Bills Digest No. 212  1998-99Social Security (Family Allowance and Related Matters) Legislation Amendment Bill 1999


Numerical Index | Alphabetical Index

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
Main Provisions
Concluding Comments
Endnotes
Contact Officer and Copyright Details

Passage History

Social Security (Family Allowance and Related Matters) Legislation Amendment Bill 1999

Date Introduced: 9 June 1999

House: House of Representatives

Portfolio: Family and Community Services

Commencement: 1 October 1999

Purpose

To amend the Social Security Act 1991 to provide a limited extension of qualification to Family Allowance (FA) and to certain groups of young jobseekers and young full-time students, not otherwise qualified for Youth Allowance (YA).

Background

Introduction

There have been concerns expressed that some young jobseekers and young full-time students have not been able to access the YA income support program, which was introduced from 1 July 1998(1). Generally, the concerns were that the tighter income testing regime and the broader coverage of the dependency requirements under YA, were restricting access to support, compared to the programs YA had replaced.

This Bill proposes to provide limited alternative assistance to some young jobseekers or young students, who cannot otherwise qualify for YA. The proposed assistance is a limited rate of FA, payable to the family of the young person. The rate of FA proposed to be paid is $50 per fortnight.

It is also proposed that where a young person otherwise qualifies for a rate of YA that is less than $50 per fortnight, the person can elect to have the FA paid to his/her parent(s), rather than the lower rate of YA.

Introduction of YA from 1 July 1998

YA was introduced from 1 July 1998, as a major rationalisation of the income support arrangements for young jobseekers and young full-time students. YA involved an amalgamation of five different payments carrying thirteen different payment regimes.

The government main income support and supplement programs that were replaced with the introduction of YA were:

  • AUSTUDY - payable to full-time students under 25 years of age
  • Newstart Allowance - payable to unemployed jobseekers aged 18 to 24 years
  • Sickness Allowance - payable to unemployed jobseekers temporarily unable to work due to an illness/injury, aged 18 to 24 years
  • Youth Training Allowance - payable to payable to unemployed jobseekers and those undertaking traineeships aged 16 to 17 years
  • More than minimum rate FA for secondary students aged 16 to 18 years

Who can get YA?

YA is payable to a young person where they meet one of the following criteria:

  • studying full-time and aged 16-24
  • aged 18-20 and looking for full-time work (ie. a jobseeker), combining part-time study and looking for work, doing other approved activities (including voluntary work), or are ill
  • studying full-time and were getting YA before having turned 25 and are still doing the same course
  • 15 years old and have reached school leaving age and are considered to be independent - ie. a homeless young person

YA is means tested for the young jobseeker/student

The rate of YA depends on whether the young person is single, has kids, lives at home or need to live away from home. The YA rate takes into consideration the personal income and assets of the young person claiming assistance and where the young person is dependent on their parent(s), the rate of YA also depends on parental income, assets, and possibly parental actual means.

For dependent jobseeker/students claiming YA, the parental actual means test looks at parents' income, assets and actual means to measure whether they can financially support the young person. This parental actual means test does not apply if the parents are entitled to some form of government income support, or if the young person qualifies as independent.

YA rates - 1999

YA maximum rates (1999)

Customer circumstances

Maximum rate (per fortnight)

Single, living at home

(Dependent or independent)

16-17 years

18 years or older

$146.40

$176.00

Single - away from home (dependent or independent) or married, no children

$267.40

Married with children

$293.60

Sole Parent

$350.20

Special rate for long-term unemployed 21 or over commencing full-time study

single, living at home single, living away from home or independent

$216.10

$324.70

Personal income test limits for YA

YA cut out points under personal the income test (1999)

Customer Circumstance

Full-time student

($230 per fortnight (pf) free area)

Other young people

($60 pf free area)

 

Disqualifying income limit

Disqualifying income limit

Single at home

16-17 years

$462.00

$292.00

Single at home

18 or over

$504.30

$334.30

Single away from home, or married no children

$634.90

$464.90

Married with children

$672.30

$502.30

Single with child

$753.10

$583.10

Long term unemployed 21 or over commencing full-time study

living at home

living away from home/independent

$561.60

$716.70

n/a

n/a

 

YA parental income test limits

Where the claimant for YA is dependent, the income of the parent(s) is examined to determine the payment rate. Income refers to adjusted taxable income being taxable income but not allowing negative gearing losses and adding in foreign income and employer provided fringe benefits.

YA parental income test limits (1999)

Weekly rate of YA

(At home)

Combined parental income

Per annum

Weekly rate of YA

(Away from home)

Aged 16 - 17

Aged 18 and over

 

 

$146.40

$176.00

$23,550

$267.40

$142.10

$171.70

$24,000

$263.10

$122.90

$152.50

$26,000

$243.90

$103.60

$133.20

$28,000

$224.60

$84.40

$114.00

$30,000

$205.40

$65.20

$94.80

$32,000

$186.20

$45.90

$75.50

$34,000

$166.90

$26.70

$56.30

$36,000

$147.70

$7.50

$37.10

$38,000

$128.50

 

$17.80

$40,000

$109.20

 

 

$42,000

$90.00

 

 

$44,000

$70.80

 

 

$46,000

$51.60

 

 

$48,000

$32.30

 

 

$50,000

$13.10

 

 

$52,000

 

YA parental means test

Separate to the parental income test, that applies to the personal income of the parent(s), there are some situations where the YA parental means test is applied. These situations are where the young person is dependent and his/her parent(s) are self-employed, have claimed a business loss, or had interests in a trust or company.

Income limits for the YA parental means test (1999

Children

Youth Allowance

No.

Ages

Circumstances

Annual income cut-off limit

(No Rent Assistance)

Annual income cut-off limit

(Full Rent Assistance)

1

16

At home

$38,776

n/a

1

16

Away

$51,360

$59,180

1

18

At home

$41,854

n/a

1

18

Away

$51,360

$59,180

2

1x18

1x19

Both at home

$42,476

$45,554

n/a

n/a

2

1x18

1x19

Both away

$55,060

$55,060

$62,880

$62,880

Estimates of the numbers of YA recipients before introduction have not been matched by the actual number of YA recipients

The estimated numbers of YA recipients made before the introduction of YA was 416,000 students and 144,000 jobseekers - a total of 560,000. The 560,000 was estimated to be made up of 416,000 students and 144,000 jobseekers.(2)

The estimates further anticipated that:

  • 153,750 - would receive more money (mainly due to the provision of rent assistance to full-time students for the first time)
  • 361,200 - will receive the same money
  • 32,250 will receive a reduced rate (due to the tighter income testing and broader dependency coverage)
  • 12,800 will receive no assistance (due to the tighter income testing and broader dependency coverage)(3)

Government projections on the potential number of YA recipients made before the program was introduced in July 1999

The most recent YA population data available were supplied at Senate Estimates on 9 February 1999, showing that as of 6 November 1998, there were 291,827 students and 84,848 jobseekers on YA, a total of 376,675. This is about 67% of the estimated YA population.(4)

Why is the actual YA population only 67% of the population estimated before implementation?

There are a number of reasons why the YA population is somewhat less than the estimates of the YA population made prior to the introduction of YA. These reasons are set out and discussed below.

Expansion of age of independence and parental means testing

Where a jobseeker or student does not meet the independent criteria, the level of their parent(s) income and means can affect the rate of YA payable. Under YA, for unemployed jobseekers the age of independence was raised from 18 to 21, exposing a greater number of jobseekers to the parental means testing arrangements. As with AUSTUDY, for dependent students, parental income and means test applies up to the age 24.

Changes to the measurement of income from the Income Tax Assessment Act (ITAA) to the Social Security Act (SSA)

The introduction of YA saw the use of the tighter income testing rules. For YA, income testing for both the young person and for the parent(s) use the rules as prescribed under the SSA. These SSA based rules for income measurement and allowable deductions are tighter than income assessments based on the ITAA, which was used under the AUSTUDY scheme. This testing applies to both the personal income test for dependent and independent jobseekers/students and also to the parental income test, for dependent jobseekers/students.

Expansion of the coverage of the use of the parental means test

Previously, the parental actual means test was only used for the AUSTUDY scheme. Now, under YA the parental means test applies to all dependent students aged up to 24 and dependent jobseekers aged up to age 19.

Withdrawal of income support for some unemployed 16-17 year olds

Prior to 1 July 1998, youth training allowance (YTA) was payable to 16-17 year old unemployed jobseekers.

However, under YA income support was withdrawn for some 16-17 year olds from 1 January 1999. From 1 January 1999, a 16-17 year old can only access YA if they meet one of the following criteria:

  • are in full-time education;
  • have their year 12 certificate;
  • have 18 months full-time work in the previous 24 months; or
  • meet the YTA independent criteria, which means that the young person is not, and cannot be, expected to obtain or seek support from parents/guardians, for reasons like domestic violence, parents unable to exercise care, etc.

As at the introduction of YA in July 1998, there were about 30,000 former Youth Training Allowance (YTA) recipients transferred across to YA. Of these, the number who will eventually qualify for YA in 1999 is unknown. Very few (ie. less than 2,000) will probably be able to meet either the year 12 certificate or the full-time work in the previous 24 months requirements. Of the 30,000, about half (15,000) were being paid the higher independent YTA rate, having met the independent criteria. This leaves about 12,000 to 15,000 who will really only be able to qualify by returning to full-time education. Of this group it is unknown how many can, are able, or are willing to return to full-time education to qualify for YA.

Origins of the expansion of access to FA as proposed in this Bill

The origins of this proposed expansion of FA to older aged young jobseekers and students arises from concerns about the actual impact of the YA program. These concerns centre on the issue that some young people would have been able to access assistance under the previous programs that were replaced by YA, but are now not able to gain assistance from YA. This then places an increased burden on the families of these young people to provide support.

Cost

The Explanatory Memorandum attached to the Bill provides and estimated cost of $42.5 million for the 1999-2000 year.

Main Provisions

Health Insurance Act 1973

Schedule 1 - Item 1 amends the Health Insurance Act 1973 (HIA). Expanding access to FA for young persons, as proposed in this Bill, changes the dependency status under the HIA for some, who may otherwise qualify for a Health Care Card (HCC) in their own right. Those families eligible to maximum rate FA, are also qualified for a HCC, but only for their dependent child/ren who attract payment of FA. Some other young persons may qualify for a HCC in their own right as a low-income earner. So that those young persons, who qualify for a HCC in their own right as a low-income earner, do not lose access to a HCC, the dependency requirements of the HIA, are proposed to be amended.

Social Security Act 1991

Schedule 1 - Item 8 expands the dependency provisions of the SSA, that refer to qualification for FA, to allow payment of FA in respect of a young person. The young person must be either a jobseeker aged 16 to 20 years, or, a young person who is a full-time student aged 16 to 24 years.

Item 8 excludes young persons within these definitions who are receiving an income support payment under the SSA.

Item 9 expands the definitions of a dependent child for FA purposes in the SSA to include the groups of jobseekers and full-time students referred to in Item 8.

Item 19 amends the FA rate provisions in the SSA to introduce a new rate of $50 per fortnight (pf), to be paid in respect of the young jobseekers and full-time students aged 18 or more but less than 25 years.

The new proposed FA rate of $50 pf is a unique rate.

The FA rates for 1999 are:

 

Maximum rate pf

Each child under age 13

$99.00

Each child 13 - 15

$128.80

Each student 16 - 18

$23.70

The proposed FA rate of $50 pf is more than the $23.70 pf currently payable to students aged 16 to 18, but less than the maximum YA rate other wise payable for YA - see YA rates - 1999 above. The maximum YA rates otherwise payable are $176.00 pf (18 and over at home) or $267.40 pf (dependent - away from home).

The delivery of assistance is also different in terms of YA being payable direct to the young person, whereas FA is payable to the parent.

The proposed FA assistance of $50 per fortnight is less than the maximum rates of YA otherwise payable. However, not all young persons, who previously qualified for income support but who now are unable to qualify for any YA, would have been able to qualify for a full rate of assistance. Many, if not most, would have received only a part-rate of assistance, due to personal income, and/or parental income and means.

Concluding Comments

There have been concerns expressed that some young jobseekers and young full-time students have not been able to access the youth allowance (YA) income support program, which was introduced from 1 July 1998. These young persons being those who would have been able to access income support assistance from the government, under the programs that the YA replaced when introduced.

This Bill proposes to provide limited alternative assistance to some young jobseekers or young students, who cannot otherwise qualify for YA. The proposed assistance is a limited rate of FA, payable to the family of the young person.

The proposed FA assistance of $50 pf is less than the maximum rates of YA otherwise payable. The delivery of assistance is also different in terms of YA being payable direct to the young person, whereas FA is payable to the parent.

Endnotes

  1. 'Youth Allowance Unfair On Families', Press Release - 4 March 1998, Senator Brian Harradine.

    Youth Allowance Impact Phone-In: 'Families Demoralised And Despairing', Press Release, 31 July 1998, Catholic Communications Centre.

    'Welfare Lobby Warns Of New Cash Hardships', West Australian, 11 July 1998, reporting on concerns raised by the West Australian Welfare Rights and Advocacy Service.

    'Youth Allowance Brings Hard Times', Canberra Times, 18 September 1998, reporting on comments made by the Woden and Civic Youth Centres and Pathways.

  2. Senate Community Affairs Legislation Committee, Consideration of Additional 1998-1999 Budget Estimates, Tuesday 9 February 1999, pg. 301.
  3. 'Youth Allowance To Benefit Many Young Australians', Ministerial Press Release - 30 June 1998, Minister for Social Security, Senator Jocelyn Newman.
  4. Ibid. pg 304.

Contact Officer and Copyright Details

Peter Yeend
30 June 1999
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

IRS staff are available to discuss the paper's contents with Senators and Members
and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 1999

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Published by the Department of the Parliamentary Library, 1999.

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