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Wednesday, 2 December 2015
Page: 14420


Mr PORTER (PearceMinister for Social Services) (09:43): I move:

That this bill be now read a second time.

The government outlined its fiscal strategy in the 2014-15 budget, and reaffirmed that strategy in the 2015-16 budget: the aim being to strengthen the government's balance sheet by redirecting spending to boost productivity and workforce participation, while maintaining strong fiscal discipline.

This approach is augmented by the government's budget repair strategy which holds the objective of achieving—on average—budget surpluses over the course of the economic cycle.

We are, as a government, committed to fiscal discipline in the Social Services portfolio. While significant savings from this portfolio have been secured through recent federal budgets, we must continue with our efforts to spend our Social Services budget more effectively to reduce the long-term pressures, to make available resources that will better target support to those who need it most, and to ensure that Australia's social security safety net is sustainable for future generations.

This budget repair bill gives further active support of our government's collective efforts towards budget repair, including through implementation of savings measures to secure the budget position.

The bill will reintroduce several measures improving the fairness and sustainability of the pension system.

The first measure was announced in the 2015 budget. From 1 January 2017, the bill will reduce from 26 to six weeks the length of time the age pension, and a small number of other payments with unlimited portability, will generally be paid at the basic means-tested rate while the person is outside Australia.

After six weeks, payment will be made on a proportional basis according to the length of the pensioner's Australian working life residence—a concept representing the length of time the person has resided in Australia between age 16 and that of pension age.

Pensioners overseas on the implementation date will stay under the current 26-week rule until they return to Australia. Subsequent trips will be under the new six-week rule. Those pensioners with 35 years or more of Australian working life residence, and those already exempt from the proportional payment rules—such as some recipients of the disability support pension—will not be affected.

It is not considered reasonable for taxpayers to pay pensions indefinitely to people outside Australia, without regard to their period of residence in Australia, for anything other than short absences. This measure will therefore reinforce and strengthen the residence based nature of Australia's social security system.

This bill also takes the opportunity to reintroduce some further measures from the 2014 b udget, all of which are currently before the Senate in the Social Services and Other Legislation Amendment (2014 Budget Measures No. 4) Bill 2014. The reintroduced measures will no longer proceed as part of that 2014 bill.

Two of these reintroduced measures are to cease the pensioner education supplement and the education entry payment.

The pensioner education supplement was introduced in 1987 to assist single parents with the ongoing costs of education. At the time, this was in recognition of the difficulties that single parents experience in obtaining employment after being in receipt of the then sole parent pension for up to 16 years. Since then, eligibility has been selectively extended.

Despite its name, the pensioner education supplement is not available to people receiving the age pension. The most common payment type whose recipients also receive pensioner education supplement is parenting payment single (43 per cent), followed by disability support pension (41 per cent) and carer payment (9 per cent).

As at the end of September 2015, the pensioner education supplement provided fortnightly payments to around 46,000 people studying full-time or part-time in secondary or tertiary education while on income support payments.

The education entry payment was introduced in 1993 to help remove financial barriers to education by providing assistance to certain long-term payment recipients with the up-front costs of study when they begin approved education courses. In 2014-15, around 83,000 recipients received an education payment worth $208 per year, paid annually as a lump sum.

When they were introduced, both of these payments aimed to assist long-term income support recipients who had been out of the workforce for a long period of time by helping them improve or re-build their skills to be more competitive in the labour market.

However, since the introduction of these payments, several policies have been introduced to reduce the length of time that income support recipients, including single parents who have capacity to work, remain out of the workforce. Policy changes include varied eligibility and participation requirements for parenting payment, recognising that, as their children age, parents' capacity to work increases.

There have also been a number of changes to assessment and eligibility criteria for payments for people with reduced capacity to work, requiring these people to work or look for work in line with their capacity. Such individuals are assisted into the workforce through services, such as jobactive, which can help jobseekers develop skills that they need to look for, find and remain in work.

The government remains committed to providing incentives for income support recipients to improve their employment prospects through study or training. However, more appropriate channels of Government-funded study and training assistance for income support recipients are available through employment service providers, the Higher Education Loan Program, FEE-HELP and VET FEE-HELP tuition loan programs.

Additionally other income support payments, including youth allowance (student) and Austudy, are particularly targeted towards students, taking into account their particular circumstances and needs. These student payments will continue and will not be affected by the removal of the pensioner education supplement and education entry payment.

The removal of the pensioner education supplement and education entry payment will contribute to ensuring the long-term sustainability of the income support system by improving the Commonwealth's fiscal position. The measure to cease pensioner education supplement is expected to save $252.4 million over the forward estimates, and the cessation of education entry payment is expected to save $64.4 million over the forward estimates.

Ceasing these supplements will also help to simplify the income support system by reducing the number of payment supplements, consistent with the recommendations of the McClure review of welfare, A New System for Better Employment and Social Outcomes. The review highlighted that the current 20 main payment types and 53 payment supplements result in an income support system that is complex, confusing and difficult for individuals to understand, as well as for the government to administer.

This bill also reintroduces elements of the 2014 budget measure, Maintain eligibility thresholds for Australian Government payments for three years. These changes will:

maintain at level for three years the income free areas for all working age allowances (other than student payments) and for Parenting Payment Single—from a new start date of 1 July 2016; and

maintain at level for three years the income free areas and other means test thresholds for student payments, including the student income bank limits—from 1 January 2016.

Under the current rules, income free areas and means test thresholds are indexed annually in line with movements in the CPI. Not indexing the value of these free areas and thresholds for three years will mean that increases to payments that would have occurred on either 1 July or 1 January of each year of the three-year period will not now occur. The specific customer impacts of pausing these various means test thresholds depend on payment type and people's circumstances. Payments will not be reduced unless customers' circumstances change, such as their income or assets increasing in value.

The indexation of these thresholds will recommence in 2019.

Of course, pausing indexation is a lever that has been used by successive governments to realise budget savings and help slow the growth in social security expenditure.

These changes collectively will help achieve the long-term sustainability of the payments system, while ensuring Australia has a targeted means-tested income support system that provides financial assistance to those most in need, while encouraging self-provision.

Reintroducing the amendments in this new bill reflects the government's ongoing commitment to the measures. All of the changes in this bill are important measures to support the sustainability of the social security system and the nation's budget. I commend the bill to the House.

Debate adjourned.