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Wednesday, 18 June 2014
Page: 6398


Mr ANDREWS (MenziesMinister for Social Services) (09:20): I move:

That this bill be now read a second time.

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 that 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 Program, 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 Program 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 program by excluding from the social security and veterans' entitlements income test any payments made under the program 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 will 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. I commend the bill to the House.

Debate adjourned.