Social security

Budget Review 2022–23 Index

Michael Klapdor

This article examines changes in expenditure on social security and significant social security budget measures. Changes to Paid Parental Leave are examined in a separate article in this Budget review.

Total expenditure on payments

Budget strategy and outlook: budget paper no. 1: 2022–23 shows that estimated expenditure on the main social security and veterans’ payments will decline by 7.9% from 2021–22 to 2022–23: from around $168.0 billion to $154.8 billion (Parliamentary Library calculations based on expense data at pp. 144, 154–158). Total expenditure is projected to increase steadily from 2022–23 to around $168.1 billion in 2025–26. 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 reasons for the anticipated decline in expenditure from 2021–22 to 2022–23 are the closing of the COVID-19 Disaster Payment in late 2021; the closing of the Pandemic Leave Disaster Payment at the end of June 2022; and an expected decline in the number of recipients of JobSeeker Payment and Youth Allowance (Other) (the main unemployment benefits) (Budget paper no. 1, p. 142).

The Age Pension and aged veterans’ Service Pension is the largest component of social security expenditure at $54.2 billion, representing over a third of social security payment expenses in 2022–23. Family assistance (including Family Tax Benefit and Paid Parental Leave) is the second largest component followed by the Disability Support Pension.

Expenditure on the main unemployment benefits is expected to decline from $15.8 billion in 2021–22 to $12.5 billion in 2022–23. Revised forecasts of unemployment benefit recipient numbers since the 2021–22 Mid-Year Economic and Fiscal Outlook have resulted in a decrease in projected expenditure on these payments of $7.7 billion over the four years to 2025–26 (Budget paper no. 1, p. 94).

Figure 1       Estimated expenses on social security and welfare payments ($ billion)

Chart - Estimated expenses on social security and welfare payments

Notes: excludes student payments, National Disability Insurance Scheme and aged care expenses.

Source: Australian Government, Budget strategy and outlook: budget paper no. 1: 2022–23, pp. 144, 154–158.

$250 one-off payment

The largest 2022–23 budget measure in the Social Services Portfolio is a one-off ‘Cost of Living’ or economic support payment for income support recipients worth $250 (Budget measures: budget paper no. 2: 2022–23, p. 167). The payment will be made in April to recipients of all social security and veterans’ income support payments, concession card holders and some veterans’ compensation payment recipients including pensions, JobSeeker Payment, Parenting Payment, student payments, Farm Household Allowance, veterans’ Disability Pension, and permanent impairment payments under military compensation schemes (pp. 87–90). Legislation providing for the payment was introduced and passed by the Parliament on 30 March 2022. Total expenditure on the payment is estimated at $1.5 billion. An individual can only receive one $250 payment regardless of how many eligibility categories they meet.

Frequent use of ‘one-off’ payments

‘One-off’ or lump-sum payments to social security recipients in response to economic downturns or to address concerns around price increases have been frequently paid under the Coalition Government. An Energy Assistance Payment worth $75 for singles and $125 for couples was paid in 2017 to certain pensioners as part of a deal between the Government and the Nick Xenophon Team to secure passage of a Bill providing for company tax cuts. Another Energy Assistance Payment, paid at the same rates but to a broader group of recipients, was made in 2019 prior to the Federal Election. As part of the COVID-19 response, the Government has provided four ‘Economic Support Payments’ to certain social security recipients: two $750 payments made in March and July 2020, and two $250 payments made in November 2020 and February 2021.

Groups missing out

Family Tax Benefit recipients were eligible for the COVID-19 Economic Support Payments (except where they received the lump attached to another qualifying payment or where they were in receipt of the separate Coronavirus Supplement paid to allowance payment recipients). Family Tax Benefit recipients are not eligible for the 2022–23 Cost of Living Payment unless they are receiving a qualifying income support payment at the same time. Low Income Health Care Card holders were not eligible for any of the Energy Assistance Payments or COVID-19 Economic Support Payments and will not be eligible for the Cost of Living Payment.

Issues

The repeated use of lump-sum payments to address financial stress amongst income support recipients raises a question as to the adequacy of income support payments and whether there is an issue with the lag between price increases and the regular indexation of these payments.

Australian Council of Social Service CEO Cassandra Goldie stated that the one-off payment would ‘help for a week or two’ but that the Budget ‘does nothing to lift the incomes of people with the least’. Economic Justice Australia, which represents community social security legal services, stated that the ‘one-off payment will do little to help the people who most need support to cover the basics of a home, food and medicine’, and its CEO, Leanne Ho, called for the rate of JobSeeker Payment and other allowances to be raised.

Disaster payments

2021–22 has seen significant expenditure on disaster payments, both those created in response to COVID-19 and those paid following natural disasters, and the Budget includes a commitment to review the effectiveness of disaster payments.

COVID-19 Disaster Payments

The COVID-19 Disaster Payment was created in June 2021 to assist those who had lost work because of state and territory government lockdowns (p. 1). In September 2021, the Government announced the payment would no longer be available two weeks after a state or territory reached 80% of its population aged 16 and over with two doses of a COVID-19 vaccination. All jurisdictions reached this threshold between mid-October and mid-December 2021 (p. 6). Around $12.9 billion in COVID-19 Disaster Payments were made to 2.4 million people (p. 21).

The Pandemic Leave Disaster Payment, paid to those required to quarantine, isolate or care for someone with COVID-19 without access to paid leave entitlements from their employer, was created in August 2020 (p. 9). In September 2021, the Government announced the payment would end on 30 June 2022. As at 27 March 2022, around $1.1 billion in Pandemic Leave Disaster Payments had been made to around 980,000 individuals.

Natural disaster payments

The Australian Government Disaster Recovery Payment (a lump sum payment of $1,000 per adult and $400 per child) and the Disaster Recovery Allowance (a time-limited payment equivalent to the rate of JobSeeker Payment or Youth Allowance) are authorised under the Social Security Act 1991 but not included in the social security and welfare function reported in the budget papers (instead, they are included in the ‘Other purposes’ function). Both payments have been activated in response to the floods in NSW and Queensland in early 2022. Two further payments equivalent to the rate of the Disaster Recovery Payment have been made to those affected by flooding in certain local government areas in NSW. Additional payments of this lump sum have not been made in response to previous natural disasters. The exclusion of some flood victims from this additional assistance has been a contentious issue.

On 30 March 2022, Prime Minister Scott Morrison stated that $1.3 billion in disaster recovery payments had been paid to 1.4 million people affected by the floods. This level of assistance indicates the massive impact of this disaster: by contrast, around $286.1 million in payments were made for around 205,000 claims in response to the 2019–20 bushfires (pp. 458–459) while around $475.0 million in payments were made for around 400,000 claims following the 2010–11 Queensland floods (p. 67).

The Budget included an announcement from the Government that it would implement the recommendation of the Royal Commission that followed the 2019–20 bushfires and review disaster recovery funding arrangements (Budget paper no. 2, p. 159). The costs of the review would be met from within existing resources of the National Recovery and Resilience Agency. The Royal Commission had recommended a review of the effectiveness of financial assistance measures with the aim of providing consistency in the treatment of affected individuals and businesses (p. 463).

Reduction in the number of unemployment benefit recipients

As noted above, revised forecasts of unemployment benefit recipient numbers have seen a decrease in projected expenditure on these payments of $7.7 billion over the 4 years to 2025–26. Budget paper no. 1 states that the revision is ‘due to stronger labour market projections as the economy recovers from the COVID-19 pandemic’ (p. 94).

While the unemployment rate has dropped below pre-pandemic levels, the number of people in receipt of unemployment benefits has not declined at the same rate. As at mid-March 2022, there were around 145,500 more people on JobSeeker Payment and Youth Allowance (Other) than there were in February 2020 (Figure 2). In particular, the number of recipients of these payments aged 55 and over has declined at a much slower rate than younger age groups.

Figure 2       JobSeeker and Youth Allowance (Other) recipients

Chart - JobSeeker and Youth Allowance (Other) recipients

Notes: Notes: JobSeeker Payment replaced Newstart Allowance, Sickness Allowance and Bereavement Allowance from March 2020—these payments are included in the totals.

Sources: Department of Social Services (DSS), ‘JobSeeker Payment and Youth Allowance recipients - monthly profile', data.gov.au website; DSS, ‘Fortnightly report on income support payments by state/territory and Statistical Area Level 2, as at 11 March 2022', provided to Senate Select Committee on COVID-19 on 18 March 2022.

Unlegislated measures still in the Budget

A number of significant social security measures previously announced have not been legislated but the forecast savings or expenditure for these measures remain in the Budget:

 

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