Budget Review 2021–22 Index
Michael Klapdor
This article examines changes in expenditure on social
security and major social security budget measures.
Total expenditure on payments
Budget
Strategy and Outlook: Budget Paper No. 1 2021–22 shows that estimated expenditure
on the main social security and veteran payments will decline by 11.1% from
2020–21 to 2021–22: from around $173.9 billion to $154.6 billion (pp. 174–178).
Total expenditure will remain stable over the forward estimates, increasing
slightly to around $158.4 billion in 2024–25. This total includes spending on
pensions, payments for job seekers, family assistance payments, Paid Parental
Leave, veterans’ payments, and other small social services programs, but
excludes spending on student payments (which are included under the education
category of expenses in the budget papers), the National Disability Insurance
Scheme and aged care services. The main reason for the decline in expenditure from
2020–21 to 2021–22 is the withdrawal of temporary measures in response to
COVID-19, including the Coronavirus Supplement for most working-age payments
and lump-sum Economic Support Payments for other payment recipients.
The Age Pension (and Veterans’ Service Pension) is the
largest component of social security expenditure, representing around a third
of estimated social security payment expenses in 2021–22. Family assistance is
the second largest component, followed by income support for job seekers.
However, expenditure on job seekers is expected to decline over the forward
estimates. Revised projections of the number of people receiving unemployment
benefits and their payment rates since the 2020–21 Mid-Year Economic and Fiscal
Outlook have seen a decrease in estimated expenditure on job seeker payments of
$5.4 billion over the four years to 2023–24 (Budget
Paper No. 1, p. 83).
Figure 1: estimated Australian
Government expenditure on social security and welfare ($ billion)
Notes:
excludes student payments, National Disability Insurance Scheme and aged care
expenses.
Source: Australian Government,
Budget strategy and outlook: budget paper no. 1:
2021-22, pp. 164, 174–178.
Decrease in unemployment benefit
recipient numbers
Australian, state and territory government measures to slow
the spread of COVID-19 in 2020 led to job losses and an economic downturn (Budget
Paper No. 1, p. 107). The number
of people receiving the two main unemployment benefits, JobSeeker Payment (formerly
Newstart Allowance) and Youth Allowance (Other) doubled from around 816,000 in
February 2020 to around 1,636,000 in May 2020. Part of this increase is due
to policy measures to temporarily expand eligibility for these payments but
other measures, particularly JobKeeper, reduced the number of people who may
have claimed benefits (pp. 5–9). Improving labour market conditions have
contributed to a decrease since August 2020, as has a
withdrawal of COVID-19 measures which expanded eligibility (pp. 7–10). However,
as at the end of April 2021 there were still around 360,000 more people in
receipt of these payments than in February 2020.
Figure 2 shows JobSeeker Payment and Youth Allowance (Other)
recipients compared to the Australian Bureau of Statistics’ measure of
unemployed persons. There has been a significant divergence in the two measures
indicating payment recipients have withdrawn from the labour force or are
working part-time and not being captured by unemployment
statistics. A 2020 Parliamentary
Budget Office paper found the two measures have historically been close but
policy changes can lead to a divergence (pp. 4, 29). It is possible that
expanded eligibility to social security has contributed to the large and persisting
divergence.
Figure 2: number of JobSeeker
Payment1 and Youth Allowance (Other) recipients compared to unemployed
persons2, March 2020 to April 2021
Notes:
(1) JobSeeker Payment replaced Newstart Allowance, Sickness Allowance and
Bereavement Allowance from March 2020—these payments are included in the
totals. (2) Seasonally adjusted.
Sources: Department of Social
Services (DSS), ‘JobSeeker
Payment and Youth Allowance recipients - monthly profile', data.gov.au
website; DSS, 'Income support payments by state/territory and
Statistical Area Level 2, as at 30 April 2021', provided to Senate Select Committee on COVID-19 on 12 May 2021; Australian
Bureau of Statistics (ABS), Labour force, Australia, ABS, March 2021.
Budget measures
$50 per fortnight increase for most
working-age payments
The 2021–22 Budget includes the previously announced
and legislated
$50 per fortnight increase in the rate of JobSeeker Payment, Youth Allowance,
Parenting Payment, Austudy, ABSTUDY Living Allowance and other allowance
payments. This measure will cost an estimated $9.5 billion over five years and
includes several other policy changes (Budget
Measures: Budget Paper No. 2: 2021–22, pp. 181–182):
- an increase in the amount of income a payment recipient can earn
before their payment is reduced under the income test—applies to JobSeeker
Payment, Youth Allowance (Other), Parenting Payment Partnered, Widow Allowance
and Partner Allowance
- an
extension to two COVID-19 response measures to 30 June 2021: a waiver of
the one-week ordinary waiting period which applies to some social security
claimants, and eligibility criteria for JobSeeker Payment and Youth Allowance
(Other) claimants self-isolating or caring for others due to COVID-19
- $197.0 million to implement a requirement for job seekers to
undertake work for the dole
activities after six months of unemployment (down from 12 months) or undertake
intensive short courses
- $12.0 million to allow for a $2,000 upfront incentive payment
under the Relocation
Assistance to Take Up a Job program and to expand eligibility criteria for
the program
- $1.5 million for changes to mutual obligation requirements and
reinstating face-to-face meetings between employment service providers and job
seekers and
- $2.5 million to set up a phone line for employers to report job
seekers they believe are not genuine in their search efforts or who have
declined offers of work.
Most of the changes were
announced on 23 February 2021 (the relocation
assistance measure was announced on 14 April 2021). The legislation
providing for the increase in payment rates, changes to the income test and
the extension of the COVID-19 response measures was passed by the Parliament on
18 March 2021. Further information on the measures in this legislation are
provided in the
Bills Digest.
The Coronavirus
Supplement, the main social security measure for those affected by the COVID-19
economic downturn, was withdrawn on 31 March 2021. The supplement, paid to most
working-age payment recipients other than Disability Support Pension and Carer
Payment recipients, was initially paid at a rate of $550 per fortnight for the
period 27 April 2020 to 24 September 2020. It
was extended at a reduced rate of $250 per fortnight until December 2020
and then extended again at a reduced rate of $150 per fortnight until 31 March
2021 (pp. 6–7, 9, 14).
The $50 per fortnight increase in payment rates following
the withdrawal of the Coronavirus Supplement (and a
long campaign from the community sector and business groups to increase
payment rates (pp. 6–7) was the largest single percentage increase in unemployment
benefit rates since 1982 (the Prime
Minister stated it was the largest ‘year-on-year’ increase since 1986). It was
criticised by
the Australian Council of Social Service (ACOSS)
as ‘measly’ and a ‘decision that shows a complete lack of humanity and empathy’.
The Business
Council of Australia welcomed the increase but called for reform of the way
payment rates are adjusted to narrow the gap between JobSeeker Payment and
pension rates.
Four-year migrant waiting period
extended to family and carer payments
The 2021–22 Budget includes one significant savings measure
in the Social Services Portfolio: setting a four-year newly arrived resident’s
waiting period for Family Tax Benefit (FTB) Part A and B, Parental Leave Pay
(PLP), Dad and Partner Pay (DAPP), Carer Payment and Carer Allowance from 1
January 2022. The measure is expected to provide savings of $671.1 million over
five years (Budget
Paper No. 2, p. 179).
Those subject to a newly arrived resident’s waiting period
are not eligible to receive certain social security or family assistance
payments for the duration of the period. The waiting
period applies to new permanent residents and commences when they are
granted a permanent visa or when they arrive in Australia, whichever is later
(many people are resident in Australia on temporary visas before they are
granted a permanent visa). The Age Pension
and Disability
Support Pension have ten-year residency period qualification requirements
rather than a waiting period. Some people are exempt from
waiting and residency periods, including refugees, Australian citizens, some
temporary humanitarian visa holders, and certain individuals in special
circumstances.
The current
newly arrived resident’s waiting periods are:
- four years for JobSeeker Payment, Youth Allowance, Austudy,
Parenting Payment and Special Benefit
- two years for Carer Payment, PLP and DAPP and
- one year for FTB Part A and Carer Allowance.
The budget
measure will extend the waiting periods for Carer Payment, PLP, DAPP, FTB
Part A and Carer Allowance to four years. A four-year waiting period will be
applied to FTB Part B. The new waiting periods will apply to those granted a
relevant visa after 1 January 2022.
A 26-week newly arrived resident’s waiting period was
introduced from January 1993 for some working-age payments and then
extended in 1997 to 104 weeks and to a wider range of payments. The 2017–18
Mid-Year Economic and Fiscal Outlook included a measure to extend existing
two-year waiting periods to four, and introduce a three-year waiting period for
Family Tax Benefit, PLP, DAPP and Carer Allowance (pp. 8–9) (these payments
were not then subject to a waiting period). The 2018–19
Budget proposed extending this three-year period to four years (pp.
172–173). Some of these proposed waiting periods were opposed by Labor who
negotiated with the Coalition Government to
legislate the current periods starting from January 2019 (the proposed
waiting period for FTB Part B was removed). Those granted a visa prior to
January 2019 were exempt from the changes. The revised
explanatory memorandum for the legislation stated the measures would
provide savings of $1.3 billion over the forward estimates (p. 2).
The Department
of Social Services stated that an estimated 13,200 individuals and 45,000
families would be affected by the 2021–22 budget measure. ACOSS
is opposed to the change which it described as ‘brutal cuts’ (p. 4).
Committee for Economic Development of Australia senior economist Gabriela
D’Souza also criticised the measure as ‘a blatant money grab from people
who can’t vote’.
Prior to 2019, the newly arrived resident’s waiting period
applied only to income support payments which assist people not earning enough
income from work to support themselves. The 2019 measures not only extended the
duration of the waiting period, it extended the categories of payment subject
to a waiting period to include those that assist with the costs of children or
caring for someone with a disability or serious illness. Many claimants of
these payments work (individuals need to meet a work test
for PLP and DAPP), and the payments are means-tested. This budget measure will
mean new permanent residents will need to wait even longer for access to
government support for the costs of caring.
Fraud and integrity
The Budget provides an additional $27.6 million to extend the
joint Services Australia and Australian Federal Police (AFP) fraud taskforce, Taskforce
Integrity, and to cease compulsory third-party verification of single parents’
relationship status (Budget
Paper No. 2, p. 180). The costs of the measure will be partially offset
from debt recovery and compliance and will have an estimated net cost of $3.2 million.
Taskforce
Integrity is one component of Services Australia’s compliance regime and
focuses on serious fraud and identity crime. As
at January 2021, the taskforce consisted of 62 Services Australia staff and
eight ‘embedded’ AFP officers. In 2019–20, the taskforce had
a budget of $10.7 million and helped
recover $9.2 million in welfare payments. The taskforce
referred 16 matters for prosecution in 2019–20.
The mandatory third-party verification process for single
parents receiving Parenting Payment and Newstart Allowance was announced in the
2017–18
Budget and commenced from January 2018 (pp. 91–92). The process required a
referee to validate new and existing claimants’ relationship status. From 1 January
2018 to November 2019, around 76,000 reviews
of existing payment recipients were conducted with 950 found to be
partnered. The Government
had anticipated over 14,000 people would have their payments reduced or
cancelled under the measure.
The mandatory third-party verification process has been on
hold since the 2019–20 bushfires and will now cease. Payment recipients and
claimants will still need to provide the contact details of a referee who
Services Australia will contact if deemed necessary to verify the person’s
relationship status.
The measure will also implement mandatory
reviews of the relationship status of couples separated but living in the
same home to be completed after 13 weeks (with ongoing reviews every 13 or 26
weeks) (p. 2). There is
currently no mandatory review period.