Social Services Legislation Amendment (Payments for Carers) Bill 2018

Bills Digest No. 107, 2017–18

PDF version [258KB]

Michael Klapdor
Social Policy Section
21 May 2018

Contents

Purpose of the Bill
Background
Committee consideration
Policy position of non-government parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human Rights
Key issues and provisions

 

Date introduced: 28 March 2018
House: House of Representatives
Portfolio: Social Services
Commencement: 20 September 2018 if Royal Assent occurs before this date, otherwise the first 1 January, 1 April, 1 July or 1 October to occur after Royal Assent.

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 May 2018.

Purpose of the Bill

The purpose of the Social Services Legislation Amendment (Payments for Carers) Bill 2018 is to amend the Social Security Act 1991 (the SS Act) to introduce an income test for Carer Allowance and the Carer Allowance (child) Health Care Card (HCC) only.[1] Under the proposed income test, those with an annual family income of $250,000 or more will be ineligible for Carer Allowance or the Carer Allowance (child) HCC. The same income limit will apply to both single and couple families and no indexation of the income limit is proposed to maintain its value over time.

The measure was announced on 5 March 2018 as a means of providing funding for a new package of supports and services for carers.[2] According to the Explanatory Memorandum, the measure is from the 2017–18 Mid-Year Economic and Fiscal Outlook (MYEFO).[3] However, no reference is made to it in the MYEFO which suggests that it was included under the ‘decisions taken but not yet announced’ line item.[4]

Background

Carer Allowance

Carer Allowance is an income supplement for people providing daily care to someone with a disability or medical condition or to someone who is frail aged.[5] It is a non-means tested payment and can be paid in addition to the means tested income support payment for carers—that is, the Carer Payment—or other income support payments.[6]

As at December 2017, there were 614,274 recipients of Carer Allowance, and 16,339 Carer Allowance (Child Health Care Card only) holders—see below for description of this group.[7]

Estimated expenditure on the Carer Allowance payment for 2017–18 is $2.3 billion.[8]

Eligibility

To be eligible for a Carer Allowance, both the carer and the care-receiver must be Australian residents and residing in Australia.[9] The care needs of the care receiver need to be considered permanent, or for a minimum period of 12 months, unless the condition of the care receiver is terminal.[10]

The rules relating to care receivers are different for children and adults. Care receivers aged under 16 years must:

  • be a dependent child of the carer
  • have a recognised disability or medical condition, or have been given a qualifying rating of ‘intense’ under the Disability Care Load Assessment (which is based on responses to questionnaires completed by the Carer Allowance claimant and the treating health professional) and
  • need care from the carer in their home or in hospital.[11]
  • Care receivers aged 16 years or over must:
  • be a family member of the carer (or otherwise approved by Centrelink)
  • receive care and attention from the carer, or the carer together with another person and
  • have a score of 30 or higher under the Adult Disability Assessment Tool (ADAT) including a treating health professional score of 12 or higher. Adults with a terminal illness who are not expected to live more than three months are taken to satisfy this disability requirement.[12]

Some Carer Payment recipients may automatically be qualified for Carer Allowance where the care-receiver is aged less than 16 years.[13]

Payment rates

The current rate of Carer Allowance is $127.10 per fortnight.[14] A person receiving Carer Allowance on 1 July for a care-receiver aged under 16 years is also eligible for a yearly $1,000 lump sum Child Disability Assistance payment.[15] A separate payment worth $600, the Carer Supplement, can be paid to recipients of Carer Allowance for each person being cared for. The Carer Supplement is paid annually in July.[16]

Health Care Card only

In some situations where a carer of a child under 16 years does not qualify for payment of Carer Allowance, the child may still be eligible to receive a HCC. This can occur in situations where the child has a disability or medical condition that does not meet the qualification requirements for Carer Allowance but who still requires and receives a level of care and attention that is substantially more than that needed by a person of the same age who does not have a disability.[17] This is generally considered to be the case where the child requires at least 14 hours of care a week.[18]

HCC holders are entitled to discounted medicines under the Pharmaceutical Benefits Scheme, lower expenditure thresholds for accessing the Medicare Safety Net, incentives for doctors who bulk-bill HCC holders, as well as concessions offered by state and territory governments on utilities, healthcare, public transport and rates.[19]

History

Carer Allowance has its origins in two payments: the Domiciliary Nursing Care Benefit (DNCB) introduced by the McMahon Government from 1973 and the Handicapped Child’s Allowance payment introduced by the Whitlam Government in 1974.[20]

The DNCB was paid by the Department of Health to those who provided professional nursing care to an aged relative in their own home.[21] The payment of $14 per week was for those willing and able to care for aged relatives in their home as an alternative to the relative entering a nursing home.[22] The DNCB was not means tested.

The Handicapped Child’s Allowance, administered by the Department of Social Security, provided $10 per week to parents or guardians caring for ‘severely handicapped’ children under the age of 16 years who were at home and in need of constant care and attention on a permanent or long-term basis.[23] The allowance was not taxable, nor was it subject to an income test.

In 1977, the disability criteria for the Handicapped Child’s Allowance were broadened to include ‘substantially handicapped’ children and in 1978 the payment was expanded to include dependent full-time students aged 16 to 24 years.[24] In 1983, a separate Rehabilitation Allowance was introduced for full-time students.[25]

In 1987, the Child Disability Allowance replaced the Handicapped Child’s Allowance. The new payment did not distinguish between handicapped and severely handicapped and was payable at the rate of $122 per month.[26]

In 1998 the Howard Government introduced a new method for assessing eligibility: the Child Disability Assessment Tool (CDAT).[27] Under the previous assessment system for Child Disability Allowance, a child had to have a disability and as a result of that disability require substantially more care and attention on a daily basis than a child of the same age without a disability. Some disabilities were considered sufficient in themselves to automatically fulfil the care requirement. They were called manifest disabilities and eligibility was automatic. The new assessment tool consisted of questionnaires for parents and treating doctors. It tried to assess functional ability in a range of areas: special care needs, behavioural issues and emotional state issues. The new system also classified certain conditions as recognised disabilities or chronic conditions, which gave automatic eligibility.[28]

Also in 1998, the rate of the Child Disability Allowance was aligned with the rate of the DNCB.[29]

In 1999, the Child Disability Allowance was merged with the DNCB to form the new Carer Allowance.[30] The new payment was to provide similar levels of assistance to carers of people with disability or medical conditions of all ages. The differing eligibility requirements for adult care-receivers under Carer Allowance, using the Adult Disability Assessment Tool, meant that more people caring for adults were eligible to receive a payment compared to the DNCB.[31] The merger also simplified the administration of payments for carers under one department.

In 2004, eligibility for carers of adults was extended to those who do not live with the person to whom they provide substantial levels of personal care on a daily basis.[32]

In 2009, the Rudd Government introduced automatic qualification for Carer Allowance for Carer Payment recipients caring for a child.[33]

Prevalence of means testing

Carer Allowance and its predecessor payments have never been means tested. This makes it unusual within the framework of Australia’s social security system.

Currently, almost every social security and family assistance payment provided by the Australian Government is either means tested through income and/or asset tests, or an income limit applies to eligibility for the payment. Non-means tested payments include Carer Allowance, Double Orphan Pension, Remote Area Allowance, some components of the Assistance for Isolated Children Scheme and Child Care Rebate. Child Care Rebate will be merged with the means-tested Child Care Benefit from July 2018 to form the new, means tested, Child Care Subsidy payment.[34] Permanently blind recipients of pension payments are not subject to the income and asset testing that would normally apply to those payments.[35]

At the time of the introduction of the Carer Allowance, former Liberal Party MP Teresa Gambaro stated:

Exempting the carer allowance from means and income tests reflects the government's commitment to Australian carers. We will always have an ongoing commitment to people in this particular role.[36]

National Commission of Audit recommendation

The Abbott Government’s National Commission of Audit (NCA) recommended applying an income limit to Carer Allowance of $150,000 per year:

In keeping with the Commission’s focus on targeting payments to those most in need, an income test could be introduced for Carer Allowance. Setting an income limit of $150,000 per year would mean that around 6 per cent of recipients would no longer be eligible. It is anticipated that around 35,000 carers would lose access to Carer Allowance under this arrangement.[37]

The NCA noted that the introduction of an income test would give rise to additional complexity, including in relation to how income was defined for the purpose of the test.[38]

Reference Group on Welfare Reform

The Reference Group on Welfare Reform, led by Patrick McClure, did not make any specific recommendations in regards to Carer Allowance. In arguing for the simplification of the social security payment system, the Group recommended there should be fewer supplementary payments and they ‘should have clearly defined purposes and be for specific additional costs’.[39] The Group recommended there be a supplement for carers and people with disability but did not propose any specific rate or means testing arrangement.[40]

Committee consideration

Senate Standing Committee for Selection of Bills

At the time of writing, the Bill had not been referred to any committees. In its report on 28 March 2018, the Senate Selection of Bills Committee deferred consideration of the Bill to its next meeting.[41]

Senate Standing Committee for the Scrutiny of Bills

The Senate Scrutiny of Bills Committee had no comment on the Bill.[42]

Policy position of non-government parties/independents

At the time of writing, non-government parties and independents had not stated their position on the Bill.

Position of major interest groups

Peak body for carers, Carers Australia, has stated that it supports the measure as the budget savings will provide funding for a new integrated carer support services model (see further discussion in the ‘Financial implications’ and ‘Key issues and provisions’ sections of this Bills Digest).[43]

Financial implications

According to the Explanatory Memorandum to the Bill, the amendments will provide savings of $85.6 million over the forward estimates.[44]

The Explanatory Memorandum states that the measures are from the 2017–18 MYEFO, however, no reference to the changes is made in the MYEFO.[45] This suggests the new income test for Carer Allowance was included under the ‘decisions taken but not yet announced’ line item.

The Explanatory Memorandum states that savings will be invested in the Integrated Carer Support Service expected to be introduced from October 2018.[46] This service will consist of digital services provided through the Carer Gateway website and, from September 2019, a network of Regional Delivery Partners providing needs assessment and planning; targeted financial support packages, coaching, counselling and training; information and advice; access to crisis support; and assistance navigating relevant services.[47]

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.[48]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights determined that the Bill did not raise human rights concerns.[49]

Key issues and provisions

The Bill introduces a means test on Carer Allowance for the first time. The means test consists of a non-indexed income limit of $250,000—those with assessable family income that exceeds this amount will be ineligible for Carer Allowance.

Assessable income will be adjusted taxable income which includes:

  • taxable income (excluding any assessable First Home Super Saver Scheme released amount)
  • employer-provided fringe benefits
  • target foreign income[50]
  • net investment losses
  • reportable superannuation income
  • income from long-term financial assets (for those with tax-free income streams)
  • paid parental leave and
  • tax-free pensions or benefits.[51]

Any child maintenance expenditure (child support) is deducted from the total income amount.[52]

The income limit will apply to current and new Carer Allowance claimants. Unlike most social security means test thresholds, the income limit will not be indexed to maintain its value over time. Most social security means test thresholds are adjusted in line with movements in the Consumer Price Index in order to maintain their real value.

The Government estimates that 6,500 current Carer Allowance recipients and 400 Health Card holders will be affected in 2018–19.[53] Estimates of future claimants affected have not been published.

Rationale

Minister for Social Services, Dan Tehan, explained the rationale for the proposed income limit in his second reading speech for the Bill:

Unlike most other social security payments, which are income tested and targeted to those most in need, there is currently no income test associated with carer allowance.

The carer payment, the age pension, and family benefits are all subject to an income test. This Bill will keep our welfare system strong and sustainable into the future.

...

The need for carers is increasing so it is essential we get the balance right in the welfare system between financial support and availability of services.[54]

The Minister’s speech suggests that the level of expenditure on Carer Allowance, and a desire to direct funding from payments to services, is the key rationale behind the measure.

Impact

As noted above, the number of current recipients the measure is expected to affect represent around one per cent of all Carer Allowance recipients and around 2.4 per cent of all Care Allowance (Child Health Care Card only) holders.

The level of the income limits means that the measure will affect those with very high incomes—it is likely that many of the carers are those with partners with high incomes (given the care-need eligibility requirements for the payment). Around 73.4 per cent of Carer Allowance recipients and 92.1 per cent of Care Allowance (Child Health Care Card only) holders are women.[55]

As the income limit will not be indexed or adjusted over time, its real value will decline. Wage rises will see more families exceeding the static income limit.

Ara Cresswell, CEO of peak body Carers Australia stated:

We appreciate that when people have become accustomed to receiving a benefit, they can feel aggrieved when it is taken away. However, the income threshold is very generous compared to other pensions and allowances, reflecting the Government’s recognition that caring can add substantially to the usual costs of maintaining a household.[56]

Carers Australia supports the changes as the budget savings will be directed towards the new Integrated Carer Support Service.[57]

Key provisions

Schedule 1—Carer allowance

Section 10A of the SS Act currently provides definitions for the purposes of the Commonwealth Seniors Health Card, including definitions used in applying the income test for that card. Item 2 in Schedule 1 of the Bill amends subsection 10A(2) of the SS Act so that the definitions also apply to Carer Allowance.

Items 3–6 in Schedule 1 of the Bill insert proposed paragraphs 953(1)(g),[58] 953(2)(g),[59] 954(1)(g)[60] and 954A(1)(ea),[61] respectively, into the SS Act so that a requirement for a Carer Allowance claimant to meet the income test under proposed section 957A (inserted by item 7) is added to the qualification requirements for the payment.

Proposed section 957A of the SS Act sets out the income test for Carer Allowance. The income test calculates whether a person’s total annual adjusted taxable income is less than $250,000. The combined adjusted taxable income of both members of a couple is used for partnered claimants.[62]

Generally, where a person has received their tax return, the income for the financial year preceding the claim is used.[63] In other cases, the income for the year preceding the last financial year is used. Proposed subsection 957A(3) of the SS Act allows a person to elect in writing that their income for the financial year in which they are claiming be used for the purposes of the income test.

Proposed section 957B (inserted by item 7) defines adjusted taxable income for the purposes of the income test (see above for the types of income to be included). In particular, it requires that child maintenance expenditure is deducted from the assessable income total[64] and, for persons aged over 60 years, income from long-term financial assets such as account-based superannuation is calculated under the deeming rules (see below).[65]

Proposed section 957C (inserted by item 7) provides for income estimates to be used, if provided in a form approved by the Secretary of the Department of Social Services, and if the Secretary is satisfied that the estimate is reasonable.

Proposed section 957D (inserted by item 7) provides a method statement for working out how income from certain superannuation income streams paid to those over the age of 60 is to be assessed under the deeming rules. The deeming rules assess an assumed rate of return based on the value of a financial asset rather than the actual income.[66]

Schedule 2—Health care card

Item 1 of Schedule 2 to the Bill inserts proposed paragraph 1061ZK(3)(e) into the SS Act to include a requirement that a person meets the Carer Allowance income test (inserted by Schedule 1) in order to qualify for the Health Care Card only Carer Allowance.



[1]. Social Security Act 1991 (Cth) (SS Act).

[2]. D Tehan (Minister for Social Services) and J Prentice (Assistant Minister for Social Services and Disability Services), Supporting Australia’s carers, media release, 5 March 2018.

[3]. Explanatory Memorandum, Social Services Legislation Amendment (Payments for Carers) Bill 2018, p. 4.

[4]. S Morrison (Treasurer) and M Cormann (Minister for Finance), Mid-year economic and fiscal outlook 2017–18, p. 134.

[5]. Department of Human Services (DHS), ‘Carer allowance’, DHS website, last updated 12 May 2018; SS Act, Part 2.19.

[6]. The Carer Payment supports people who are unable to work in substantial paid employment because they are providing full time daily care to someone with a severe disability or medical condition, or to someone who is frail aged. Department of Social Services (DSS) ‘Payments for carers’, DSS website, last updated: 27 August 2017.

[7]. Department of Social Services (DSS), ‘DSS Demographics December 2017’, data.gov.au website, last updated 11 April 2018.

[8]. Australian Government, Portfolio additional estimates statements 2017–18: Social Services Portfolio, p. 39.

[9]. DHS, ‘Residence descriptions’, DHS website, last updated 17 January 2018.

[10]. DSS, ‘3.6.7.30 Qualification for CA’, Guide to social security law, DSS website, last reviewed 2 January 2015.

[11]. Ibid.

[12]. Ibid.

[13]. DSS, ‘3.6.7.35 Qualification for CA (child) – automatic qualification for CA (child) through qualification for CP (child)’, Guide to social security law, DSS website, last reviewed 16 May 2016.

[14]. DHS, ‘How much carer allowance can you get’, DHS website, last updated 12 May 2018.

[15]. DHS, ‘Child disability assistance payment’, DHS website, last updated, 12 May 2018.

[16]. DHS, ‘Carer supplement’, DHS website, last updated 12 May 2018.

[17]. DSS, ‘3.6.7.10 Qualification for HCC only CA (child)’. Guide to social security law, DSS website, last reviewed 9 February 2015.

[18]. Ibid.

[19]. DHS, ‘Benefits of a Health Care Card’, DHS website, last updated 12 May 2018.

[20]. National Health Act 1972; Social Services Act (No. 3) 1974.

[21]. K Anderson, ‘Ministerial Statement: Nursing Care’, Senate, Debates, 16 August 1972, pp. 59–60.

[22]. K Anderson, ‘Second reading speech: National Health Bill 1972’, Senate, Debates, 24 October 1972, p. 1814.

[23]. D Daniels, Social security payments for the aged, people with disabilities and carers 1901 to 2010, Background note, Parliamentary Library, Canberra, 21 February 2011, p. 21.

[24]. Social Services Amendment Act 1977.

[25]. Social Security Legislation Amendment Act 1982.

[26]. Social Security and Veterans’ Entitlements Amendment Act (No. 2) 1987.

[27]. D Daniels and M Tapley, Assistance for Carers Legislation Amendment Bill 1999, Bills digest, 148, 1998–99, Parliamentary Library, Canberra, 30 March 1999, p. 6.

[28]. Ibid.

[29]. Ibid.

[30]. Assistance for Carers Legislation Amendment Act 1999.

[31]. Daniels and Tapley, Assistance for Carers Legislation Amendment Bill 1999, op. cit., p. 7.

[32]. Family and Community Services and Veterans’ Affairs Legislation Amendment (2004 Budget Measures) Act 2004.

[33]. Social Security Legislation Amendment (Improved Support for Carers) Act 2009.

[34]. Department of Education and Training (DET), ‘The new child care package’, DET website.

[35]. DSS, ‘4.3.1.30 Rate of income – couples, blind pensioners and children’, Guide to social security law, DSS website, last reviewed 15 August 2016.

[36]. T Gambaro, ‘Second reading speech: Assistance for Carers Legislation Amendment Bill 1999’, House of Representatives, Debates, 23 March 1999, p. 4129.

[37]. National Commission of Audit, Towards responsible government, ‘Appendix volume 1’, National Commission of Audit, Canberra, 2014, p. 310.

[38]. Ibid.

[39]. Reference Group on Welfare Reform, A new system for better employment and social outcomes: final report, (McClure Review), DSS, Canberra, 2015, p. 16.

[40]. Ibid.

[41]. Senate Standing Committee for the Selection of Bills, Report, 4, 2018, The Senate, Canberra, 28 March 2018.

[42]. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 5, 2018, The Senate, 9 May 2018, p. 53

[43]. Carers Australia, New national approach to carer support services announced, media release, 5 March 2018.

[44]. Explanatory Memorandum, Social Services Legislation Amendment (Payments for Carers) Bill 2018, p. 4.

[45]. Ibid; Morrison and Cormann, Mid-year economic and fiscal outlook 2017–18, op. cit., p. 134.

[46]. Explanatory Memorandum, Social Services Legislation Amendment (Payments for Carers) Bill 2018, p. 4; DSS, ‘Integrated carer support service’, DSS website, last updated 16 April 2018.

[47]. DSS, New services for carers, Fact sheet, DSS, last updated 16 April 2018.

[48]. The Statement of Compatibility with Human Rights can be found at pages 9–10 of the Explanatory Memorandum to the Bill.

[49]. Parliamentary Joint Committee on Human Rights, Human rights scrutiny report, 4, 8 May 2018, p. 96.

[50]. SS Act, section 10A defines target foreign income as foreign income that is not taxable income or received in the form of a fringe benefit.

[51]. Explanatory Memorandum, Social Services Legislation Amendment (Payments for Carers) Bill 2018, p. 6.

[52]. Under proposed subsection 957B(9) of the SS Act deductible child maintenance expenditure is worked out according to the provisions of the A New Tax System (Family Assistance) Act 1999. See DSS, ‘3.2.7 Deductible child maintenance expenditure’, Guide to Social Security Law, DSS website, last reviewed 1 July 2016.

[53]. D Tehan, ‘Second reading speech: Social Services Legislation Amendment (Payments for Carers) Bill 2018’, House of Representatives, Debates, 28 March 2018, p. 3022.

[54]. Ibid., p. 3023–4.

[55]. DSS, ‘DSS Demographics December 2017’, op. cit.

[56]. Carers Australia, New national approach to carer support services announced, op. cit.

[57]. Ibid.

[58]. SS Act, subsection 953(1) sets out the qualification for Carer Allowance where a person is caring for one disabled child.

[59]. SS Act, subsection 953(2) sets out the qualification for Carer Allowance where a person is caring for two disabled children.

[60]. SS Act, subsection 954(1) sets out the qualification for Carer Allowance where a person is caring for a disabled adult in the home of both the adult and the carer.

[61]. SS Act, subsection 954A(1) sets out the qualification for Carer Allowance where a person is caring for a disabled adult in a home not shared by the adult and the carer.

[62]. SS Act, proposed subsection 957A(1), method statement, step 2.

[63]. SS Act, proposed subsection 957A(2) defines this as the person’s reference tax year.

[64]. SS Act, proposed subsection 957B(9).

[65]. SS Act, proposed subsection 957B(8).

[66]. DSS, ‘4.4.1.10 Overview of deeming’, Guide to social security law, DSS website, last reviewed 3 July 2017.

 

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