Purpose of the Bill

The Social Services and Other Legislation Amendment (More Support in the Safety Net) Bill 2024 (the Bill) amends the Social Security Act 1991 (the SS Act), the Social Security (Administration) Act 1999 (the SS Admin Act), the A New Tax System (Family Assistance) Act 1999 (the FA Act), and the Veterans’ Entitlements Act 1986 (the VE Act) to:

• increase maximum rates of Commonwealth Rent Assistance (CRA) by 10%
• increase the JobSeeker Payment rate for recipients who have an assessed partial capacity to work of 0–14 hours per week and
• provide more flexibility for Carer Payment recipients to undertake work and study without losing qualification for the payment.

The first 2 measures will have effect from 20 September 2024; the Carer Payment measure will have effect from 20 March 2025.

All 3 measures were included in the 2024–25 Budget (pp. 164, 166–167). The Carer Payment measure was announced prior to the Budget on 4 May 2024.

Structure of the Bill and the bills digest

The Bill contains 3 schedules, one for each of the measures set out above. This bills digest will provide background information, analysis and stakeholder comments for each of the schedules in separate sections.

Financial implications

According to the Explanatory Memorandum, the CRA changes in Schedule 1 will cost $1.9 billion over the 5 years from 2023–24 (p. 1). The JobSeeker Payment changes in Schedule 2 will cost $41.2 million and the Carer Payment changes in Schedule 3 will cost $18.6 million over the same 5‑year period (p. 1).

Committee consideration

At the time of writing, the Bill had not been referred to or considered by any committees.

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.[1]

Parliamentary Joint Committee on Human Rights

At the time of writing, the Parliamentary Joint Committee on Human Rights was yet to consider the Bill.

Policy position of non-government parties/independents

Coalition

In his second reading speech on the Bill, Shadow Minister for Social Services Michael Sukkar stated that the Coalition would support the Bill. The Shadow Minister described the measures as ‘very minor proposals’ and ‘Pretty uncontroversial stuff, but a bandaid on a bullet wound here of what is being felt by Australians throughout this country’ (p. 2).

Independents

Independent MP for North Sydney Kylea Tink welcomed the measures in the Bill but stated that they will ‘fall well short’ of delivering solutions to the causes of disadvantage and poverty. Ms Tink stated the proposed CRA increase would provide additional nominal support but ‘the real rate of this payment will arguably not make a dent in the rapidly increasing rental prices’ (p. 100).

Regarding the Bill as a whole, Ms Tink stated:

While most Australians are struggling through a cost-of-living crisis right now, we must recognise that there is an ocean of need. While this government is at least doing something, the truth is that the something is the equivalent to stirring a teaspoon of sugar into it. (p. 99)

In her second reading speech, Independent MP for Wentworth Allegra Spender stated:

… this bill moves the needle in the right direction and I commend the government for listening to the advice of experts and delivering help where it is most needed. I acknowledge the truth of the Treasurer's words that he cannot provide money or funds for all the worthy projects that he and others across this parliament are approached on. However, I think that in this budget we should have seen greater support for those who most need it, particularly in terms of the rate of JobSeeker, and we should have considered other areas of spending restraints to enable that to happen … (p. 91)

Schedule 1—Increased support for Commonwealth Rent Assistance recipients

Schedule 1 will amend the SS Act, the FA Act, and the VE Act to increase the maximum rates of CRA by 10% from 20 September 2024. CRA is a supplement paid to recipients of income support payments and some Family Tax Benefit Part A recipients who rent privately.

The 2023–24 Budget also included a measure to increase the maximum rate of CRA by 15%. This increase took effect on 20 September 2023. For further information, see the Bills Digest for the Social Services and Other Legislation Amendment (Strengthening the Safety Net) Bill 2023 (pp. 18–22).

Background

Australia’s rental crisis

According to April 2024 CoreLogic figures, at $627 per week, national median advertised market rents are at record high levels, having averaged a growth rate of 9.1% a year for the past 3 calendar years. Rents for existing leases, as measured by the Consumer Price Index (CPI), rose 7.8% annually in the March 2024 quarter. This was the strongest rise since the March 2009 quarter.

Increasing rents reflect sustained low national residential rental vacancy rates. These rates have remained just over 1% since March 2022. A housing vacancy rate of around 3–4% is generally considered to represent a point at which the market is evenly balanced between landlords and renters (p. 61).

CoreLogic attributes the unusually large rent rises post-COVID pandemic to several factors, both immediate and longer-term.

More recent factors include a notable decline in the average household size from late 2020; a rapid increase in the Australian population from late-2022 as international border restrictions were lifted; and an abrupt decline in investment housing activity between May 2022 and February 2023 in response to interest rate increases.

Longer term factors that have increased demand for private rental properties and helped to increase rental costs include a reduction in social housing supply; a declining rate of home ownership; and decreasing average household sizes.

Commonwealth Rent Assistance

CRA is a non-taxable income supplement paid through Centrelink to individuals and families who rent in the private rental market. The supplement is intended to assist individuals and families on low incomes in meeting their basic living costs by reducing the proportion of their budget that must be spent on housing.

Qualifying criteria for receipt of CRA

Recipients of a social security pension or allowance, an eligible Department of Veterans’ Affairs (DVA) payment^[2], or an amount over the base rate of Family Tax Benefit Part A, who are also paying private rent above minimum thresholds, may be eligible for CRA.

CRA is not paid to homeowners or purchasers, people living in public housing (but is paid to qualifying community housing residents), or people living in residential aged care services with government-funded beds.

The minimum amount of rent to qualify for CRA is indexed to the CPI twice yearly (on 20 March and 20 September).

CRA rates

Where rent is paid in excess of the threshold, the CRA amount is calculated at a rate of 75 cents for every dollar of rent paid above the specified threshold until the maximum rate of assistance payable is reached. The maximum rate—which is also indexed to the CPI twice per year—places a cap on the amount of CRA that can be paid.

The maximum rates and minimum rent thresholds vary according to a person’s family situation and the number of dependent children they have. For single people without children, the rent threshold and maximum rate also vary according to whether they share their accommodation with others. See Table 1 and Table 2 below for details of current rent thresholds and maximum rates, and the proposed rate increases.

Effectiveness of CRA

In March 2024 there were 1,295,005 income units receiving CRA with a social security payment or Family Tax Benefit (an income unit comprises a single person with or without dependent children or a couple with or without dependent children). Most CRA recipients (71.9%) were paying enough rent to be eligible for the maximum rate of assistance.

CRA is not designed to meet a specified benchmark for ensuring housing affordability (in the same way that rent for social housing is typically set at around 25% of a tenant’s assessable income), but rather to improve housing affordability for income support recipients.

As at June 2023, nationally, 43% of CRA recipients were in housing stress—that is, they were paying more than 30% of their income on rent, after CRA. Without the benefit of CRA, close to three-quarters (71%) of CRA recipients would have been in housing stress. According to the ABS, without the 15% increase in the maximum rates of CRA provided at the 2023–24 Budget, rents would have increased by 9.5% over the 12 months to the March 2024 quarter.

Problems with CRA

While the increase will provide additional relief to some renters, it falls well short of the amount requested by several welfare organisations and other stakeholders in the lead-up to the 2024–25 Budget.

Following the Budget, the Australian Council of Social Service (ACOSS) expressed its dissatisfaction with the size of the increase:

The modest Commonwealth Rent Assistance increase builds on last year’s rise, giving a single person an extra $9.40 a week if they’re receiving the maximum rate. Based on median rents, private renters receiving JobSeeker or Youth Allowance will still be in deep housing stress because their base rate of payment is so low. Even with the increase, they will be paying half of their income in rent alone.

Several other issues have been identified in relation to CRA, in addition to the rate at which it is paid. These include:

• the maximum rate being indexed to the CPI rather than average rents paid by CRA recipients, with increases in rents outstripping general inflation in many areas of Australia and
• CRA being only available to people in receipt of income support or an amount of Family Tax Benefit over the base rate of Family Tax Benefit Part A, and not to other people on low incomes who are renting privately.

For a brief discussion of these concerns, see page 20 of the Bills Digest for the Social Services and Other Legislation Amendment (Strengthening the Safety Net) Bill 2023.

Calls for a review of CRA

For some time, housing and welfare experts have been calling for changes to be made to CRA arrangements and the Productivity Commission recently recommended that the Government should: ‘review Commonwealth Rent Assistance as a priority. There is a strong case for changes to improve its adequacy and targeting’ (p. 2).

Key provisions

Items 7 and 8 of Schedule 1 replace the CRA rate tables in the FA Act. Items 9–14 replace the CRA rate tables in the SS Act. Items 17 and 18 replace the CRA rate tables in the VE Act. Other amendments update the rent thresholds set out in the legislation to the current rent thresholds.[3] The rent thresholds set the minimum fortnightly rent required for a person to qualify for CRA. CRA rates are calculated at 75 cents for each dollar of fortnightly rent above the rent threshold, up to the maximum rate.

The current rent thresholds and maximum CRA rates compared to the proposed increases are set out in Table 1 and Table 2. Table 1 sets out the CRA settings for those with dependent children who receive CRA with Family Tax Benefit Part A. Table 2 sets out the CRA settings for those without dependent children who receive CRA with their income support payment.

The proposed rates will commence on 20 September 2024 but indexation will also be applied to CRA on that date (in line with CPI movements between December 2023 and June 2024).[4] This means that the actual maximum rates from 20 September 2024 onwards will be higher than those shown in the tables.

Table 1 CRA for recipients with children – paid with Family Tax Benefit Part A

Sources: Services Australia (SA), A guide to Australian Government payments: 20 March 2024–30 June 2024, (Canberra: SA, 2024), 38; Parliamentary Library estimates based on Schedule 1 of the Social Services and Other Legislation Amendment (More Support in the Safety Net) Bill 2024.

Table 2 CRA for recipients without children – paid with income support

Sources: Services Australia (SA), A guide to Australian Government payments: 20 March 2024–30 June 2024, (Canberra: SA, 2024), 38; Schedule 1 of the Social Services and Other Legislation Amendment (More Support in the Safety Net) Bill 2024; subsection 1070L(2), Social Security Act 1991.

Schedule 2—Increasing JobSeeker payments for certain recipients who have a partial capacity to work

Schedule 2 of the Bill will amend the SS Act to increase the rate of JobSeeker Payment paid to single recipients who have an assessed partial capacity to work of 0–14 hours per week. The higher rate will be the same as the JobSeeker Payment rate currently paid to single principal carers of dependent children and singles aged 55 or over who have been in receipt of income support for 9 continuous months or more.

Currently, single JobSeeker Payment recipients with an assessed partial capacity to work can receive a maximum of $778.30 per fortnight (including the base rate, energy supplement and pharmaceutical allowance). The higher rate (paid to single parents and singles aged 55+) is currently $833.20 per fortnight (including the base rate, energy supplement and pharmaceutical allowance).

The Government estimates around 4,700 individuals will benefit from this measure.

Background

Partial capacity to work

A partial capacity to work for the purposes of social security payments (including JobSeeker Payment, Youth Allowance (Other), Parenting Payment and Special Benefit) is defined at section 16B of the SS Act. A person has a partial capacity to work if:

• the person has a physical, intellectual or psychiatric impairment and
• the Secretary [of the Department of Social Services] is satisfied that:
  • the impairment of itself prevents the person from doing 30 hours per week of work independently of a program of support within the next 2 years and
  • no training activity is likely (because of the impairment) to enable the person to do 30 hours per week of work independently of a program of support within the next 2 years.

‘30 hours per week of work’ is defined as 30 hours per week on wages at or above the relevant minimum wage (subsection 16B(5)).

A program of support (as defined at section 16B) is a program designed to help people prepare for, find or maintain work which is funded wholly or partly by the Commonwealth. These programs are usually offered by Workforce Australia providers or Disability Employment Services.

Introduction of the partial capacity to work category

The 2006 Welfare to Work changes to Disability Support Pension (DSP) saw the introduction of the partial capacity to work arrangements for Newstart Allowance (which was merged with Sickness Allowance and Bereavement Allowance to form JobSeeker Payment in March 2020). DSP has 2 main qualification criteria:

• an impairment criterion and
• a continuing inability to work criterion.

To meet the impairment requirement, a person must be permanently blind or have a permanent physical, intellectual or psychiatric condition resulting in a functional impairment of at least 20 points on the impairment tables. If an individual is not participating in the supported wage system, they must also have an assessed continuing inability to work. This means that, because of their impairment, an individual is unable to do any work of at least 15 hours per week independently of a program of support in the next 2 years or be reskilled for such work within the next 2 years.

Prior to the 2006 changes, the DSP continuing inability to work criterion was that an individual be unable to do any work of at least 30 hours per week. The 2006 changes also brought in the program of support element.

The creation of the new partial capacity to work criterion was to allow those who might previously have qualified for DSP to receive the unemployment benefit but with reduced mutual obligation requirements (p. 7).

How is a partial capacity to work assessed?

A partial capacity to work is generally established by an Employment Services Assessment or a Job Capacity Assessment.

An Employment Services Assessment (ESA) examines an individual’s barriers to finding and maintaining employment, work capacity, and interventions/assistance that may be of benefit to the individual to improve their work capacity. The assessors are health and allied health professionals employed by Services Australia. An individual may be referred for an ESA if:

• they are in receipt of income support payments and applying for an exemption from mutual obligation requirements
• other income support recipients who are eligible to volunteer
• they register directly with an employment services provider
• they inform Services Australia or their employment services provider of a significant change in their circumstances that affects their work capacity and/or employment assistance needs
• the JSCI [Job Seeker Classification Instrument] administered by Services Australia or an employment services provider, indicates they have barriers to work that require further assessment, and/or
• they are a DSP recipient under age 35 with potential participation requirements who does not already have a current work capacity assessment. The assessment will establish work capacity bandwidths of 0–7 or 8+ hours per week and will not affect the recipient's eligibility for DSP.

Job Capacity Assessments (JCAs) are generally carried out as part of claim for Disability Support Pension. The assessors are medical, health and allied health professionals employed by Services Australia. JCAs assess an individual’s level of functional impairment and work capacity (current and future).

According to the Department of Social Services’ Social security guide, ESAs and JCAs assess work capacity in bandwidths of 0–7 hours per week, 8–14 hours per week, 15–22 hours per week, 23–29 hours per week or 30 hours per week.

Medical evidence is also required to establish the impairment criterion – this evidence needs to include a diagnosis by a medical practitioner of a condition that gives rise to the impairment and information on the functional impairment.

Mutual obligation requirements for people assessed as having a partial capacity to work

Being assessed as having a partial capacity to work affects an individual’s mutual obligation requirements. These requirements are assessed on the basis of the job seeker’s future capacity, with intervention. A job seeker is not expected to participate at this future capacity immediately but is expected to gradually increase their participation with the assistance of employment services.

According to the Social security guide, job seekers with a partial capacity to work in the 0–7 or 8–14 hours a week bandwidths can meet their mutual obligation requirements by attending a quarterly interview with Services Australia. The job seeker can volunteer to accept a referral to a program of assistance but cannot be penalised for not accepting.

JobSeeker Payment recipients with a partial capacity to work of 15–29 hours a week can meet their mutual obligation requirements by doing 15 hours per week of paid work (including self-employment) or approved study (or a combination). If not meeting their requirements through work or study, they will need to be connected to an employment services program and looking for work of 15–29 hours a week (that matches their capacity). They can also meet their requirements by participating in a program of assistance recommended by their ESA/JCA.

The proportion of JobSeeker Payment recipients with a partial capacity to work has been growing

The number and proportion of unemployment benefit recipients with a partial capacity to work has been steadily increasing. In 2007, less than 10% of Newstart recipients had a partial capacity to work (p. 9). As at May 2024, 43% (349,995) of the 818,250 JobSeeker Payment recipients had a partial capacity to work of less than 30 hours a week.

Figure 1 is drawn from Department of Social Services data and shows the number of Newstart Allowance and JobSeeker Payment recipients by assessed capacity to work since January 2012. The significant increase in JobSeeker Payment recipients following the COVID-19 restrictions has since declined and the proportion of recipients with a partial capacity to work has been above 40% since March 2022.

Figure 1: Newstart Allowance/JobSeeker Payment recipients by assessed capacity to work, January 2012 to May 2024

Source: Department of Social Services (DSS), DSS Income Support Recipients – Monthly Time Series April 2024; DSS, Expanded DSS JobSeeker Payment and Youth Allowance Recipients - monthly profile - May 2024.

Those with a partial capacity to work stay on income support for longer

Data published as part of the Department of Social Services’ Australian Priority Investment Approach to Welfare 2022 report found that those aged 22–30 on JobSeeker Payment who had a partial capacity to work were expected to spend, on average, 29% longer on income support over the next 5 years than those with a full capacity to work. Older recipients with a partial capacity to work were also projected to spend longer on income support compared to those with a full capacity – 4.2 out of the next 5 years for those aged 55–64 with a partial capacity to work compared to 3.8 out of the next 5 years for those aged 55–64 with a full capacity.

The analysis also found that those with a partial capacity to work and who lived in a low socio-economic index area or who were First Nations were projected to spend more time on income support than other JobSeeker Payment recipients with a partial capacity to work.

A small number of JobSeeker recipients with a disability will benefit

As noted above, the government estimates that around 4,700 people will benefit from the increased rate for single JobSeeker Payment recipients with an assessed partial capacity to work of 0–14 hours per week. This represents around 1.3% of JobSeeker Payment recipients with a partial capacity to work of less than 30 hours a week.

Department of Social Services officials told a Senate Estimates hearing on 4 June 2024 that there were around 9,800 JobSeeker Payment recipients with a capacity to work of 0–14 hours per week (p. 43). Some of those with a capacity to work of 0–14 hours a week will already be in receipt of the higher rate as they are single parents or aged 55 or over and in receipt of income support for 9 continuous months or more.

The small number of JobSeeker Payment recipients with an assessed capacity to work of under 15 hours a week reflects the fact that most income support claimants with an impairment resulting in a work capacity of 0–14 hours a week would be seeking DSP rather than JobSeeker Payment. People receiving JobSeeker Payment with an assessed partial capacity to work of less than 15 hours per week represent people with disability who could meet the DSP Continuing Inability to Work criterion but not one of the other DSP qualification criteria – most likely the impairment requirements but possibly the residence criteria. The Australian priority investment approach to welfare 2022 report found that 35% of new DSP recipients in 2022 were on JobSeeker Payment with a partial capacity to work in 2021 (p. 34).

The increased JobSeeker Payment rate for this small group is $283.10 per fortnight lower than the maximum rate for DSP (including all typically-paid supplements) (pp. 15, 22).

In a 2020 paper, the Parliamentary Budget Office found that the 2006 DSP changes, together with further changes to eligibility criteria in 2012 and 2015, led to a significant decline in the share of new applicants granted access to DSP (p. 12). These changes will have shifted more people with impairments affecting work capacity onto the lower rate JobSeeker Payment and other payments such as Youth Allowance (Other) and Parenting Payment. A 2021 paper from the Brotherhood of St Laurence found evidence of a similar decline in successful DSP claimants correlated with an increase in JobSeeker recipients with a partial capacity to work (pp. 15–17).

Those receiving Youth Allowance (Other), Parenting Payment or Special Benefit with a partial capacity to work of less than 15 hours a week will not be eligible for a higher rate (these payments do not have a rate category equivalent to the JobSeeker Payment rate for long term recipients aged 55+).

Stakeholder response

In a post-Budget media release, ACOSS noted that the measure would benefit 4,700 people: ‘not even half a percent of the more than one million people receiving JobSeeker and related payments unable to afford food. People on the lowest incomes expected and deserved much more in this Budget’ (p. 2).

Key provisions

Item 4 of Schedule 2 replaces the table at existing point 1068-B1 of the SS Act, which sets out the maximum basic rates of JobSeeker Payment. The new table includes a new payment category (item 6 of the table) which is a single JobSeeker Payment recipient to whom proposed point 1068-B1AA applies. Proposed point 1068-B1AA is inserted by item 5. It applies to a person if:

• they are receiving JobSeeker Payment
• they have a partial capacity to work because of an impairment and
• the Secretary is satisfied:
  • the impairment of itself prevents the person from doing 15 hours per week of work independently of a program of support within the next 2 years and
  • no training activity is likely (because of the impairment) to enable the person to do 15 hours per week of work independently of a program of support within the next 2 years.

The proposed criteria are similar to the existing partial capacity to work criteria at section 16B, except for the fewer hours of work capacity (less than 15 hours per week rather than less than 30 hours per week).

A person who meets the criteria at proposed point 1068-B1AA will receive a maximum basic rate equivalent to single parents and those aged 55 and above who have been in receipt of income support for 9 continuous months.

Schedule 3—Providing flexibility to carers

Schedule 3 amends the SS Act and the SS Admin Act to provide greater flexibility to Carer Payment recipients undertaking work and study so that they do not lose eligibility for the payment when they temporarily cease providing care to the care-recipient. The proposed changes will take effect from 20 March 2025 (Schedule 3, item 12).

Background

Carer Payment is an income support payment for those providing constant care to someone with a disability or medical condition, or an adult who is frail aged. The Carer Payment rate is the same as that for the Age Pension and DSP, and the same pension income and assets tests apply.

To qualify for Carer Payment, an individual must be providing ‘constant care’ to someone who needs care for at least 6 months or caring for someone at the end of their life. Constant care means for a ‘significant period’ each day, at least the equivalent of a normal working day in personal care, which prevents the carer from working full-time.

Carers can remain qualified for Carer Payment during temporary periods where they cease to provide constant care for up to 63 days in a calendar year (or another limited number of days as determined by the Secretary of the Department of Social Services in a particular case).

A separate rule allows carers to undertake up to 25 hours a week of employment, volunteer work, training or study (including travel time and meal breaks) without it affecting their qualification for the payment. Where time in employment, volunteer work, training or study exceeds 25 hours in a week, the carer can use 7 days of their 63 cessation of care days to remain qualified for Carer Payment. Income from work may affect the carer’s payment rate under the income test.

As at April 2024, there were 308,410 recipients of Carer Payment. Around 10% (30,950) had earnings from employment.

Key changes and provisions

Items 2–7 of Schedule 3 will amend subsections 198AC(4)–(5) of the SS Act so that the 25-hour rule only applies to paid work and will change the limit from 25 hours per week to a total of 100 hours over a 4-week period. This provides more flexibility to those with varying work patterns (for example a week with 30 hours of paid work followed by a week with 10 hours of paid work).

Time spent in training, study or voluntary work will no longer count towards the 100 hours over 4 weeks rule. This appears to remove the limit on time spent on these specific activities. However, the Explanatory Memorandum states that ‘a day spent undertaking such activities may be counted towards the carer’s temporary cessation of care days’ (p. 12). The proposed change would mean time spent on training, study or voluntary work would count as a cessation of care, where the time spent on these activities means they do not meet the definition of constant care. There would no longer be a special allowance for a set number of hours to be spent in these unpaid activities before Carer payment qualification could be affected.

Minister for Social Services Amanda Rishworth stated that travel time will no longer count towards the 100 hours over a 4 week period rule–this would involve a policy rather than legislative change.

Item 1 of Schedule 3 will add proposed subsection 198AC(3C) to the SS Act to allow those who exceed their 63-day cessation of care period to resume providing constant care in the same calendar year and remain qualified for Carer Payment. However, the carer will not qualify for Carer Payment on any further days in that calendar year not providing constant care.

Item 11 adds proposed section 95CA to the SS Admin Act so that an individual’s Carer Payment will be suspended, rather than cancelled, in specific circumstances. Where a payment is only suspended, the recipient does not need to make a new claim to resume payment. The suspension period will be for up to 26 weeks. The circumstances are:

• the carer temporarily ceases to provide care because of an event or change of circumstances that means the 63-day limit is exceeded
• the carer’s payment rate is reduced to nil under the income test because of an event or change of circumstances.

To be eligible for a suspension rather than cancellation, the carer will need to notify Services Australia of the relevant event or change of circumstances and meet other conditions.

Item 8 adds proposed section 1061ZCB to the SS Act so that carers remain eligible for the Pensioner Concession Card during the period their payment is suspended.

Stakeholder response

Carers Australia welcomed the proposed changes:

Carers Australia, the national peak body representing 2.65 million unpaid carers, has been calling for a review of the 25-hour rule for over 10 years.

Carers have repeatedly stated the rules around the Carer Payment have contributed to ongoing disadvantage. The Albanese Labor Government’s announcement to relax the rules and allow more flexibility in the hours that carers work, study or volunteer over a four-week period, is a significant step towards mitigating the disadvantage.