Income Support and Family Assistance

Peter Yeend
Social Policy Section

Seniors Bonus and Carer Bonus payments

The Government announced in the 2007–08 Budget a one-off payment of $500 to recipients of Age Pension or Service Pension age also receiving the Utilities Allowance[1], and to recipients of the Seniors Concession Allowance[2]as at 8 May 2007. Individuals receiving Mature Age Allowance, Widows Allowance or Partner Allowance at 8 May 2007 will also receive the payment.[3]Seniors Concession Allowance is provided to self-funded retirees not on Age Pension or Service Pension and have a Commonwealth Seniors Health Card.[4]

The Government also announced a one-off lump sum payment to carers, in recognition of their contribution to caring for people with disabilities, the frail and aged. Carer Payment recipients will receive $1000 and recipients of Carer Allowance will receive $600 for each eligible person in their care. Those in receipt of both payments on 8 May 2007 will receive both lump sum payments.[5]

In addition, those in receipt of both the Carer Allowance and either the Wife Pension or Department of Veterans’ Affairs Partner Service Pension on 8 May 2007 will receive both bonus payments.

Previous one-off cash payments

The one-off cash payments presented in this 2007–08 Budget are like other one-off cash payments the Government has made in the past. These payments have been:

  • July 2000: an aged persons savings bonus of up to $1000, and a self-funded retirees supplementary bonus of up to $2000. These bonuses were paid as a part of the compensation measures for the introduction of the Goods and Services Tax (GST)[6]


  • 2001–02 Budget: a one-off aged persons bonus of $300 to all persons over the ‘age pension’ age and on an income support payment[7]


  • 2004–05 Budget: a one-off lump sum payment of $600 to families for each qualifying child for the Family Tax Benefit Part A (FTB-A) and for each child aged up to 18 years to whom Youth Allowance was paid[8]

  • 2004–05 Budget: a one-off carer bonus payment of $1000 to each person in receipt of Carer Payment and $600 to each recipient of Carer Allowance[9]


  • 2005-06 Budget: a one-off carer bonus payment of $1000 to each person in receipt of Carer Payment and $600 to each recipient of Carer Allowance for each person in their care[10]and

  • 2006–07 Budget a one-off carer bonus payment of $1000 to each person in receipt of Carer Payment and $600 to each recipient of Carer Allowance for each person in their care.[11]

Alternative forms of assistance

One-off tax free payments that are also not included as income under the income test applied under the Social Security Act 1991 (SSA) have been used as a means of providing financial assistance in recent budgets. In particular, payments to carers on Carer Payment and also
those on Carer Allowance have been a feature of the last three budgets. Unlike the other payments made to carers which are ongoing, the benefit of a one-off payment, while welcome, merely serves as a temporary top-up. It can not be relied upon from year to year and once expended there is no guarantee of a further benefit. Now that the Government has considered this level of financial assistance to recipients of Carer Payment and Carer Allowance to be desirable three years in a row, it is legitimate to ask whether an increase in the ongoing rate of assistance might not be a more useful way of providing this assistance. The Government’s apparent preference for delivering this assistance in the form of one-off payments would suggest that at its discretion it might well dispense with this payment when the economic cycle turns and budgetary constraints are tighter.

Child care

Dale Daniels
Social Policy Section


Child care affordability and the structure of Commonwealth child care fee assistance have been the subjects of much political debate since the introduction of Child Care Benefit (CCB) in 2000. The debate has continued with the introduction of the Child Care Tax Rebate (CCTR) in 2005.

Budget measures

The Government has announced changes to both the CCTR and the CCB:

  • from 1 July 2007, CCTR will be paid as a direct payment (it is unclear at this stage whether the payment will be renamed) soon after the financial year in which child care costs were incurred. As part of the transition to this arrangement families will receive the rebate for 2005–06 and 2006–07 at the same time in the latter half of 2007. The change from a tax offset to a direct payment means that families with insufficient tax liability to access their full CCTR entitlement will now receive their full rebate, and in July 2007 the rate of CCB will be increased by ten per cent on top of the normal indexation rise (expected to be three per cent).[12]

Addressing timeliness issues

The Government’s response to concerns about child care affordability was the introduction of the CCTR in 2005. It was structured as a tax rebate in part to address a long-running debate about tax deductibility for child care costs.

The CCTR allows families with children in approved care to claim 30 per cent of out-of-pocket child care expenses (up to a maximum of $4000 per child, indexed) as a tax offset against their income tax liability. The ‘out-of-pocket’ refers to the amount that families have to pay themselves after their CCB entitlement is taken into account. Families began to receive the 30 per cent rebate for their 2004–05 child care expenses when they finalised their 2005–06 taxation returns, that is, from July 2006 onwards.[13] This delayed payment is caused by the need to reconcile CCB entitlement for the financial year before an accurate assessment of out-of-pocket expenses can be made. That happens too late for a claim to be possible in the tax return at the end of the year in which the child care was used. So CCTR can only be claimed at the end of the following financial year. That means that the payment might be made up to two years after the out-of-pocket expense was incurred.

The original decision to deliver assistance through the tax system therefore imposed rigidities that have prevented timely delivery of the benefit of the CCTR. For this reason the CCTR has been criticised for delivering assistance much too long after child care costs are incurred, therefore providing little immediate assistance to working families coping with high child care costs. Delivering it now as a payment and bringing it forward by twelve months is therefore a logical improvement to the program as it goes some way to address the problem of timeliness.

However, delivery of the CCTR on a fortnightly basis would have been even better. It would have been more useful especially for those families in tight financial circumstances. It might also have been more effective as a mechanism for reducing workforce participation disincentives. However, it is likely that this was not considered an option as the Government is wary of the potential for a repeat of the overpayment debt problems encountered with CCB and Family Tax Benefit in the first years of this decade.

Targeting those most in need

Another criticism that has been made about CCTR is that it is not income tested and that it provides greater benefits to higher income families. This is on account of their higher ‘out-of-pocket’ expenses because they have lower entitlements to CCB which is income tested. As has been pointed out, however, it is misleading to look at CCTR in isolation. Viewed with CCB, the whole package of assistance has directed most assistance to lower income families.[14]

This situation will continue with the Budget’s changes. The change to providing CCTR as a direct payment will allow low-income families to access their full rebate. That change together with the increase in the rate of CCB is in fact likely to improve the progressivity of child care assistance by tipping the balance somewhat more in favour of lower and middle income families.

Eligibility restrictions

The other persistent issue around the CCTR concerns the exclusion from eligibility of non-approved care such as in-home care provided by nannies and relatives. This feature of the CCTR was given considerable attention in the report on balancing family and work by the House of Representatives Standing Committee on Family and Human Services.[15] The Committee recommended that these types of care become approved care and the users therefore become eligible for CCB and CCTR. The Government has not acted on this concern in this budget.

Carer Adjustment Payment (CAP)

Dale Daniels
Social Policy Section

The Government has introduced a Carer Adjustment Payment (CAP). The CAP will be available where a family has a child aged up to 6 years who is diagnosed with a major disability due to accidental injury or severe illness. CAP may be made available where:

  • the child has significant care requirements, e.g. requires full-time care from the carer for a minimum of 2–3 months following the incident
  • the child's carer qualifies for Carer Allowance in respect of the child
  • the carer is not eligible for Carer Payment
  • the family is not already receiving an income support payment and
  • the carer is able to demonstrate a very strong need for financial support during the adjustment period immediately after the catastrophic event.

The Government will review the eligibility criteria for Carer Payment (child). CAP is an interim payment available while the review is being conducted and it will terminate on 30 June 2008.[16]

This trial payment represents a significant departure from present policy on assistance to carers. It appears to have been prompted by the case of a young eye cancer sufferer from Melbourne. In March the Prime Minister announced on Melbourne radio that the child’s family would receive an ex-gratia payment of $10 000 to help with the costs of adjusting to their son’s disability.[17]

The expansion of assistance to families coping with children with severe disabilities or illnesses will be most welcome to many families. However, establishing a form of assistance that provides improved assistance to all families having to adjust to the needs of a child with a severe disability will require some very careful policy development. The potential for arbitrarily choosing some for assistance and excluding others with equally pressing care needs is very real.

The interim CAP for example is restricted to those diagnosed with a major disability due to accidental injury or severe illness. The policy has already excluded families coping with a disability (often genetically based) that was not apparent at birth, such as autism. This is commonly diagnosed at an age of three years or more. The question arises—are these families in any less need of extra assistance?

The availability of Carer Payment for carers of children with disabilities was expanded in July last year when eligibility was made available to carers of children with severe intellectual, psychiatric or behavioural disabilities who required constant care or supervision. If the eventual payment that succeeds the interim payment requires eligibility under the Carer Payment income test, then only very low income families dealing with a newly injured or diagnosed child will benefit.


 [1].     For further information about the Utilities Allowance see, accessed on 17 May 2007.

[2].     For further information about the Seniors Concession Allowance see, accessed on 17 May 2007.

[3].     Australia. ‘Budget measures 2007–08’, Budget Paper No. 2, p. 193,, accessed on 17 May 2007.

[4].     For further information about the Commonwealth Seniors Health Card see, accessed on 17 May 2007.

[5].     Australia, op. cit., p. 180.

[6].     Lesley Lang, ‘A New Tax System (Bonuses for Older Australians) Bill 1998’, Bills Digest, no. 93, Department of the Parliamentary Library, Canberra, 1998–99,, accessed on 17 May 2007.

[7].     Australia. ‘Portfolio budget statements 2001–02: Family and Community Services Portfolio’, Budget Related Paper No. 1.8, p. 176,, accessed on 17 May 2007.

[8].     Australia. ‘Portfolio budget statements 2004–05: Family and Community Services Portfolio’, Budget Related Paper No. 1.8, p. 51., accessed on 17 May 2007.

[9].     ibid., p. 57.

[10].   Australia. ‘Budget Measures 2005–06’, Budget Paper No. 2, p. 160,, accessed on 17 May 2007.

[11].   Australia. ‘Budget Measures 2006–07’, Budget Paper No. 2, p. 209,, accessed on 17 May 2007.

[12]    Australia. ‘Budget Measures 2006–07’, Budget Paper No. 2, pp. 181–183,, accessed on 17 May 2007.

[13]    For a fuller description see Greg McIntosh, ‘The New Child Care Tax Rebate’ Research Note, no. 3, Parliamentary Library, 2005–06,, accessed on 17 May 2007.

[14].   See Greg McIntosh, ‘Commonwealth Child Care Support – What Do Families Get’, Research Note, no. 11, Parliamentary Library, Canberra, 2006–07,, accessed on 17 May 2007.

[15]    House of Representatives Standing Committee on Family and Human Services, Balancing Work and Family: Report on the Inquiry into Balancing Work and Family, The Committee, Canberra, 2006, recommendations 11 to 13,, accessed on 17 May 2007.

[16]    M. Brough (Minister for Families, Community Services and Indigenous Affairs), Financial support for carers of young children in exceptional circumstances, media release, 8 May 2007,, accessed on 17 May 2007.

[17]    J. Metlikovec, ‘Mum wins $10,000 for battling carers’, Herald Sun, 24 March 2007,, accessed on 17 May 2007; and J. Howard (Prime Minister), Interview with Neil Mitchell, Radio 3AW, Melbourne, interview transcript, 23 March 2007,, accessed on 17 May 2007.