The bill contains 13 measures that relate to welfare expenditure:
removes the job commitment bonus (schedule 4);
removes the waiting period exemption for new migrants who are
family members of Australian citizens or long-term permanent residents
repeals the student start-up scholarship payment (schedule 11);
applies an interest charge to certain government debts (schedule
introduces departure prohibition orders (DPOs) to prevent certain
government debtors from leaving Australia (schedule 13);
includes Commonwealth parental leave payments in the income test
for income support payments (schedule 14);
changes how fringe benefits are treated under income tests for
family assistance, youth income support payments and other related purposes (schedule
removes the backdating provision for the Carer's Allowance
pauses indexation for certain family tax benefit limits and the
income limit for paid parental leave payments (schedule 17);
removes the social security income and asset tests test
exemptions for certain aged care residents (schedule 18);
removes the nil rate period exemption from the income test for
certain family and youth support payments (schedule 19);
applies equal treatment in respect of social security payments
for people charged with a serious offence, irrespective of whether they are
confined in a psychiatric institution or prison (schedule 20); and
prevents new recipients of welfare payments or concession cards
from being paid the energy supplement from 20 March 2017 (schedule 21).
The committee received evidence on all of the above schedules. This
chapter provides an overview of submitters' views on the various measures
contained in these schedules.
Schedule 4: Job commitment bonus
Schedule 4 removes the job commitment bonus. Currently, a person aged
between 18 and 30 who has been receiving the Newstart allowance for at least
12 months can qualify for the bonus if they complete 12 months of
continuous paid employment. The completion of a further 12 months attracts a
second bonus. The value of the bonus is $2 500 for the first year, and $4 000
for the second year.
The bonus was intended to encourage young long-term unemployed job
seekers to keep and find a job. Analysis of the program has shown that it has
not had an appreciable effect on young job seekers. The Explanatory Memorandum
The job commitment bonus has had low take-up since its
introduction, with less than 30 per cent of expected claims for the 2015–16 financial
year being achieved. Further, the job commitment bonus did not increase job
seekers' efforts to find a job and generally was not an incentive for
potentially eligible individuals to stay in a job. Survey results show that, of
those people who were aware of the bonus, the majority said that the bonus did
not increase their job application effort, the number of jobs they applied for,
or their motivation to find a job. Individuals who were potentially eligible
for the bonus generally stated that their main motivation was to move from
welfare into work. Once they got work, they expressed a desire to stay in work
and off income support, regardless of the bonus.
The bill makes provisions so that a person who qualified before the
commencement date is still able to claim bonuses for which they are eligible.
Views on schedule 4
The National Welfare Rights Network (NWRN) echoed the government's
position, noting that the job commitment bonus 'was based on the flawed
assumption that lack of motivation is a significant factor in youth
The Australia Institute and the NWRN both supported the move to end the job
Schedule 10: Newly arrived resident's waiting period
Schedule 10 seeks to remove the exemption from the newly arrived
resident's two year waiting period for new migrants who are family members of
Australian citizens or long-term permanent residents.
Currently, exemptions are provided for certain newly arrived residents
to access a social security payment, a concession card or farm household
allowance for new migrants who are family members of Australian citizens or
long-term permanent residents under section 3 of the Social Security
Legislation Amendment (Newly Arrived Resident's Waiting Periods and Other
Measures) Act 1997 (Newly Arrived Resident's Waiting Period Act).
The two year (104 weeks) waiting periods in the Social Security Act do
not apply to refugees, former refugees, family members of refugees, Australian
citizens, family members of Australian citizens, a person who has been an
Australian resident for a continuous period of two years and the family member
of a person who has been an Australian resident for a continuous period of two
Under the proposed changes, schedule 10 will remove the exemption from
the waiting period for family members of Australian citizens and family members
of persons who have been Australian residents for a continuous period of two
years. The change is designed to align the Social Security waiting period for
working age payments for all newly arrived migrants to Australia, apart from
refugees, former refugees and their family members.
Those who are no longer exempt will be required to serve the current
newly arrived resident's waiting period of 104 weeks before being able to
access a social security payment, a concession card or farm household
allowance. The Explanatory Memorandum states that by moving the exemption
provisions (section 3) from the Newly Arrived Resident's Waiting Period Act
into the Social Security Act and the Farm Household Act there will be less
confusion regarding the various waiting periods across the acts. The Explanatory
Memorandum also notes that there is an expectation that ‘migrants, particularly
those with family members living in Australia, should be financially secure or
at least have arrangements in place to support themselves prior to moving to
Australia.' The Explanatory Memorandum also suggests that the impact of the
measure will be minimal.
In its submission, the Australian Council of Social Service (ACOSS)
noted that the 2015–16 Additional Senate Estimates Community Affairs question
on notice (QoN) highlighted that a change to the waiting period had the
potential to 'impact approximately 5 700 people each year, and threatens to
place affected families on low incomes in severe financial hardship'. The same
Community Affairs QoN estimated the potential whole of government savings over
the forward estimates of this measure to be in the vicinity of $225 million.
Increased hardship on new migrant
Both ACOSS and the NWRN noted that there could be significant risks of
increased domestic violence incidents due to the removal of the exemptions and
that this change may disproportionately affect women.
There is also a valid
concern that denying family members access to income support payments for two
years could heighten the risk of domestic violence and prevent people from
leaving abusive situations because they are financially dependent on their
family member. ACOSS understands three-quarters of people who will be affected
by this change are women.
The Disabled People's Organisations Australia (DPO Australia) also noted
that the present exemptions provide significant support to spouses, partners
and/or children of Australian citizens just as they are trying to establish
themselves. Furthermore, DPO Australia highlighted the significant impact that
the measure will have on new families supporting a family member with a
For families who are
supporting a family member with disability, who are subject to a ten year
waiting period for the Disability Support Pension, the removal of this
exemption will result in greater hardship. It will significantly reduce support
and increase financial pressure at a critical time of facing challenges
associated with adapting to life in a new country.
Schedule 11: Student Start-up scholarships
Schedule 11 repeals the student start-up scholarship payment from
1 July 2017, or the first of 1 January or 1 July following Royal
Assent if Royal Assent is after 1 July 2017. The earliest this Schedule can
commence is 1 July 2017.
On 1 January 2016, Schedule 11 to the Labor 2013-14 Budget Savings
(Measures No. 2) Act 2015 (Budget Savings Measures No. 2 Act) amended the
Social Security Act and Student Assistance Act to provide for the student
start-up loan and ABSTUDY student start-up loan. These loans are income
contingent and repayable under similar arrangements to the Higher Education
Loan Programme. The qualification provisions for the student start-up loan and
ABSTUDY student start-up loan are similar to the qualification provisions for
the student start-up scholarship currently contained in Division 1 of Part
2.11B of the Social Security Act.
The Budget Savings Measures No. 2 Act also amended the qualification
provisions for the student start-up scholarship payment. As a result of those
amendments, a person is qualified for a student start-up scholarship payment
only if the person received a student start-up scholarship payment, ABSTUDY
student start‑up scholarship payment or Commonwealth Education Costs
Scholarship before 1 January 2016; and the person has been receiving
youth allowance on the basis of undertaking full-time study, Austudy payment or
payments under the ABSTUDY Scheme known as Living Allowance for a continuous
period since receiving the scholarship.
In its submission, ACOSS raised concerns regarding the impact of this
measure on students with low incomes particularly those who do not have their
family to support them with large up-front education costs. In particular,
ACOSS and Universities Australia both note that this measure has the potential
to impact 80 000 students. ACOSS also suggested that a distributional
analysis be undertaken into the impact of the removal of the start-up
scholarships before proceeding with this proposal.
Universities Australia also noted that the measure ends the
grandfathering arrangements that cover students who were in receipt of the scholarship
before it was replaced by the Student Start-up Loan Scheme (SSLS). As such, Universities
Australia considered the measure to be contrary to the intent of the
legislation establishing the SSLS, which specifically included the
grandfathering arrangements to protect students already in receipt of the
Schedule 12: Interest charge
Schedule 12 seeks to incentivise responsible self-management of debts
and encourage debtors to repay their debts in a timely manner, where they have
the financial capacity to do so. It does this by applying an interest charge to
social security, family assistance (including childcare), paid parental leave
and student assistance debts.
The new annual interest charge scheme is proposed to apply from 1
January 2017 to former recipients of social welfare payments who have
outstanding debts and have failed to enter into, or have not complied with, an
acceptable repayment arrangement. The proposed interest charge would be based
on the 90-day Bank Accepted Bill rate (approximately 2 per cent currently),
plus an additional 7 per cent. This is consistent with the charge applied by
the Australian Taxation Office under the Taxation Administration Act 1953.
The measure was included in the 2015–16 Mid-Year Economic and Fiscal
Outlook, and is projected to save $387 million over the forward estimates.
Several submitters, such as the Australian Unemployed Workers Union and
The Australia Institute, expressed concern that the imposition of interest
charges had the potential to push low-income and vulnerable Australians into further
The NRWN contended that this measure was not sufficiently targeted to
debtors who deliberately evade their obligations. They suggested the measure be
restricted to cases where 'the former payment recipient has persistently and
deliberately failed to enter into a repayment arrangement'.
Schedule 13: Debt recovery
Schedule 13 introduces departure prohibition orders (DPOs) so that, in
certain cases where a person does not have a satisfactory arrangement in place
to repay their social security, family assistance, paid parental leave or
student assistance debt(s), they may be prevented from leaving Australia
without either having wholly paid their debt(s) or making satisfactory
arrangements to pay.
There are two parts to this measure. The first part amends the A New
Tax System (Family Assistance) (Administration) Act 1999 (Family Assistance
Administration Act), Paid Parental Leave Act 2010, Social Security Act 1991 and
Student Assistance Act 1973 to introduce DPOs to prevent debtors under
these Acts from leaving the country.
The second part removes the six-year limit on debt recovery currently in
place for social security, family assistance and paid parental leave debts.
The Explanatory Memorandum states that the number of social welfare
payment debtors is higher than the number of child support debtors, and claims
that the DPOs will only be issued in the most extreme welfare payment debt
cases. Furthermore, the Explanatory Memorandum notes that there are some
2 000 DPOs in place—that is, DPOs apply to less than two per cent of all
ACOSS noted that it does not specifically object to this measure, though
it is concerned that aggressive debt recovery techniques could potentially push
disadvantaged people into further hardship.
The Australian Unemployed Workers Union (AUWU) expressed similar concerns.
ACOSS further suggested that 'the Department of Human Services is poorly
resourced to manage its existing client base, which impacts on its ability to
follow up on debts and prevents debts from occurring'.
For its part, the NWRN stated that it believes the increased powers are
unwarranted and confer wide ranging discretion on the Secretary of the
Department of Human Services.
Schedule 14: Parental leave payments
Currently, Commonwealth parental leave payment (PLP) and dad and partner
pay (DAPP) recipients can receive the full rate of an income support payment at
the same time as PLP or DAPP. This schedule seeks to make changes to the social
security and veterans' entitlements legislation to ensure PLP and DAPP payments
are included in the income test for income support payments, thereby treating
income from PLP or DAPP consistently with the treatment of income from other
The measure was set out in the 2015–16 MYEFO.
The NRWN highlighted that there is currently an unequal treatment of
income for social security purposes. Whereas Commonwealth PLP and DAPP do not
count as income for income support purposes, income from employer paid parental
leave does. Given the measure will provide for greater equity in this regard,
the NRWN indicated that it did not oppose the measure.
Schedule 15: Fringe benefits
Schedule 15 changes the way in which fringe benefits are treated under
the income tests for family assistance, youth income support payments and for
other related purposes.
Under current rules, the net value of reportable fringe benefits (or 51
per cent) is used to calculate an individual's adjusted taxable income (ATI).
From the first of 1 January or 1 July after the bill receives the
Royal Assent, the gross rather than adjusted net value of reportable fringe
benefits will be used to calculate an individual's ATI, except in relation to
fringe benefits which are received by individuals working for certain
Fringe benefits received by an individual who is employed by a
not-for-profit institution defined under section 57A of the Fringe Benefits
Tax Assessment Act 1986 (public benevolent institutions, health promotion
charities and some hospitals and public ambulance services) will continue to be
assessed under current arrangements.
Affected payments include Family Tax Benefit (FTB) Part A and Part B,
Child Care Benefit (CCB), Parental Leave Pay, Dad and Partner Pay, Stillborn
Baby Payment, Youth Allowance, and payments under the ABSTUDY scheme and
Assistance for Isolated Children scheme.
This schedule seeks to apply a new treatment of reportable fringe
benefits to certain tax offsets. These offsets include the Net Rebate for
Medical Expenses, Rebate for Low Income Aged Persons and Pensioners, Dependant
(Invalid and Carer) Tax Offset and Dependant (non-student child under 21 or
student) Notional Tax Offset.
The NWRN argued that the measure will disproportionately affect workers
in the community sector, where some employers offer salary packaging to
increase their attractiveness to the workforce. Using the grossed up value of
fringe benefits in assessing certain family assistance payments will reduce the
rate of payment to some low and middle income households and offset some of the
benefits of salary packaging.
Schedule 16: Carer's allowance
Under current rules, the start day for carer allowance for a disabled
child, or for an adult where the disability affecting the adult is due to an
acute onset, may be backdated by up to 12 weeks before the day on which the
person made the claim. By contrast, the start day for carer payment cannot be
earlier than the day worked out under the general start day rules.
Schedule 16 seeks to amend the rules so that a person's start day for
carer allowance will be day worked out under the general start day rules.
Disabled People's Organisations Australia reflected that the backdating
provisions were introduced as a means to recognise and address the significant
turmoil, disruption and financial impact experienced by carers when they take
on a caring role.
The Council of the Aging (COTA), meanwhile, highlighted that few carers consider
applying for Carers Allowance on the day they commence caring:
It is unfathomable that in
those moments of crisis, individuals would think or be able, to attend a
Centrelink office in order to submit a form to claim the Allowance.
Similarly, the Combined Pensioners and Superannuants Association (CPSA)
The provision, in its current form, allows carers to focus on
the provision of care immediately following an acute incident (when care needs
are likely to be greatest), with the knowledge that they will be able to seek
financial support retrospectively.
The Superannuated Commonwealth Officers' Association (SCOA) proposed a
SCOA believes that it is only reasonable to allow some
backdating, say up to four weeks, because people may become carers as a result
of an unexpected illness, accident or natural disaster and, in the first few
weeks, may have more important things to deal with than filing in the Centrelink
COTA also noted that carers from culturally and linguistically diverse
backgrounds face additional barriers in becoming aware of and navigating
complex public support mechanisms, such as Carers Allowance. As such, these
carers may lose out if the capacity to backdate claims is removed.
Taking a broader view, the CPSA considered that this measure would not
provide the savings envisaged over time:
The longer term costs of withdrawing support for informal
carers, in terms of a reduced capacity to care, far outweigh the potential
short-term Budget savings produced through Measure 16 of the Omnibus Bill.
Schedule 17: Indexation of family tax benefit and parental leave
Schedule 17 seeks to make amendments to pause indexation for family tax
benefit (FTB) Part A and the primary earner income limit for FTB Part B until
1 July 2020. The income limit for parental leave pay (PLP) will also
be paused for a further three years, until 1 July 2020.
FTB Part A is subject to an income test based on family income. There
are two income test thresholds. The upper threshold is currently $94 316.
If an individual's adjusted taxable income (ATI) is above this threshold the
per-child rate is reduced by 30 cents for each dollar over the threshold.
The primary earner income limit for FTB Part B is currently $100 000.
An individual cannot access FTB Part B if their ATI is more than this amount
(unless they or their partner are receiving an income support payment). The
amendments made in this measure pause indexation for three years.
To be eligible for PLP or dad and partner pay (DAPP), a person must
satisfy an income test. In general terms, to satisfy the income test, the
person's income for a particular income year must not be more than the PPL
income limit. Under the current rules, this limit is $150 000 until 30
June 2017 and is then to be indexed.
Both ACOSS and the NRWN note that the pause on indexation merely
continues the existing pause that was introduced in the 2014 Budget, meaning
that income tests will be frozen for five years, thus further tightening access
to these payments. Both organisations
argued that more attention should be placed on investment to address
inadequacies in the current family payment system, particularly for single parents
and older children.
Schedule 18: Pension means testing for aged care residents
This schedule removes the social security income and assets test
exemptions that are available to aged care residents who are renting their
former home and paying their aged care accommodation costs by periodic
New entrants to residential and flexible aged care from the commencement
of this schedule have:
the net rental income from their former home assessed under the
social security income test; and
the value of their former home assessed under the social security
assets test after two years, unless the home is occupied by a protected person,
such as their partner, in which case it will continue to be exempt.
Several stakeholders were supportive of the proposed change. The Council
of the Aging (COTA) supported this measure as a matter of principle, in that
all assets should be treated equally.
That said, COTA noted that more consideration should be given to the
transitional impacts of entering care and paying accommodation fees while the
home is being sold. Leading Age Services Australia was supportive of the
inclusion of rental income in the means tests.
By contrast, other stakeholders considered that the measure limits
choice for aged care residents to contribute towards their care and
accommodation. For example, ACOSS submitted that:
...this measure will make retaining the home near impossible
because it will reduce the income they [Age Pensioners] have to pay for their
Similarly, the NRWN contended that:
There is a case for careful reform of aged care means testing
arrangements. But the NWRN does not support this measure as it places further
pressure on pensioners to sell their home and limits their choices about how to
pay for aged care.
Schedule 19: Employment income
Currently, families receiving FTB Part A are subject to an income test,
and dependent young people receiving youth allowance or ABSTUDY living
allowance payments are subject to a parental income test when determining their
rate of payment, unless the family or parent is eligible for a social security
pension or benefit. The income test exemption for income support recipients is
extended to income support recipients who are in an employment income nil rate
period. An employment income nil rate period allows an income support recipient
to retain an entitlement to their income support payment for up to 12 weeks if
their income support payment is not payable due to employment income (either
wholly or partially).
Schedule 19 seeks to remove the exemption from the income test for
families receiving family tax benefit Part A and the exemption from the
parental income test for dependent young people receiving youth support
payments, where the family or parent is in an employment income nil rate
The NRWN expressed its opposition to the measure, submitting:
The purpose of the current rules is to provide an additional
incentive for people to take up work, especially casual, short-term or insecure
It does so by ensuring the person remains on payment and payments are not affected
for up to 12 weeks and they can get back onto payments easily if the work does
not continue. Although these rules do treat families with similar income levels
differently for a period of up to 12 weeks, they do so for the reasonable
purpose of recognising the difficulty re-entering the workforce, especially
into precarious and insecure work.
Similarly, the Australian Association of Social Workers considered that
this measure 'could prove a disincentive to gaining part-time employment for
the families affected'.
Looking at the broader consequences of the measure, the Australian
Unemployed Workers' Union noted that the measure would 'lead to many
Australians receiving a lower entitlement, pushing them further below the
Schedule 20: Psychiatric confinement
Schedule 20 seeks to amend the Social Security Act 1991 (Social
Security Act) to cease social security payments to a person who is undergoing psychiatric
confinement because they have been charged with a serious offence.
The amendments made by this schedule seek to ensure equal treatment in
respect of social security payments for people charged with a serious offence, irrespective
of whether they are confined in a psychiatric institution or prison.
The provisions of schedule 20 are equivalent to the Social Services
Legislation Amendment Bill 2015, which was first introduced to the House of
Representatives on 25 March 2015. On 26 March 2015, the Senate referred that
bill to the Community Affairs Legislation Committee for inquiry and report by
15 June 2015.
The Social Services Legislation Amendment Bill 2015 lapsed with the prorogation
of the 44th Parliament in April 2016.
Currently, the Social Security Act restricts certain social security
payments being made to persons who are in gaol or psychiatric confinement
following being charged with an offence.
As noted in the Senate's previous considerations of the proposed amendments,
similar measures have existed in social security law since at least 1947.
However, in 1986, an additional provision was included in the Social
Security Act that amended the definition of psychiatric confinement.
This additional provision provides that the confinement of a person in a
psychiatric institution is not taken to be in psychiatric confinement for the
purpose of social security law provided that the person is undertaking a
'course of rehabilitation'.
The interpretation of a 'course of rehabilitation' has evolved since the
1986 amendments. In a 2002 case, the Federal Court ruled that, for purpose of
defining psychiatric confinement, a broad interpretation of a 'course of
rehabilitation' be upheld.
The effect of this ruling has meant that most people confined in a psychiatric
institution are considered to be undertaking a course of rehabilitation.
Consequently, relevant social security payments continue to be payable to such
The bill seeks to support the original policy intention behind section
1158 of the Social Security Act, namely that:
...income support payments are not payable to a person who is
in gaol or a person who is undergoing psychiatric confinement because the
person has been charged with an offence.
Distinction between serious and
For the purpose of implementing the proposed amendments to the Social
Security Act, the bill provides a definition of what constitutes as serious
A serious offence will include the offences of
murder or attempted murder, manslaughter, rape or attempted rape, as well as
other violent offences that are punishable by imprisonment for life or for a
period (or maximum period) of at least seven years.
A number of submitters argued that the distinction between serious and
non-serious offences is irrelevant. This is because people who are not
convicted on the grounds of mental impairment are not deemed to be morally
culpable of the offence committed. This is the case regardless of the
seriousness of the offence. The National Mental Health Commission, for example,
The nature of the offence with which a person was charged –
but not convicted – should not define whether they are taken to be in
psychiatric confinement or undertaking a course of rehabilitation, nor should
it be relevant to whether they have access to social security payments.
Submitters also argued that, by ceasing social security payments to
affected persons, the bill introduces a punitive dimension to psychiatric
confinement and reinforces negative stereotypes regarding mental illness. This
risks undermining the primary rehabilitative aim of forensic psychiatric
The detention of these individuals in psychiatric
hospitals...is for the purposes of care and rehabilitation, not punishment or
deterrence. However, the effect of this punitive Bill would be to criminalise
However, the Explanatory Memorandum outlines:
This policy does not have a punitive intent, rather it is a
recognition that people in these circumstances, like those in gaols, have a
reduced need for social security payments as their basic needs are met by the
states and territories that confine them.
The committee notes that the concerns raised by submitters with regard
to this measure are similar to those previously examined by the Senate as part
of the Community Affairs Legislation Committee's consideration of the provisions
of the Social Services Legislation Amendment Bill 2015.
Impact on rehabilitation and
Submitters noted that people's economic circumstances are a key
determinant of health, and raised concern that this measure will impede
recovery by limiting the economic resources necessary for successful
rehabilitation and reintegration.
Some submitters argued that shifting the 'cost burden' to state and
territory health systems to fund rehabilitation could also be detrimental to
the recovery of people affected. For example, the Western Australian
Association for Mental Health commented:
We are extremely concerned that the burden of additional
costs for the state government, which will have to fund the daily living
expenses for people transitioning to community should this Bill come to pass,
will add further impediments to an already slow and challenging release
The definition of a 'period of
Schedule 20 provides that a person in psychiatric confinement because
they have been charged with a serious offence will not be taken to be in
psychiatric confinement during a period of integration back into the community.
As noted in the report by the Community Affairs Legislation Committee,
the bill will be supported by a legislative instrument which will define the
'period of integration' during which social security payments would resume.
This would allow easier modification of the definition, should this be required.
The Explanatory Memorandum provided an example of what such a definition could
A legislative instrument made for the purpose of new
subsection 23(9C) may provide, for example, that a period of integration back
into the community for a person is where the person regularly spends a set
number of nights in a fortnight outside of the psychiatric institution. The
legislative instrument may also provide that a person's day of integration back
into the community is the first day of the fortnight in which the person spends
the set number of nights outside of the psychiatric institution. An effect of
this would be that the person's social security payment is payable for the full
fortnight, even if the person spends some days in that fortnight in the
Submitters raised concerns regarding this proposed definition of a
'period of integration', noting the potential limits on people's access to
funds to support themselves, especially with regard to accommodation costs, on
days they are not confined.
Some submitters also highlighted the apparent inequity between the
entitlements afforded to people affected by the bill as compared to those who
have been convicted of an offence and are serving a period of periodic
No such provisions exist for people found guilty of an
offence who are on periodic detention – they instead receive social security
payments for any days outside detention.
Moreover, submitters raised concerns that this inequity in social
security entitlements characterises the people affected by the bill as less
favourable than those convicted of an offence and serving a period of
imprisonment. Consequently, submitters argued that this measure appears to
discriminate against those with mental illness or intellectual disability.
A number of submitters also expressed concern that social security
payments are used by people in psychiatric confinement for the purposes of
meeting ongoing financial commitments, such as maintaining housing. Submitters
argued that the bill will consequently 'impair people's capacity to maintain
housing while they are in confinement, increasing the risk of homelessness on
return to the community'.
The Mental Health Review Tribunal raised concerns that people affected
by the bill, in addition to meeting ongoing financial obligations, are also
reliant on social security entitlements to pay their hospital expenses:
Forensic patients are responsible for their hospital
expenses, and are encouraged to pay for these because this is an important step
for them to make by acknowledging that they have an illness that requires
As noted in the Explanatory Memorandum, people in psychiatric
confinement receive 'benefits in kind', such as food and housing, provided by
the relevant state or territory institution. The provision of these benefits in
kind negates the need for social security payments in these circumstances.
Schedule 21: Closing carbon tax compensation to new welfare recipients
Schedule 21 prevents new recipients of welfare payments or concession
cards from being paid the energy supplement from 20 March 2017.
The measure also prevents the single income family supplement from being paid
to new recipients from 1 July 2017. It is anticipated that this measure will
result in savings of approximately $1.3 billion over the forward estimates.
The energy supplement is an ongoing payment for pensioners, families who
receive family assistance, income support and payment customers and
Commonwealth Seniors Health Card holders.
The energy supplement was introduced in 2012 to offset the anticipated
impact of the Emissions Trading Scheme. The proposed measures will mean that
any new recipients of pensions, allowances and FTB will no longer receive the
energy supplement (worth $14.10 per fortnight for a single pensioner and $8.80
for a single Newstart recipient with no children). Current recipients of the
energy supplement will still receive the supplement as long as they remain
continuously eligible for a qualifying payment.
The impact on low-income and other
Catholic Social Services Australia, ACOSS, and the NSW Council of Social
Service, along with others, raised concerns that the removal of the energy
supplement would significantly impact the poorest members of the Australian
Concerns were most prominent in relation to the schedule's effect on Newstart
It was pointed out to the committee that:
Removal of the energy supplement will abolish the first above
CPI increase to Newstart in over two decades and follows the removal of the $4
per week Income Support Bonus. The current rate of Newstart is well below the
poverty line of $38 per day.
Good Shepherd Microfinance (GSM)—Australia's largest microfinancing organisation—highlighted
that any reduction of income to very low income households will limit their
access to credit markets. It noted that a $4.40 per week reduction in income
for people on low incomes represents 'a third of the weekly repayment for an $800
[No Interest Loan Scheme] loan'.
GSM expressed fears that the changes proposed in the schedule will move people
towards 'high cost fringe credit and goods rental'.
Carers Australia informed the committee that carers are heavy users of
energy as they are home longer hours than most Australians, and may be required
to operate specialist energy-intensive equipment or maintain a constant
Pensioners are also vulnerable as they are not in a position to readily
increase their income by other means. Disabled People's Organisations Australia
raised concerns that a further effective reduction in income for their
constituents will reduce their ability 'to be able to participate fully in the
economic, social, cultural, civil and political life of Australia'.
Payments recipients may be worse
off than if supplement had not been introduced
Some submitters, including Carers Australia, pointed out that had the
energy supplement never been introduced, the basic rate of payment of CPI
indexed payments would have been higher today. To prevent welfare recipients
being compensated twice (through the energy supplement and normal indexation of
prices) basic payments were adjusted at the time of the introduction of the
Removing the energy supplement therefore means that recipients of these
payments will have missed out on an indexation payment in an earlier year,
meaning their payments are lower today.
Similarly, Mr David Plunkett suggested that by removing the energy
supplement, a sole parent on Newstart with two children, aged 8 and 10, would
be worse off by an estimated $7.50 per week than if the energy supplement had
never been introduced.
To remedy this apparent problem, the Superannuated Commonwealth Officers'
Association suggested that a small increase should be applied to affected
payments at the same time as the abolition of the energy supplement, thereby at
least returning recipients to the same financial position they would have been
in if the energy supplement had not been created.
Increased complexity of
ACOSS also suggested that the proposed changes would create inequality
within the payments system and increase the complexity of administering
Cessation of the Energy Supplement will create two levels of
payment because existing recipients will continue to receive the supplement.
This creates inequality as two people in the same circumstances will receive
different rates of payment and will add further complexity to an already
complicated income support system.
Several stakeholders similarly argued that the measure would create a
two-class payment system where the date of eligibility determines access to
The Superannuated Commonwealth Officers' Association pointed out that a
two-tiered payment system also creates an incentive for people on Newstart not
to take up short-term work. If a person currently on Newstart interrupted their
payment with a short-term contract they would then be worse off if they
required Newstart at the conclusion of their contract.
The rationale for the measure
ACOSS questioned the Australian Government's rationale of removing the
payments on the grounds that the Carbon Pollution Reduction Scheme has been
abolished. It was observed that tax reductions for wage earners, introduced as
part of the package of compensation measures, have not been rescinded.
The Treasurer, the Hon Scott Morrison MP, noted that the carbon tax is
no longer in existence, and it was not necessary to compensate people for a
tax that no longer exists.
Speaking more broadly to this measure and other changes proposed in the bill
regarding the welfare system, Mr Morrison further emphasised that the
government 'remains committed to ensuring the welfare system continues to
provide a welfare safety net for Australia's most vulnerable people and
The committee notes the concerns raised by submitters in relation to the
welfare measures covered by the schedules in this chapter. Indeed, the
committee is cognisant that these measures will adversely affect the welfare
benefits that some people may receive in the future. However, the government is
committed to ensuring the welfare system is equitable while also undertaking
the significant task of repairing the federal budget.
On balance, the committee considers that these measures will contribute
to greater consistency across different welfare entitlements and improve the
sustainability of the welfare system in the longer term.
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