toohey stating:
One of the most concerning cuts is the abolition of the
energy supplement. We know that utility bills are a source of distress and
financial hardship for people receiving the full age pension and young families
struggling to make ends meet. We also know that older people, young and
vulnerable families budget very carefully with their use of gas and electricity
and that some people turn off their heating in the winter in order to save
money.[129]
Financial implications
According to the Explanatory Memorandum to the Bill, the
measures in Schedule 9 are expected to provide savings of $933.4 million over
the forward estimates.[130]
Key issues and provisions
Who will be
affected
The Department of Social Services told a Senate Estimates
hearing on 2 March 2017 that, by 30 June 2020, 1.7 million income support
and DVA clients would not receive the Energy Supplement as a result of the
measures in Schedule 9.[131]
For the previous Omnibus Bill, the Government expected
around 2.2 million people would be affected by the closure of the Energy
Supplement to new recipients over the forward estimates (it is unclear if this
number included those in receipt of veterans’ payments or eligible
cardholders).[132]
Around 6.5 million people would continue to receive the Energy Supplement under
the grandfathering provisions.[133]
Newstart Allowance recipients are likely to be one of the
main payment recipient categories affected as there is a large turnover in the
number of people in receipt of this payment—in the period between 1 October
2014 and 30 September 2015, there were 419,459 entries onto Newstart
Allowance and 266,519 exits.[134]
Many Newstart Allowance recipients will move on and off the payment as they
move to and from short-term employment. Under the proposed changes, those that
are currently in receipt of an eligible payment who exit income support, even
for a brief period, would no longer be eligible for the Energy Supplement.
The Department of Social Services provided a breakdown of
the numbers affected over the forward estimates to June 2020 by payment type:
- ABSTUDY—6,524
- Age Pension—403,236
- Austudy—42,478
- Bereavement Allowance—173
-
Carer Payment—105,628
-
Disability Support Pension—109,327
- Newstart Allowance—472,962
-
Parenting Payment Partnered—66,488
- Parenting Payment Single—138,894
- Sickness Allowance—7,935
-
Special Benefit—12,443
- Widow Allowance—2,637
- Youth Allowance (Student)—199,338
- Youth Allowance (Other)—144,053
- Department of Veterans’ Affairs customers—18,626.[135]
The
adequacy of allowance payment rates
During the debate on the Budget Savings (Omnibus) Bill 2016,
one of the key concerns was the impact that the loss of the Energy Supplement would
have on allowance payment recipients. This was partly because Newstart
Allowance recipients are likely to be one of the most affected groups (see
section above) but mainly because of an ongoing debate over whether allowance
payment rates are adequate and should be subject to rate cuts.
As the Parliamentary Library noted in its 2013 Briefing
Book for the 44th Parliament, there is widespread agreement that allowance
payments are too low.[136]
A Coalition-chaired Senate committee inquiry found in 2012 that the payment
rate for allowances was inadequate and impeded income support recipients’
ability to meet their basic costs of living over the longer term.[137]
Despite the concern from welfare, community and business
groups at the low-rate of allowance payments, and a long-running campaign to
increase rates, the Government is reducing the level of assistance provided to
these payment recipients by closing off the Energy Supplement. New allowance
payment recipients will not only be receiving $120–$250 less per year (depending
on their age and family circumstances); they also miss out on the Income
Support Bonus, a lump sum payment that was paid twice annually to allowance,
student assistance and Parenting Payment recipients. The Income Support Bonus,
worth $185.60 per year for each member of a couple and $223.00 per year for
singles, was abolished for all recipients from 20 September 2016.[138]
Amendments were made to remove this small supplementary payment at the time the
minerals resource rent tax (mining tax) was repealed in 2014.[139]
Indexation
issue means many worse off than had the carbon price compensation never been
introduced
As noted in the ‘Background’ section, at the time the Energy
Supplement commenced, special indexation arrangements effectively
removed the expected impact of the carbon price (a 0.7 per cent increase in the
CPI) from any CPI adjustment of the payments to which the Clean Energy
Supplement was attached. This meant that this 0.7 per cent CPI impact of the
carbon price was delivered via the Clean Energy Supplement, not through the
indexation of the attached payments. As such, the basic payment rate of many of
the attached payments was not increased by as much as they would have, had the
Energy Supplement not being introduced—and this has had a flow-on effect where
subsequent rate adjustments have been based on a lower base rate.
The consequence of this is that many of the
new payment recipients not eligible for the Energy Supplement will be worse-off
than had the Energy Supplement never been introduced—the basic rate of their
payment will be lower than the basic rate of payment would have been without
the 2013 indexation arrangements. This issue affects those payments indexed to
CPI-only: primarily allowance payments, Parenting Payment Partnered, some
transitional-rate pensions and Family Tax Benefit. Most pensions and Parenting
Payment Single are not affected in the same way as a result of a different
indexation process. Pensions are indexed to both CPI and another index, the
Pensioner and Beneficiary Living Cost Index (PBLCI), and are also benchmarked
to a percentage of Male Total Average Weekly Earnings (MTAWE). Parenting
Payment Single is indexed to CPI and benchmarked to a percentage of MTAWE. In
2013, these payments were adjusted according to the MTAWE benchmark rather than
CPI indexation. As a result, they were not affected by the 0.7 per cent CPI
adjustment.
Former policy analyst with the Department of Social Security
(and successor departments), David Plunkett, illustrated the immediate impact
of 2013 indexation adjustment in his submission to the Senate Economics
Committee inquiry into the Budget Savings (Omnibus) Bill 2016. The chart below
shows Newstart Allowance rates in March 2013: the first column shows the rate
prior to indexation, the second column shows the rate if normal CPI-indexation
had occurred, and the third shows the actual rate with the two Clean Energy
Supplement components (the 0.7 per cent inflation component deducted from the
normal CPI indexation and the additional one per cent component):
Figure 1:
Impact of 2013 indexation adjustment on Newstart Allowance rates
Source: D Plunkett, Submission
to the Senate Economics Legislation Committee, Inquiry into the Budget
Savings (Omnibus) Bill 2016, Attachment A, September 2016.
As can be seen, the rate after the normal indexation process
is higher than the actual rate on 20 March 2013 minus the Clean Energy
Supplement (comparing the second and third blue columns). With subsequent
indexation adjustments being based on this lower base rate, many payments are
now significantly lower than they would have been had normal indexation
occurred:
Table 5:
Fortnightly payment rates compared to those if Energy Supplement never
introduced, as at 20 September 2016
| Payment |
Current rates without Energy Supplement |
Rates if Energy Supplement never introduced |
| Single Newstart Allowance, no children |
$528.70 |
$532.30 |
| Single Newstart allowance, with dependent children |
$571.90 |
$575.90 |
| Partnered Newstart allowance (each) |
$477.40 |
$480.60 |
| Youth Allowance, 18+, at home |
$285.20 |
$287.00 |
| Youth Allowance, 18+, away from home |
$433.20 |
$436.20 |
Source: D Plunkett, Submission to the Senate Economics Legislation
Committee, Inquiry into the Budget Savings (Omnibus) Bill 2016,
Attachment C, September 2016.
Table 5 above shows that a single Newstart recipient will be
around $94 a year worse-off without the Energy Supplement, than if the
compensation payment had never been introduced and indexation had occurred
as normal.
Plunkett has argued that the effect of this indexation issue
combined with the loss of the Energy Supplement, means that new income support
recipients will be subject to a ‘double penalty’.[140] New recipients will not
only lose the 1.0 per cent compensation bonus that was a component of the Clean
Energy Supplement; they also lose the 0.7 per cent price increase component
that was deducted from the main payment rate.
Complexity
of the social security system
By closing off the Energy Supplement to new recipients and
grandfathering existing recipients, the amendments in Schedule 9 will create
two tiers of payment rates across the social security system:
- a pre-20 September 2017 tier and
-
a post-20 September 2017 tier.
This will create new complexities for the administration
of the system in terms of determining those eligible for the Energy Supplement
as well as calculating rates under the means tests.
Introducing new complexities into the system is at odds with
the Minister for Social Services’ statements about wanting to simplify the
system and reduce the number payments and supplements. In his second reading
speech for the Social Services Legislation Amendment (Family Payments
Structural Reform and Participation Measures) Bill 2016, Minister Porter
referenced the 2015 report of the Reference Group on Welfare Reform (the
McClure Review)[141]
in promoting the alignment of different payment rates for young people and the
abolition of the Family Tax Benefit end-of-year supplements:
Aligning these two rates of payment, is in itself a much
needed part of the reform process to simplify payments where possible.
...
Crucially, these changes are consistent with the reform
recommendations of the McClure Review to reduce the number of supplements in
the system. McClure emphasised that there are far too many supplements—some 20
main payment types and 55 supplements.[142]
The amendments in Schedule 9 of the Bill increase the
complexity of the system by creating new categories of recipient ineligible for
the Energy Supplement across all of the main payment types.
Comment
The measures in Schedule 9 will deliver significant savings
which are to be directed towards the National Disability Insurance Scheme
(NDIS).[143]
Some of those in receipt of the payments affected by the removal of the Energy
Supplement will also be beneficiaries of the NDIS. This raises the question as
to whether the services offered by the NDIS should be funded by the withdrawal
of direct financial support for people with disability and carers.
While the removal of carbon tax compensation runs counter to
the Coalition’s 2013 Election commitments, it could be argued as justified
given the abolition of the carbon price. However, the measures go further than
trimming the compensation provided via the Household Assistance package and
will actually leave some welfare recipients worse-off than had the carbon price
never been introduced.
The removal of the Energy Supplement follows a number of
benefit cuts and reductions over the last three years including the abolition
of the Income Support Bonus and the Schoolkids Bonus and the proposed removal
of Family Tax Benefit supplements, the Pensioner Education Supplement and the
Education Entry Payment.[144]
Critics may argue that at a time of growing concern as to the adequacy of some
payments, the level of support offered by the social security system is being
slowly eroded.
Key
provisions
Social
Security Act 1991
Item 4 of Schedule 9 of the Bill inserts proposed
section 22 into Part 1.2—Definitions of the SS Act. Proposed
section 22 defines when a person is considered to be a transitional
energy supplement person. A person is a transitional energy supplement
person if on 19 September 2016:
- they are receiving an income support payment where the Energy
Supplement was used to work out the rate
- Energy Supplement is payable to the person (under section 1061UA)
- they are eligible to receive the Energy Supplement as a result of
receiving a War Widow/War Widower pension (under section 62B of the VE Act)
- they are eligible to receive the Energy Supplement as holders of
a Commonwealth Seniors Health Card or Gold Card under the VE Act
(section 118PA)
- they are eligible to receive the Energy Supplement as a result of
receiving a payment under the Veterans’ Children Education Scheme or the
Military Rehabilitation and Compensation Act Education and Training Scheme
- the person receives an Energy Supplement as a result of receiving
a compensation payment for the death of their partner under section 238A of the MRC Act or
- the person is receiving an ABSTUDY living allowance.
A person ceases to be a transitional energy supplement
person, and may never again be one, if none of the above criteria apply
to a person on a day on or after 20 September 2016.
While War Widows/War Widowers pension recipients and
veterans’ service pensioners are included in the definition of transitional
energy supplement person (as a service pension is defined as an income support
payment), veterans’ Disability Pension recipients and the recipients of certain
payments under the MRC Act have been left out of this definition.
Instead, separate definitions of transitional energy supplement person
covering veterans’ Disability Pension recipients and certain MRC Act payments
will be inserted into the VE Act and the MRCA Act by amendments
in Parts 3 and 4 of Schedule 9, respectively.
Proposed subsections 22(3)–(7) of the SS Act
provide for certain individuals to continue to be considered as transitional
energy supplement persons, including those who have their payment rate
reduced to nil on or after 19 September 2016; those who have their payment
suspended on or after 19 September 2016; those who have an absence from
Australia longer than six weeks; those who move between being a Commonwealth
Seniors Health Card holder and being an income support payment recipient; and
those who make a claim or are provided with a Commonwealth Seniors Health Card
within a certain period of time after certain income support payments are cancelled.
Specific criteria apply in each situation for persons in these situations to
remain eligible for the Energy Supplement.
Proposed subsection 22(7), together with
subsection 1061U(6) which was inserted by item 37 of Schedule 21 of the Budget
Savings (Omnibus) Act 2016 (commencing 20 March 2017), will ensure that
those who have their pension payment cancelled as a result of the new assets
test arrangements which commenced on 1 January 2017, and who are therefore
automatically issued with Commonwealth Seniors Health Card, will continue to be
eligible for an Energy Supplement paid with the Commonwealth Seniors Health
Card.[145]
Items 11–34, 36–39, 41–44, 46–52 and 54–55 amend
various rate calculators for social security payments so the Energy Supplement
is not added to the rate calculations for these payments from 20 September 2017
unless the person is a transitional energy supplement person on that day.
The rate calculators apply to the following payments:
- Age Pension, Disability Support Pension, Wife Pensions and Carer
Payment (people who are not blind) at section 1064
- Age Pension and Disability Support Pension (blind people) at
section 1065
- Bereavement Allowance and Widow B Pension at section 1066
- Disability Support Pension (people under 21 who are not blind) at
section 1066A
- Disability Support Pension (people under 21 who are blind) at
section 1066B
- Youth Allowance at section 1067G
-
Austudy Payment at section 1067L
- Widow Allowance, Newstart Allowance, Sickness Allowance, Partner
Allowance and Mature Age Allowance at section 1068
- Parenting Payment Single at section 1068A and
- Parenting Payment Partnered at section 1068B.
Items 35, 40, 45 and 53 amend the partner income
free area provisions for Youth Allowance, Austudy Payment, Widow Allowance,
Newstart Allowance, Sickness Allowance, Partner Allowance, Mature Age Allowance
and Parenting Payment Partnered so the Energy Supplement is not included where
the person is not a transitional energy supplement person (unless their partner
is a transitional energy supplement person). The partner income free area is
the amount of income an income support recipient’s partner can have before the
recipient’s payment rate is reduced—the income free area is based on the
partner’s age, whether or not they receive a social security benefit, and the
rate of benefit that would be payable if they were in receipt a benefit.
Item 56 amends point 1071A-2A to remove the
Energy Supplement from the formula used to calculate the allowable income
limits for a Low Income Health Care Card.[146]
These amendments will lower the amount of allowable income a person can earn
and still qualify for the Health Care Card and will apply irrespective of
whether the person held a card prior to 20 September 2017 (the commencement
date). This will mean that some holders of a Low Income Health Care Card may
lose their eligibility due to the tighter income test.
Farm
Household Support Act 2014
Items 58–61 in Part 2 of Schedule 9 to the Bill make
minor amendments and insert notes into the Farm Household Support Act 2014
to explain that some Farm Household Support Allowance recipients will not
receive the Energy Supplement (that is, those who are not transitional energy
supplement persons). The rates of Farm Household Support Allowance are tied to
the payment rates of Newstart Allowance and Youth Allowance in the SS Act
and are therefore affected by the amendments in Part 1 of Schedule 9.
Veterans’
Entitlements Act 1986
Items 65–67 in Part 3 of Schedule 9 to the Bill amend
section 62A of the VE Act which currently provides for the
payment of the Energy Supplement to recipients of the Disability Pension under
the VE Act. Item 67 inserts proposed subsections 62A(4)–(6)
to define a transitional energy supplement person as a person who
on 19 September 2016 is in receipt of the Energy Supplement as a veterans’
Disability Pension recipient, or as a person eligible for permanent impairment
payment under subsection 83A(1) of the MRC Act, or as a person eligible
for the Special Rate Disability Pension under the MRC Act. Only those
who meet the definition of transitional energy supplement person under either the
VE Act or the SS Act can receive the Energy Supplement after 20 September
2017.
If a person ceases to meet the definition of transitional
energy supplement person they cannot regain that status.[147]
Item 70 inserts proposed subsection 62B(4) into
the VE Act so that a War Widow/War Widower pension recipient can be
eligible for the Energy Supplement after 20 September 2017 if they meet the
definition of transitional energy supplement person set out in proposed
section 22 of the SS Act (inserted by item 4 in Part 1 of
Schedule 9 to the Bill).
Item 76 amends section 118P of the VE Act
which sets out the eligibility for the Energy Supplement for holders of a
Commonwealth Seniors Health Card or a DVA Health Card All Conditions (Gold) to
prevent new Gold card holders after 20 September 2017 from receiving the Energy
Supplement; to stop payment of the Energy Supplement for people who became Gold
card holders on or after 20 September 2016 with effect from 20 September
2017; and to set out conditions where a person who claims or receives a card
after having another payment cancelled, or who moves from being a cardholder to
receiving an income support payment, can continue to receive the Energy
Supplement. Items 81–87 (excluding item 85) in Part 3 of Schedule
9 to the Bill make amendments to the method statements for determining payment
rates for the Service Pension. Item 85 provides for the Energy
Supplement to not be included in the rate calculation process unless the person
is a transitional energy supplement person as defined under the SS Act.
Military
Rehabilitation and Compensation Act 2004
Item 89 of Part 4 of Schedule 9 to the Bill inserts
proposed subsections 83A(4)–(6) into the MRC Act so that a person in
receipt of a permanent impairment payment under the MRC Act will only be
eligible for the Energy Supplement from 20 September 2017 if they are a transitional
energy supplement person. A transitional energy supplement person for
the purposes of this section of the MRC Act is defined in proposed
subsection 83A(5) as a person who is eligible for the Energy Supplement on
19 September 2016 in respect of a permanent impairment payment under the MRC
Act, a Special Rate of Disability Pension under the MRC Act or a
Disability Pension payable under the VE Act. A person who ceases to meet
the criteria to be a transitional energy supplement person after 19 September
2016 can never again become a transitional energy supplement person.[148]
Item 91 inserts proposed subsections 209A(3)– (5)
into the MRC Act so that a person in receipt of a Special Rate
Disability Pension under the MRC Act will only be eligible for the
Energy Supplement from 20 September 2017 if they are a transitional
energy supplement person. A transitional energy supplement person for
the purposes of this section of the MRC Act is defined in proposed
subsection 209A(4) as a person eligible for the Energy Supplement on 19
September 2016 in respect of a Special Rate Disability Pension, a permanent
impairment payment under the MRC Act or a Disability Pension under the VE
Act. A person who ceases to meet the criteria to be a transitional energy
supplement person after 19 September 2016 can never again become a transitional
energy supplement person.[149]
Item 93 inserts proposed subsection 238A(4)
into the MRC Act so that a person in receipt of a compensation payment
as a wholly dependent partner under the MRC Act will only be eligible
for the Energy Supplement from 20 September 2017 if they are a transitional
energy supplement person as defined in section 22 of the SS Act
(as inserted by item 4 in Part 1 of Schedule 9 to the Bill).
Schedule 10—stopping
the payment of pension supplement after 6 weeks overseas
Purpose and background
The purpose of this measure is to amend the Social
Security Act 1991 (the SS Act) and the Veterans’ Entitlements Act
1986 (the VE Act) to limit the portability of the pension
supplement. This measure was announced in the 2016-17 Mid-Year Economic and
Fiscal Outlook, and has not been included in a previous Bill.[150]
Commencement
This Schedule is intended to commence on 1 July 2017 if it
receives Royal Assent before that date. If not, it will commence on the first 1
January, 1 April, 1 July or 1 October to occur after Royal Assent. Items 26
(in respect of the SS Act) and 38 (in respect of the VE Act)
provide that the amendments in Schedule 10 ‘apply in relation to a temporary or
permanent absence from Australia for a period that begins before, on or after
the day this item commences’. Following the commencement date, any recipients
who have been overseas for longer than six weeks continuously will stop being
eligible for the pension supplement.
Overview of
the pension supplement and changes
The pension supplement is a payment provided in addition
to some pensions and income support payments, including the Age Pension, Carer
Payment and Disability Support Pension.[151]
People who leave Australia temporarily for fewer than six
weeks typically continue to receive the same rate of pension supplement during
their travel period.[152]
Currently, people who leave Australia permanently or for more than six weeks
and remain eligible for their qualifying payment (such as the Age Pension)
receive a reduced rate of pension supplement, known as the basic amount.[153] The
amendments in Schedule 10 will change this arrangement so that pensioners cease
receiving the pension supplement entirely once they have been outside Australia
continuously for six weeks, or when they leave Australia if departing
permanently.
The annual pension supplement for singles is $1,713.40
(basic amount $598.00) and for members of a couple is $1,292.20 (basic amount $491.40).[154]
Parenting Payment (Single) recipients under age pension age receive the pension
supplement basic amount. The pension supplement is paid fortnightly, or
quarterly at a reduced rate (known as the minimum pension supplement amount) if
the recipient chooses.[155]
The pension supplement is subject to the pension income
and assets test but the minimum pension supplement amount is the last component
of the pension rate to be reduced when the income test is applied. The minimum
pension supplement amount remains payable if any pension supplement is payable
after the application of the income and assets test.
It is difficult to calculate how many people will no
longer be eligible for the pension supplement due to this measure. September
2016 data shows more than 88,000 people receiving the Age Pension reside in an
‘unknown’ region (including but not exclusively outside Australia), as do
approximately 7,000 people receiving the Disability Support Pension, and
smaller numbers of people receiving other qualifying payments.[156]
History of
the pension supplement
The current pension supplement was created as part of a
major pension reform in 2009 from a combination of existing supplements and
allowances and an additional increase.[157]
These included the GST pension supplement, which had been introduced in 2000 to
compensate for the reduced purchasing power of the pension, and ‘was structured
as a supplement so as to ensure that the value of the compensation for the GST
was always preserved as an amount additional to the pension rate’.[158] Other
payments bundled together in the pension supplement were:
- the Utilities Allowance, introduced in 2004 as a twice yearly
payment to assist with utility bills
- the Telephone Allowance, introduced in 1992 as a payment for
pensioners with a telephone account
- the Pharmaceutical Allowance, introduced in 1990 to compensate
pensioners for reduced entitlements to free pharmaceuticals.[159]
Policy
basis for the measure
The Government has stated that ‘the intent of the Pension
Supplement is to assist with specific cost of living pressures for pensioners
living in Australia’.[160]
In particular, the Explanatory Memorandum notes that the pension supplement
basic amount equates to the former GST supplement, and argues ‘Pensioners who
leave Australia permanently or who are temporarily absent from Australia for
more than six weeks are unlikely to be impacted by the Australian GST and it is
therefore not appropriate to continue to pay them the pension supplement basic
amount’.[161]
Policy position of non-government parties/independents
Labor has described the measure as ‘stripping pensioners
of the pension supplement’ as part of a broader sweep of pension ‘cuts’.[162]
Position of major interest groups
The National Social Security Rights Network (NSSRN) is
opposed to this measure, stating that the existing portability rules already
‘place great weight’ on the principle of residence and the further tightening
is ‘unjustified because it does not give enough weight to the importance of
travel overseas, especially for the many older Australians who are migrants and
have strong ties to family and communities overseas’.[163]
Further, the NSSRN was concerned that the provisions would affect pensioners
already overseas:
We also note our grave concern at the departure from basic
principle in Schedule 10. Individuals already overseas have always been
protected from the potential detrimental impact of portability changes.
Schedule 5 is consistent with this principle, and only applies to departures
after it commences. Schedule 10 departs from this principle unacceptably, as it
applies to all pensioners whether overseas on date of commencement or not. Many
of these pensioners will have already exercised the right they have under
Australian social security law to choose their country of retirement and this
will cut their incomes even though they may be unable to do anything about it.[164]
The Australian Council of Social Service did not raise any
significant concerns with the measure, noting only that:
In effect, this measure would only apply to the GST component
of the Pension Supplement as the rest of the supplement is already no longer
not payable after six weeks overseas. While in theory this measure should not
disadvantage pensioners whilst overseas because they are not paying GST, in
practice it reduces their income.[165]
Financial implications
The Government estimates this measure will provide savings
of $123.6 million over the forward estimates 2016‑17 to 2019-20.[166]
Key issues and provisions
Items 1–26 of Schedule 10 amend the SS
Act, and items 27–38 amend the VE Act.
A number of items in Schedule 10 insert the words ‘if any’
following mentions of the pension supplement, thereby indicating that some
pensioners will not be eligible to receive any amount of pension supplement.
The following affect the SS Act: items 1, 2, 7,
12 and 17. The VE Act is similarly amended by items 27,
31, 32 and 33.
The SS Act and VE Act include calculators
for working out payment rates for particular pension types. Schedule 10 amends
some of these calculators, including by removing the points in the calculators
that allow those absent from Australia for more than six weeks to be paid the
pension supplement basic amount. The details of these amendments are shown in Table
6.
Table 6:
Payment calculators amended by Schedule 10
| Item numbers |
Amended calculator |
Pension type/s affected |
Repealed/amended |
Amended Act |
| 3-6 |
Pension Rate Calculator A |
Age Pension, Carer Payment, Disability Support Pension,
Wife Pension |
Point 1064‑BA5 |
SS Act |
| 8-11 |
Pension Rate Calculator B |
Age Pension and Disability Support Pension (permanently blind
people aged 21 and older) |
Point 1065-BA5 |
| 13-16 |
Pension Rate Calculator C |
Bereavement Allowance, Widow B Pension |
Point 1066-BA5 |
| 18-22 |
Parenting Payment Rate Calculator |
Parenting Payment (single) |
Point 1068A-BA5 |
| 34-37 |
Rate Calculator |
Service Pension |
Point SCH-BA5 of Schedule 6 |
VE Act |
The option for pensioners to elect to receive the minimum
pension supplement amount on a quarterly basis as a separate payment is
retained in each of the calculators listed above.
Items 24 and 25 respectively repeal the
current method statements in the SS Act for calculating the transitional
maximum pension payment rate for single people and coupled people outside
Australia for longer than six weeks. These items also insert new method
statements which do not include the step of calculating and adding the pension
supplement for the person, because Schedule 10 renders them ineligible for the
pension supplement. Items 29 and 30 similarly amend method
statements in the VE Act.
Division 2 of Part 4.2 of Chapter 4 of the SS Act outlines
the portability of social security payments. Item 23 inserts proposed
section 1216A to put beyond doubt that, even if a person’s right to
be paid a payment is not affected by their absence from Australia, their
payment rate may be affected (in accordance with the relevant Rate Calculator
listed in Chapter 3 of the SS Act). Item 28 makes a similar
amendment to the VE Act.
Schedule 11—automation of income stream review processes
Purpose and background
The purpose of this measure is to amend the Social
Security (Administration) Act 1999 (the SS Admin Act) to enable the
electronic collection of income stream data from financial service providers by
expanding what information can be obtained by the Secretary to verify claims.[167]
This measure was announced in the 2016-17 Mid-Year Economic and Fiscal Outlook,
and has not been included in a previous Bill.[168]
Commencement
This Schedule will commence on the day after Royal Assent.
The Explanatory Memorandum states that once the Schedule commences, ‘DHS will
coordinate a staged implementation in consultation with income stream
providers’.[169]
In the Mid-Year Economic and Fiscal Outlook, the Government stated that the
proposed six monthly electronic data collection from financial service
providers will be introduced from 1 January 2018.[170]
Income
streams and reviews
For social security purposes, an income stream ‘is a series
of related payments, over an identifiable period of time, with at least one
payment being made on an annual basis’.[171]
The Social Security Act 1991 (the SS Act) specifies the
types of payments which may be considered income streams (such as an income
stream from a superannuation scheme or retirement savings account), and the
types of payments that are excluded (such as a managed investment).[172] Income
from income streams is assessed for the purposes of the income tests that apply
to social security payments.
Currently, the Department of Human Services (DHS) undertakes
reviews into the income stream details of people receiving income support
payments in order to ensure that they are receiving correct rate of payment.
These reviews are conducted in February and August of each year. Payment
recipients are sent letters if they are required to provide additional
information to DHS for the reviews, and if they do not provide the required
information in the designated timeframe, their payments may be stopped.[173]
In some cases, DHS can obtain details directly from income
stream providers (such as superannuation funds) which means that income support
recipients do not receive review letters and do not have to provide information
to DHS themselves.[174]
Proposed
changes and policy basis
The Government states that this measure will support the
introduction of ‘a six monthly electronic data collection process’ that ‘will
improve the accuracy and efficiency of Australia’s social security system and
reduce the regulatory burden on income stream providers (primarily financial
institutions) and recipients of social security payments’.[175]
Policy position of non-government parties/independents
On 9 February 2017, Greens Senator Rachel Siewert discussed
Schedule 11 in the context of what she described as ‘the debacle over Christmas
of the Centrelink automated debt recovery process’.[176] Labor members have
similarly commented on the amendments in Schedule 11 in this context.[177]
The concern is that the increased automation of the income stream review
process may result in errors.
Position of major interest groups
The National Social Security Rights Network (NSSRN) has
stated that it does not oppose the measure in Schedule 11 and that
obtaining income stream information directly from providers is a ‘sensible
reform’.[178]
However, the NSSRN recommended that the Government provide assurances that the
new system would not be used to retrospectively review entitlements in the same
way as DHS’s online compliance intervention system has been used to review
reported employment income.[179]
The Australian Council of Social Service stated that it did
not have a ‘firm view’ on the measure but also expressed ‘concerns about the
accuracy of an automated process in assessing revenue streams’.[180]
Financial implications
The Government estimates this measure will provide savings
of $38.1 million over the forward estimates (2016–17 to 2019–20).[181]
Key issues and provisions
As noted above, some parliamentarians and advocacy
organisations have raised concerns regarding Schedule 11 in relation to the
recent Centrelink automated debt recovery issues. The Department of Social
Services has reiterated Schedule 11 ‘is not a data matching or compliance
measure’.[182]
Section 195 of the SS Admin Act provides for the
Secretary of the Department of Social Services to require that a person give
certain types of information about social security claimants and recipients to
the Department for purposes including verifying the qualification of those
claimants and recipients to any benefits and ensuring compliance with
requirements. Subsection 195(2) sets out the specific information the Secretary
can require a person to give them about social security claimants and
recipients.
Item 1 of Schedule 11 adds proposed
paragraph 195(2)(ja) to the SS Admin Act, to allow the Secretary to
obtain 20 new points of information ‘in relation to an income stream received
by the person’. These include specific information on the type of income
stream, date of the first payment from the income stream, account balances and
amounts paid. In addition to this specific data, proposed subparagraph 195(2)(ja)(xx),
allows the Secretary to obtain ‘any other information required by the Minister
in an instrument made under subsection (3A)’.
Consistent with this power, item 2 inserts proposed
subsection 195(3A) into the SS Admin Act which permits the
Minister to ‘specify information required to be given in relation to an income
stream received by a person’ by making a legislative instrument. Item 2 also
adds proposed subsection 195(3B), which requires the Minister to
first ‘consult the Information Commissioner in relation to matters that relate
to the [Commissioner’s] privacy functions’ and ‘have regard’ to the
Commissioner’s submissions.
Schedule 12—Seasonal
horticultural work income exemption
Schedule 12 proposes amendments to the Social Security
Act 1991 (the SS Act), the Farm Household Support Act 2014
and the Veterans’ Entitlements Act 1986 (VE Act)) to provide for
an income test incentive aimed at encouraging job seekers on income support to
undertake seasonal horticultural work.
The measures are part of a two-year trial program commencing
1 July 2017 to encourage jobseekers to undertake seasonal horticultural work
such as fruit-picking. Under the measure, participants will be able to earn up
to $5,000 from specified horticultural seasonal work during the 12 months after
they join the trial program, without that income affecting their income support
payment rate under the income test. Up to 7,600 job seekers who have been in
receipt of Newstart Allowance or Youth Allowance (Other) for at least three
months will be eligible to participate in the trial.[183]
The program will be run by employment services providers who
will receive a ‘Provider Seasonal Work Incentive Payment’ of $100 a week for up
to six weeks a year for each participant they place with eligible farmers.[184]
Participants will be eligible for a travel allowance of $300 if they undertake
horticultural work that is more than 120 kilometres from their home.[185]
Commencement
Parts 1 and 2 of Schedule 12, the main provisions, commence
on 1 July 2017. Part 3 of Schedule 12, which repeals the amendments made by
Parts 1 and 2, commences on 1 July 2020 so that it is clear that the trial has
a start date and an end date.
Background
The measure was announced in the 2016–17 Mid-Year Economic
and Fiscal Outlook (MYEFO).[186]
A trial of such an income test incentive for jobseekers was
proposed by the Nick Xenophon Team (NXT) in the context of debate over changes
to the income tax rates for working holiday makers (the ‘backpacker tax’).[187]
The NXT secured support for its proposal as part of an agreement to support the
backpacker tax legislation (the Income
Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016 (No. 2).[188]
NXT MP Rebekha Sharkie stated:
We need to address the work force shortage that our local
growers experience during harvest time. With the uncertainly surrounding a
backpacker tax, we have developed a seasonal regional employment strategy for
Government that will encourage unemployed people to take on short term fruit picking
work and assist the horticulture and viticulture industries to address the ever
challenging issue of finding enough hands to get fruit into the packing shed.
This is a win-win for farmers and for local employment.
Our plan gives unemployed Australians the opportunity to
‘taste’ work in primary production without fear of losing unemployment
benefits. We are assisting farmers to access a wider pool of casual labour
though the Job Active program, which for many unemployed Australians could
likely lead to on-going work on the land.[189]
Policy position of non-government parties/independents
It is unclear what the position of non-government parties is
on this measure, other than NXT Members and Senators who proposed the measure
and secured the Government’s support for it.
Position of major interest groups
The Australian Council of Social Service (ACOSS) is ‘broadly
supportive’ of the measure but stated that it should be broadened to apply to
all people in receipt of an unemployment payment. ACOSS has recommended an
‘income bank’ of $4,000 that accrues over time to ‘enable all receiving an
unemployment payment to undertake casual or sporadic work without incurring a
sharp or total loss of payment’.[190]
The Australian Council of Trade Unions (ACTU) stated that it
held no substantial objections to the proposed trial program but was ‘concerned
about the underlying issue of worker exploitation in the agriculture sector
especially amongst temporary work visa holders’.[191]
The ACTU stated that the ‘Government must take action to end the exploitation
in this industry and, if this program goes ahead, ensure that job seekers are
not exposed to exploitation and abuse’.[192]
The National Social Security Rights Network (NSSRN)
suggested that incentives such as that proposed in the trial ‘have generally
been unsuccessful in the past ... because there are other far more significant
factors affecting the take up of work’.[193]
The NSSRN also suggested that the program would be a departure from the ‘very
fundamental principles of payment according to need and can therefore lead to
inequity’.[194]
The NSSRN stated it could support the measures as a trial, provided it is
rigorously evaluated.[195]
Financial implications
According to the Explanatory Memorandum to the Bill, the
measure is expected to cost $27.5 million over the forward estimates.[196]
Key issues
and provisions
Income support eligibility and work
disincentives
Eligibility conditions for
unemployment payments
The qualification criteria for Newstart Allowance require
that an individual be considered unemployed and meet the activity test.[197]
The qualification criteria for Youth Allowance require an individual to meet
the activity test but an individual undertaking full-time work of at least 35
hours a week is considered to have not met the activity test.[198]
This means that for both payments, an individual undertaking full-time work
would normally be disqualified.
The activity test for Newstart Allowance and Youth
Allowance (Other) requires claimants to look for and take up any offers of
suitable paid work (unless an exemption from activity test requirement
applies).[199]
Suitable paid work includes seasonal work, though certain
types of seasonal work might be considered unsuitable if the person has to
commute for more than 90 minutes.[200]
If a recipient has indicated they would be prepared to live away from home for
work or are accustomed to undertaking employment away from home, then they
would be expected to take up employment opportunities outside their local area.
Different types of employment are considered unsuitable for different types of
recipients—for example, those with caring responsibilities.[201]
Income testing
Income testing is intended to target income support to
those without the means to support themselves. Income over certain thresholds
reduces payments rates, and income over a certain amount means that a person
receives a zero rate or is ineligible for payment. While the income test is
necessary for targeting payments to those in need, it can also act as a disincentive
to work as the withdrawal of income support partly offsets any increased income
from working. When combined with income tax, income test withdrawals can
significantly reduce the amount of disposable income gained from undertaking
paid work (the combined effect of income support reductions and income tax is
known as an effective marginal tax rate).
Newstart Allowance recipients can earn $104 a fortnight
before their payment rate is affected.[202]
Fortnightly rates of Newstart are reduced by 50 cents for every dollar of
income between $104 and $254, and by 60 cents in the dollar for every dollar of
income over $254 in a fortnight. Single parents have a different income
test—their fortnightly rates reduce by 40 cents for every dollar of income over
$104.
Single Newstart Allowance recipients with no children will
not receive any payment if their fortnightly income is over $1,036.34. Single
principal carers of dependent children will not receive any payment if their
fortnightly income is over $1,576.00.
Youth Allowance (Other) recipients can earn up to $143 per
fortnight before their payment rate is affected.[203]
Fortnightly rates of Youth Allowance (Other) are reduced by 50 cents for every
dollar of income between $143 and $250, and by 60 cents for every dollar of
income over $250 per fortnight. A single Youth Allowance (Other) recipient
living away from their family home will not receive any payment if their
fortnightly income is over $901.67.[204]
If a person is a member of a couple, their partner’s
income can also affect their payment rates.
Working credit
The Working Credit scheme allows Newstart Allowance and
Youth Allowance (Other) recipients to build up credits during periods when
little or no income is earned which can reduce the amounts that are counted
under the income test when earned income increases.[205]
Recipients typically accrue one credit for each dollar of difference between
$48 and their income in each fortnight. For example, if an individual has no
income in a fortnight they can accrue 48 credits; if they earn $40 they can
accrue eight credits and if they earn $48 or more they cannot receive credits
in that fortnight. Newstart Allowance recipients can accrue a maximum of 1,000
credits (so $1,000 of income can be excluded from the income test if they do
take up work). Youth Allowance (Other) recipients can accrue 3,500 credits.
The Working Credit scheme is intended as an incentive for
payment recipients to take up work, including short-term work such as seasonal
work. It works to reduce the disincentive effect of high effective marginal tax
rates.
Employment income nil rate periods
Another incentive for income support recipients to take up
short-term or seasonal work is the Employment Income Nil Rate Period. Where a
Newstart Allowance or Youth Allowance (Other) recipient’s payment is reduced to
nil due to employment income they can still be considered a benefit recipient
for a set period of time known as an ‘employment income nil rate period’.[206]
If the person’s income falls during this period, and they become eligible for
some income support again, they can recommence payment without having to
reapply and serve a waiting period. An employment income nil rate period can
last for up to six fortnights after the fortnight during which the payment was
reduced to nil (in effect this means a nil rate period can last for six or
seven fortnights).
Seasonal worker preclusion period
People claiming income support payments who have
undertaken seasonal or intermittent work (or whose partner has undertaken such
work) in the six months prior to making a claim may be subject to a ‘seasonal
worker preclusion period’ (SWPP).[207]
The SWPP applies to a range of working-age income support payments, including Newstart
Allowance and Youth Allowance (Other).[208]
The SWPP is a period during which a person is not eligible to receive a social
security payment—it is calculated based on the amount of earnings a person or
their partner earned, the number of weeks spent undertaking
seasonal/intermittent work and any intervening weeks.
The SWPP only affects those lodging new claims for affected
payment if they are single and earned income above Average Weekly Ordinary Time
Earnings (or a member of a couple who earned more than twice Average Weekly
Ordinary Time Earnings) and the income was earned during a period of seasonal
or intermittent work that ended in the six months before lodging a claim.[209]
Exemptions from the SWPP can be granted where a person was
in receipt of income support for a continuous period exceeding 12 months on the
day before they commenced intermittent work (does not apply to seasonal work).
Exemptions can also be granted if the person is undertaking certain employment
services or rehabilitation activities. SWPPs can be waived if the claimant is
in severe financial hardship and the hardship is a result of unavoidable or
reasonable expenditure.[210]
Seasonal horticultural seasonal
work trial
The measures proposed in Schedule 12 are aimed at
alleviating some of the disincentives to take up seasonal work built into the
design of income support payments for jobseekers. Primarily, the measure will
remove some of the disincentive effect of the income test by allowing
jobseekers to earn income without losing part of their income support payment.
Secondly, it will allow Youth Allowance (Other) recipients to work full-time
hours without losing eligibility for the payment.
The trial is, in effect, providing an enlarged Working
Credit balance to a select group of income support recipients who are willing
to undertake seasonal work. This will provide a significant incentive for
eligible jobseekers to take up seasonal work.
A study by Roger Wilkins and Andrew Leigh on the effects
of the Working Credit program estimated that it has positive effects on the
employment participation of people receiving income support and the income of
these people (Wilkins and Leigh note that the way the program was implemented
and the data available make it difficult to credibly evaluate the causal
effects of the program).[211]
However, the study estimated that there were ‘ambiguous—or possibly zero—effects
on exits from the income support system’.[212]
The measures in Schedule 12 have, however, not been framed
as measures that will encourage jobseekers to move off of welfare. Instead, the
Minister has stated that ‘the measure responds to concerns about the ability of
the Australian horticulture industry to attract sufficient numbers of seasonal
workers’.[213]
As such, the measure is intended to boost labour supply rather than encouraging
people to move from welfare and into work.
It is unclear whether trial participants will be affected
by the SWPP.[214]
Only those who become ineligible for their Newstart Allowance or Youth
Allowance (Other) payment during the trial period could be affected by the SWPP
as it only affects new claims. It could affect those who earn a significant
amount of income while participating in the trial over a long period so that
their payment rate is reduced to zero under the income test (after accounting
for the proposed $5,000 exemption) and receive a zero rate for longer than the
permissible employment income nil rate period (six or seven fortnights). It is
unlikely that such a circumstance would arise during the trial period.
Key provisions
Item 2 adds the ‘seasonal work living away and
travel allowance’ to the list of amounts excluded from the definition of income
at subsection 8(8) of the SS Act. This is the payment of $300 for those
who move 120 kilometres or more to participate in the trial program. The
amendment will mean that this amount is not included in the social security
income test.
As noted above, the qualification criteria for Youth
Allowance require an individual to meet the activity test but an individual
undertaking full-time work of at least 35 hours a week is considered to have
not met the activity test.[215]
Item 3 inserts proposed subsection 541(3A) into the SS Act
so that a person in receipt of Youth Allowance will not be disqualified for
undertaking full-time work of 35 hours a week or more if that work is
qualifying seasonal horticultural work (as defined at proposed subsection
1073K(6) inserted by item 7) and the income earned, derived or
received from that work is being disregarded under the income test (under proposed
subsection 1073K(2) inserted by item 7).
Item 7 inserts proposed Division 1AC—Seasonal
horticultural work income exemption, which consists of proposed section
1073K, into Part 3.10 of the SS Act. To qualify for the exemption,
the Secretary of the Department of Social Services must be satisfied that a
person is placed in qualifying seasonal horticultural work under the program
known as the ‘Seasonal Horticultural Work Program’ in 2017–18 or 2018–19. If
the person qualifies for the income test exemption, they will have the first
$5,000 of any ordinary income earned, derived or received by the person under
that program disregarded when working out their payment rate. The exemption
applies for up to 12 months from the first day of the instalment period
(payment fortnight) that includes the day the person is placed in the program.
However, the $5,000 exemption is respective to each of the financial years of
the program and a person eligible in both years cannot transfer any unused
balance from their total from the first year over to the second year.
Proposed subsection 1073K(3) provides for this
exemption to also apply in relation to the person’s partner (for example, under
the partner income test if the partner is also receiving an income support
payment).
Proposed subsection 1073K(5) states that qualifying
payments for the seasonal horticultural work income exemption are Newstart
Allowance and Youth Allowance (Other).[216]
Proposed subsections 1073K(6) and (7) provide for
the Secretary of the Department of Employment to determine, by legislative
instrument, what kinds of seasonal work are to be considered qualifying
seasonal horticultural work.
Part 3 of Schedule 12 (items 10–18) will repeal all
of the amendments made by the Schedule on 1 July 2020.
Schedules 13–16—ordinary waiting periods, age requirements
for various Commonwealth payments, income support waiting periods and other
waiting period amendments (Rapid Activation of young job seekers)
With the exception of their commencement dates, the
measures in Schedules 13 to 16 to this Bill are identical to those contained in
the Social Services Legislation Amendment (Youth Employment) Bill 2016, which
is currently before the House of Representatives.[217]
Schedule 13—ordinary waiting periods
Commencement
The measures in Schedule 13 commence on the first 1
January or 1 July after Royal Assent.
Purpose
Schedule 13 amends the Social Security Act 1991 (the
SS Act) to make changes to the ordinary waiting period requirements.
These changes:
- extend the application of the ordinary waiting period to new
recipients of Parenting Payment and Youth Allowance (Other).[218]
The ordinary waiting period is seven days. It currently applies to Newstart
Allowance and Sickness Allowance recipients
- create a more stringent test for waiver of the waiting period.
The current grounds for waiver are that a person is in severe financial
hardship.[219]
The proposed changes tighten the waiver provisions by introducing an additional
requirement—that the person is experiencing a personal financial crisis,[220] and
- clarify that the ordinary waiting period is to be served after
certain other relevant waiting periods or preclusions have ended.[221]
History of
the measure
This Schedule represents the sixth time the proposed
changes have been put forward in the last three years.
The measure was first introduced in the Social
Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014.[222]
The Government was unable to secure the passage of this Bill through the Senate
and it was discharged from the Notice Paper in the Senate on 28 October 2014.
Subsequently, the measure was reintroduced in the Social
Services and Other Legislation Amendment (2014 Budget Measures No. 4) Bill 2014.[223]
This Bill did not proceed beyond the second reading stage in the Senate and a
revised version of the measure was introduced in the Social Services Legislation Amendment (Youth Employment and Other
Measures) Bill 2015.[224]
Under this revised version, claimants of Widow Allowance were
excluded from the ordinary waiting period and additional circumstances in which
a person may meet the definition of experiencing a personal financial crisis,
and thus be exempt from the ordinary waiting period, were set out. The
Government failed to secure the passage of this Bill through the Senate.
The measure was then reintroduced in the Social Services Legislation Amendment (Youth Employment) Bill 2015 which was before the House of Representatives when
Parliament was dissolved.[225]
The measure was then reintroduced in the Social
Services Legislation Amendment (Youth Employment) Bill 2016, which is
currently before the House of Representatives.[226]
Further information
For an analysis of the measure, see the Bills Digest for
the Social Services Legislation Amendment (Youth Employment and Other
Measures) Bill 2015.[227]
Schedule 14—age requirements for various Commonwealth
payments
Commencement
The measures in Schedule 14 commence on the first 1
January or 1 July after Royal Assent.
Purpose
Schedule 14 amends the SS Act and the Farm
Household Support Act 2014 to:
- raise the eligibility age for Newstart Allowance and Sickness
Allowance, from 22 to 25 years,[228]
- raise the current ceiling age for Youth Allowance, from 21 years
to 24 years, and
- make consequential amendments to align the rates for Farm
Household Allowance with Newstart Allowance and Youth Allowance.[229]
History of
the measure
This Schedule represents the sixth time the proposed
changes have been put forward in the last three years.
This measure was originally introduced in the Social
Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014.[230]
The Government was unable to secure the passage of this Bill through the Senate
and it was discharged from the Notice Paper on 28 October 2014. The measure was
reintroduced in the Social
Services and Other Legislation Amendment (2014 Budget Measures No. 4) Bill 2014.[231]
This Bill did not proceed beyond the second reading stage in the Senate and the
measure was reintroduced in the Social Services Legislation Amendment (Youth Employment and Other
Measures) Bill 2015.[232] The Government failed to
secure the passage of this Bill through the Senate and the measure was
reintroduced in the Social Services Legislation Amendment (Youth Employment) Bill 2015 which, as noted above, lapsed on the prorogation of
Parliament.[233]
The measure was reintroduced in the Social
Services (Youth Employment) Bill 2016, which is currently before the House
of Representatives.[234]
Further Information
The proposed changes are controversial. For an analysis of
the measure, and discussion of the key issues, see the Bills Digest for the Social
Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014.[235]
Schedule 15—income support waiting periods
Commencement
The measures in Schedule 15 commence on the first 1
January or 1 July after Royal Assent.
Purpose
Schedule 15 amends the SS Act to introduce a four-week
waiting period for new claimants of Youth Allowance (Other) and Special
Benefit who are under 25 years of age.[236]
The waiting period will apply to those new claimants who
are determined to be the most work-ready, that is, those claimants who are
assessed as being eligible for Stream A services under jobactive employment
services arrangements.[237]
During the four-week waiting period, new claimants will be obliged to
participate in a RapidConnect Plus rapid activation strategy, introduced under
Schedule 16 of the Bill (see below).
History of the measure
This Schedule represents the sixth time a proposed waiting
period for income support for young people has been put forward in the last
three years.
A measure that would have imposed a six-month waiting
period on a majority of new claimants of Newstart Allowance, Youth Allowance
(other) and Special Benefit under the age of 30 was introduced in the Social
Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014.[238]
The Government was unable to secure the passage of this Bill through the Senate
and it was discharged from the Notice on 28 October 2014.
Subsequently, the measure was reintroduced in the Social
Services and Other Legislation Amendment (2014 Budget Measures No. 4) Bill 2014.[239]
This Bill did not proceed beyond the second reading stage in the Senate.
A revised measure that would apply a waiting
period of four weeks on new claimants of Youth Allowance (other) and Special
Benefit aged under 25 years was introduced in the Social Services Legislation Amendment (Youth Employment and Other
Measures) Bill 2015.[240] The Government
failed to secure the passage of this Bill through the Senate and the measure
was reintroduced, with a relatively minor change, in the Social Services Legislation Amendment (Youth Employment) Bill 2015.[241]
This Bill lapsed on the prorogation of Parliament and the measure was
reintroduced in the Social
Services Legislation Amendment (Youth Employment) Bill 2016, which is
currently before the House of Representatives.[242]
Further Information
The proposed changes are controversial. For
a brief analysis of the measure, see the Bills
Digest for the Social Services Legislation Amendment (Youth Employment) Bill
2016[243]
and the 2015–16 Budget Review article Waiting
period for young people to access income support.[244]
Schedule 16—other waiting period amendments
(Rapid Activation of young job seekers)
Commencement
The measures in Schedule 16 commence immediately after the
commencement of Schedule 15.
Purpose
Schedule 16 amends the SS Act to introduce a requirement that young people
subject to the new four-week income support waiting period (introduced under
Schedule 15) undertake a number of additional job search activities[245] during this period in
order to qualify for the receipt of income support.[246]
This measure, which was announced as a part
of the 2015–16 Budget, was first introduced in the Social Services Legislation Amendment (Youth Employment) Bill 2015.[247]
This Bill lapsed on the prorogation of Parliament and the measure was
reintroduced in the Social
Services Legislation Amendment (Youth Employment) Bill 2016, which is
currently before the House of Representatives.[248]
For an analysis of the measure, see
the Bills Digest for the Social
Services Legislation Amendment (Youth Employment) Bill 2015.[249]
[1]. Parliament
of Australia, ‘Paid
Parental Leave (Reduction of Compliance Burden for Employers) Amendment Bill
2010 homepage’, Australian Parliament website.
[2]. Explanatory
Memorandum, Social Services Legislation Amendment (Omnibus Savings and
Child Care Reform) Bill 2017; Department of Social Services (DSS), Department
of Education and Training and Department of Employment, Submission
to Senate Community Affairs Legislation Committee, Inquiry into the Social
Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill
2017, 3 March 2017.
[3]. Senate
Standing Committee for the Scrutiny of Bills, Report,
8, 2016, The Senate, 9 November 2016, p. 461.
[4]. Senate
Community Affairs Legislation Committee, ‘Social
Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill
2017’, Inquiry homepage.
[5]. Ibid.
[6]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny
digest, 2, 2017, The Senate, 15 February 2017, pp. 26-36.
[7]. See
discussion of the Committee’s views in M Klapdor, Family
Assistance Legislation Amendment (Jobs for Families Child Care Package) Bill
2016, Bills digest, 39, 2016–17, Parliamentary Library, Canberra, 2016,
pp. 18–20.
[8]. The
Statement of Compatibility with Human Rights can be found on pages 206 to 269 of
the Explanatory
Memorandum to the Bill.
[9]. Parliamentary
Joint Committee on Human Rights, Scrutiny
report, 1, 2017, The Senate Canberra, p. 53.
[10]. Department
of Human Services (DHS), ‘Family
Tax Benefit’, DHS website, last updated 24 January 2017.
[11]. Ibid.
[12]. T
Abbott (Prime Minister) and S Morrison (Minister for Social Services), Jobs
for Families child care package delivers choice for families, media
release, 10 May 2015.
[13]. P
Yeend and M Klapdor, ‘Family
payments’, Budget review 2014–15, Research paper series, 2013–14,
Parliamentary Library, Canberra, 2015, pp. 141–142.
[14]. Parliament
of Australia, ‘Social
Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014
homepage’, Australian Parliament website; Parliament of Australia, ‘Social
Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014
homepage’, Australian Parliament website.
[15]. Parliament
of Australia, ‘Social
Services and Other Legislation Amendment (2014 Budget Measures No. 4) Bill 2014
homepage’, Australian Parliament website; Parliament of Australia, ‘Social
Services and Other Legislation Amendment (2014 Budget Measures No. 6) Bill 2014
homepage’, Australian Parliament website.
[16]. Australian
Government, Budget
measures: budget paper no. 2: 2015–16, p. 151.
[17]. T
Abbott (Prime Minister) and S Morrison (Minister for Social Services), Jobs
for Families child care package delivers choice for families, media
release, 10 May 2015.
[18]. C
Porter, ‘Second
reading speech: Social Services Legislation Amendment (Family Payments
Structural Reform and Participation Measures) Bill 2015’, House of
Representatives, Debates, 21 October 2015, p. 11919.
[19]. Ibid.
[20]. M
Klapdor, Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill 2015, Bills digest, 50, 2015–16,
Parliamentary Library, Canberra, 2015.
[21]. Parliament
of Australia, ‘Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill 2015 homepage’, Australian Parliament website.
[22]. Social Services
Legislation Amendment (Family Payments Structural Reform and Participation
Measures) Act 2015.
[23]. Parliament
of Australia, ‘Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill (No. 2) 2015 homepage’, Australian Parliament
website.
[24]. Parliament
of Australia, ‘Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill 2016 homepage’, Australian Parliament website.
[25]. M
Klapdor, ‘Omnibus
Bill compromise to find further savings from family payments’, FlagPost,
Parliamentary Library blog, 14 September 2016; Australian Parliament,
‘Budget
Savings (Omnibus) Bill 2016 homepage’, Parliament of Australia website.
[26]. S Morrison
(Treasurer) and M Cormann (Minister for Finance), Government
secures support for over $6 billion in budget savings, joint media
release, 13 September 2016; D Crowe, ‘Families
to wear cost of budget savings deal’, The Australian, 14
September 2016, p. 1.
[27]. S Morrison
(Treasurer) and M Cormann (Minister for Finance), Government
secures support for over $6 billion in budget savings, op. cit.
[28]. Explanatory
Memorandum, Social Services Legislation Amendment (Family Payments
Structural Reform and Participation Measures) Bill 2016, p. 2; Explanatory
Memorandum, Social Services Legislation Amendment (Omnibus Savings and
Child Care Reform) Bill 2017, p. 6.
[29]. Revised
Explanatory Memorandum, Budget Savings (Omnibus Bill) 2016, p. 6.
[30]. Senate
Education and Employment Legislation Committee, Family
Assistance Legislation Amendment (Jobs for Families Child Care Package) Bill
2016 [Provisions] and the Social Services Legislation Amendment (Family Payment
Structural Reform and Participation Measures) Bill 2016 [Provisions],
The Senate, Canberra, 10 October 2016.
[31]. Ibid.,
p. 28.
[32]. Ibid.,
p. 29.
[33]. Labor
Senators, Dissenting
report, Senate Education and Employment Legislation Committee, Inquiry
into the Family Assistance Legislation Amendment (Jobs for Families Child Care
Package) Bill 2016 [Provisions] and the Social Services Legislation Amendment
(Family Payment Structural Reform and Participation Measures) Bill 2016
[Provisions], The Senate, Canberra, 10 October 2016; Australian Greens
Senators, Dissenting
report, Senate Education and Employment Legislation Committee, Inquiry
into the Family Assistance Legislation Amendment (Jobs for Families Child Care
Package) Bill 2016 [Provisions] and the Social Services Legislation Amendment
(Family Payment Structural Reform and Participation Measures) Bill 2016
[Provisions], The Senate, Canberra, 10 October 2016.
[34]. M
Klapdor, Social
Services Legislation Amendment (Family Payment Structural Reform and
Participation Measures) Bill 2016, Bills digest, 26, 2016–17,
Parliamentary Library, Canberra, 2016, pp. 4–5.
[35]. J
Macklin (Shadow Minister for Families and Social Services), Transcript
of doorstop interview: Parliament House, Canberra, media release,
8 February 2017.
[36]. R
Siewert (Australian Greens spokesperson on Community Services), Deal
with crossbench tries to sneak through four week wait and other nasties,
media release, 8 February 2017.
[37]. Australian
Greens, Equality
and compassion: lifting income support, Australian Greens policy
document, Election 2016.
[38]. Australian
Greens Senators, Dissenting
report, Senate Education and Employment Legislation Committee, Inquiry
into the Family Assistance Legislation Amendment (Jobs for Families Child Care
Package) Bill 2016 [Provisions] and the Social Services Legislation Amendment
(Family Payment Structural Reform and Participation Measures) Bill 2016
[Provisions], The Senate, Canberra, 10 October 2016, p. 46.
[39]. ‘Xenophon
Team, Lambie to vote against omnibus welfare bill’, SBS News, 14
February 2017.
[40]. Australian
Council of Social Service (ACOSS), ACOSS
urges Parliament to reject latest attempt to cut incomes of poorest in new
Omnibus Bill, media release, 8 February 2017.
[41]. National
Social Security Network, Submission
to Senate Community Affairs Legislation Committee, Inquiry into the Social
Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill
2017, Submission 9, 3 March 2017, p. 2.
[42]. Benevolent Society, The
Benevolent Society concerned over proposed changes to social services
legislation, media release, 8 February 2017.
[43]. Explanatory
Memorandum, Social Services Legislation Amendment (Omnibus Savings and
Child Care Reform) Bill 2017, p. 6.
[44]. Ibid.
[45]. Klapdor,
Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill 2015, op. cit.
[46]. Family Assistance
Legislation Amendment (More Help for Families—Increased Payments) Act 2004;
Family and Community
Services and Veterans’ Affairs Legislation Amendment (Further 2004 Election
Commitments and Other Measures) Act 2005.
[47]. Department
of Social Services (DSS), Annual
report 2014–15, DSS, Canberra, p. 262.
[48]. S
Morrison (Treasurer), C Porter (Minister for Social Services), S Birmingham
(Minister for Education and Training), Transcript
of joint press conference: Canberra, media release, 21 October 2015, p.
4; Budget
Savings (Omnibus) Act 2016, Schedule 23.
[49]. Australian
Tax Office (ATO), ‘Single
Touch Payroll’, ATO website, last modified 22 September 2016.
[50]. C
Porter, ‘Second
reading speech: Social Services Legislation Amendment (Omnibus Savings and
Child Care Reform) Bill 2017’, House of Representatives, Debates, 8
February 2017, p. 214.
[51]. Disability
Support Pension recipients aged under-21 with no dependent children are also
eligible for the Youth Disability Supplement of $124.70 per fortnight. DHS, A
guide to Australian Government payments: 20 March–30 June 2017, DHS,
Canberra, 2017, p. 15
[52]. Item
1 and item 7 of Schedule 3 to the Bill.
[53]. Item
2 and item 8 of Schedule 3 to the Bill.
[54]. DSS,
‘3.1.7.03
Maintenance income test ceiling’, Family assistance guide,
version 1.192, DSS website, last reviewed 1 July 2016.
[55]. DSS,
‘1.1.M.22
Maintenance income test ceiling (FTB)’, Family assistance guide,
version 1.192, DSS website, last updated 11 May 2015
[56]. M
Klapdor, Family
Assistance Legislation Amendment (Jobs for Families Child Care Package) Bill
2015, Bills digest, 110, 2015–16, Parliamentary Library, Canberra,
2016; M Klapdor, Family
Assistance Legislation Amendment (Jobs for Families Child Care Package) Bill
2016, Bills digest, 39, 2016–17, Parliamentary Library, Canberra, 2016.
[57]. Productivity
Commission (PC), Childcare
and early childhood learning, Inquiry report, 73, PC, Canberra, 31
October 2014.
[58]. Australian
Government, ‘Part 2:
expense measures’, Budget measures: budget paper no. 2: 2015–16, p.
154–155.
[59]. S
Birmingham (Minister for Education and Training) and C Porter (Minister for
Social Services), Family
tax reform to better support Australian children, joint media release,
2 December 2015.
[60]. Department
of Education and Training, Submission,
no. 30, to Senate Education and Employment Legislation Committee, Inquiry
into the Family Assistance Legislation Amendment (Jobs for Families Child Care
Package) Bill 2015, January 2016, pp, 24, 29.
[61]. B
Phillips, Distributional
modelling of proposed childcare reforms in Australia, ANU Centre for
Social Research and Methods, Canberra, March 2016.
[62]. See
discussion in Klapdor, Family
Assistance Legislation Amendment (Jobs for Families Child Care Package) Bill
2015, op. cit., pp. 29–45.
[63]. Joint
group of 23 early childhood organisations, Submission
to Senate Community Affairs Legislation Committee, Inquiry into the Social
Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill
2017, 3 March 2017, p. 1.
[64]. Department
of Social Services (DSS) and the Department of Education and Training, Submission
to Senate Community Affairs Legislation Committee, Inquiry into the Social
Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill
2017, 3 March 2017, p. 4; Australian Government, Australian
Government response to the Senate Education and Employment Legislation
Committee report: Inquiry into the Family Assistance Legislation
Amendment (Jobs for Families Child Care Package Bill 2015 [Provisions],
9 February 2017, p. 512; Australian Government, Australian
Government response to the Senate Education and Employment Legislation
Committee report: Inquiry into the Family Assistance Legislation
Amendment (Jobs for Families Child Care Package Bill 2016 and Social Services
Legislation Amendment (Family Payments Structural Reform and Participation
Measures) Bill 2016, 9 February 2017, p. 8.
[65]. Explanatory
Memorandum, Social Services Legislation Amendment (Omnibus Savings and
Child Care Reform) Bill 2017, p. 6.
[66]. Explanatory
Memorandum, Family Assistance Legislation Amendment (Jobs for Families
Child Care Package) Bill 2016, p. 4.
[67]. Australian
Government, ‘Part 2:
expense measures’, Budget measures: budget paper no. 2: 2015–16, p.
154–155.
[68]. Australian
Government, Mid-Year
Economic and Fiscal Outlook 2016–17, p. 45. The Portfolio Additional
Estimates Statements stated that the $7.6 billion decrease is in cash terms and
equals a decrease of $6.2 billion in fiscal balance terms. Department of
Education and Training, Portfolio
Additional Estimates Statements 2016–17, p. 11.
[69]. Department
of Social Services (DSS) and the Department of Education and Training, Submission
to Senate Community Affairs Legislation Committee, Inquiry into the Social
Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill
2017, Submission 7, 3 March 2017, p. 6.
[70]. Australian
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[71]. Australian
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[72]. Ibid.,
p. 197.
[73]. Department
of Human Services (DHS), ‘Budget
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three years’, DHS website.
[74]. The
Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015
passed both Houses on 22 June 2015 and received Royal Assent on 30 June
2015—see Social
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[75]. Senate,
Bills
list as at cob 15 December 2014, 2014 final edition, Senate Table
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[76]. DSS,
‘Portability
of Australian income support payments’, DSS website.
[77]. For
details on the application of portability rules see: DSS, ‘7.1.2.20
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security law, version 1.2226, released 4 October 2016, DSS website.
[78]. DHS,
‘Age
Pension while travelling outside Australia’, DHS website.
[79]. DSS,
‘1.2.7.30
Pensioner Education Supplement (PES) – Description’, Guide to social
security law, version 1.229, DSS website, last updated
2 January 2013.
[80]. Ibid.
[81]. DSS,
‘Pensioner
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[82]. DSS,
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[83]. Ibid.
[84]. National
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[85]. DSS
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Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill
2017, Submission 7, 3 March 2017, p. 9.
[86]. DSS,
‘1.2.7.60
Education Entry Payment (EdEP) – Description’, Guide to social security
law, version 1.229, DSS website, last updated 2 January 2014.
[87]. National
Commission of Audit, op. cit., p. 107.
[88]. Department
of Social Services (DSS) and the Department of Education and Training, Submission
to Senate Community Affairs Legislation Committee, Inquiry into the Social
Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill
2017, 3 March 2017, p. 9.
[89]. P
Yeend and L Buckmaster, Social
Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014,
Bills digest, 14, 2014–15, Parliamentary Library, Canberra, p. 12.
[90]. DHS,
‘Income
test for Newstart Allowance, Partner Allowance, Sickness Allowance and Widow
Allowance’, DHS website, 20 March 2017.
[91]. Yeend
and Buckmaster, op. cit., p. 12.
[92]. Senate
Community Affairs Legislation Committee, ‘Social
Services Legislation Amendment (Budget Repair) Bill 2016’, Inquiry
homepage.
[93]. Senate
Community Affairs Legislation Committee, Social
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[94]. Ibid.,
p. 20.
[95]. Ibid.,
p. 24.
[96]. Senate
Standing Committee for the Scrutiny of Bills, Alert
digest, 1, 2016, The Senate, 3 February 2016, p. 35; Senate Standing
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[97]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny
digest, 2, 2017, op. cit.
[98]. Senate
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(Budget Repair) Bill 2016, Submissions
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[99]. M
Klapdor, ‘Pensions’,
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Library, Canberra, May 2015, pp. 143–145.
[100]. C
Ey, M Klapdor, M Thomas and P Yeend, Social
Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014,
Bills digest, 16, 2014–15, Parliamentary Library, Canberra, p. 32.
[101]. The
last time it was introduced was in the Social Services Legislation Amendment
(Budget Repair) Bill 2016.
[102]. M
Klapdor and M Thomas, Social
Services Legislation Amendment (Youth Employment and Other Measures) Bill 2015,
Bills digest, 16, 2014–15, Parliamentary Library, Canberra, p. 15.
[103]. Yeend
and Buckmaster, op. cit., pp. 11–14; Ey, et al, op. cit., pp. 11–18.
[104]. Australian
Government, Budget
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[105]. Parliament
of Australia, ‘Budget
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[106]. N
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[107]. P
Yeend and L Buckmaster, Clean
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[108]. K
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[109]. DSS,
‘1.2.12.10
Clean Energy Advance (CEA) – description’, Guide to social security law,
version 1.229, DSS website, last reviewed 20 March 2017.
[110]. J Macklin, ‘Second reading speech: Clean Energy (Household Assistance
Amendments) Bill 2011’, House of Representatives, Debates,
13 September 2011, p. 9858.
[111]. Ibid.
[112]. Explanatory Memorandum, Clean
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[113]. T Abbott (Leader of the Opposition), Address to the NSW Liberal Party State Council, Central Coast, speech, 1 June 2013.
[114]. Social
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[115]. DSS,
‘3.15.2 ES
– Qualification & Payability’, Guide to social security law,
version 1.229, DSS website, last reviewed 20 March 2017.
[116]. C
Porter, ‘Second
reading speech: Social Services Legislation Amendment (Omnibus Savings and
Child Care Reform) Bill 2017’, House of Representatives, Debates, 8
February 2017, p. 217.
[117]. C
Porter (Minister for Social Services), Real
money for a real commitment to the NDIS, media release, 3 May 2016.
[118]. Abbott, Address to the NSW Liberal Party State Council, Central Coast,
op. cit.
[119]. Senate
Economics Legislation Committee, Inquiry
into the Budget Savings (Omnibus) Bill 2016, Inquiry homepage.
[120]. Senate
Economics Legislation Committee, Inquiry
into the Budget Savings (Omnibus) Bill 2016, The Senate, Canberra, 14
September 2016, p. 40.
[121]. Ibid.
[122]. J
Macklin, ‘Second
reading speech: Social Services Legislation Amendment (Omnibus Savings and
Child Care Reform) Bill 2017’, House of Representatives, Debates, 27
February 2017, p. 35.
[123]. Australian
Greens, Dissenting report, Senate Economics Legislation Committee, Inquiry
into the Budget Savings (Omnibus) Bill 2016, The Senate, Canberra, 14
September 2016, p. 59.
[124]. Ibid.,
p. 61.
[125]. R
Sharkie, ‘Second
reading speech: Budget Savings (Omnibus) Bill 2016’, House of
Representatives, Debates, 14 September 2016, p. 831.
[126]. J
Lambie, ‘Second
reading speech: Budget Savings (Omnibus) Bill 2016’, Senate, Debates,
15 September 2016, p. 1162.
[127]. R
Lewis, ‘Porter
“testing” crossbench waters on omnibus bill’, The Australian, 24
February 2017, p.2.
[128]. Australian
Council of Social Service, ACOSS
urges Parliament to reject latest attempt to cut incomes of poorest in new
Omnibus Bill, media release, 8 February 2017.
[129]. Benevolent
Society, The
Benevolent Society concerned over proposed changes to social services
legislation, media release, 8 February 2017.
[130]. Explanatory
Memorandum, Social Services Legislation Amendment (Omnibus Savings and
Child Care Reform) Bill 2017, p. 6.
[131]. Senate
Community Affairs Legislation Committee, Proof
committee Hansard, 2 March 2017, p. 81.
[132]. Senate Community Affairs Legislation Committee, Official committee Hansard, 6 May
2016, p. 127.
[133]. Ibid.,
p. 128.
[134]. DSS,
‘DSS
Demographics September 2016’, data.gov.au website.
[135]. C
Halbert (Group Manager, Payments Policy, Department of Social Services), Evidence
to Senate Community Affairs Legislation Committee, Inquiry into the Social
Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill
2017, 9 March 2017, p. 59; Senate Community Affairs Legislation Committee,
‘Customer
numbers affected by closure of energy supplement to new welfare recipients
excluding FTB-B customers’, document tabled by Department of Social
Services at Canberra public hearing 9 March 2017, Inquiry into the Social
Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill
2017, The Senate, 2017.
[136]. M
Klapdor, ‘Adequacy
of income support payments’, Briefing book: key issues for the 44th
Parliament, Parliamentary Library, Canberra, 2013, p. 76.
[137]. Senate
Education, Employment and Workplace Relations References Committee, The adequacy of the allowance
payment system for jobseekers and others, the appropriateness of the allowance
payment system as a support into work and the impact of the changing nature of
the labour market, The Senate, Canberra, November 2012, pp. 50, 54.
[138]. Department
of Human Services (DHS), ‘Income
Support Bonus’, DHS website, last updated 7 March 2017.
[139]. Minerals Resource
Rent Tax Repeal and Other Measures Act 2014. See also, T Dale, K
Swoboda, K Sanyal, B Pulle and M Klapdor, Minerals
Resource Rent Tax Repeal and Other Measures Bill 2013, Bills digest,
27, 2013–14, Parliamentary Library, Canberra, 9 December 2013.
[140]. D
Plunkett, Submission
to the Senate Economics Legislation Committee, Inquiry into the Budget
Savings (Omnibus) Bill 2016, September 2016, [p. 1].
[141]. Reference
Group on Welfare Reform, A new
system for better employment and social outcomes: final report of the Reference
Group on Welfare Reform to the Minister for Social Services, (McClure
Report), DSS, Canberra, 2015.
[142]. C
Porter, ‘Second
reading speech: Social Services Legislation Amendment (Family Payments
Structural Reform and Participation Measures) Bill 2016’, House of
Representatives, Debates, 1 September 2016, p. 277.
[143]. Australian
Government, Budget
measures: budget paper no. 2: 2016–1 , pp. 143–144.
[144]. Minerals Resource
Rent Tax Repeal and Other Measures Act 2014; M Klapdor, Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill (No. 2) 2015, Bills digest, 65, 2015–16,
Parliamentary Library, Canberra, 2016; D Arthur, Social
Services Legislation Amendment (Budget Repair) Bill 2015, Bills digest,
78, 2015–16, Parliamentary Library, Canberra, 2016.
[145]. For
information on the assets test changes and automatic-issue Commonwealth Seniors
Health Cards, see: M Klapdor, Social
Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015,
Bills digest, 129, 2014–15, Parliamentary Library, Canberra, 2015.
[146]. DSS,
‘3.9.1.70
low income HCC—assessment of income’, Guide to social security law, version
1.224, DSS website, 20 March 2017.
[147]. Proposed
subsection 22(2) of the SS Act inserted by item 4 in Part 1 of
Schedule 9 to the Bill and proposed subsection 62A(6) of the VE Act
inserted by item 67 in Part 3 of Schedule 9 to the Bill.
[148]. Proposed
subsection 83A(6) of the MRC Act inserted by item 89 in Part
4 of Schedule 9 to the Bill.
[149]. Proposed
subsection 209A(5) of the MRC Act inserted by item 90 in Part
4 of Schedule 9 to the Bill.
[150]. S
Morrison (Treasurer) and M Cormann (Minister for Finance), Mid-year
economic and fiscal outlook 2016–17, p. 194.
[151]. Department
of Social Services (DSS), ‘3.12.1 Pension
Supplement—Qualification and Payability’, Guide to social security law,
version 1.229, DSS website, last reviewed 2 January 2015.
[152]. Ibid.
[153]. Ibid.
[154]. The
single rates also apply to each member of an eligible couple separated by
illness or imprisonment. Rates are updated on 20 March and 20 September
each year. DSS, ‘5.1.9.10
Pension Supplement—Current Rates’, Guide to social security law,
version 1.229, DSS website, last reviewed 20 March 2017.
[155]. DSS,
‘3.12.1
Pension Supplement—Qualification and Payability’, op. cit.; DSS, ‘1.2.10.10
Pension Supplement—Description’, Guide to social security law,
version 1.229, DSS website, last reviewed 1 July 2013.
[156]. DSS,
‘DSS
Demographics September 2016’, data.gov.au website.
[157]. DSS,
‘1.2.10.10
Pension Supplement—Description’, Guide to social security law, op.
cit.
[158]. D
Daniels, L Buckmaster and P Yeend, Social
Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget
Measures) Bill 2009, Bills digest, 179, 2008–09, p. 13.
[159]. Ibid.,
pp. 12–13.
[160]. Morrison
and Cormann, Mid-year
economic and fiscal outlook 2016-17, op. cit., p. 194.
[161]. Explanatory
Memorandum, Social Services Legislation Amendment (Omnibus Savings and
Child Care Reform) Bill 2017, p. 131.
[162]. J
Macklin (Shadow Minister for Families and Social Services), Liberals
are the party of pension cuts, media release, 20 December 2016.
[163]. National
Social Security Rights Network, Submission
to Senate Community Affairs Legislation Committee [no. 9], Inquiry into the Social
Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill
2017, 3 March 2017, p. 3.
[164]. Ibid.,
p. 4.
[165]. ACOSS,
Submission
to Senate Community Affairs Legislation Committee, Inquiry into the Social
Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill
2017, Submission 13, 3 March 2017, p. 5.
[166]. Explanatory
Memorandum, Social Services Legislation Amendment (Omnibus Savings and
Child Care Reform) Bill 2017, p. 6.
[167]. C
Porter, ‘Second
reading speech: Social Services Legislation Amendment (Omnibus Savings and
Child Care Reform) Bill 2017’, House of Representatives, Debates, 8
February 2017, p. 213.
[168]. Morrison
and Cormann, Mid-year
economic and fiscal outlook 2016–17, op. cit., p. 192.
[169]. Explanatory
Memorandum, Social Services Legislation Amendment (Omnibus Savings and
Child Care Reform) Bill 2017, p. 136.
[170]. Morrison
and Cormann, Mid-year
economic and fiscal outlook 2016–17, op. cit., p. 192.
[171]. Department
of Social Services (DSS), ‘4.9.1.10
Background to Income Streams’, Guide to social security law, version
1.229, 19 September 2014.
[172]. Social
Security Act 1991 (the SS Act) Part 1.2—Definitions, subsection
9(1) .
[173]. DHS,
‘Income
stream reviews webpage’, DHS website.
[174]. Ibid.
[175]. Morrison
and Cormann, Mid-year
economic and fiscal outlook 2016–17, op. cit., p. 192.
[176]. R
Siewert, ‘Committees:
Selection of Bills Committee Report’, Senate, Debates, 9 February
2017, p. 446. For discussion of Centrelink’s automated
debt recovery system see, for example: T McIlroy, ‘Centrelink
debt system faces growing chorus of criticism’, The Age, 3 January
2017, p. 9 and C Knaus, ‘Centrelink
debt notices based on 'idiotic' faith in big data, IT expert says’, Guardian
Australia (online), 30 December 2016, The Commonwealth Ombudsman has
launched an own
motion investigation into the Centrelink system and the Senate Community
Affairs References Committee is conducting an inquiry.
[177]. M
Keogh, ‘Second
reading speech: Social Services Legislation Amendment (Omnibus Savings and
Child Care Reform) Bill 2017’, House of Representatives, Debates, 28
February 2017, p. 7; S Jones, ‘Second
reading speech: Social Services Legislation Amendment (Omnibus Savings and
Child Care Reform) Bill 2017’, House of Representatives, Debates, 28
February 2017, p. 53.
[178]. National
Social Security Rights Network, Submission
to Senate Community Affairs Legislation Committee [no. 9], Inquiry into the Social
Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill 2017,
3 March 2017, p. 6.
[179]. Ibid.
[180]. Australian
Council of Social Service, Submission
to Senate Community Affairs Legislation Committee [no. 13], Inquiry into the
Social Services Legislation Amendment (Omnibus Savings and Child Care Reform)
Bill 2017, 3 March 2017, p. 5.
[181]. Explanatory
Memorandum, Social Services Legislation Amendment (Omnibus Savings and
Child Care Reform) Bills 2017, p. 6.
[182]. DSS
and the Department of Education and Training, Submission
to Senate Community Affairs Legislation Committee, Inquiry into the Social
Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill
2017, 3 March 2017, p. 12.
[183]. Youth
Allowance (Other) is paid to jobseekers aged 16–21 and Newstart Allowance is
paid to jobseekers aged 22 and over (but see proposed changes to eligibility
age in Schedule 14 of this Bill). Youth Allowance (Student) is paid to
full-time students and apprentices and has different eligibility criteria.
Department of Human Services (DHS), ‘Youth
Allowance’, DHS website, last updated 3 January 2017; Explanatory
Memorandum, Social Services Legislation Amendment (Omnibus Savings and
Child Care Reform) Bill 2017, p. 139.
[184]. DSS
and the Department of Education and Training, Submission
to Senate Community Affairs Legislation Committee, Inquiry into the Social
Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill
2017, 3 March 2017, p. 12.
[185]. Ibid.
[186]. Morrison
and Cormann, Mid-year
economic and fiscal outlook 2016–17, p. 195.
[187]. N
Xenophon and R Sharkie, Relax
dole rules to give Aussies a chance to work on farms, media release, 20
September 2016.
[188]. N
Xenophon and R Sharkie, A
win for NXT’s seasonal workers incentive trial and Aussie job seekers,
media release, 28 November 2016.
[189]. N
Xenophon and R Sharkie, Relax
dole rules to give Aussies a chance to work on farms, op. cit.
[190]. ACOSS,
Submission
to Senate Community Affairs Legislation Committee, Inquiry into the Social
Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill
2017, 3 March 2017, p. 5.
[191]. Australian
Council of Trade Unions, Submission
to Senate Community Affairs Legislation Committee, Inquiry into the Social
Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill
2017, Submission 11, 3 March 2017, p. 10.
[192]. Ibid.
[193]. National
Social Security Rights Network, Submission
to Senate Community Affairs Legislation Committee, Inquiry into the Social
Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill
2017, 3 March 2017, p. 6.
[194]. Ibid.
[195]. Ibid.
[196]. Explanatory
Memorandum, Social Services Legislation Amendment (Omnibus Savings and
Child Care Reform) Bill 2017, p. 6.
[197]. Social Security Act
1991, sections 593 and 595.
[198]. Social Security Act
1991, subsection 541(3).
[199]. DSS,
‘3.2.8.10
mutual obligation requirements for NSA/YA job seekers overview’, Guide
to social security law, version 1.229,
DSS website, 4 January 2016.
[200]. DSS,
‘3.2.8.60
unsuitable work’, Guide to social security law, version 1.229, DSS
website, 1 July 2015.
[201]. Ibid.
[202]. DHS,
‘Income
test for Newstart Allowance, Partner Allowance, Sickness Allowance and Widow
Allowance’, DHS website, last updated 23 November 2016.
[203]. DHS,
‘Personal
income test forAustudy and Youth Allowance’, DHS website, 10 January 2017.
[204]. Ibid.
[205]. DHS,
‘Working
Credit’, DHS website, 29 September 2016.
[206]. DSS,
‘3.1.12
employment income nil rate period’, Guide to social security law,
version 1.229, DSS website, 3 January 2017.
[207]. DSS,
‘1.1.S.455
SWPP’, Guide to social security law, version 1.229, DSS website, 7
November 2016.
[208]. DSS,
‘3.1.7.10
who is affected by an SWPP’, Guide to social security law, version
1.229, DSS website, 9 November 2016.
[209]. DSS,
‘1.1.S.455
SWPP’, op. cit.
[210]. DSS,
‘3.1.7.10
who is affected by an SWPP’, op. cit.
[211]. R
Wilkins and A Leigh, ‘Effects
of temporary in-work benefits for welfare recipients: examination of the
Australian Working Credit programme’, Fiscal Studies, 33(3), 2012,
p. 367.
[212]. Ibid.
[213]. C
Porter, ‘Second
reading speech: Social Services Legislation Amendment (Omnibus Savings and
Child Care Reform) Bill 2017’, House of Representatives, Debates,
(proof), 8 February 2017, p. 7.
[214]. Concern
about the potential impact was raised by the National Social Security Rights
Network. See National Social Security Rights Network, Submission
to Senate Community Affairs Legislation Committee, Inquiry into the Social
Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill
2017, submission no. 9, 3 March 2017, p. 6.
[215]. Subsection
541(3), Social
Security Act 1991 (Cth).
[216]. Youth
Allowance (Other) means for recipients other than Australian Apprentices or
full-time students.
[217]. Parliament
of Australia, Social
Services Legislation Amendment (Youth Employment and Other Measures) Bill 2016
homepage, Australian Parliament website.
[218]. Social
Security Act, proposed sections 500WA and 500WB (re. parenting
payment ordinary waiting period) and 549CA and 549CB (re. youth
allowance ordinary waiting period).
[219]. A
person is in severe financial hardship if the value of their liquid assets is
less than their fortnightly rate of payment if they are single, or less than
double their fortnightly payment if they are partnered. See subsections 19C(2)
and (3) of the Social Security Act,
[220]. Social
Security Act, proposed section 19DA. A person will be considered to
be ‘experiencing a personal financial crisis’ if they are in severe financial
hardship and have been subject to domestic violence; or incurred
unavoidable or reasonable expenditure in the preceding four weeks. Additional
circumstances can be prescribed by the Secretary though a legislative
instrument.
Note: Other existing exemptions from the ordinary waiting period will continue
to be available, including:
-
reclaiming within 13 weeks of last
receiving income support
-
participating in certain employment
services designed for vulnerable job seekers with multiple barriers to work.
[221]. The
proposed changes remove the concurrent application of the waiting period. This
means the ordinary waiting period will be served after the liquid assets test
waiting period, income maintenance period, seasonal work preclusion period and
newly arrived resident’s waiting period (as relevant to the specific claimant).
[222]. Parliament
of Australia, ‘Social
Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014
homepage’, Australian Parliament website.
[223]. Parliament
of Australia, ‘Social
Services and Other Legislation Amendment (2014 Budget Measures No. 4) Bill 2014
homepage’, Australian Parliament website.
[224]. Parliament
of Australia, ‘Social
Services and Other Legislation Amendment (Youth Employment and Other Measures)
Bill 2015 homepage’, Australian Parliament website.
[225]. Parliament
of Australia, ‘Social
Services Legislation Amendment (Youth Employment) Bill 2015 homepage’,
Australian Parliament website.
[226]. Parliament
of Australia, ‘Social
Services Legislation Amendment (Youth Employment) Bill 2016 homepage’,
Australian Parliament website.
[227]. M
Klapdor and M Thomas, Social
Services Legislation Amendment (Youth Employment and Other Measures) Bill 2015,
Bills digest, 120, 2014–15, Parliamentary Library, Canberra, 15 June 2015.
[228]. See
items 3 to 5 of Schedule 14 to the Bill. Note existing Newstart
and Sickness Allowance recipients aged 22-24 years will remain in receipt of
Newstart Allowance (grandfathering applies). See items 16-17 of Schedule
14 to the Bill. Also note the age at which a person is regarded as
‘independent’ (currently 22 years) will not change under the proposed
amendments, meaning persons above 22 will continue to not be subject to
parental means testing.
[229]. Items
19, 21, 22, 24 and 25 of Schedule 14 to the Bill.
[230]. Parliament
of Australia, ‘Social
Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014
homepage’, Australian Parliament website.
[231]. Parliament
of Australia, ‘Social
Services and Other Legislation Amendment (2014 Budget Measures No. 4) Bill 2014
homepage’, Australian Parliament website.
[232]. Parliament
of Australia, ‘Social
Services and Other Legislation Amendment (Youth Employment and Other Measures)
Bill 2015 homepage’, Australian Parliament website.
[233]. Parliament
of Australia, ‘Social
Services Legislation Amendment (Youth Employment) Bill 2015 homepage’,
Australian Parliament website.
[234]. Parliament
of Australia, ‘Social
Services Legislation Amendment (Youth Employment) Bill 2016 homepage’,
Australian Parliament website.
[235]. C
Ey, M Klapdor, M Thomas and P Yeend, Social
Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014,
Bills digest, 16, 2014–15, Parliamentary Library, Canberra, 21 August 2014, in
particular, pp. 33 to 36.
[236]. See
Social Security Act, proposed subsections 549CAA(3)-(4), at item
6 of Schedule 15 to the Bill (youth allowance) and proposed subsections 739AA(3)-(4),
at item 9 of Schedule 15 to the Bill (special benefit).
The income support waiting period will be served in addition to the one week
ordinary waiting period. Other waiting periods may also be applicable. The
social security benefit becomes payable once all waiting periods have elapsed.
[237]. Exemptions
from the income support waiting period include:
- young people with barriers to
employment (people classified as eligible for Stream B or C services)
- Disability Employment Services
participants
- parents with 35% or more care of a
child
-
young people in (or recently left)
State care
- people with an activity test
exemption of 15 days or more (eg. pregnant women within six weeks of birth,
domestic violence victims, disability support pension claimants, and others in
special circumstances).
- people who have served a four-week
income support waiting period within the last six months.
- people who have transferred from
another social security payment.
See Social Security Act, proposed
section 549CAB and proposed subsection 549CAA(2), at item 6 of Schedule
15 to the Bill (re. youth allowance); and proposed section 739AB
and proposed subsection 739AA(2), at item 9 of Schedule 15 to
the Bill (re. special benefit).
[238]. Parliament
of Australia, ‘Social
Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014
homepage’, Australian Parliament website.
[239]. Parliament
of Australia, ‘Social
Services and Other Legislation Amendment (2014 Budget Measures No. 4) Bill 2014
homepage’, Australian Parliament website.
[240]. Parliament
of Australia, ‘Social
Services and Other Legislation Amendment (Youth Employment and Other Measures)
Bill 2015 homepage’, Australian Parliament website.
[241]. Parliament
of Australia, ‘Social
Services Legislation Amendment (Youth Employment) Bill 2015 homepage’,
Australian Parliament website.
[242]. Parliament
of Australia, ‘Social
Services Legislation Amendment (Youth Employment) Bill 2016 homepage’,
Australian Parliament website.
[243]. M
Thomas, Social
Services Legislation Amendment (Youth Employment) Bill 2016, Bills
digest, 16, 2016–17, Parliamentary Library, Canberra, 5 October 2016. A brief
analysis of the measure in its original form is contained in C Ey, M Klapdor, M
Thomas and P Yeend, Social
Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014,
Bills digest, 16, 2014–15, Parliamentary Library, Canberra, 21 August 2014, pp.
33–36.
[244]. M
Thomas, ‘Waiting
period for young people to access income support’, Budget review 2015–16.
[245]. The activities
include:
- meeting with a job search provider
- agreeing to a Employment Pathway
Plan
- developing an up-to-date resume
- creating an online job seeker
profile, and
- providing evidence of satisfactory
job search activities (20 job applications)
[246]. Social
Security Act, proposed subsections 549CAC(1) and 739AC(1) (youth
allowance or special benefit not payable when a claimant fails to comply with
an employment pathway plan during waiting period).
[247]. Parliament
of Australia, ‘Social
Services Legislation Amendment (Youth Employment) Bill 2015 homepage’,
Australian Parliament website.
[248]. Parliament
of Australia, ‘Social
Services Legislation Amendment (Youth Employment) Bill 2016 homepage’,
Australian Parliament website.
[249]. M
Thomas, Social
Services Legislation Amendment (Youth Employment) Bill 2015, Bills
digest, 34, 2015–16, Parliamentary Library, Canberra, 16 October 2015.
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