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Leaked cabinet document: government hypocritical over sole parents, welfare

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Richard Alston



The Government's attacks on the Coalition's program of welfare reform outlined in Fightback are nothing if not hypocritical.

Attached is a Cabinet-in-Confidence submission obtained by the Opposition and believed to have been presented to Cabinet last year. It proposes among other things that the qualifying age of the youngest dependent child for the sole parent pension be reduced from 16 to 12 years - the very Coalition initiative the Government has been falling over itself to attack!

The submission states that one of the reasons for its proposed reforms is that rising numbers of sole parent numbers has "called into question the assumption in the forward years that numbers have stabilised."

This concern is well founded.

During 1990-91, the sole parent pension queues swelled by another 16,800 (an increase of 7%) taking the total number to 265,700.

On top of this, the number of sole parent pensioners is now expected to average 287,500 throughout 1991-92, an increase of another 21,800.

The sole parent pension program is clearly out of control.

The case for lowering the qualifying age of the youngest dependent child from 16 to 12 is outlined in the submission very well:

"The qualifying age could be lowered to, say, 12 years, when the child enters high school to reflect the decreased need for constant parental · care and attention as children grow oldef; and

"It could be expected that the introduction o f an activity test for sole parents where the youngest child is older than 12, similar to that which applies to Job Search Allowance recipients (a requirement to seek work and undertake training), would further encourage self-h e lp___ __ _

rather than passive reliance on the pension." > c :a

P A R U m M o - ί £ /-'vK Y LiLiivnK Ϊ M1CAH

Given that outlays on the Department of Social Security now represent 27.7% of total Commonwealth spending and that for 1991-92 spending by DSS is set to rise by 14.4% (11.4% in real terms - and this is not all due to rising dole outlays) it is time for genuine welfare reform.

Senator Richardson has had a number of opportunities to introduce meaningful reform particularly in the area of sole parent pensions, unemployment benefits, invalid pension and sickness benefits. On each occasion he has squibbed the

challenge, preferring instead to introduce cosmetic name changes rather than a significant overhaul of the system, the need for which is so clearly evident from the dramatic blowout in the numbers of invalid pension, sole parent pension and sickness benefit recipients in recent years.

His reluctance to curb government expenditure in this area whilst splashing extraordinary amounts of taxpayers' funds on his overseas travel junkets makes his priorities clear.

Instead of calling a press conference for next Tuesday to run yet another diversionary scare campaign, Senator Richardson ought to cut the hypocrisy, stop the knocking and skip the bleating. Senator Richardson ought to get on with addressing thecentral issue of the Fightback package: how to get nearly one million Australians back to work - the best poverty alleviation of all.

For further information contact: Senator Richard Alston on [03] 890 5177 (w) or [03] 817 1675 (h).

Sunday, 8 December 1991.

Cabinet-ln-21 -Confidence

h— i^i i d a r B3


Prper-g-n fiescrrrf ion "

Sole parent; pensions and allowances are paid to persons who have

substantial sale care and control cf a child cedar Ιό years c :

ape. payments are at the sane rate and subject to the sane

income and assets test as ace pension.

2. Beth nutters of sole parent pensioners and real outlays grew

rapidly until ISSS-Et, but growth has levelled cut since then.

Outlays on sole parent pension in 1SES--30 are estitated to be

52 3 3 Cm- Estimates for 2S9C— S1 to 19S2-B3 era based on numbers

of sale parser pensioners retaining steady at around 241, oco

annually, fhis reflects, arc·no other mines, the reduction ir. '

the child qualifying age iron 24 to 15, acre intensive review

activity, as veil as measures to reduce their reliance on social

security (e.g. the Child Support Scheme) ar.d enhance _

their labour marh-et prospects {the Jobs, Education, end Training

Program - JEZ>.

3. Despite these measures, there remains co.-.s id arable co.-.earn

about major aspects of this program: . "

(a) Budget and forward estimates of expenditura for IS55-50 ana

2990-51 (ar.d later) have recently bad to be revised upwards

significantly ($13On for 29S0-S1), largely because numbers

of recipients have been higher than estimated. In .

particular, the number of recipients has so tar risen .

sharply throughout 1SS9-50 and this has called into question

the assumption in the forward years that numbers have

stabilised; " * '

(b> the objective of persuading sole parents to raise their

overall living standards by tapping additional sources cf

income appears to be meetrine with less than expected _

success; in particular, savings in sols parent pension

outlays achieved frea the new Child Support Scheme have been

considerably lever then had earlier bean bedgated for; and

(c) it 5- S i unclear to what extent pensions are being claimed by

sore parents vho in fact have r.o entitlement because they

2f"c living with/being supported by ce factos; have jobs but

are net declaring the income; or vho claim they have been


22 .


. . &TTAC35KEST S3 .

• deserted when the spouse may be temporarily absent for ether

reasons. .

4. There is a coot case for addressing these concerns by:

" (a) e wide ranging review c: the Sole Parents prccraa aired at

■ cnrcailinc outlays by farther reviewing eligibility;

• (b) further encouraging self-arcvzsion (either through

participation in tbs labour market or greater effsrts to

seek maintenance); and

(c) increasing effort to target assistance to those rest in

' . need. ·

Area? for Tie'.’i e v ■

5. Specific measures that should be covered in such a review

include: ’

(i) Child qualifying ace

6. Currently, a ‘qualifying child* for the purpose cf scle

parent pension eligibility is a child under i€ or a child

attracting child disability allowance (CCX). The qualifying age,

could be lowered to, say, 12 years, when the child enters high

school to reflect tne decreased need fer constant parental car*

and attention as children grow older.

(ii) Activity Testing

7. In the 198S-ES Budget the Government introduced 3ΞΤ for scle

parent pensioners to assist and accelerate their transition into

paid deployment with the ait of increasing their incones and

reducing their dependence on welfare. It present participation

in the JTT program is voluntary. it could be expected teat the

introduction of an activity test fer sole parents where the

ycuncest child is elder than 15 ■ similar to that which applies ta

Job Search allowance recipients (a requirement ta seek weri: cr

undertake training)., would further encourage self-help rather

than passive reliance on the pension.

8. Such a test might also uncover more quickly scle parent

pension recipients Who already have jobs but are net declaring

the income to CSS.

(iii) Review activity ,

9- * Z.t present reviews cf all sole parent pensioners every four

• weeks during their first three months on pension and at

•subsequent 3 month intervals are supplemented by the week cf 5

Cabin et-ln-Confldence

Cabinet-t «-Confidence ΖΤϊΧΟΣΧΣΧΤ S3

aotolls review teams. Zr. L938-S5 triese teams conducted over "

iOv'000 re vie vs as a rest It of which 1 ,800 pensions were .cancelled

and s s a e T ' 9 ^ reduced. Zr ccnpariscr. with the V 3 population,

wfr.ioh is new covered fcy 35 nubile review tears, scle parents are,

arguably, under-rev: ewer. This combined with the high ^hit

gates" cf existing reviews suggests that additional tears would

he likely to uncover significant numbers cf pensions being paid

in unwarranted circunstareas. .

(iv) Indicia for de facto relationships *

1C. These were introduced in the 15c9 Xpril Zoonotic Statenent

to clarify the factors to be taken into account is deciding

whether a de facto, relationship exists, there a relationship is

indicated, the onus of proof is on the pensioner to demonstrate

that none exists. The original savings for this rassure were

$25= in lSSi-51 and $42= in i55l-=2. However, DSS is

encounter in; treeless in isplener.tinc the char.oe which nav

•iescardise tha=e savings anJess corrective action is taken

exactly. In addition, there is sccoc fer tightening the indicia

thenselves 'ey, far exactle. including the presence cf natural or

adactivg ch~~dr°n cf each of the pensioner and the ether resident

ana nsvinc shared joint assets and liabilities fincluding

financial interests* cf anv value.

(v) aaiansiaace in core test

11. Currently the maintenance income test withdraws pension at

the rate cf fifty cents ir. the collar for each dollar cf

maintenance above a threshold of $15 per week where there is one

child plus $5 per week fer each additional child. The Child

Sunccrt Senses verbs to the· advantage of beta parents, who are

thereby able to shift sens of tbs financial responsibility for

-their children tax ravers and sole parents, who enjoy

increased inters beyond those of ether pensioner and beneficiary

fanilies with children. X tighter taper rata and/or a lower

threshold wczlc further restrict the opportunity for parents to

avoid cn-ccing financial responsibilities for their children and

deliver significant budgetary savings. ?or example, a 255 taper

would save in the order cf $30= in the first year, $40a in the

second and =soa in the third. This would still be sore generous

than the 2. 00s taper applied to maintenance in countries such as



• 24

Cabinet-ln-Confidence ΧΤΤΧεΞΚΞΜΤ B3

3nired States ar.d Hew 2ee.l2.nd where it directly replaces

-rather· t-v>*n adds to income support. . _ .

(vi) Requirement to take reasonable action to obtain


12. ' Grant cf scle parent pension is now contingent upon the

• applicant talcing reasonable action to obtain naintenance. SSS

guidelines cttline a number_cf .circumstances in which the

applicant far sale parent pension is exempted ircn taking

reasonable action to obtain taintstance. Current!v, in sene 23i

c f ' sole tarent pensions .cranted. the annlicar.t is be ire e>:enrtBC

fro» the requirement to seek nair.tenance; this is a considerably

higher rate cf exemption than had been assumed in the earlier"

•estimates of the savings to be achieved iron the Child Support

Scheme and is a manor factor in the shortfall to date in the

^delivery of savings in sole parent pension outlays fcy the Scheme.

The exemption rate could be reduced "by:

(a> a more critical approach to claims of exemption ca grounds

that, eg the identity of the father is net known, or his

whereabouts are unknown (it is important that such claims

. are properly investigated, because the maintenance income

' test (claw hack) arrangements provide an incentive fer

collusion "between the custodial and noo-custcdial parents tt

make payments vithemt disclosing them to the CSS); and

(b) more intensive reviaw and fcllcw-up cf cases where exemption

has been granted (sc where the non-custcdia! parent is in

gaol or overseas, cr on law income) to ensure that changes "

in circumstances are picked up (eg return from oversees,

release from.gaol, obtaining a full time deb) and that .

' maintenance, acticn is then initiated. .

(vii) Payments to sole parent pensioners overseas.

13. Currently sole parent pensioners can continue to receive I

payments far up to twelve months whilst overseas. In 2SS9, 556 :

sole parent pensioners were paid overseas at a cost cf

Reductions in outlays csuld—— allevirnr maynents

oversets for a much shorter tine, say six months.

(viijL) T.ignid assets * _

14. In the 12S0 Tehruary Rconamic Stzterent. the Government

announced that from September 1950 applicants for unemployment


TEL No. 4 Jun 90 15:58 Mo . 015 P.01

> - ·· ■

r : · ' -· -- -<-7a;2StSe655i^s · · .· ~ 1 ." Cabinei-Sn-Confidenee ir- ~ - rf.·*» ............ ~-=»

" ... _ . · . J^TTACSmsCT B3 "

>ίντβίic who have aogg than SSOOO in lie-aid asset·. will be ·

^requires to serves λ oeferaer.c period of ' icur weeks' in addition to tise standard oae week waiting period. Ths rationale, behind "this tteasare was to help ensure that payments are targeted towards

- people with r.o other available naans of suruort. This ■

ceald be acactsd to apply to applicar.ts for sole parent nensisr.


Cabinet-] n-Conft den c e AIThCHHEHT C3


Proposals ·

The -Departments of Social Security and Finance prepare a

Memorandum by 15 June 1990 identifying options for curtailinc·

outlays by further reviewing eligibility; farther encouraging

self-provision; and increasing effort to target assistance to

these eest in need. Such a review to include in particular!

. lowering to 12 the qualifying age of a child for the purpose

' of sole parent pension eligibility;

. introducing an activity test for sole parents where the

youngest child is older, than 12;

. increasing the number of aotiile review teans; .

. tightening the indicia for de facto relationships and

inproving effectiveness of their administration;

. strengthening the requirement to take reasonable action to

obtain maintenance;

. restricting payments to sole parent pensioners overseas to 6

conths duration# and »

. subjecting applicants for sole parent pension to a liquid

assets test.