Michael Klapdor
In the 2017–18 Budget, the Government announced funding for
a small, one-off Energy Assistance Payment (EAP) for pensioners; changes to the
residency requirements for pension eligibility; and a measure to provide
Pensioner Concession Cards to those no longer eligible as a result of asset
test changes that commenced on 1 January 2017.[1] Each measure will require
legislation.
Energy Assistance Payment
The EAP will be a one-off payment of $75 for single
recipients and $125 for couple recipients (combined) paid to those in receipt
of a qualifying payment on 20 June 2017 and resident in Australia. The
qualifying payments are Age Pension, Disability Support Pension (DSP),
Parenting Payment Single, Service Pension, veterans’ Income Support Supplement,
veterans’ Disability Pension, War Widow(er)’s Pension and permanent impairment
payments under the Military Rehabilitation and Compensation Act 2004 and
the Safety, Rehabilitation and Compensation Act 1988. Recipients of
other income support payments, such as Carer Payment, Newstart Allowance, Youth
Allowance or Parenting Payment Partnered are ineligible.[2]
The measure will cost $268.9 million over two years.
The payment was announced as part of a deal between the
Government and the Nick Xenophon Team to secure passage of a company tax cut.[3]
The Government agreed to the one-off payment despite pursuing a separate
measure to remove the existing Energy Supplement payment to new recipients of
income support payments (including all pensions and allowances).[4]
The existing Energy Supplement was introduced as part of the carbon price
compensation package. Per year, it is worth around four to five times the
amount of the EAP for pensioners. Prior to the 2013 election, the Coalition
committed to removing the carbon price but keeping the compensation package,
but it has since changed this position and determined that there is no ‘need
for ongoing carbon tax compensation for new welfare recipients’.[5]
The EAP will provide a small boost to some pensioners’
income but the measure runs counter to the Government’s policy of cutting
energy cost related payments. Those on lower-rate allowance payments will be
ineligible for the assistance. Unusually, Carer Payment recipients will also be
excluded, despite normally being treated in the same way as other pension
payments.
Residency requirements
A further measure will tighten the residency requirements
for the Age Pension and the DSP from 1 July 2018. The current
requirements are for at least ten continuous years of Australian residency, or for
periods exceeding ten years with at least one period of five years duration or
more. There are some exemptions for refugees or former refugees who reside in
Australia and, for DSP, for those who are Australian residents at the time
their disability arises. To be an Australian resident a person must reside in
Australia and be an Australian citizen, the holder of a permanent visa or a New
Zealander with a Special Category Visa who was in Australia on, just before, or
just after 26 February 2001.
Under the proposal in the 2017–18 Budget, there will be
different residency requirements depending on the pension claimant’s
circumstances (current exemptions will remain). The proposed requirements are:
- ten years continuous Australian residence with at least five
years during the person’s working life (between 16 years of age and the Age
Pension age) or
-
if less than five years of Australian working life residence,
then ten years of continuous residence and to not have been in receipt of an
activity-tested income support payment (such as Newstart Allowance) for
cumulative periods greater than five years or
- 15 years continuous Australian residence.
Residency rules are complex and have changed significantly
over time. When the Age Pension was introduced in 1909, the residency
requirement was for 20 years continuous residence (with absences of up to one
tenth of total residency allowed). This was modified in 1952 so those with 18
years of residence could be deemed to have been resident during occasional
absences totalling two years (plus six months for each year of residence
exceeding 18 years). This was reduced in 1962 to ten years continuous residence
or, when continuous residence was at least five years, the ten-year requirement
was reduced by all periods of residence totalling in excess of ten years. The
current requirements were introduced in 1985.[6]
The proposed changes are expected to provide savings of
$119.1 million over five years and will primarily affect older migrants to
Australia.[7] The Government estimates
that around 2,390 pension claimants will be affected by the change each
year—2,300 will be delayed from claiming a pension due to the ten-year
continuous residence requirement, and an estimated 90 people a year on parent
or partner visas who have been in receipt of an income support payment for
longer than five years will have to wait an additional five years before
claiming an Age Pension.[8]
While relatively few people will be affected by the changes,
the measure is significant in that it makes a claimant’s history of income
support receipt relevant to their eligibility for a pension for the first time.
The changes could mean that some elderly people in their 70s will be reliant
upon a lower-rate payment, such as Special Benefit, rather than a pension.[9]
The Federation of Ethnic Communities’ Councils of Australia has raised concerns
that the measure will disproportionately impact migrant Australians.[10]
Pensioner Concession Card
reinstatement
The Government will reinstate the Pensioner Concession Card
(PCC) to around 92,000 former pension recipients and 3,600 veterans’ payments
recipients who lost eligibility for their payment following asset changes that
commenced 1 January 2017.[11] The measure will cost $3.1
million.
Those who lost their pension following the asset test
changes were automatically granted a Commonwealth Seniors Health Card (CSHC). While
the PCC is provided to those in receipt of an eligible income support payment,
the CSHC is a standalone concession card given to those who meet an income
test. The PCC and CSHC are very similar in that both provide access to
discounted medicines under the Pharmaceutical Benefits Scheme and access to
bulk billed doctor appointments (at the discretion of the doctor). The key
difference between the cards at the Commonwealth level is that CSHC holders are
not eligible for subsidised Australian Government hearing services. The main
difference in entitlements, however, is in regards to state and territory
government concessions, with CSHC holders unable to access the same concession
entitlements as PCC holders in some jurisdictions.
Another difference is that while eligibility for the CSHC is
not attached to an income support payment, some CSHC cardholders receive the
Energy Supplement (recently passed legislation has meant that the Energy
Supplement is no longer paid to new CSHC holders from 20 March 2017).[12]
PCC holders receive the Energy Supplement as part of their attached income
support payment—the PCC itself does not grant eligibility to any payments. What
this means is that those affected by this budget measure would lose their
Energy Supplement payment if they simply had their CSHC replaced by a PCC.
Instead, as part of the measure, those who have their PCC reinstated will also
keep their CSHC so that they can continue to receive the Energy Supplement.
[1].
The budget figures and information in this brief have taken from the
following document unless otherwise sourced: Australian Government, Budget measures:
budget paper no. 2: 2017–18 .
[2].
Department of Human Services (DHS), ‘Energy
Assistance Payment’, DHS website, last updated 10 May 2017.
[3].
G Chan, ‘Company
tax cuts: deal struck with Xenophon in return for pension boost’, Guardian
(Australia), online edition, 31 March 2017.
[4].
D Arthur, A Dunkley, M Klapdor and M Thomas, Social
Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill
2017, Bills digest, 76, 2016–17, Parliamentary Library, Canberra, 2017,
pp. 28–38.
[5].
T Abbott (Leader of the Opposition), Address
to the NSW Liberal Party State Council, Central Coast, speech, 1 June
2013; S Morrison (Treasurer), Interview
David Speers, Sky News, transcript, 3 April 2017.
[6].
D Daniels, Social
security payments for the aged, people with disabilities and carers 1909 to
2010, Background note, Parliamentary Library, Canberra, 2011.
[7].
Federation of Ethnic Communities’ Councils of Australia (FECCA), FECCA
concerned about impact of key budget measures on migrant Australians,
media release, 9 May 2017.
[8].
Department of Social Services (DSS), Welfare—other
measures, fact sheet, DSS, Canberra, May 2017, pp. 3–4.
[9].
Department of Human Services (DHS, ‘Special
Benefit’, DHS website, last updated 11 May 2017.
[10].
FECCA, op. cit.
[11].
DSS, op. cit., p. 3. For background on the changes see M Klapdor, Social
Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015,
Bills digest, 129, 2014–15, Parliamentary Library, Canberra, 2015.
[12].
The Government has a policy of removing the Energy Supplement (see Energy
Assistance Payment section above). While it has passed legislation to no longer
pay the Energy Supplement to new CSHC holders from 20 March 2017, it has, to
date, been unable to pass legislation to remove the supplement from new income
support payment recipients.
All online articles accessed May 2017.
For copyright reasons some linked items are only available to members of Parliament.
© Commonwealth of Australia
Creative Commons
With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.
In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.
To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.
Inquiries regarding the licence and any use of the publication are welcome to webmanager@aph.gov.au.
This work has been prepared to support the work of the Australian Parliament using information available at the time of production. The views expressed do not reflect an official position of the Parliamentary Library, nor do they constitute professional legal opinion.
Any concerns or complaints should be directed to the Parliamentary Librarian. Parliamentary Library staff are available to discuss the contents of publications with Senators and Members and their staff. To access this service, clients may contact the author or the Library‘s Central Enquiry Point for referral.