Bills Digest no. 120 2009–10
Social Security and Family Assistance Legislation
Amendment (Weekly Payments) Bill 2010
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Social Security and Family Assistance
Legislation Amendment (Weekly Payments) Bill 2010
Date introduced: 10 February 2010
House: House
of Representatives
Portfolio: Families, Housing, Community Services and Indigenous
Affairs
Commencement: On Royal Assent
Links: The
relevant links to the Bill, Explanatory Memorandum and
second reading speech can be accessed via BillsNet, which is at
http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
This Bill seeks to amend the
Social Security Act 1991, the Social Security
Administration (Administration) Act 1999, the A New Tax
System (Family Assistance) Act 1999 and the A New Tax
System (Family Assistance)(Administration) Act 1999 to enable
welfare payments, as well as Family Tax Benefit (FTB) and baby
bonus payments, to be made on a weekly rather than fortnightly
basis to vulnerable income support recipients.
Typically, welfare payments (including
income support and income supplement) are paid on a fortnightly
basis. While most welfare recipients are able to manage their
finances over this period, some disadvantaged people experience
great difficulty in doing so. Vulnerable people—such as
people who are homeless or at risk of homelessness and people with
mental health and substance abuse problems—can struggle to
organise a budget such that they are able to pay their bills and
purchase groceries over a fortnightly period. In many instances,
these disadvantaged Australians live on a day-to-day, hand-to-mouth
basis and find themselves spending their payments too quickly.
Where this is the case, this is not only bad for these
people’s immediate health and well-being—increasing the
risk of their going without food and necessary health services and
becoming homeless—but it can also serve to prolong and
exacerbate their experience of disadvantage.
It has long been recognised that certain welfare recipients
struggle for various reasons to maintain a budget over a
fortnightly period. There has also been a longstanding interest in
determining whether a shorter pay period might assist these
people.[1]
During the past decade two trials of the weekly payment of
income support have been conducted in Australia. The first of these
was carried out from September 2001 to March 2003 as a part of a
broader trial of culturally sensitive banking and financial
services in Town Camp communities in Alice Springs. The trial of
services offered to Town Camp residents by the Tangentyere
Council[2] through a
Westpac agency located on its premises included: the delivery of
face-to-face, over the counter banking services to Aboriginal
clientele; a financial literacy program designed to assist
Aboriginal clients in the shift from cheque-based to electronic
banking; and, a weekly payments trial.[3]
The Tangentyere weekly payments trial, which was funded through
the then Department of Family and Community Services (FaCS), was
intended to help in countering the ‘feast-and-famine’
cycle experienced by many Indigenous welfare recipients, and to
ameliorate the worst effects of this fortnightly cycle. According
to Siobhan McDonnell, a former visiting fellow at the
Centre for Aboriginal Economic Policy Research (CAEPR), many
Indigenous people face a feast-and-famine cycle as a result of
their ‘low personal incomes, distinct cultural patterns of
immediate expenditure often for a wide social network, combined
with a lack of access to savings’.[4] The consequences of a feast-and-famine
cycle can be severe. Families that have spent their income support
payment early can end up going without food and, in the worst case
scenario, this can create problems of child malnutrition.[5]
Based on a limited study of the trial conducted by FaCS, weekly
payments would appear to have helped Tangentyere weekly payments
trial participants to better manage their money and, as a result,
had some impact on the feast-and-famine cycle and its effects. The
weekly payments trial was reported to have resulted in less people
going without food, and people either buying more food or buying
food more often.[6]
Another positive outcome of weekly payments, according to FaCS, was
that they ‘reduce the amount of money available to buy
alcohol in one sitting, thus reducing potential intake amongst
Indigenous customers who binge drink.’[7] In this respect, FaCS contended that
weekly payments could be viewed as a harm minimisation
strategy.
On the strength of her own assessment of the weekly payments
trial, and FaCS’ evaluation of the trial, McDonnell was
generally supportive of the use of weekly payments as a strategy to
overcome the fortnightly feast-and-famine cycle in the Tangentyere
town camps. However, while noting that the initial results of the
trial had seemed positive, McDonnell identified some problems that
would, she argued, need to be addressed if the trial were to be
expanded to other Indigenous central Australian communities. Some
of these problems were of a technical nature, with Centrelink
experiencing difficulties in putting weekly payments in place.
Others related to people choosing to exit the trial and return to
fortnightly payments because weekly payment amounts were
insufficient to allow them to make larger purchases.[8]
McDonnell also highlighted the fact that a limited number of
people had participated in the trial, and that this could have
influenced the trial’s results. It is worth noting that while
the evaluation results may certainly have been biased towards the
small number of people who chose to remain on weekly payments this
does not detract from the benefits reported by these participants.
Nevertheless, the point is that we do not know, on the basis of the
trial’s limited results, whether or not those people who
dropped out of the trial suffered ill effects as a result of
returning to fortnightly payments. All that we can safely say,
then, based on available trial results, is that there is evidence
that weekly payments are helpful to some people—and
especially when combined with additional services—and worth
making more widely available, as a result.
The main point made by McDonnell in her assessment of the
Tangentyere trial was that if weekly payments were to prove
successful, then this demanded that they be voluntary. Participants
in any program of weekly payments, she argued, should be able to
return to fortnightly payments at any time, to ensure that their
consumer choices are not unduly limited.[9] So long as this condition could be met,
McDonnell supported an expansion of the weekly payments trial
beyond Town Camp communities in Alice Springs to other Indigenous
communities throughout central Australia.
Following the success of the Tangentyere trial of weekly
payments, a weekly payment trial was conducted in the broader
Australian community by FaCS, the then Department of Employment and
Workplace Relations (DEWR) and Centrelink. [10] From 24 October 2005 to 30 April
2006, the option of weekly payments was made available to
disadvantaged welfare recipients across 69 Centrelink Customer
Service Centres located throughout Australia. A majority of these
sites were located in Western Australia and South Australia. Around
1700 disadvantaged welfare recipients are reported to have been
involved in the trial, with most of these people in receipt of the
disability support pension and suffering from some form of mental
illness.[11]
The trial sought to determine the costs and benefits of weekly
payment arrangements, both for participants themselves, and for
other stakeholders. These stakeholders included Centrelink social
workers and support services that cater to the needs of
disadvantaged welfare recipients, and Centrelink staff who may have
had to deal with these recipients’ requests for advance or
urgent payments when their fortnightly payments had been exhausted.
It is important to note that weekly payments were not offered in
isolation; trial participants were also provided with access to
other support services that were calculated to assist in
stabilising their circumstances.
While the evaluation report on the trial has not been made
publicly available, it is generally recognised that the trial, with
its combination of weekly payments and services to assist
participants, was reasonably successful.[12] The Minister for Workplace
Participation during the time in which the trial was conducted, Dr
Sharman Stone, is reported as having stated, ‘preliminary
results suggest the trial is a positive initiative for
disadvantaged income support recipients when weekly payments are
accompanied by other contact arrangements’.[13]
A similar assessment was made by the then president of the
National Welfare Rights Network, Michael Raper. Based on feedback
provided to him by community groups, Raper is reported as having
stated that, as a result of the weekly payments trial, ‘very
vulnerable clients have been able to turn their lives around with
improved health and personal outcomes, more stable accommodation
and reduced costs in terms of demands on the health and legal
systems.’[14]
Indeed, given the reported success of the trial for participants
and Centrelink, Raper was ‘at a loss as to why it [was] being
wound up’.[15]
It would appear that the reason for the trial’s being
finalised was that, under existing arrangements, income support
payments must be paid in arrears, and in respect of a 14 day
instalment period. Hence, to have continued to pay income support
recipients on a weekly basis would have been to pay them in advance
of when they were entitled to receive their payment—that is,
at day 15 in respect of a 14 day instalment period. Weekly payments
were able to be made to Weekly Payment Trial participants on a
limited, trial basis only.
The current Bill would provide for weekly payments to be made to
vulnerable income support recipients through two part payments in
respect of a 14 day instalment period. This would enable weekly
payments to be made by treating the two part payments as though
they were a single payment being paid at the end of a 14 day
instalment period, while preserving the 14 day instalment period
that applies to most income support recipients.
In the context of the 2007 Federal election campaign, then
opposition leader, Kevin Rudd, made a commitment to tackle the
issue of homelessness in Australia as a matter of national
priority. The problem of homelessness was to be addressed within
Labor’s broader housing affordability and social inclusion
agendas through a focus on the prevention of homelessness, improved
crisis services, and the creation of exit points to secure longer
term housing and stop the cycle of homelessness.
On gaining office, the Rudd Government signalled its intention
to develop a comprehensive, long-term plan to tackle homelessness.
To this end, it commissioned the development of a Green Paper to
‘promote public discussion of homelessness, highlight the
challenges faced by people who are homeless, and suggest ways
forward’. The paper, Which Way Home? A new approach to
homelessness was released in May 2008.[16] This was followed on 21 December 2008
by the homelessness White Paper, The Road Home: A
National Approach to Reducing Homelessness, which seeks to
provide a national plan of action on homelessness for the years
leading up to 2020.[17]
The paper outlines three strategies through which homelessness
is to be tackled. These are: a focus on early intervention in the
provision of homelessness services; increased responsiveness of and
connectivity between homelessness services so as to achieve
sustainable housing, improve economic and social participation and
reduce homelessness; and moving homeless people quickly out of the
crisis accommodation system and into stable housing with the
necessary support to ensure that their homelessness does not recur.
One of the initiatives identified under the first of these
strategies was the weekly payment of income support. The Government
made a commitment to make weekly payments available to people who
are homeless or at risk of homelessness as a means to help prevent
homelessness.[18]
Weekly payments are to be voluntary, with people who are
homeless or at risk of homelessness to be offered the option of
receiving their welfare payments weekly, where it is determined
that this could help them. Centrelink has introduced a
‘flag’ in its systems to identify claimants who are
either homeless or at risk of homelessness. This ‘flag’
lets Centrelink staff know that a Centrelink Social Worker is
needed to provide assistance to the person identified, including,
if appropriate, access to weekly payments.
While there has been very little comment
on the Bill, all of the commentary in relation to the weekly
payments measure has been supportive.
Both the Australian Council of Social Services (ACOSS) and the
Welfare Rights Centre have welcomed the measure. Each organisation
has expressed the view that weekly payments, along with
Centrelink’s Centrepay bill-paying service, are a more
effective and empowering means of assisting vulnerable income
support recipients to manage their finances than a compulsory
income management scheme.[19] The Government has indicated that it does not intend
weekly payments to serve as a substitute for income management,
which it proposes to extend beyond Indigenous communities in the
Northern Territory.[20] However, in specific cases it is possible that weekly
payments may be offered to income support recipients who are
subject to income management.[21] In the absence of further detail, it is to be
assumed that this would be in instances where the income support
recipient concerned was homeless or at risk of homelessness.
According to the Explanatory Memorandum, the measure has no
administered costs and Departmental costs are to be ‘absorbed
within existing resources by the responsible
departments’.[22]
It is worth noting at this point that the Government appears
keen to restrict the availability of weekly payments to only those
people who are the most disadvantaged. This is despite the fact
that weekly payments could potentially be of some benefit to a
broader range of income support recipients. It is to be assumed
that the Government wishes to restrict the scope of the measure as
a means to avoid increasing administrative costs. In 2008–09,
Centrelink completed over 6 billion transactions on customer
records.[23] Were
income support payments to be made on a weekly basis for a
substantial number of claimants, this would undoubtedly increase
the number of Centrelink transactions by a considerable amount.
A substantial body of US research evidence indicates that many
income support recipients, and especially disadvantaged income
support recipients, experience a feast-and-famine cycle. For
example, a 2003 study of the response of household consumption
expenditures to the monthly arrival of social security benefits
found
an increase in the amount of and probability of
spending across multiple categories of expenditure in the first few
days following social security check [sic] receipt relative to the
day before the check arrives … when the sample is limited to
households for which social security is a significant portion of
their income, the spending increase is more pronounced and
statistically significant across all categories of instantaneous
consumption.[24]
Further research shows that disadvantaged income support recipients (and people
on low incomes in general) do not save very much and do not have
access to credit that would enable them to avoid the
‘famine’ part of the feast-and-famine cycle.
Where disadvantaged income support recipients spend their
payments shortly after receiving them, this can have a range of
adverse consequences for themselves and others, both in relation to
the expenditure itself and the lack of finances that results. A
recent US study found evidence of a causal relationship between
income support payment times and a cycle in drug and alcohol
related hospitalisations and mortality.[25] It was found that drug and alcohol
related hospitalisations increased abruptly immediately following
the receipt of income support payments. The study also found
evidence of a monthly cycle in crime, with a large increase in
arrests for drug possession and sale and decreases in arrests for
some revenue generating crimes immediately after social security
recipients receive their payments.[26]
Ultimately, the study’s authors conclude that alternative
disbursement policies—such as weekly or biweekly rather than
monthly payments—could help to reduce drug and alcohol
bingeing. This, they argue, could in turn significantly reduce
drug-related hospitalisations, arrests for drug possession and
mortality among income support recipients.[27]
Based on available evidence of the benefits of weekly payments
in an Australian context, it would appear that weekly payments are
most helpful to disadvantaged income support recipients where they
are combined with other forms of assistance. The Government has
indicated that such assistance, which could include financial
counselling, alcohol, drug or gambling rehabilitation services,
will be offered to weekly payment recipients.[28]
The amendment to subsection 22(1) under Item 1
provides that while the Secretary must give notice of a
determination of a FTB claim to a claimant, the Secretary is not
obliged to let the claimant know whether or not they fall within a
class of persons for whom weekly payments has been approved by the
Minister.
The grant of claim notification requirements do not extend to
those who have been approved for weekly payments.
Item 2 repeals and substitutes the existing
definition of instalment period of 14 days to enable weekly
payments to be made to classes of persons specified by the Minister
to be vulnerable and likely to benefit from a weekly rather than
fortnightly payment cycle.
Item 3 inserts new subsections (3A), (3B), (3C)
and (3D) at the end of section 23. The effect of this insertion is
to: enable the Minister to specify by disallowable instrument a
class of persons to whom the Secretary may determine that weekly
payments may be made; enable the Secretary to determine whether any
individual in a class of persons specified by the Minister should
be offered weekly payments; and provide that the Secretary must
return a claimant to fortnightly payments where they are determined
to no longer be vulnerable, but may also return claimants to
fortnightly payments for other reasons, at their discretion. This
arrangement leaves the decision as to when to move claimants
between weekly and fortnightly payments to the Secretary. That
said, the initial decision about whether or not claimants wish to
be moved to weekly payments will be made by relevant claimants
themselves. In this sense, weekly payments are to be voluntary.
The intent of subsection (3C) would appear to be that weekly
payments be reserved only for those income support recipients who
are deemed to be in need of a reduced payment cycle. Weekly
payments are thus envisaged as a means to an end, that is, ensuring
that vulnerable people’s circumstances are stabilised
sufficient to enable them to return to mainstream (fortnightly)
payment arrangements.
Section 25 of the A New Tax System (Family
Assistance)(Administration) Act 1999 deals with general
notification requirements of people in receipt of FTB. It requires
that they notify of changes of circumstances that relate to their
qualification for payment.
Item 4 inserts a new subsection (3) at the end
of section 25 to provide that claimants on weekly payments of FTB
must notify the Secretary if their circumstances change such that
they no longer fall within a class of persons specified by the
Minister as being able to receive weekly payments. Nevertheless,
because the rate of payment remains the same whether claimants are
on weekly or fortnightly payments, it is not an offence for
claimants to fail to notify the Secretary of such a change of
circumstances.
Item 5 repeals and substitutes section 47, with
new subsection (23) providing that the Secretary must make baby
bonus payments in 26 weekly instalments rather than 13 fortnightly
instalments to claimants determined to have weekly payment periods,
where the determination is made before the end of the first
fortnightly baby bonus instalment period.
Subsections (8), (9), (10) and (11) mirror those amendments at
Item 3, above.
New subsection (3) extends the Secretary’s current ability
to make advance or urgent payments under fortnightly instalments to
weekly instalments, and to determine that income support recipients
can be moved from one payment period to the other.
New sections 47AA and 47AB provide for the Secretary to pay
maternity immunisation allowance in a way and at a time that he or
she considers appropriate, so long as this is to the credit of a
bank account nominated by the claimant.
Amendments to the A New Tax System (Family
Assistance) Act 1999
Item 8 provides for the Secretary to direct
that people currently in receipt of or entitled to baby bonus can
receive this on a weekly rather than fortnightly basis if the
Secretary determines that they may be paid weekly payments.
Amendments to the Social
Security (Administration) Act 1999
Item 9 inserts new subsections that provide for
weekly payments to be made to vulnerable persons as determined by
the Minister and the Secretary as two part payments in respect of a
14 day instalment period. (Subsection (3B) allows for the Minister
to specify by legislative instrument a class of persons to whom
weekly payments may be paid.) Thus, under subsection 43(3C), the
Secretary has the discretion to pay the first part payment at any
time from day 8 of the 14 day instalment period and the second part
payment at any time from day 15 (under Section 43(3D)).
Subsection 43(3E) ensures that a person who is paid two weekly
payments in respect of a 14 day instalment period is taken to have
received one instalment of their payment. This enables weekly
payments to be made to approved claimants while preserving and not
undermining existing fortnightly payment arrangements.
The legislative changes contained in this Bill will enable the
payment of welfare payments to disadvantaged people on a weekly
rather than fortnightly basis. Such a measure, when combined with
other forms of social support, is likely to assist these people to
better manage their finances and to help in stabilising their
circumstances. The measure is thus beneficial both to disadvantaged
people themselves and to society more generally.
It is clear that the Government does not intend for weekly
payments to become a mainstream, alternative payment option.
Rather, it envisages that weekly payments will be reserved for
those welfare recipients who are the most highly disadvantaged.
Matthew Thomas
24 February 2010
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