Welfare benefits, employment programs and pensions – May 2017
The Government will consolidate seven working age payments into a single Jobseeker payment.
The changes reflect the recommendations of the 2015 McClure welfare reform report.
The Budget provides $84.1 million over five years from 2016-17 to consolidate seven working age payments and allowances into a new JobSeeker Payment and to strengthen the participation requirements for job seekers, the Budget says.
Consolidation of working age payments
On 20 March 2020, Newstart Allowance and Sickness Allowance recipients will transition to the new JobSeeker Payment.
The JobSeeker Payment will be set at the same rate as Newstart Allowance and current mutual obligation exemptions for Sickness Allowance will be retained.
The Widow Allowance will be closed to new recipients from 1 January 2018 and will cease on 1 January 2022, when all remaining recipients have reached Age Pension eligibility age. Widow Allowees transferring to the Age Pension will receive a higher payment rate.
The Partner Allowance, which has been closed to new recipients since 20 September 2003, will cease on 1 January 2022, when all remaining recipients have reached the eligibility age for the higher payment Age Pension.
The Widow B Pension, which has been closed to new recipients since 20 March 1997, will cease on 20 March 2020. Recipients will transition to the Age Pension with no change to their payment rate.
The Wife Pension, which has been closed to new recipients since 1 July 1995, will cease on 20 March 2020. Most recipients will transition to the Age Pension or Carer Payment at the same payment rate. Australian residents who do not qualify for these payments will transition to the new JobSeeker Payment. Transitional arrangements will ensure that those who transfer to the JobSeeker Payment have their rates preserved; however, those aged under 55 will be required to meet mutual obligation requirements.
The Bereavement Allowance will be closed to new recipients from 20 March 2020 and will be replaced by the new JobSeeker Payment. Existing recipients of Bereavement Allowance will not be impacted by the change. Newly bereaved people on the new JobSeeker Payment will receive a triple payment in the first fortnight and current mutual obligation exemptions will be retained.
Eligibility for the Pensioner Concession Card and the Health Care Card will not be affected by the changes.
Work participation requirements
A new participation framework will apply from 20 September 2018. Key elements include aligning the participation requirements for recipients aged 30 to 49 with those for recipients under 30, and recipients aged 55 to 59 will only be able to meet up to half of their participation requirements through volunteering. Recipients aged between 60 and Age Pension age will have a new activity requirement of 10 hours per fortnight that can be met through volunteering. The current jobactive program will be enhanced to support both mature age and inexperienced job seekers to increase their chances of finding employment, including through a new Career Transition Assistance Program.
Social security spending
Overall, the Budget said the Social Security budget Social security and welfare function are estimated to increase by 3.3 per cent in real terms from 2016-17 to 2017-18, and by 8.9 per cent in real terms from 2017-18 to 2020-21.
The most significant driver of growth is the assistance to people with disabilities sub-function, which is expected to grow by 19.1 per cent in real terms from 2016-17 to 2017-18, and by 23.0 per cent in real terms from 2017-18 to 2020-21, reflecting the progressive implementation of the National Disability Insurance Scheme (NDIS).
This sub-function includes Commonwealth as well as State and Territory contributions to the NDIS. Other drivers include the assistance to the aged sub-function, which is expected to grow by 1.2 per cent in real terms between 2016-17 and 2017-18, and by 8.7 per cent in real terms between 2017-18 and 2020-21; the assistance to families with children sub-function, which is expected to increase by 1.7 per cent in real terms between 2017-18 and 2020-21; and the assistance to the unemployed and the sick sub-function, which is expected to increase by 16.8 per cent in real terms between 2017-18 and 2020-21.
The principal driver of growth over the forward estimates for the assistance to the aged sub-function is income support for seniors, which is estimated to grow by 0.1 per cent in real terms from 2016-17 to 2017-18, and by 7.7 per cent in real terms from 2017-18 to 2020-21, reflecting demographic changes. Growth in these years is partially moderated by the reduction in expenses associated with incremental increases in the age pension age.
Also contributing to growth from 2017-18 to 2020-21 is an increase in expenses associated with home care, home support and residential and flexible aged care programs, largely reflecting demographic factors.
Boosting the Local Care Workforce
The Budget provides for increased assistance to service providers in rural, regional and outer suburban areas to provide the workforce required to meet the expected growth in the disability and aged care sectors arising from the introduction of the NDIS and an ageing population by investing $33.0 million over three years from 2017-18.
It will be funded from within the existing Department of Social Services and the Department of Health budgets.
Department of Human Services — improving service delivery and reducing red tape
The Budget makes a number of changes to the administrative processes of the Department of Human Services (DHS) service delivery and reduce red tape.
- piloting with existing accredited Government service providers to reduce call wait times by increasing Centrelink call centre capacity by 250 full-time equivalent roles;
- increased information-sharing arrangements with the Australian Taxation Office by requiring welfare claimants to provide their Tax File Number (TFN) when first lodging claims; and
- streamlining of referrals for welfare fraud prosecution by allowing information held by DHS to be used in respect to potential criminal proceedings.
A total of $5.5 million over five years from 2016-17 will be invested to deliver on improvements to TFN and referrals processes.
Funding to support efforts to improve call centre operations was not published because of commercial-in-confidence sensitivities.
Energy Assistance Payment
The Government will provide $268.9 million over two years to make a one-off Energy Assistance Payment in 2016-17 of $75 for single recipients and $125 per couple for those eligible for qualifying payments on 20 June 2017 and who are resident in Australia.
Qualifying payments include the Age Pension, Disability Support Pension, Parenting Payment Single, the Veterans’ Service Pension and the Veterans’ Income Support Supplement, Veterans’ disability payments, War Widow(er)s Pension, and permanent impairment payments under the Military Rehabilitation and Compensation Act 2004 (including dependent partners) and the Safety, Rehabilitation and Compensation Act 1988.
Residency Requirements for Pensioners
The Government will save $119.1 million over five years from 2016-17 by revising the residency requirements for claimants of the Age Pension and the Disability Support Pension (DSP).
From 1 July 2018, claimants will be required to have 15 years of continuous Australian residence before being eligible to receive the Age Pension or DSP unless they have either:
- 10 years continuous Australian residence, with five years of this residence being during their working life (16 years of age to Age Pension age); or
- 10 years continuous Australian residence, without having received an activity tested income support payment for a cumulative period of five years.
Existing exemptions for DSP applicants who acquire their disability in Australia will continue to apply.
Expansion of Cashless Debit Card
The Government will extend current cashless debit card trials in Ceduna (South Australia) and the East Kimberley (Western Australia) until 30 June 2018. It will also expand to a further two locations from 1 September 2017.
Extension of Income Management
The Government will provide $145.5 million over three years from 2016-17 to extend Income Management (IM) in all current locations until 30 June 2019.
Under new arrangements, Financial Counselling, Capability and Resilience Hubs will be renamed Money Support Hubs, and funded for a further two years until 30 June 2019, ensuring continued access to Financial Wellbeing and Capability services in locations where IM and the Cashless Debit Card are operating.
Government Response to the Parliamentary Inquiry into the Child Support Program
The Government will provide $12.4 million over five years from 2016-17 to implement three priority recommendations of the report of the House of Representatives Standing Committee on Social Policy and Legal Affairs, From conflict to cooperation — Inquiry into the Child Support Program, including:
- extending the time period before determining when to adjust the amount of child care support payable, including Family Tax Benefit and other payments, in interim care determinations;
- enabling simpler and more flexible court processes to set aside and modify child support arrangements, in particular Child Support Agreements made before 1 July 1998; and
- adopting a more equitable approach to collecting child support debts and overpayments, taking into account the best interests of the child.
Liquid Assets Waiting Period
Savings of $138.5 million over four years from 2017-18 will be achieved by increasing from 13 weeks to 26 weeks the maximum Liquid Assets Waiting Period when a claimant’s liquid assets are equal to or exceed $18,000 for singles without dependants or $36,000 for couples and singles with dependants.
Pensioner Concession Card — reinstatement
The Budget provides $3.1 million in 2017-18 to reinstate the Pensioner Concession Card for pensioners who were no longer entitled to the pension following changes to the pension assets test from 1 January 2017. Reinstating the Pensioner Concession Card will enable pensioners to access Commonwealth subsidised hearing services.
Social Impact Investing Market — trials
The Government will provide $20.2 million over 10 years from 2017-18 to encourage the development of the Australian market for social impact investments.
The measure includes:
- $12.2 million over 10 years from 2017-18 to partner with State and Territory Governments to trial social impact investing initiatives; and
- $8.0 million over 4 years from 2017-18 to establish a Social Impact Investment Readiness Fund to build capacity in the non-government and private sector to develop social impact investment proposals.
A drug testing trial for 5,000 new welfare recipients will be introduced. JobSeeker recipients who test positive would be placed on the Cashless Debit Card for their welfare payments and be subjected to further tests and possible referral for treatment.
Other welfare measures include: strengthening verification requirements for single parents seeking welfare, a crackdown on those attempting to collect multiple payments, stricter residency rules for new migrants to access Australian pensions, and denying welfare for a disability caused solely by a person’s substance abuse.
Announcing the Government’s plans to return the Budget to surplus, Mr Morrison noted that about three quarters of the increase in debt since 2007-08 had been driven by welfare, health and education spending.