2.1
The Australian welfare system operates as a safety net within the context of government social and economic policy, which is designed to encourage growth and create jobs. The highly targeted income support system is to support individuals who are unable to support themselves through work, savings or other means.
2.2
Since the beginning of the COVID-19 pandemic in March 2020 the Australian government has introduced a series of temporary measures aimed at supporting individuals, families, businesses and the economy. Among these measures are significant extra financial supports for those individuals in receipt of income support payments.
2.3
The Social Services and Other Legislation Amendment (Extension of Coronavirus Support) Bill 2020 (bill) seeks to extend this temporary financial support through the coronavirus supplement and other temporary eligibility and access measures for an additional three months to 31 March 2021.
2.4
The committee received evidence from a range of organisations. The views expressed centred on the extension of the coronavirus supplement and the liquid assets test waiting period.
Extension of the coronavirus supplement
2.5
As noted in chapter 1, the bill allows for the extension of the coronavirus supplement from 1 January 2021 to 31 March 2021. This will be ensured by continuing the power for the Minister to extend the coronavirus supplement by disallowable legislative instrument until 31 March 2021.
2.6
The majority of submitters to the inquiry welcomed the introduction of the coronavirus supplement in April 2020; and noted the positive effects it had on individuals, families and communities.
2.7
The Australian Council of Social Service (ACOSS) observed that the increase in income support in April 2020 hugely benefited everyone receiving these payments, and particularly highlighted the extra support it provided to single parents and their children.
2.8
The Salvation Army and Mission Australia both commented that their organisations witnessed a significant decrease in regular users of emergency relief services as the coronavirus supplement had enabled those individuals to afford to buy essential items including fresh food, as well as housing, health care, electricity bills, and other basic needs.
2.9
More broadly, submitters noted the positive effect that the introduction of the coronavirus supplement had on communities and the economy.
2.10
In particular, in their joint submission, Australia Together and Every Child commented that ‘as businesses closed and economies faltered, the income support system supported those without work and ensured that money continued to flow into communities and into the economy’.
2.11
In light of the positive effects following the introduction of the coronavirus supplement for individuals, communities and the economy more broadly, submitters expressed that they were pleased the coronavirus supplement was due to continue.
2.12
In particular, the AHRC noted its support of the measures outlined in the bill, as they ‘will go some way to alleviating financial hardship caused or exacerbated by the COVID-19 pandemic’.
2.13
Whilst submitters noted that the extension of the coronavirus supplement to 31 March 2021 was a positive measure, submitters also expressed concerns that this measure was due to end and that the rate of the coronavirus supplement was due to be extended at a new rate of $150 per fortnight. These points are addressed in the sections below.
Proposed reduction of the coronavirus supplement
2.14
Submitters raised concerns about the proposed reduction of the rate of the coronavirus supplement from $250 to $150 per fortnight from 1 January 2021.
2.15
Just as submitters had noted the positive effects of the introduction of the coronavirus supplement, submitters commented on the possible effects of the reduction of the coronavirus supplement, notably that it would cause some recipients to fall below some measures of income poverty.
2.16
Tomorrow Movement, a project of YOUNG Campaigns, Per Capita and Mission Australia each cited the effects that the proposed reduction would have on individuals. Tomorrow Movement highlighted:
This bill will push almost 2 million people back to trying to live on $51 a day at Christmas time and then back to the unlivable rate of $40 or $33 (for Youth Allowance) a day in April 2021. There is a wealth of evidence to show that basic expenses such as food, housing, transportation and healthcare are unaffordable on this rate.
2.17
In their submissions to the inquiry, ARACY, Australia Together and Every Child, and the National Council for Single Mothers and their Children highlighted the detrimental effects of the proposed changes to the level of supplement on children and single parents.
End date for the coronavirus supplement
2.18
Submitters also expressed concerns that the coronavirus supplement is due to end on 31 March 2021. Broadly, submitters considered that the effects of the COVID-19 pandemic were still being felt by individuals, communities and businesses, and that more extended support would be beneficial.
2.19
In particular, Per Capita contended that ‘it is too early to withdraw the powers to make the provisions that have provided additional income support to people in receipt of unemployment benefits and related payments’. Per Capita further explained:
The COVID-19 economic shock has clearly demonstrated the primacy of economic, rather than social, conditions as the cause of unemployment. Australia’s economy has undergone a sharp and extraordinary contraction; Australia’s economic recovery will require a similarly extraordinary intervention.
2.20
Anglicare Australia highlighted that there are currently 1.6 million people looking for work and thirteen jobseekers for each vacancy, and that Anglicare Australia’s Jobs Availability Snapshot shows that there are 106 jobseekers for each entry-level vacancy. Anglicare Australia further noted that ‘unemployment is expected to reach a record high once wage subsidies come to an end’.
2.21
Per Capita noted the government’s suggestion that the reduction of income support payments is necessary to provide an incentive for unemployed people to look for work. However, Per Capita, along with other participants in the inquiry argued that the current state of the economy and the lack of available jobs was a greater impediment to people moving off income support payments than the rate of those payments.
2.22
In their joint submission to the inquiry, Dr Bruce Bradbury and Mr Peter Whiteford further noted their view that more people may become dependent on income support payments into 2021, likely leading to large adverse macro-economic effects.
2.23
The Department of Social Services (DSS) noted that the extension of the temporary coronavirus supplement would allow the government to continue to provide targeted additional support to Australians impacted by the COVID-19 pandemic. DSS further clarified that ‘the measures enabled by the bill will support people as they re-engage with the workforce as labour market conditions improve and confidence increases’.
Liquid assets test waiting period
2.24
As noted in chapter 1, Part 3 of the bill permanently ends the temporary COVID-19 exemptions from the liquid assets test waiting period from 1 January 2021. The liquid asset waiting period was reintroduced on 25 September 2020 and has been in place since then. Several submitters were not supportive of this proposal, and to the reverse, considered that the liquid asset test waiting period should be permanently waived.
2.25
ACOSS noted its strong support of the suspension of the liquid assets test waiting period at the beginning of the COVID-19 pandemic; however expressed in its submission to the inquiry, that the re-instatement of the waiting periods would be detrimental to those individuals seeking income support:
ACOSS strongly opposes the return of these waiting periods, which only serve to deny people income support when they need it, and forces people to whittle away limited savings just to access support. Income support is means-tested and there is no reason to deny people with limited savings access to income support when they become unemployed.
2.26
COTA Australia (COTA) noted the possible negative effects of the proposed re-introduction of waiting periods particularly for older Australians. COTA explained that the practical effect of the change proposed in the bill would be that older Australians who do have assets outside of their superannuation would be required to draw on those assets prior to being eligible to access income support, thereby reducing their retirement incomes.
2.27
COTA pointed out that those unemployed mature age workers will be among the most vulnerable individuals in a recession.
2.28
In its submission to the inquiry, DSS noted that the exemption to the liquid assets test waiting period was introduced in March 2020 as part of the broader initial economic response package when the extent of the impact of the pandemic was unknown. DSS also noted that the liquid assets test waiting period was reintroduced on 25 September 2020.
2.29
DSS further commented that this reintroduction ensures that income support is appropriately targeted as the economy recovers; reflecting the ‘long-standing principle in the social security system that people should rely on their own resources before calling on the community for assistance’.
Other matters raised
2.30
Some submitters also raised broader issues related to the income support system, which are outside the scope of the bill and this inquiry, including:
a call to extend the eligibility for income support to temporary visa holders as they have been adversely affected by the COVID-19 pandemic; and
the need for a permanent increase to the rate of the JobSeeker and related payments.
Committee view
2.31
Australia’s highly targeted income support system is designed to support individuals who are unable to support themselves through work, savings or other means.
2.32
Throughout the COVID-19 pandemic, the government has assisted individuals, families, communities and businesses through the introduction of a wide range of temporary support measures. The extension of support provided for in this bill builds on the overall response package of $507 billion invested since the crisis began.
2.33
The targeted income assistance programs put in place by the government since the beginning of the pandemic will continue to ensure that support remains appropriate to the economic and health conditions. As such, this bill responds to the continuing uncertainty around economic conditions in Australia by allowing the government to extend temporary financial support, through the coronavirus supplement and other temporary eligibility and access measures.
2.34
The committee is of the view that the measures enabled by the bill will adequately support people as they re-engage with the workforce as labour market conditions improve and confidence increases.
2.35
The committee notes that the new power provided in Part 4 of the bill will provide the government with the flexibility to respond quickly to changes in economic conditions and health measures as the economy reopens and people return to work.
2.36
In relation to the liquid assets test waiting period and assets test for various social security payments, the committee notes that these exemptions were put in place rapidly as part of the initial package of Coronavirus Economic Response measures in March 2020, when the extent of the impact of the pandemic was unknown. The committee considers that their reintroduction, which has already occurred, reflects the long-standing principle in the social security system that people should rely on their own resources before calling on the community for assistance.
2.37
Finally, the committee considers that the provisions of the bill will further support Australians during the COVID-19 pandemic, with the flexibility to adapt to new circumstances as the country transitions to a post-COVID economy. Importantly, this bill is part of a broader suite of measures aimed at ensuring Australians are supported to engage with the workforce.
2.38
The committee recommends that the bill be passed.
Senator Wendy Askew
Chair