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Bereavement Allowance, Bereavement Payments and the Welfare Reform Bill

During the Senate debate on the Social Services Legislation Amendment (Welfare Reform) Bill 2017 (the Welfare Reform Bill), significant amendments were made to the way a proposed new lump-sum amount for newly bereaved welfare recipients would be calculated. The Senate eventually agreed to amendments proposed by Pauline Hanson’s One Nation Party and supported by the Government. Under these amendments, the rate of payment for a recipient of the proposed Jobseeker Payment whose partner has recently died will be broadly equivalent to the rate of the payment for newly-bereaved people that the Government is proposing to abolish: Bereavement Allowance.

Welfare Reform Bill’s changes to payments for the bereaved

The Welfare Reform Bill includes a proposal to merge Newstart Allowance, Sickness Allowance and Bereavement Allowance into a single new payment: the Jobseeker Payment. The Bill also proposes to cease a number of payments that have been closed to new recipients for a long time, including Wife Pension and Widow B Pension.

Bereavement Allowance is a payment for people not in receipt of another income support payment whose partner has recently died and who meet other eligibility criteria including a means test. It is paid at the same rate as the Age Pension (currently $907.60 per fortnight for a single person including relevant supplements) and can be paid for up to 14 weeks. For those who are pregnant when their partner dies, they may be able to receive Bereavement Allowance for the length of their pregnancy.

The Welfare Reform Bill proposes abolishing the Bereavement Allowance and instead providing a lump-sum payment to newly bereaved recipients or claimants of the Jobseeker Payment or Youth Allowance (for those aged under 22 years). Under the Bill as first introduced, the lump-sum payment rate would be equivalent to two fortnights worth of Jobseeker Payment (or Youth Allowance). This would be paid on top of their normal fortnightly payment meaning they would receive a payment worth three times the normal fortnightly rate in one fortnight to assist them during their bereavement period.

Newly bereaved recipients would also be exempted from participation requirements for a period of 14 weeks (or longer if pregnant). Bereaved claimants for the Jobseeker Payment or Youth Allowance would be exempted from a range of waiting periods that normally apply to new applicants of working-age income support payments.

The Jobseeker Payment will be paid at the same rate as Newstart Allowance. Using current rates of Newstart Allowance, the bereavement lump-sum, as first proposed, would be $1,091.60. Combined with the normal fortnightly payment, including Energy Supplement, the rate for a newly bereaved person in one fortnight would be $1,646.20 and over 14 weeks would be $4,973.80. This 14 week amount is $1,379.40 less than a Bereavement Allowance recipient would receive in total over 14 weeks.

One Nation amendments

During the Committee of the Whole debate in the Senate on the Welfare Reform Bill, the Government proposed amendments that would have increased the rate of the bereavement lump-sum for pregnant recipients to an amount similar to what their entitlement would be under the current rates of Bereavement Allowance.

Pauline Hanson’s One Nation Party proposed amendments that would increase the rate of the bereavement lump-sum for all recipients, not just those who were pregnant when their partner died. The Parliamentary Library estimates that based on current payment rates, the amendments proposed by One Nation would see essentially the same rates of payment for newly-bereaved recipients of Jobseeker Payment and Bereavement Allowance over a 14-week period, and for pregnant recipients over the extended period for which they are eligible to receive Bereavement Allowance.

The Australian Labor Party and the Australian Greens proposed amendments which would have removed the changes to Bereavement Allowance from the Bill.

The Government supported the One Nation amendments, and the Senate agreed to the Bill including these amendments on 21 March 2018.

Some will be worse off

Senator Michaelia Cash told the Senate during debate on the Bill that approximately 30 people per year who would have been eligible for the Bereavement Allowance will not be eligible for the bereavement lump-sum together with Jobseeker Payment or Youth Allowance. This is because these individuals will have income or assets which make them ineligible for the Jobseeker Payment or Youth Allowance but which would not have precluded them from the Bereavement Allowance (which uses the pension income and assets test).

A separate issue relates to the rates of payment over time. The proposed Jobseeker Payment and Youth Allowance have their rates adjusted according to movements in the Consumer Price Index (CPI) while the Bereavement Allowance, as it is based on the pension rate, is adjusted differently—using the CPI and other factors such as average wages. This would mean that, if pension rates are pushed higher as a result of these other drivers, future rates of the bereavement lump-sum amount will be lower than what the equivalent rate would be under Bereavement Allowance. Further, One Nation’s amendments use set amounts for calculating rates for pregnant women—these set amounts will not be adjusted and will therefore decline in real value over time.

Bereavement Payments

The Welfare Reform Bill only proposes to cease Bereavement Allowance; not the separate support provided to bereaved welfare recipients known as Bereavement Payments. Bereavement Payments are made as a temporary continuation of deceased person’s income support payment. They may be paid following the death of an income support recipient and sometimes following the death of a dependant (for example for Carer Payment recipients caring for a child).  The amount of payment, and the circumstances in which it is paid, depend on the person’s circumstances.

Bereavement Allowance is different in that it is for those not in receipt of another income support payment. However, people who receive another income support payment may transfer to Bereavement Allowance as it may be better for them financially or because they will be exempt from participation requirements.

The Welfare Reform Bill does not propose amendments to Bereavement Payment provisions. The Bill applies the current Bereavement Payment provisions applicable to Newstart Allowance to Jobseeker Payment and maintains the Youth Allowance Bereavement Payment provisions. If a person is entitled to a Bereavement Payment for Jobseeker Payment (i.e. they and their partner are receiving Jobseeker Payment and their partner dies), they will not be eligible for the lump sum amounts proposed by the Bill unless they elect to not receive Bereavement Payment.