1.1
The Social Services and Other Legislation Amendment (Lifting the Income Limit for the Commonwealth Seniors Health Card) Bill 2022 (bill) was introduced in the House of Representative on 27 July 2022.
1.2
On 28 July 2022, the Senate referred the provisions of the bill to the Community Affairs Legislation Committee (committee) for inquiry and report by 24 August 2022.
Conduct of the inquiry
1.3
In accordance with usual practice, the inquiry was advertised on the committee’s webpage. The committee wrote to a number of organisations and individuals inviting written submissions by 12 August 2022. The committee received nine submissions, listed at Appendix 1.
1.4
The committee thanks all individuals and organisations who assisted with the inquiry, especially those who made written submissions.
Purpose of the bill
1.5
The bill proposes to increase the income test limits for the Commonwealth Seniors Health Card (CSHC), thereby allowing more people to become eligible for the card.
1.6
This bill seeks to ease some of the cost-of-living pressures that seniors are currently facing, specifically it aims to assist many self-funded retirees to deal with the cost of health care. These changes are expected to allow more than 50 000 self-funded retirees to become eligible for the CSHC.
Background
1.7
The CSHC was first offered in 1994 as a means of providing access to health concessions for retirees who did not qualify for other government benefits either due to residency status or failing the assets test.
1.8
Currently, the CSHC provides those eligible access to cheaper health care and discounted medicines under the Pharmaceutical Benefits Scheme (PBS). It also provides access to concessions offered by the states and territories, such as lower electricity bills and public transport fares.
1.9
A person may be eligible for the CSHC if they are an Australian resident or a special category visa holder who has reached the age-pension or veteran‑pension age, and does not receive a social security payment, veteran service pension, income support supplement or veteran payment.
1.10
To be eligible for the CSHC a person must also satisfy an income test. The person’s adjusted taxable income and deemed income from any account-based superannuation pension must not exceed the income test limit for the relevant tax year. Different income test limits apply depending on the person’s family situation.
1.11
The income test limits are indexed in line with the Consumer Price Index on the 20 September each year.
Key provisions
1.12
The bill contains a single schedule, which would amend the Social Security Act 1991 and the Veterans’ Entitlements Act 1986.
1.13
The table below summarises the current and proposed income test limits for the CSHC.
Table 1.1: : Current and proposed income limit test
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Single
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$50 000
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$90 000
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Couple separated due to illness, respite care or a gaol
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$50 000
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$90 000
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Couple
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$40 000 per person or $80 000 (combined)
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$72 000 per person or
$144 000 (combined)
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Source: Explanatory memorandum [p. 5].
1.14
The bill also proposes that indexation of the amounts will be modified for the years 2022 and 2023, as the limits will only be indexed from 20 September 2023.
1.15
If passed, these amendments will apply on a day on or after 20 September 2022 when determining whether a person qualifies for the CSHC.
Financial implications
1.16
The explanatory memorandum accompanying the bill states that the cost of the bill’s proposed changes is $69.4 million over the forward estimates. The ongoing cost per year is not provided.
Consideration by other committees
1.17
At the time of tabling this report, the Senate Standing Committee for the Scrutiny of Bills and Parliamentary Joint Committee on Human Rights had not reported on the bill.
1.18
The statement of compatibility with human rights, contained within the explanatory memorandum, notes that the bill engages with the right to social security and the right to health services.
Comments from submitters
1.19
Most submitters welcomed the changes proposed in the bill, recognising the positive health benefits it will provide older Australians, particularly at a time of rising cost of living.
1.20
The Commissioner for Senior Victorians explained the unique challenges retirees face:
Older people, who are more likely to be on fixed incomes with limited expectation of increased financial resources in future, are particularly vulnerable to cost of living increases and other economic shocks…For older people, financial strain may translate into decreased access to the necessary services and supports they need to age well, and cause or exacerbate the isolation and loneliness experienced by many older people.
1.21
Multicultural Aged Care highlighted that the CSHC enables older people to maintain an independent lifestyle and having access to state and territory concessions such as cheaper public transport, means they can continue to access to their community.
1.22
Similarly, Carers NSW submitted that extending eligibility for the CSHC would allow ‘greater access to affordable healthcare and supports proactive engagement with health services and treatment for people who are ageing and their carers’.
1.23
The Australian Nursing and Midwifery Federation noted the benefits offered by the CSHC:
Reducing the cost of co‐payments for senior health care cardholders for PBS listed medicines from $42.50 to a maximum of $6.80 will result in positive health outcomes for the community and for those who may have previously been unable to afford vital medicines.
1.24
COTA Australia, a national peak body for older Australians, noted there are approximately 420 000 current CSHC holders and this bill will make approximately ‘44 000 more people eligible in the first year, rising to over 50 000 in a few years’.
1.25
The Department of Veterans Affairs submitted that the proposed changes ‘will allow an estimated 586 additional veterans and families to access relevant pharmaceutical and medical benefits’.
1.26
Financial Planning Association of Australia (FPA) highlighted that an increase to the availability of concessions like the CSCH is important ‘to address longevity risk and improve financial adequacy for older Australians, as they allow retirement income to sustain expenditure for longer, prolonging the need for age pension support’.
1.27
This means self-funded retirees can retain their financial independence for longer, and access concessions without having to rely on the aged pension. COTA Australia further explained:
There is also a constant refrain from older people who are not pension eligible, who are self-funded retirees, that they resent not being eligible for the health and other concessions, and their extra expenditure on these items can in effect reduce their other disposable income to less than that of a part pensioner in similar financial circumstances.
Concerns raised
1.28
The Australian Council of Social Services (ACOSS) submitted that they oppose the bill, predominantly due to the assets test being poorly targeted and not considering a person’s entire superannuation balance. ACOSS further explained:
Currently, eligibility for the card is based on an income test that only applies to taxable income. This means that actual income received from superannuation is not considered because it’s tax free for people over 60.
1.29
ACOSS acknowledged that account-based superannuation is ‘deemed’ to earn a certain amount, but that the deeming rates are low. ACOSS elaborated on the possible effect:
Consequently, singles and couples with millions in super will become eligible for the card if this bill is passed. For example, a single person with $4 million in superannuation would qualify for the card, while a couple with more than $6 million in superannuation would become eligible.
1.30
In contrast, FPA was supportive of the bill and suggested that the income limits be further increased to an adjusted taxable income of $100 000 for a single person or $150 000 for a couple combined, with these limits to be indexed annually.
1.31
COTA Australia noted that the increased income limits proposed by the bill will create a ‘buffer’ between pension eligibility and complete ‘self-funding’, with concessions continuing while in the buffer. COTA Australia noted the views of expressed by many self-funded retirees:
They are saying, firstly, that it offers greater assurance they will be able to retain their financial independence for longer, thereby lessening the likelihood of needing to call on the aged care pension for assistance. They also feel validated by the nation acknowledging ‘finally’ that being a self‑funded retiree with what others might see as a comfortable nest egg, does not guarantee immunity from the mounting cost of living pressures currently being experienced by all in the community.
1.32
In relation to the deeming rules, Services Australia notes that these rules are used on superannuation account-based income streams, however, if an investment return is higher than the deemed rates, currently a maximum of 2.25 per cent, the extra amount does not count as income.
1.33
Services Australia further states, deeming is done this way to incentivise investing without it affecting access to social security payments or concessions.
Committee view
1.34
The committee notes the broad support for increasing the income test limits to allow more people who do not qualify for the aged pension to access the CSHC and notes that the proposed changes will allow approximately 50 000 more self‑funded retirees to be eligible for the CSHC.
1.35
The committee acknowledges the concerns raised by ACOSS, particularly in relation to the income test not including a person’s entire superannuation balance. However, the committee considers that the bill strikes the right balance between providing incentives for self-funded retirees to invest, while also providing the CSHC to those who would benefit from the concessions offered by the card.
1.36
The committee recognises these changes can help older people have better health outcomes as they gain access to discounted medicines and cheaper health services. Ultimately, the committee is of the view that the bill will offer more equitable access to all self-funded retires, particularly for those feeling the rising cost of living and therefore recommends that the bill be passed.
1.37
The committee recommends that the bill be passed.
Senator Marielle Smith
Chair