Government urged to make a new start in 2015

30 December 2014

Two of the nation’s leading community welfare organisations today called on our nation’s politicians and leaders to partner with business, welfare, community groups, and churches and charities in 2015, to address growing poverty and the country’s jobs crisis, if we are to build a more prosperous, productive and fairer society.

Dr Cassandra Goldie, CEO of the Australian Council of Social Service (ACOSS) and Maree O’Halloran, President of the National Welfare Rights Network (NWRN) said today: “Australia’s social security system provides safety for families and individuals and helps stabilise the economy in downturns.”

“Unfortunately, a number of social security changes will take effect from 1 January 2015 that will cause hardship for families, young people and people with disabilities. The most welcome news in 2014 was that the Senate blocked the most extreme and harsh social security measures to come before the Parliament since the Social Security Act was first introduced in 1947.”

“Of the more than 20 major social security changes flagged in the 2014 Federal Budget, the most extreme involved denying people under 30 years of age unemployment payments for six months of each year. The Government estimated that 110,000 people each year would be impacted by this policy with some becoming destitute. The Government planned to set aside $230 million over four years for food parcels and other emergency relief for those made destitute by this policy.

“The Senate rejected a proposal to raise the eligibility age for Newstart Allowance to 25 for young unemployed people. Due to start on 1 January 2015, over a 12 month period, this measure would leave around 70,000 young people with $48 a week less to live on.

“An estimated 3.8 million Age, Carer, Veteran and Disability Support Pensioners would have been short-changed by $100 a week over a decade if less generous indexation rules were passed by the Senate. The Age Pension eligibility age will not increase from 67 to age 70 while the Senate maintains its opposition. This harsh plan would severely affect older people who lose their job and Indigenous people who have much lower life expectancy than their non-Indigenous peers.

“January 1, 2015 marks two years since the Labor Government pushed more than 60,000 single parents onto the lower-paying Newstart Allowance (some single parents had already suffered this harsh cut in 2006 under a Coalition Government). There are currently around 90,000 single parents – 95 per cent of them women – whose families have lost between $80 and $140 per week under a policy that Labor has now apologised for implementing.

“Around 260,000 Parenting Payment Single recipients were due to have their pensions frozen in real terms under Budget 2014 plans to alter indexation arrangements from 1 January 2015. If this plan had been approved by the Senate it would have left single parent families around $80 a week worse off over the next 10 years.

“From January 1, over 42,000 single parents, carers and Disability Support Pensioners would have also lost up to $64 a fortnight if the Abbott Government’s plans to axe the study payment, the Pensioner Education Supplement, had passed the Senate by 1 January 2015.

“New laws in place are set to cause significant harm to low income and disadvantaged people in Australia. Among the major social security changes that are due to take effect in 2015 are:

  • A medical review of 28,000 Disability Support Pension recipients aged under 35 under tighter impairment tables if they qualified for payments between January 2008 and December 2011. Around half (48 per cent) of those being reviewed by the under 35 measures have a mental health condition. An estimated 1.4 per cent (around 1,400 people with disabilities) will be moved onto a lower Newstart Allowance. This would leave them around $170 per week worse off;
  • Apply ‘program of support’ rules to DSP recipients under 35 and new compulsory ‘participation plans’ with compliance penalties to apply;
  • Generally limit DSP overseas portability to just 4 weeks each 12 months, saving $5 million;
  • Limit of six-weeks overseas portability to student payments;
  • Pause indexation of assets value of limits of all working age allowance, student and parenting payment from single for 2 years from July 2015;
  • Pause indexation for 3 years of assets test free areas for all pensions (except Parenting Payment Single) from July 2017, and
  • Axe relocation assistance scholarship assistance for students relocating within and between major cities from 1 January 2015.

“The first Abbott Government Budget contains billions of dollars in social security spending cuts that will lead to intolerable hardship for the poorest and most disadvantaged in the community.”

“The Government has, however, supported a number of modest measures aimed at higher income earners that both ACOSS and Welfare Rights support. From 1 January 2015 untaxed superannuation income will be included in the assessment for Commonwealth Seniors Health Card. The Senate also agreed to improve the targeting of Family Tax Benefit Part B by reducing the primary earner income limit from $150,000 to $100,000 a year from July 2015.

“There is some welcome news for young people receiving social security payments, with small increases in these very low weekly payments on 1 January. Those on Youth Allowance, Abstudy and Austudy Payment increase only even 12 months, unlike other social security payments which are increased every six months. The maximum rate of Youth Allowance for a person over 18 and living away from home is just $213.40 a week, and will be increased by just $6.20 a week. Young people on such low rates find it extremely difficult to make ends meet, especially if they rent privately. Welfare, business and the ACTU are calling on the Federal Government to increase single allowance payments by $51 a week in the 2015 Federal Budget.”

“ACOSS, along with the Welfare Rights Network and hundreds of thousands of people with disabilities and their families and carers await the release of the Government’s review of the welfare system with high levels of both caution and concern.

“While the simplification of social security payments is important, a more critical issue for the overall health of our system is found in addressing the concerns of both the adequacy of payments, especially for those on allowance payments and the provision of more effective employment assistance.

“Leaks suggest over time, payments for people with disabilities will be reduced and that some people with certain types of disabilities should be paid lesser amounts because of the nature of their disability. Indications are that people with psychiatric or mental illnesses will be singled out, despite evidence pointing to the global dimensions of mental health problems, and evidence suggesting that employers are less likely to employ people with mental health conditions.

“We want to see the Government make a new start in 2015, by scrapping harmful legislation currently before Parliament and working with us to develop a strategy to address growing poverty and the jobs crisis facing our country.”

Media comment:
Cassandra Goldie, ACOSS CEO: Mobile: 0419 626 155

Further comments
Social Security cuts affecting families

“The Bills currently before the Parliament contain a wide range of measures that have complex interactions with each other. For example, a single parent on Newstart Allowance with a teenage son, an eight year old daughter and a 22 year old son will be hit by many simultaneous cuts to her income and her overall family income will be reduced a number of times by the numerous income tests that apply to her situation (often referred to as the “stacking” of income tests).

“We identified that a single parent could be impacted by 11 different measures in the Bills before the Parliament. If her oldest child is required to serve a six month exclusion period, they will be expected to support that child for six months of each year to help cover basic costs like food and medicines and transport, until they turn 30.

“Other changes that will impact this families’ income includes the freezing to income test thresholds, FTB income test thresholds; freezing of the FTB ‘end of year’ supplements; a freeze to the Youth Allowance income test threshold; axing of the Pensioner Education Supplement and the Education Entry Payment. They may also lose some of the benefits available through the Pensioner Concession Card as a result of more restricted access to concessions as a result of the termination of the National Partnership Agreement on concessions, with the removal of $100 million in funding to the states and territories.

No strategy to address poverty and the jobs crisis facing Australians
The practical effect of many of the proposed social security changes is to reduce the prospects for work and entrench poverty and disadvantage.

“Our other major concerns with the Government’s agenda is that it has no coherent plan or strategy to deal with the crisis of long term joblessness.

“The only response to the explosion on long term joblessness is the funneling of over $900 million into wasteful, expensive and ineffective ‘Work For The Dole’ programs. Increased wage subsidy schemes and ‘demand-led’ employment programs are needed to support the 705,000 Newstart Allowance recipients seeking to find employment.”