Budget Review 2020–21 Index
Social security and welfare expenditure in 2020–21 is
estimated to be $227.5 billion, representing 33.9 per cent of the Australian
Government’s total expenditure (p. 6-9). Government measures in response to
COVID-19 and a massive increase in the number of people receiving income
support payments mean that expenditure on social security and welfare in
2020–21 is 21.8 per cent ($40.7 billion) higher than forecast in the 2019–20
Budget (p. 5-7).
This administrative category of expenditure consists of a
broad range of services and payments to individuals and families including:
income support such as pensions and JobSeeker Payment; family payments and
child care; the National Disability Insurance Scheme (NDIS); and payments and
services for veterans. Expenditure on the JobKeeper Payment is not included in
this category but under the ‘Other economic affairs’ category. Figure 1
provides a breakdown of expenses in the social security and welfare category
over the forward estimates.
This article provides further information on social
security, family payments and disability expenditure. Separate articles in this
Budget Review examine aged care and veterans’ affairs.
Figure 1: estimated Australian
Government expenses on social security and welfare
Source: Australian Government,
Budget strategy and outlook: budget paper no. 1:
2020-21, pp. 6-10, 6-22-6-26.
The key drivers of social security payment expenditure
increases in 2020–21 are:
- government measures to limit the spread of COVID-19 which caused
unemployment and underemployment and led to an increase in the number of income
support recipients and
- the Australian Government’s COVID-19 Economic Response
measures—including the Coronavirus Supplement and Economic Support Payments.
Both these drivers have seen a marked increase in spending
on social security payments, particularly JobSeeker Payment and Youth Allowance
(Other). Expenditure on these payments in 2020–21 ($34.1 billion) is
estimated to be more than three times the amount forecast in the 2019–20 Budget
Increase in income support
Table 1 sets out the number of recipients of the main income
support payments as at December 2019 and as at 11 September 2020 (the most
Table 1: recipients of main income
support payments, December 2019 and September 2020
|Disability Support Pension
|Newstart Allowance (combineda)—JobSeeker
|Parenting Payment Partnered
|Parenting Payment Single
|Youth Allowance (Other)
|Youth Allowance (Student and
(a) Newstart Allowance, Sickness Allowance and
Bereavement Allowance were merged to form JobSeeker Payment from 20 March 2020.
The December data is the combined total of the three merged payments.
Sources: Department of Social
Services (DSS), ‘DSS Demographics December 2019’, data.gov.au website, last updated 21 April 2020;
DSS, ‘JobSeeker Payment and Youth Allowance recipients
monthly profile: August 2020’,
data.gov.au website, last updated 18 September 2020; DSS, ‘Income support payment data by state and statistical
area level 2 and by earnings and partner earnings as at 11 September 2020’, provided to Senate Select Committee on COVID-19 on
18 September 2020 (Additional information item no. 26).
COVID–19 response measures
In March 2020, the Government announced two packages of
measures to support those needing assistance from the social security system which
$750 lump sum Economic Support payments to some social security and
veterans’ payment recipients
Coronavirus Supplement of $550 per fortnight to recipients of JobSeeker
Payment, Parenting Payment, Youth Allowance, Farm Household Allowance, Special
Benefit, Partner Allowance, Widow Allowance and student payments and
improved access to income support through changed eligibility
criteria for JobSeeker Payment and Youth Allowance; and the waiver of the
assets tests and some waiting periods for certain payments.
On 25 September 2020, the
Coronavirus Supplement was reduced to $250 per fortnight and the assets
test was reinstated. The Supplement and other eligibility changes are set to
end on 31 December 2020.
Funding for these measures was included in the 2020–21 Economic
and Fiscal Update and totalled $28.2 billion over the forward
estimates (pp. 160–163).
New social security measures
Two $250 Economic Support Payments
In the 2020–21 Budget the Government announced two
further Economic Support payments to be paid at a rate of $250 to those
receiving an eligible payment or holding an eligible concession card on 27 November
2020 and/or 26 February 2021. Eligible payments include pensions and veterans’
payments. Carers Allowance and Family Tax Benefit recipients can also receive
the payments if they are not receiving an income support payment at the same
measure is estimated to cost $2.6 billion with around 5.1 million
recipients and will require legislation.
Ahead of the Budget, there were calls
from the Labor Opposition to address the lack of a pension rate increase in
September 2020. Most social security payments are usually increased on 20 March
and 20 September of each year but a decline in some of the indices used to
adjust payment rates meant
that rates remained static in September for the first time in more than 20
Cashless Debit Card to receive
Government announced that the current Cashless Debit Card (CDC) trials will
receive ongoing funding from 2021. The budget papers did not publish the cost
of the measure as the Government is still negotiating with potential providers.
The measure will
Recipients of some working-age social security payments in
CDC sites have 80 per cent of their payment placed into an account that can
only be accessed through the CDC—cash cannot be withdrawn from this account and
the CDC can only be used at approved stores and online merchants. The
Department of Social Services states the intent of the CDC is to test ‘whether
reducing the amount of cash available in a community will reduce the overall
harm caused by welfare fueled alcohol, gambling and drug misuse’.
The CDC is currently being trialled in the Ceduna region in
South Australia, the East Kimberley and Goldfields regions in Western
Australia, and the Bundaberg and Hervey Bay region in Queensland. A
Bill before the Senate seeks to extend the trials and move those currently subject
to income management in the Northern Territory and Cape York to the CDC. Income
management also restricts how a portion of a person’s social security payment
can be spent but uses different technology and policy settings.
As at 4 September 2020 there were 12,194 CDC
participants and 25,456 income
management participants in the Northern Territory and Cape York. On 25
March 2020, the
Minister for Families and Social Services announced a temporary pause on
new CDC participants. The large increase in income support payment recipients
since March 2020 will mean that there are likely to be many more CDC participants
once this temporary pause is lifted (no date for ending the pause has been
The changes mean the CDC will no longer be a trial measure
but an ongoing program, despite a
second evaluation of the trials in Ceduna, East Kimberley and Goldfields regions
still being in progress and only baseline data collection having been
undertaken for the trial in Bundaberg and Hervey Bay. The first evaluation of
the CDC trials in Ceduna and East Kimberly was criticised by stakeholders
and the Australian
National Audit Office (ANAO) found that the evaluation did not make use of
all relevant data. The ANAO found that the Department of Social Services’
approach to monitoring and evaluation meant ‘it is difficult to conclude
whether there had been a reduction in social harm and whether the card was a
lower cost welfare quarantining approach’.
The budget measure also includes funding for a trial of
‘emerging payment acceptance technologies’. This may refer to a
trial of product-level blocking (the card blocks specific products from
being purchased rather than specific merchants) which commenced in December
Improved access to Youth Allowance
Budget included two measures to make it easier for young people to be
considered ‘independent’ for Youth Allowance and ABSTUDY. Those considered
independent are not subject to a parental means test. Currently, young people
under 22 can establish
independence by working at least 30 hours a week for 18 months over a two-year
period. Regional students can meet the criteria by working 15 hours a week for
at least two years or earning 75 per cent of the National Training Wage
Schedule for a 14 month period.
Under the first budget measure, those applying for Youth
Allowance and ABSTUDY from 1 January 2021 will have the period between 25
March and 24 September 2020 automatically added to any consideration of
independence under the work criteria, regardless of their actual work or
earnings during this period. The measure is expected to cost $25.0 million and
will require legislation.
The second measure will allow young people who earn $15,000
through employment in the agricultural sector in the period 30 November 2020 to
31 December 2021 to be considered independent. Only those whose combined
parental income is below $160,000 (plus $10,000 for each additional child) will
be eligible. The measure is intended to encourage young people to work in the
2020–21 harvest season prior to undertaking further study. The measure is
expected to cost $16.3 million and will require legislation.
No commitment to JobSeeker Payment
support for a permanent increase in the JobSeeker Payment rate from
community sector and business groups, the Budget did not include any measure to
increase the rate or continue the Coronavirus Supplement beyond December 2020. Treasurer
Josh Frydenberg stated ‘we will make a decision about that level of payment
closer to the end of the year when we have a better sense of the labour market
dynamics’. It is unclear what new information on the labour market will become
available to the Government in the next three months which will help determine
the adequacy of the payment rate. Also, the calls for an increase in the JobSeeker
Payment rate came well before the current recession and are not directly related
to specific labour market conditions or the large increase in the number of
No measures for temporary visa
Most temporary visa holders are ineligible
for social security payments. In March 2020, when the initial COVID-19
response measures were being introduced, the
Government indicated it would extend eligibility for income support to some
temporary visa categories ‘in the near future’. However, this is yet to occur
and community groups have continued to raise concerns about the
wellbeing of temporary visa holders in Australia whose incomes have been
affected by COVID-19. No new assistance measures were announced in the Budget; however,
budget papers noted that any amounts of the Paid Pandemic Leave Disaster
Payment paid to temporary visa holders would be refunded to the Commonwealth by
state governments (p. 107).
As part of its Second
Women’s Economic Security Package, the Government announced changes to the
Paid Parental Leave work test in response to COVID-19. Rather than requiring ten
months of work in the 13 months preceding the birth or adoption of a child,
eligible parents will qualify if they have ten months of work in the preceding
20 months. The measure will apply to those with births or adoptions between
22 March 2020 and 31 March 2021. The measure will cost an
estimated $90.3 million and requires legislation.
and the Australian
Greens previously proposed changes to the work test to assist those whose
work was interrupted by COVID-19—these
were rejected by the Government at the time.
on the NDIS, which includes Commonwealth, state and territory
contributions, is expected to increase from $18.7 billion in 2019–20 to $23.4
billion in 2020–21 due to a large number of people entering the scheme under
transition arrangements with the states and territories (p. 6-23). In real
terms, expenditure will decrease by 2.6 per cent from 2020–21 to 2023–24. The
budget papers state that this is due to the payment arrangements previously
agreed to with state and territory governments. State and territory
contributions will increase from 38.7 per cent of total National
Disability Insurance Agency (NDIA) expenses in 2020–21 to 44.3 per cent in
2023–24 (p. 168).
$798.8 million in additional funding for the NDIA and the
NDIS Quality and Safeguards Commission was announced in the Budget but was not
linked to any specific policy changes or new initiatives. Minister
for the NDIS and Government Services Stuart Robert stated that $92.9
million of this funding would be allocated to the NDIS Quality and Safeguards
Significant changes to the NDIS were
announced in August 2020, including the introduction of independent
assessments of participant support needs, and the NDIS
Participant Service Guarantee which sets out timeframes for the NDIA to develop
plans, make decisions and deliver services.
All online articles accessed October 2020
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