One-off energy assistance payment

Budget Review 2019–20 Index

Michael Klapdor

The 2019–20 Budget includes a one-off Energy Assistance Payment for some social security income support recipients, and veterans pension and compensation recipients (p. 159). Eligible single recipients will receive $75 and eligible couples will receive $125 ($62.50 each). The payment will be exempt from income tax and not count as income for the purposes of means testing. It is intended to be paid before the end of the 2018–19 financial year, with legislation introduced and passed by both Houses of Parliament on 3 April 2019.

The original announcement of the measure, and the measure as presented in the budget papers, limited the payment to certain social security pensioners and recipients of some veterans payments and compensation recipients (p. 159). The exclusion of lower-rate allowance payments, such as Newstart Allowance and Youth Allowance, attracted significant criticism, particularly in light of the personal income tax cuts announced in the Budget. The Australian Council of Social Service (ACOSS) stated that the Government was ‘ignoring the people who are doing it the hardest’.

However, when the Government introduced the Bill for the measure the morning after the Budget was released, it had expanded the range of payments eligible for the Energy Assistance Payment to include all social security allowances and some previously excluded pensions, such as Wife Pension and Widow B Pension.

Treasurer Josh Frydenberg and Minister for Families and Social Services Paul Fletcher stated that the payment would ‘help with their next energy bill and cost of living expenses’. The payment will be paid into eligible recipients’ bank accounts and does not have to be put towards energy costs. Around five million people are expected to be eligible for an Energy Assistance Payment. The measure announced in the Budget was expected to cost $284.4 million over two years (p. 159) while the expanded measure is expected to cost $365.0 million over the forward estimates.

Eligible recipients

Under the revised measure, those in receipt of the following social security and farm household support payments will be eligible for the Energy Assistance Payment if they were residing in Australia on 2 April 2019:

  • Age Pension
  • Disability Support Pension
  • Carer Payment
  • Parenting Payment
  • Austudy
  • ABSTUDY Living Allowance
  • Double Orphan Pension
  • Newstart Allowance
  • Partner Allowance
  • Sickness Allowance
  • Special Benefit
  • Widow Allowance
  • Widow Pension B
  • Wife Pension
  • Youth Allowance
  • Farm Household Allowance

Those in receipt of the following veterans’ affairs payments will also be eligible: Service Pension, Income Support Supplement, Disability Pension, War Widow’s/er’s Pension or Orphan’s Pension, Veteran Payment, permanent impairment compensation under the Military Rehabilitation and Compensation Act 2004 (the MRCA), Special Rate Disability Pension under the MRCA, compensation as a wholly dependent partner under the MRCA, and permanent impairment compensation under the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988.

Those in receipt of an eligible veterans’ affairs payment other than the Service Pension or Income Support Supplement will receive an Energy Assistance Payment of $75, regardless of whether or not they are a member of a couple.

The Bill provides that only one Energy Assistance Payment can made to an individual, even if they are in receipt of multiple qualifying payments: for example, the veterans’ affairs Service Pension and Disability Pension.

Ineligible payment recipients

Under the expanded eligibility criteria presented in the Bill and in government statements relating to the payment, there appears to be one group that may miss out on the Energy Assistance Payment. Young people in receipt of an Education Allowance under the Veterans’ Children Education Scheme or the Military Rehabilitation and Compensation Education and Training Scheme have not been referred to as being eligible for the Energy Assistance Payment. These schemes, which offer a payment similar to Youth Allowance, are provided for under legislative instruments and it is possible provision may be made for an Energy Assistance Payment to these young people under a separate determination.

2017 Energy Assistance Payment

A similar one-off Energy Assistance Payment was made to certain pensioners and veterans’ affairs payment recipients in 2017. The 2017 payment was implemented as part of a deal between the Government and the Nick Xenophon Team to secure passage of a Bill providing for company tax cuts. The 2017 payment was paid at the same rates as the 2019 payment. It was payable to almost the same categories of recipients as the 2019 Energy Assistance Payment, as first announced, with the notable exception of the Carer Payment. Allowance payment recipients were excluded from the 2017 payment.

Rationale for changing eligibility for the allowance

According to the Government at the time, the 2017 payment was limited to ‘welfare recipients who have a limited ability to earn additional income’. A similar rationale for excluding allowances from the 2019 Energy Assistance Payment was reportedly provided by a spokesperson for the Minister for Families and Social Services who stated ‘the one off payment is limited to those who don’t have the opportunity to work or earn additional income’. There are some problems with this rationale: many pensioners do work and earn additional income while many allowance recipients are unable to work due to illness, a temporary incapacity, or due to caring responsibilities. However, it indicates that the Government intended to focus the one-off payment on those in receipt of income support payments that do not carry work participation requirements.

No clear rationale has been provided for the decision to alter the policy the day after the Budget. In response to a Question without Notice on the changed position, Prime Minister Scott Morrison stated:

... the performance of the budget over the last 12 months has meant that we are $10 billion better off this time this year than we were at the time when we handed down the last budget. We believe that when we’re in that position where we have outperformed on our budget and where we’ve been able to deliver a better financial outcome we should take the opportunity to ensure that those who need it most are given the opportunity to ease their cost-of-living pressures.

Attempts to close the Energy Supplement

The payment of another new small supplementary payment to assist with energy costs is notable in the context of the Government’s previous policy—announced in the 2016–17 Budget and then reversed in August 2018—to close the Energy Supplement to all new income support recipients (including pensioners and allowances) from September 2016. The Energy Supplement is an ongoing payment introduced as part of the carbon price compensation package in 2013. It is paid with eligible payments and the rates vary between payments—it is worth around $366.60 per annum for single pensioners and $228.80 per annum for single Newstart Allowance recipients with no children. The Turnbull Government tried three times to legislate for the payment to be closed to new income support recipients. They did succeed in passing legislation in September 2016 to close the payment to new recipients of Family Tax Benefit Part A and Family Tax Benefit Part B; and to new recipients of the Commonwealth Seniors Health Card.

No increase in allowance payment rates

While the decision to extend access to the Energy Assistance Payment to allowance payment recipients has been broadly welcomed, community groups, supported by key business lobby groups, continue to campaign for an increase in the payment rates of Newstart Allowance and Youth Allowance. ACOSS has been campaigning for a $75-per-week increase in the single rate of Newstart Allowance.

 

All online articles accessed April 2019

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