Income Support and Family Assistance
Peter Yeend
Social Policy Section
Seniors Bonus and Carer Bonus payments
The Government announced in the 2007–08 Budget a one-off payment of $500
to recipients of Age Pension or Service Pension age also receiving the
Utilities Allowance[1],
and to recipients of the Seniors Concession Allowance[2] as at 8 May 2007. Individuals
receiving Mature Age Allowance, Widows Allowance or Partner Allowance
at 8 May 2007 will also receive the payment.[3]
Seniors Concession Allowance is provided to self-funded retirees not on
Age Pension or Service Pension and have a Commonwealth Seniors Health
Card.[4]
The Government also announced a one-off lump sum payment to carers, in
recognition of their contribution to caring for people with disabilities,
the frail and aged. Carer Payment recipients will receive $1000 and recipients
of Carer Allowance will receive $600 for each eligible person in their
care. Those in receipt of both payments on 8 May 2007 will receive both
lump sum payments.[5]
In addition, those in receipt of both the Carer Allowance and either
the Wife Pension or Department of Veterans’ Affairs Partner Service Pension
on 8 May 2007 will receive both bonus payments.
Previous one-off cash payments
The one-off cash payments presented in this 2007–08 Budget are
like other one-off cash payments the Government has made in the past.
These payments have been:
- July 2000: an aged persons savings bonus of up to $1000, and a self-funded
retirees supplementary bonus of up to $2000. These bonuses were paid
as a part of the compensation measures for the introduction of the Goods
and Services Tax (GST)[6]
- 2001–02 Budget: a one-off aged persons bonus of $300 to all persons
over the ‘age pension’ age and on an income support payment[7]
- 2004–05 Budget: a one-off lump sum payment of $600 to families for
each qualifying child for the Family Tax Benefit Part A (FTB-A) and
for each child aged up to 18 years to whom Youth Allowance was paid[8]
- 2004–05 Budget: a one-off carer bonus payment of $1000 to each person
in receipt of Carer Payment and $600 to each recipient of Carer Allowance[9]
- 2005-06 Budget: a one-off carer bonus payment of $1000 to each person
in receipt of Carer Payment and $600 to each recipient of Carer Allowance
for each person in their care[10] and
- 2006–07 Budget a one-off carer bonus payment of $1000 to each person
in receipt of Carer Payment and $600 to each recipient of Carer Allowance
for each person in their care.[11]
Alternative forms of assistance
One-off tax free payments that are also not included as income under
the income test applied under the Social Security Act 1991 (SSA) have
been used as a means of providing financial assistance in recent budgets.
In particular, payments to carers on Carer Payment and also
those on Carer Allowance have been a feature of the last three budgets.
Unlike the other payments made to carers which are ongoing, the benefit
of a one-off payment, while welcome, merely serves as a temporary top-up.
It can not be relied upon from year to year and once expended there is
no guarantee of a further benefit. Now that the Government has considered
this level of financial assistance to recipients of Carer Payment and
Carer Allowance to be desirable three years in a row, it is legitimate
to ask whether an increase in the ongoing rate of assistance might not
be a more useful way of providing this assistance. The Government’s
apparent preference for delivering this assistance in the form of one-off
payments would suggest that at its discretion it might well dispense with
this payment when the economic cycle turns and budgetary constraints are
tighter.
Child care
Dale Daniels
Social Policy Section
Introduction
Child care affordability and the structure of Commonwealth child care
fee assistance have been the subjects of much political debate since the
introduction of Child Care Benefit (CCB) in 2000. The debate has continued
with the introduction of the Child Care Tax Rebate (CCTR) in 2005.
Budget measures
The Government has announced changes to both the CCTR and the CCB:
- from 1 July 2007, CCTR will be paid as a direct payment (it is unclear
at this stage whether the payment will be renamed) soon after the financial
year in which child care costs were incurred. As part of the transition
to this arrangement families will receive the rebate for 2005–06 and
2006–07 at the same time in the latter half of 2007. The change from
a tax offset to a direct payment means that families with insufficient
tax liability to access their full CCTR entitlement will now receive
their full rebate, and
- in July 2007 the rate of CCB will be increased by ten per cent on
top of the normal indexation rise (expected to be three per cent).[12]
Addressing timeliness issues
The Government’s response to concerns about child care affordability
was the introduction of the CCTR in 2005. It was structured as a tax rebate
in part to address a long-running debate about tax deductibility for child
care costs.
The CCTR allows families with children in approved care to claim 30 per
cent of out-of-pocket child care expenses (up to a maximum of $4000 per
child, indexed) as a tax offset against their income tax liability. The
‘out-of-pocket’ refers to the amount that families have to
pay themselves after their CCB entitlement is taken into account. Families
began to receive the 30 per cent rebate for their 2004–05 child
care expenses when they finalised their 2005–06 taxation returns,
that is, from July 2006 onwards.[13] This delayed
payment is caused by the need to reconcile CCB entitlement for the financial
year before an accurate assessment of out-of-pocket expenses can be made.
That happens too late for a claim to be possible in the tax return at
the end of the year in which the child care was used. So CCTR can only
be claimed at the end of the following financial year. That means that
the payment might be made up to two years after the out-of-pocket expense
was incurred.
The original decision to deliver assistance through
the tax system therefore imposed rigidities that have prevented timely
delivery of the benefit of the CCTR. For this reason the CCTR has
been criticised for delivering assistance much too long after child care
costs are incurred, therefore providing little immediate assistance to
working families coping with high child care costs. Delivering it now
as a payment and bringing it forward by twelve months is therefore a logical
improvement to the program as it goes some way to address the problem
of timeliness.
However, delivery of the CCTR on a fortnightly basis would have been
even better. It would have been more useful especially for those families
in tight financial circumstances. It might also have been more effective
as a mechanism for reducing workforce participation disincentives. However,
it is likely that this was not considered an option as the Government
is wary of the potential for a repeat of the overpayment debt problems
encountered with CCB and Family Tax Benefit in the first years of this
decade.
Targeting those most in need
Another criticism that has been made about CCTR is that it is not income
tested and that it provides greater benefits to higher income families.
This is on account of their higher ‘out-of-pocket’ expenses
because they have lower entitlements to CCB which is income tested. As
has been pointed out, however, it is misleading to look at CCTR in isolation.
Viewed with CCB, the whole package of assistance has directed most assistance
to lower income families.[14]
This situation will continue with the Budget’s changes. The change to
providing CCTR as a direct payment will allow low-income families to access
their full rebate. That change together with the increase in the rate
of CCB is in fact likely to improve the progressivity of child care assistance
by tipping the balance somewhat more in favour of lower and middle income
families.
Eligibility restrictions
The other persistent issue around the CCTR concerns the exclusion from
eligibility of non-approved care such as in-home care provided by nannies
and relatives. This feature of the CCTR was given considerable attention
in the report on balancing family and work by the House of Representatives
Standing Committee on Family and Human Services.[15] The Committee
recommended that these types of care become approved care and the users
therefore become eligible for CCB and CCTR. The Government has not acted
on this concern in this budget.
Carer Adjustment Payment (CAP)
Dale Daniels
Social Policy Section
The Government has introduced a Carer
Adjustment Payment (CAP). The CAP will be available where a family has
a child aged up to 6 years who is diagnosed with a major disability due
to accidental injury or severe illness. CAP may be made available where:
- the child has significant care requirements, e.g. requires full-time
care from the carer for a minimum of 2–3 months following the incident
- the child's carer qualifies for Carer Allowance in respect of the
child
- the carer is not eligible for Carer Payment
- the family is not already receiving an income support payment and
- the carer is able to demonstrate a very strong need for financial
support during the adjustment period immediately after the catastrophic
event.
The Government will review the eligibility criteria for Carer Payment
(child). CAP is an interim payment available while the review is being
conducted and it will terminate on 30 June 2008.[16]
This trial payment represents a significant departure from present policy
on assistance to carers. It appears to have been prompted by the case
of a young eye cancer sufferer from Melbourne. In March the Prime Minister
announced on Melbourne radio that the child’s family would receive an
ex-gratia payment of $10 000 to help with the costs of adjusting
to their son’s disability.[17]
The expansion of assistance to families coping with children with severe
disabilities or illnesses will be most welcome to many families. However,
establishing a form of assistance that provides improved assistance to
all families having to adjust to the needs of a child with a severe disability
will require some very careful policy development. The potential for arbitrarily
choosing some for assistance and excluding others with equally pressing
care needs is very real.
The interim CAP for example is restricted to those diagnosed with a major
disability due to accidental injury or severe illness. The policy has
already excluded families coping with a disability (often genetically
based) that was not apparent at birth, such as autism. This is commonly
diagnosed at an age of three years or more. The question arises—are these
families in any less need of extra assistance?
The availability of Carer Payment for carers of children with disabilities
was expanded in July last year when eligibility was made available to
carers of children with severe intellectual, psychiatric or behavioural
disabilities who required constant care or supervision. If the eventual
payment that succeeds the interim payment requires eligibility under the
Carer Payment income test, then only very low income families dealing
with a newly injured or diagnosed child will benefit.
Endnote
[1]. For further information
about the Utilities Allowance see http://www.centrelink.gov.au/internet/internet.nsf/payments/utilities_allowance.htm,
accessed on 17 May 2007.
[2]. For further information
about the Seniors Concession Allowance see http://www.centrelink.gov.au/internet/internet.nsf/payments/seniors_concession.htm,
accessed on 17 May 2007.
[3]. Australia. ‘Budget measures
2007–08’, Budget Paper No. 2, p. 193, http://www.aph.gov.au/budget/2007-08/bp2/html/expense-16.htm,
accessed on 17 May 2007.
[4]. For further information
about the Commonwealth Seniors Health Card see http://www.centrelink.gov.au/internet/internet.nsf/payments/conc_cards_cshc.htm,
accessed on 17 May 2007.
[5]. Australia, op. cit., p. 180.
[6]. Lesley Lang, ‘A New Tax
System (Bonuses for Older Australians) Bill 1998’, Bills Digest,
no. 93, Department of the Parliamentary Library, Canberra, 1998–99,
http://www.aph.gov.au/library/pubs/bd/1998-99/99bd093.htm,
accessed on 17 May 2007.
[7]. Australia. ‘Portfolio
budget statements 2001–02: Family and Community Services Portfolio’, Budget
Related Paper No. 1.8, p. 176, http://www.facsia.gov.au/internet/facsinternet.nsf/aboutfacs/budget/budget2001-budget2001.htm#pbs,
accessed on 17 May 2007.
[8]. Australia. ‘Portfolio
budget statements 2004–05: Family and Community Services Portfolio’, Budget
Related Paper No. 1.8, p. 51. http://www.facs.gov.au/internet/facsinternet.nsf/aboutfacs/budget/budget2004-pbs.htm#budget,
accessed on 17 May 2007.
[9]. ibid., p. 57.
[10]. Australia. ‘Budget Measures
2005–06’, Budget Paper No. 2, p. 160, http://www.budget.gov.au/2005-06/bp2/html/index.htm,
accessed on 17 May 2007.
[11]. Australia. ‘Budget Measures
2006–07’, Budget Paper No. 2, p. 209, http://www.budget.gov.au/2006-07/bp2/html/index.htm,
accessed on 17 May 2007.
[12] Australia. ‘Budget Measures
2006–07’, Budget Paper No. 2, pp. 181–183, http://www.budget.gov.au/2006-07/bp2/html/index.htm,
accessed on 17 May 2007.
[13] For a fuller description
see Greg McIntosh, ‘The New Child Care Tax Rebate’ Research Note,
no. 3, Parliamentary Library, 2005–06, http://www.aph.gov.au/Library/pubs/rn/2005-06/06rn03.pdf,
accessed on 17 May 2007.
[14]. See Greg McIntosh, ‘Commonwealth
Child Care Support – What Do Families Get’, Research Note, no.
11, Parliamentary Library, Canberra, 2006–07, http://www.aph.gov.au/Library/pubs/rn/2006-07/07rn11.htm,
accessed on 17 May 2007.
[15] House of Representatives
Standing Committee on Family and Human Services, Balancing Work and
Family: Report on the Inquiry into Balancing Work and Family, The
Committee, Canberra, 2006, recommendations 11 to 13, http://www.aph.gov.au/house/committee/fhs/workandfamily/report/reportfinal.pdf,
accessed on 17 May 2007.
[16] M. Brough (Minister
for Families, Community Services and Indigenous Affairs), Financial
support for carers of young children in exceptional circumstances,
media release, 8 May 2007, http://www.facs.gov.au/Internet/Minister3.nsf/content/budget07_financial_support_carers.htm,
accessed on 17 May 2007.
[17] J. Metlikovec, ‘Mum
wins $10,000 for battling carers’, Herald Sun, 24 March 2007, http://parlinfoweb.aph.gov.au/piweb/TranslateWIPILink.aspx?Folder=pressclp&Criteria=CITATION_ID:Z6LM6%3B,
accessed on 17 May 2007; and J. Howard (Prime Minister), Interview
with Neil Mitchell, Radio 3AW, Melbourne, interview transcript,
23 March 2007, http://www.pm.gov.au/media/Interview/2007/Interview24214.cfm,
accessed on 17 May 2007.
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