Social Welfare

Budget Review October 2022–23 Index

Carol Ey, Don Arthur and Luke Buckmaster

This article examines changes in expenditure on social security and discusses significant social welfare budget measures, including the National Disability Insurance Scheme (NDIS).

Total expenditure on payments and related programs

Estimated expenditure on the main social security payments and associated programs is expected to fall by 2.9% from 2021–22 to 2022–23, before climbing by 14.5% to 2025–26 (Parliamentary Library calculations from Budget strategy and outlook: budget paper no. 1: October 2022–23, pp. 180, 189–92). The total expenditure of $159.1 billion in 2022–23 includes spending on pensions, income support payments for job seekers, family assistance payments, veterans’ payments and other small social welfare programs, but excludes payments to students (which are included in education expenditure in the budget papers), the NDIS and aged care services. Figure 1 below shows expected expenditure by each of the main payment groupings.

The decline in 2022–23 is largely the result of a significant reduction in expenditure on ‘Other programs’ due to the cessation of the Pandemic Leave Disaster Payment in October 2022 (Budget paper no. 1, p. 192). Expenditure on job seeker payments also falls in 2022–23 due to low unemployment levels, before rising gradually to slightly lower than 2021–22 levels by 2025–26, reflecting the weaker outlook for employment over the out years (p. 192). Increased expenditure on the Child Care Subsidy and Family Assistance (which includes Paid Parental Leave) are partially driven by measures announced in this Budget (see below). Demographic factors are responsible for the expected increases in payments to the aged, Disability Support Pension and carer payments, and for a decline in expenditure on veterans’ payments (pp. 189–90).

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

Graph - Estimated expenses on social security and welfare payments ($ billion)

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

Source: Budget strategy and outlook: budget paper no. 1: October 2022–23, pp. 180, 189–92.

Budget measures

The page references below refer to Budget measures: budget paper no. 2: October 2022–23 unless otherwise indicated.

Child Care

One of the centrepieces of the Government’s ‘Responsible cost-of-living relief’ package is increasing the child care subsidy rate for working parents (see p. 93 and Building a better future: Budget October 2022–23, p. 12). This measure, set to cost $4.7 billion over 4 years and $1.7 billion per year ongoing, increases the Child Care Subsidy from a maximum of 85% to 90% for the first child in care and extends coverage to households earning up to $530,000.

The Government estimates these reforms will increase hours worked by women with young children by up to 1.4 million hours per week in 2023–24 (Building a better future, p. 12). While the move has generally been welcomed, there is concern that a shortage of workers will limit the capacity of the sector to meet the additional demand.

This measure is included as part of the Family Assistance Legislation Amendment (Cheaper Child Care) Bill 2022, which also incorporates the ‘Child Care Subsidy Reforms Integrity Package’, which is estimated to cost $65.3 million over 4 years (p. 91). For further information on these measures, please see the Bills Digest.

Paid Parental Leave

Another feature of the ‘Responsible cost-of-living relief’ package is expanding Paid Parental Leave (see p. 117 and Building a better future, p.13). From 1 July 2023, the Paid Parental Leave Scheme (which includes Parental Leave Pay and Dad and Partner Pay, currently a total of 20 weeks) will be made more flexible, to allow parents to more equally share care. In addition, from 1 July 2024, the Government will commence expanding the Scheme by 2 additional weeks per year until it reaches 26 weeks from 1 July 2026.

The proposal to increase the flexibility of the Scheme was included in the previous Government’s budget in March but was not implemented prior to the election. This proposal received some criticism because it did not include any ‘use it or lose it’ provisions to encourage fathers to access the scheme (see Budget review 2022–23: Changes to the Paid Parental Leave Scheme for discussion of the proposal and the reaction to it). The measure in this Budget states that the Women’s Economic Equality Taskforce ‘will assist in the finalisation of the changes … including the period of concurrence and the most appropriate proportion of “use it or lose it” weeks’.

The Morrison Government proposal was due to commence in March 2023. Presumably the later commencement date in the current measure is the reason for the expected savings in 2022–23 and 2023–24. Overall, the measure is estimated to cost $531.6 million over 4 years and $619.3 million per year ongoing.

Support for people living with disability

National Disability Insurance Scheme

Scheme funding

The estimated cost of the National Disability Insurance Scheme (NDIS) continues to rise substantially, with the Budget noting an upward revision of $5.9 billion over the 4 years to 2025–26 since PEFO (Budget paper no. 1, p. 93). The Government says this largely reflects ‘projected increases to participant numbers and a projected increase in the average value of participant plans’ (p. 93). Over the next decade, the Commonwealth’s contribution to payments for NDIS supports is expected to increase on average by 13.8% per year (the second fastest growing payment behind interest) (p. 87).

The total cost of the NDIS to Commonwealth, state and territory governments is expected to rise from $29.9 billion in 2022–23 to $51.8 billion in 2025–26 (p. 191). Over this period, the Commonwealth’s contribution is expected to rise from $22.5 billion to $37.2 billion (Portfolio budget statements October 2022–23: budget related paper no. 1.14: Social Services portfolio, p. 135). For further information on NDIS funding, including the issue of financial sustainability, see the Briefing Book article, ‘Funding the National Disability Insurance Scheme’.

Measures

The Budget includes several expenditure measures under the heading, ‘Plan for the National Disability Insurance Scheme’ (pp. 184–85). These include:

  • $385.0 million in 2023–24 in additional operational funding to the National Disability Insurance Agency (NDIA) to support NDIS participants
  • $12.4 million to resolve disputes, reduce the number of appeals and provide earlier outcomes for participants, and $21.2 million to support participants and their families with their appeals
  • $18.1 million over 2 years from 2022–23 to review NDIS design, operations and sustainability (the Government announced the Independent Review of the National Disability Insurance Scheme on 18 October 2022).

The Government has also announced funding of $158.2 million over 4 years to the NDIA to ‘increase its public service staff over two years by the equivalent of 380 full-time workers, most of whom will work in the front line to improve service delivery for existing and future NDIS participants’ (Portfolio budget statements, p. 18). 

The Budget also includes $126.3 million over 4 years from 2022–23 for a cross-agency Fraud Fusion Taskforce to ‘address fraud and serious non-compliance’ in the NDIS (p. 9). The Government estimates that this will lead to $291.5 million in increased receipts from recoveries of debts from NDIS providers.

Other measures

The Government is providing $19.4 million over 4 years to extend the Disability Employment Services program for 2 years to 2025 (p. 179). This extension is to allow for a detailed design for a new disability employment services model to be prepared. Further information on the background to this development is contained in the Briefing Book article ‘People with disability and work’.

In addition, the Government will provide $47.0 million over 4 years to improve support for people living with disability and their families (p. 176), including a $32.2 million contribution to the building of 400 new ‘Changing Places’ toilets for people with high support needs. The Government is also providing $11.2 million over 4 years for the Disability Representative Organisations Program, and $5.3 million to develop a National Autism Strategy (Portfolio budget statements, p. 19). 

Abolishing the Cashless Debit Card and creating a new ‘enhanced income management’ scheme

The Government is abolishing the Cashless Debit Card (CDC) program and creating a new ‘enhanced income management’ scheme.

CDC participants in Cape York and the Northern Territory will automatically transfer to the new enhanced income management scheme on 6 March 2023. Voluntary CDC participants in other locations will also transfer to enhanced income management on 6 March 2023. The Government has indicated that income management participants in the Northern Territory and some other locations will have the option to move to enhanced income management from 1 July 2023. This would require additional legislation.

The Budget provides $217.7 million over 4 years to create the new scheme and manage the transition (p. 75). There is no detailed breakdown of the costs because some components of this measure will involve negotiating contracts with a card provider or providers.

Like the existing CDC program, the new ‘enhanced income management’ scheme will use a debit card that blocks access to cash. However, income support recipients participating in the scheme will deal with Services Australia rather than the card provider.

Legislation for the ‘enhanced income management’ scheme was enacted in September 2022.

Improving service delivery

This Budget includes 2 measures to assist in the delivery of social welfare services:

  • $500.2 million is to be provided over 4 years (and $145.6 million ongoing) to improve front-line service delivery. This includes 200 additional staff for Services Australia, 500 staff for the Department of Veterans’ Affairs to clear the claims backlog and 380 staff for the NDIS (p. 81).
  • The Government is also providing $560.0 million over 4 years in funding supplementation to Community Sector Organisations at need due to staff wage pressures and higher inflation (p. 84).

Funding of $30.0 million is provided in 2022–23 for the Royal Commission into the Robodebt Scheme (p. 54).

Other measures already being considered by Parliament

A number of other social services and related measures in Budget paper no. 2 have already had related legislation introduced to Parliament. These include:

 

 

All online articles accessed October 2022

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