Chapter 2Views on the bill
2.1This chapter discusses the views raised during the Senate Community Affairs Legislation Committee’s (the committee’s) inquiry into the Social Services and Other Legislation Amendment (Strengthening the Safety Net) Bill 2023 (the bill).
2.2Submissions were overwhelmingly supportive of the bill and recommended that the bill be passed as a matter of priority. However, many inquiry participants also argued that the bill did not go far enough and called for wider reforms, particularly in relation to increasing the rates of working aged payments and Commonwealth Rent Assistance (CRA), as well as further expanding the qualification for Parenting Payment (Single).
2.3This chapter will conclude with the committee’s views and recommendation.
Proposed increase to rates of working age and student payments
2.4As outlined in Chapter one, the bill provides for an increase of $40per fortnight to JobSeeker Payment and a range of other working age and student payments.
2.5In outlining the rationale for the proposed increase, the Department of Social Services (DSS) stated:
These measures deliver on the Government’s commitment to consider the adequacy of income support payments in each Budget, while demonstrating fiscal restraint and balancing the need to maintain participation incentives. These measures also take into account recommendations from the Women’s Economic Equality Taskforce and the Economic Inclusion Advisory Committee.
2.6The Hon Amanda Rishworth MP, Minister for Social Security (the Minister) also emphasised that the bill provides for:
…responsible changes, which are carefully calibrated to balance providing additional support to those on the lowest income support payments, without adding to inflation.
2.7Some submitters expressed the view that, as a first step, the bill should be immediately passed without amendments to provide urgent relief to people on low incomes. Notwithstanding the calls to pass the bill, submitters highlighted that the proposed increase would not be sufficient to make a material difference.
2.8For example, Anglicare Australia commented that ‘the proposed increase…is so meagre as to be almost meaningless.’
2.9The Antipoverty Centre noted that:
There are 2 million working age people on payments below the poverty[line] now and there will be 2 million people on payments below the poverty line after this bill passes…
2.10In its submission to the committee, the Anti-Poverty Network South Australia highlighted the views of jobseekers, including Rita, in her late 50s, who stated:
Some people will say, "better than nothing". But "better than nothing" doesn't pay the rent. "Better than nothing" doesn't put food on the table.
2.11By contrast, the Australian Unemployed Workers Union proposed that the bill be amended before its passage to include wider anti-poverty measures. The Asylum Seeker Resource Centre said asylum seekers and refugees had again ‘been systematically excluded’ and recommended that asylum seekers have access to the mainstream social support.
2.12On the question of how much should working aged payments be increased by, submitters provided a range of views, including:
a minimum income of $88 a day – the level of the Henderson Poverty Line;
at least $128 per week, as recommended by the Economic Inclusion Advisory Committee;
parity with the Age Pension; and
parity with the Disability Support Pension.
2.13In support of calls for a larger increase to affected payments than the $40perfortnight increase provided for by the bill, some submissions highlighted the positive impact of the Coronavirus Supplement, for example on ‘the ability to meet basic needs’, ‘physical and emotional well-being’ and ‘labour market engagement’. Economic Justice Australia argued:
The inadequacy of income support rates was implicitly acknowledged by the Government when it increased payments during the COVID-19 pandemic. Lives were transformed by the effective doubling of non-pension payment rates from April 2020 with the addition of the Coronavirus Supplement. The COVID measures show that it is entirely possible for Australia to raise income support rates to adequate levels. …
2.14Similarly, the Anti-Poverty Network South Australia cited numerous studies finding multiple beneficial effects of the higher income received by income payment recipients through the Coronavirus Supplement.
2.15Other suggestions made by submitters concerning the proposed increase to working age payments included:
broadening the $40 per fortnight increase to apply to Carer Payment;
broadening the $40 per fortnight increase to apply to Parenting Payment (Single);
applying the increase to the Disability Support Pension for those aged over 21; and
applying the increase so it comes into effect sooner than 20September2023.
2.16By contrast, the Institute of Public Affairs contended that the bill would disincentivise social security recipients from finding a job while also ‘compounding the inflation-inducing economy-wide worker shortage challenge’.
2.17However, other submitters, such as the Anti-Poverty Network South Australia, argued that such claims ‘have long been lacking in evidence’.
2.18DrJohnHawkins, a Senior Lecturer at the Canberra School of Politics, Economics and Society at the University of Canberra, elaborated that:
The main argument against an increase in JobSeeker is any possible adverse impact on the incentive to work. But the proposed increase in JobSeeker still leaves it less than half the minimum wage. It is a much smaller proportion of the average wage. Indeed the unemployment benefit in Australia is a smaller proportion of the average income than in almost all our OECD peers. … Even a significantly higher increase than the proposed $20 a week is only likely to discourage a negligible proportion of recipients from seeking work…
2.19On the adequacy of income support payments, DSS highlighted that ‘poverty is not just a factor of the income support system’ and suggested the need to ‘look more holistically at a range of supports the government can provide’.
2.20Along similar lines, Treasury gave evidence that the Budget measures provided for in the bill form part of a wider set of Budget measures designed to provide support for those facing cost‑of‑living pressures which will assist people on income support. Treasury provided the following examples of such other measures that would assist income support recipients, including the Energy Bill Relief Fund ($1.5 billion); the Household Energy Upgrades fund ($1.3billion); the tripling of bulk-billing incentives; and changes to maximum dispensing quantities for a range of PBS medicines (enabling two months’ worth of medicines to be dispensed per visit).
2.21On the question of workforce participation incentives, DSS explained that around 75 per cent of job seekers report no earnings, and therefore do not access the existing income free area and taper rate. DSS added that, in light of this, changing the income free area and taper rate would not be expected to lead to major behavioural changes in terms of people engaging in employment.
Proposed increase to rates of Commonwealth Rent Assistance
2.22The bill provides for an increase of 15 per cent increase in maximum rates of Commonwealth Rent Assistance, as discussed in Chapter one.
2.23The Minister highlighted that, with high rental costs, ‘renters on income support are at particular risk of rental stress and housing insecurity’. Shedescribed CRA as ‘the government’s most direct lever to quickly provide assistance’ to such renters.
2.24DSS explained that the proposed increase recognises that CRA had ‘not kept pace with the cost of renting’ despite six-monthly indexation to the Consumer Price Index (CPI).
2.25The committee heard support for the CRA increase proposed in the bill.
2.26Many inquiry participants, while generally supporting as a first step the 15percent increase to CRAproposed in the bill, advocated for a higher increase. Forexample, the Australian Council of Social Service said the bill’s CRA increase was ‘notenough to significantly reduce housing stress and homelessness’. Professor Garry Redmond observed that:
In March 2023, maximum CRA for a family with up to two children covered approximately 20% of median rents in NSW, rising to 27% in SA and Tasmania. … The increase in CRA will only marginally increase housing affordability for renters.
2.27The St Vincent de Paul Society and People with Disability Australia called for a CRA increase of 50 per cent.
2.28Several submissions called for changes in the indexation method used for CRA.
2.29Others stressed that many income support recipients do not currently qualify for CRA. Anglicare Australia highlighted that ‘two in three people on JobSeeker and nine in ten people looking for work on Youth Allowance are not eligible’ for CRA. The Australian Unemployed Workers’ Union said the CRA increase proposed in the bill would ‘do nothing for the over 70% of welfare recipients who do not receive [CRA] due to the incredibly strict qualifying criteria’. TheSouthAustralian Council of Social Service noted its research suggesting one quarter of households below the poverty line derive their main income from wages, with half of those receiving no Centrelink income, and noted that many such households would not be eligible from CRA.
2.30At the hearing, DSS commented that the purpose of CRA is to alleviate rental stress, not to eliminate it entirely. DSS outlined that at 30June2023, rental stress was experienced by 42.9percent of CRA recipients, but that this figure would stand at 70.6percent in the absence of CRA. DSS also explained why not all income support recipients are eligible for CRA. To be eligible, a person must be paying a minimum amount of rent (varying according to household type). Furthermore, homeowners and those in public housing provided by state and territory governments are not eligible, although those in community housing are.
2.31DSS also gave evidence that increases in CRA have over time outstripped increases in the median rent paid by CRA recipients. Noting that CRA is indexed to CPI, DSS provided the following data for three recent periods:
the ten years from 2013 to 2023: CRA median rent up by 25percent; CPI up by 29.5percent;
the past five years: CRA median rent up by 11.1percent; CPI up by 17.8percent; and
the period between December2019 and March2023; CRA median rent up by 8.7percent; CPI up by 13.7percent.
Proposed expanded eligibility for Parenting Payment (Single)
2.32The bill provides for the extension of Parenting Payment (Single) eligibility until a PPS recipient’s youngest child turns 14 (up from eight).
2.33DSS has explained as follows the rationale for the proposed cut-off age of 14:
By 14 years of age, children have typically settled into high school and need less parental supervision, putting single parents in a much stronger position to take on paid work. This change in qualifying age also broadly aligns with the age at which Family Tax Benefit A is increased.
2.34The committee heard strong support for the cut-off age to be raised from eight.
2.35Some inquiry participants advocated returning the cut-off age to 16, as it was upuntil 2006.
2.36The Council of Single Mothers and their Children Inc. (CSMC) and SingleMother Families Australia (SMFA) jointly welcomed the proposed increase in the cut‑offage, while recommending it be raised further to16. Theycontrasted the age‑related thresholds used for PPS with those applicable to Family Tax Benefit PartA, FamilyTaxBenefit Part B and child support.
2.37In calling for a cut-off age of 16, and for wider reform of the PPS program, CSMCand SMFA cited research suggesting that past PPS reform had, by2011and 2016, left single mothers ‘financially worse off, in terms of total income’. They quoted the following findings of one study from late 2016:
… for a family with no private income and two children over the age of 8, policy changes since 2005 have left them around $5,750 a year worse off, or about 17.2 per cent by 2018. Where the single parent works three days per week on the minimum wage, they will be $6,391 worse off or 14.8 per cent.
Overall, due to lower government benefits and lower payment indexation, many single parent families are considerably worse off as a direct result of policy change enacted by various governments since 2005.
2.38Some submitters advocated earlier implementation of the proposed expansion in PPSeligibility, so its benefits would flow to families whose youngest child will turn eight in the months leading up to the planned implementation date of 20 September2023. CSMC and SMFA observed that commencing on1July2023 rather than 20September 2023 would benefit ‘8000 families whose children turn eight in the interim period and will lose over $200 a fortnight, as well as tighter income and work tests’. The Antipoverty Centre expressed a similar view.
2.39CSMC and SMFA also recommended ‘a participatory co-research evaluation … within twelve months of the impact of the [PPS] changes…’.
2.40In relation to calls to increase the PPS cut-off age to 16, DSS noted that the workforce participation rate of single parents rises as children age. DSS told the committee that this participation rate increases, aschildren go into the high school years, from a fairly stable workforce participation rate of 50percent when children are younger.
2.41Regarding the proposed implementation date of 20September 2023, DSS outlined that there are two key reasons for this prospective date:
The date of 20 September was chosen to ensure that the totality of arrangements announced in the budget—not just this measure but all of the changes to base rates, the increase in maximum rate of CRA—could all take effect on a date at which there is already quite substantial change to the indexation of a range of payments. Doing it prospectively provides that assurance that parliament has passed the bill and it takes effect on that date.
2.42Secondly, DSS advised that having a prospective date would enable Services Australia to communicate with those people affected by the proposed changes and allow a transition that is as seamless as possible. DSS submitted:
The commencement date accounts for the time required by Services Australia to implement ICT and systems changes to deliver these measures. This includes ICT systems build and changes, service delivery changes, technical and business verification testing, quality assurance, customer communications and staff training. These measures require a number of changes to rates and eligibility criteria for some payments. For most recipients, this will occur automatically.
2.43As for the cohort of PPS recipients whose youngest child will turn eight in the months leading up to the implementation of the proposed amendments, ServicesAustralia gave evidence that members of this cohort will be transitioned as seamlessly as possible from PPS to JobseekerPayment upon their youngest child’s eighth birthday; and then if the bill is passed they will be moved automatically from JobSeeker to PPS from 20September 2023.
Proposed lowering of qualifying age for eligibility for higher JobSeeker rate
2.44If passed, the bill would lower from60to55 the qualifying age for long‑standing JobSeeker Payment recipients to receive the higher rate of JobSeeker Payment. As noted in Chapter one, a single person aged over 60 who receives an unemployment benefit receives a higher benefit rate if they have been on income support for a specified period.
2.45In explaining the rationale for this, DSS noted that:
This measure … acknowledges the additional barriers older Australians face when looking for work such as age discrimination or poor health.
Mature aged JobSeeker Payment recipients have a lower probability of exiting income support due to employment earnings over the long term. …
They are also more likely to be long-term recipients…
Further, … more than 60 per cent of single recipients aged 55 and over have an assessed partial capacity to work…
2.46The committee heard general support for this aspect of the bill. NationalSeniorsAustralia stressed the need to support people in later life to stay out of poverty, including after exiting the workforce due to poor health.
2.47However, there were also calls for further expansion of eligibility for the higher rate of JobSeeker Payment. For example, some inquiry participants called for access to the higher rate of JobSeeker Payment to be afforded to JobSeeker recipients younger than 55, especially those with a disability or partial capacity to work.
Committee view
2.48The committee thanks the individuals and organisations who took the time to share their views and recommendations on the bill.
2.49The committee notes the overwhelming support expressed by organisations for the bill to be passed.
2.50The committee acknowledges the concerns of inquiry participants that Australia’s income support payments are insufficient.
2.51However, the committee considers the bill would, if passed, provide financial relief asquickly as practicable to over two million people at a time of significant cost‑of‑living pressures. Inthecommittee’s view, the billisfiscally responsible.
2.52Finally, the committee is of the view that the measures enacted in this bill are to be assessed in the context of the wider array of Government measures designed to assist low-income Australians.
2.53The committee recommends that the Senate pass the bill.
Senator Marielle Smith
Chair