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Thursday, 26 June 2014
Page: 4112


Senator PAYNE (New South WalesMinister for Human Services) (16:22): I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

SOCIAL SERVICES AND OTHER LEGISLATION AMENDMENT (2014 BUDGET MEASURES No. 1) BILL 2014

This Bill introduces a package of measures from the 2014 Budget in the Social Services portfolio.

The 2014 Budget is key part of the Government’s Economic Action Strategy to build a strong, prosperous economy and a safe, secure Australia.

The Government’s welfare reforms encompassed in the Budget are aimed at increasing everyone’s ability to contribute to the economy - everyone who can contribute, should contribute.

The Government will continue to provide assistance for families, seniors, people with disability, carers and those most in need. The 2014 Budget includes $146 billion of welfare spending - or 35 per cent of total Budget expenditure. This includes pensions, family payments, unemployment benefits and childcare support.

However, our population is ageing, and government spending has been growing faster than the economy. This is placing greater pressure on our welfare system. We want government assistance to be targeted towards supporting the most vulnerable Australians, while encouraging those who are able to work or study, to do so.

Firm and decisive action is required to put the Budget back onto a secure and sustainable footing.

Budget measures

Seniors Supplement and Energy Supplement

To help ensure that payments to senior Australians remain targeted to those who need them the most, the first Budget measure in the Bill will cease the Seniors Supplement, currently received by holders of the Commonwealth Seniors Health Card (or the Veterans’ Affairs Gold Card) after the June 2014 payment.

However, other benefits will continue to be available to cardholders, including discounts on medicines under the Pharmaceutical Benefits Scheme, health safety net thresholds, and lower fees on medical services.

Recognising the Government’s commitment to abolish the carbon tax, while keeping in place the associated payment increases, this Bill will rename the former Clean Energy Supplement as the Energy Supplement, and maintain it at current levels from 1 July 2014 by permanently removing indexation of the supplement.

The new Energy Supplement will be available to people who formerly received the Clean Energy Supplement in association with their main income support payment, family payment or Veterans’ Affairs payment, or through being a holder of the Commonwealth Seniors Health Card or an eligible holder of the Gold Card.

Indexation and rates

Several changes and pauses to indexation for Australian Government payments will be implemented. These measures will help reduce our debt, but pausing indexation will not reduce payments.

These measures include pausing indexation of the income and asset free areas for all working age allowances (other than student payments) and for Parenting Payment Single for three years from 1 July 2014.

Family Tax Benefit income thresholds (for the maximum rate of Family Tax Benefit Part A and the lower income earner threshold for Family Tax Benefit Part B) will stay at current levels for three years from 1 July 2014.

The Bill will also ensure Parenting Payment Single is indexed only against the Consumer Price Index from 20 September 2014.

Disability Support Pension

The Bill will also introduce changes to help young people with disability to enter the workforce if they are able to do so.

From 1 July 2014, certain Disability Support Pension recipients aged under 35 will undertake compulsory work-focused activities, such as a programme with an employment service provider, work experience, or education and training, to help increase their chances of finding and keeping a job.

A targeted review will also be undertaken of Disability Support Pension recipients aged under 35 who originally accessed the payment under less rigorous impairment tables in operation between 2008 and 2011. Recipients will have their level of impairment reassessed against the current impairment tables, and will also have their work capacity reassessed.

People with a manifest disability or with a work capacity of zero to seven hours a week will not be reviewed under this measure. Recipients assessed as having an ability to work at least eight hours a week will be provided with the support needed to allow them to develop their work capacity, while still receiving the Disability Support Pension.

Workforce age and student changes

As part of a package of changes to simplify the social security system, and strengthen the incentives for young unemployed people to participate in education, training and employment, the Bill will apply the ordinary waiting period of seven days for all working age payments from 1 October 2014.

A further measure will ensure that, while a student can currently continue to receive payment even while they are overseas on holiday, students will continue to receive payments while overseas, from 1 October 2014, only in certain circumstances such as when studying or in a family emergency.

Family payment reform

Several reforms were announced in the Budget to improve the sustainability of family payments, while ensuring they continue to support those most in need of assistance.

The Government will continue to provide payment assistance to families to supplement their incomes. In 2014-15, the Government will provide around $19 billion in Family Tax Benefit. However, the payment should provide assistance to families who need it most, and encourage everyone who can work, to do so.

Amendments in this Bill, effective from 1 July 2014, will maintain the standard payment rates of Family Tax Benefit Parts A and B at current levels for two years until 30 June 2016.

Social and Community Services Pay Equity Special Account

The Bill will also make a non-Budget amendment to add the Western Australian Industrial Relations Commission decision of 29 August 2013 as a pay equity decision under the Social and Community Services Pay Equity Special Account Act 2012. This amendment will allow payment of Commonwealth supplementation to service providers affected by the decision.

Conclusion

Our welfare system must be sustainable and it must be fair. It needs to provide a safety net, whilst ensuring we are delivering a work-ready, not a welfare-ready, nation.

Our welfare system is complicated and costly and, in the Budget measures introduced by this Bill, we begin the work of making it strong for the future.

SOCIAL SERVICES AND OTHER LEGISLATION AMENDMENT (2014 BUDGET MEASURES No. 2) BILL 2014

This is the second Bill in the Social Services portfolio to introduce measures from the 2014 Budget.

This second Bill follows up the reforms to indexation and payment rates, supplements, Disability Support Pension, and student and workforce age payments already introduced in the Social Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014.

Indexation and rates

Several further changes and pauses to indexation and deemed income arrangements for Australian Government payments will be introduced by this Bill.

Indexation of the income and asset free areas for student payments, and student income bank limits, will be paused for three years from 1 January 2015.

Indexation of the income and asset free areas for all pensions (other than Parenting Payment Single), and the deeming thresholds for all income support payments, will be paused from 1 July 2017 for three years.

The Social Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014 introduced amendments to ensure Parenting Payment Single is indexed only against the Consumer Price Index from 20 September 2014. This second Budget Bill will similarly ensure all other pensions are indexed only against the Consumer Price Index, from the later date of 20 September 2017. This will help ensure the Age Pension in particular is sustainable, while pensions generally still keep up with the cost of living.

The Government will also change the level of a person's financial assets at which a higher return is deemed. From 20 September 2017, the social security and veterans' entitlements income test deeming thresholds will be reset to $30,000 for single income support recipients, and $50,000 combined for pensioner couples. The deeming threshold amount for a member of a couple other than a pensioner couple will be $25,000.

Disability Support Pension and carers

From 1 January 2015, recipients of the Disability Support Pension who travel overseas for more than 28 days in a 12-month period will need to reapply for the payment on their return to Australia. There will be some exemptions - for example, for people with terminal illness who are returning to their country of origin to be with family, or people with permanent and severe disability and no future work capacity.

This Budget has delivered $3 million in funding to honour the Government's election commitment to set up the Young Carer Bursary Programme, which will provide support for young carers in Australia who look after people with disability, people with physical or mental health issues, or older people in need of care.

The responsibilities of young carers can have a significant impact on their personal lives and educational opportunities. The Young Carer Bursary Programme will help reduce the financial burden on young carers by providing around 150 bursaries annually that will allow them to continue their studies.

This Bill will support the new programme by excluding from the social security and veterans' entitlements income test any payments made under the programme from 1 January 2015.

Commonwealth Seniors Health Card

A measure affecting the Commonwealth Seniors Health Card will include untaxed superannuation income received in the form of an account-based income stream in the assessment for the card. This will ensure people with similar incomes are treated consistently, whether they are being assessed for a payment such as the Age Pension or for the health card. Superannuation products purchased before 1 January 2015 by existing cardholders will be exempt from the new arrangements.

Related to this measure, holders of the Commonwealth Seniors Health Card will benefit from an extension from six to 19 weeks in the length of time they may be absent from Australia without having to reapply for the card on their return.

Workforce age and student changes

From 1 January 2015, young unemployed people aged 22 to 24 will no longer be qualified for Newstart Allowance or Sickness Allowance, and instead will be able to qualify for Youth Allowance (student) or Youth Allowance (other) until they turn 25 years of age.

The changes simplify the social security system, and strengthen the incentives for young unemployed people to participate in education, training and employment.

A six-month waiting period and time-limited income support payments will give young people stronger incentives to earn or learn. Young people will have access to a full range of supports to help them become work-ready, including employment services, training and relocation assistance. Exemptions exist for those with limited capacity to work, who are undergoing study, who have a significant disability, or who have parenting responsibilities.

In recognition of the importance of education and training in preventing future unemployment, young people returning to full-time school, vocational education or university will not be subject to the waiting period.

For every one year of work history, one month will be discounted from their waiting period, pro-rated for part-time or casual work, to a maximum of five months' discount from the waiting period.

Also from 1 January 2015, the current Relocation Scholarship assistance for students relocating within and between major cities will be removed, as will the Education Entry Payment and the Pensioner Education Supplement.

Family payment reforms

Several further reforms will be implemented from 1 July 2015 to improve the sustainability of family payments, while ensuring they continue to support those most in need of assistance:

The Family Tax Benefit Part B primary earner income limit will be reduced from $150,000 to $100,000. Families with primary earner income over $100,000 will not be eligible for Family Tax Benefit Part B.

The Large Family Supplement will also be better targeted, by being directed to families with four or more children.

The Family Tax Benefit Parts A and B end-of-year supplements provide additional assistance at the end of the year when Family Tax Benefit is reconciled against tax return incomes. The supplements will be revised to their original values of $600 and $300, and indexation will cease.

Payments of Family Tax Benefit Part B will be available to families until their youngest child turns six. Transitional arrangements will apply for two years to families already receiving the payment for children aged six and over.

The Government recognises that single parents have greater difficulties balancing work and caring for their children. This Bill will provide low-income single parents with extra assistance of $750 a year. This will be provided to single parents on the maximum rate of Family Tax Benefit Part A, and not receiving Family Tax Benefit Part B, for each child aged six to 12.

The per-child add-on that currently applies for each child after the first under the income test for the base rate of Family Tax Benefit Part A will be removed.

Pension age

Building on the move by the former Labor Government to increase the pension age to 67 from 1 July 2017, this Bill will continue the gradual increase in the qualifying age for the Age Pension, and the non-veteran pension age, to 70 by 1 July 2035. The Bill does not change the pension age for veterans.

Australians are living longer, and our population is ageing. Between 2010 and 2050, the number of people aged 65 to 84 will more than double, and those aged 85 and over more than quadruple.

This will present challenges for economic growth, living standards and fiscal sustainability. The change in the pension age will encourage greater self-provision. Those who cannot fully support themselves before pension age are protected by the social security safety net, subject to meeting relevant eligibility criteria.

Veterans' Disability Pension

In the last Budget measure, the Bill will remove from 1 January 2015 the three months' backdating of disability pension under the Veterans' Entitlements Act 1986.

Conclusion

The Government is committed to ensuring our welfare system is sustainable and fair.

Ordered that further consideration of the second reading of these bills be adjourned to the first sitting day of the next period of sittings, in accordance with standing order 111.