Social security system needs overhaul, not just a quick fix

ACOSS has called for two key measures in its submission to the Government’s pension review.

Firstly, a $2 billion financial relief package for Australia’s 5 million social security recipients. This would commence from July 2009 and focus on increases in Rent Assistance, Utilities Allowance, and Pharmaceutical Allowance. Secondly, ACOSS calls for a fundamental reform of the social security system to simplify an unfair and unwieldy system.

“The Government should introduce a financial relief package to help pensioners, sole parents, people with disabilities, unemployed people and carers struggling with the rising cost of essentials such as rents, energy bills and medical costs,” said David Thompson, Deputy President ACOSS.

“The social security system needs more than a quick fix. ACOSS calls on the Government to overhaul the system to make it fairer and simpler. Payments should be based on an Australian Minimum Standard of Living set at levels high enough for singles and couples to avoid poverty. The base rate would be supplemented by payments for extra costs such as rents, cost of disability and caring. The system should be reformed to encourage workforce participation and training.”

ACOSS is calling for:

1. A financial relief package for social security recipients

  • Typical increases in payments from the package range between $6 – $31 per week, depending on whether people rent privately and whether they already get the Utilities Allowance.
  • The package is carefully structured to help those who are struggling with increasing rents, household energy bills and pharmaceutical costs. It would include changes to:
  • Rent Assistance – an increase of 30% for maximum rates, with an average gain of $15 per week for social security recipients renting privately.
  • Utilities Allowance – an increase of 30% or $150 per year, with an average weekly gain of $3 for those currently receiving the allowance. The allowance would be extended to Parenting Payment, Newstart Allowance and other social security recipients who currently miss out. They would gain an average of $13 per week.
  • Pharmaceutical Allowance – an increase of 100%, equating to an average gain of $3 per week for pensioners and unemployed people with disabilities or a chronic illness.

2. Fundamental social security reform

  • The Henry Review, which is looking at the whole tax and social security system, should develop proposals for this reform.
  • The reformed system would be much simpler. Instead of separate levels of payment for each category (eg. Disability Support Pensions and Newstart Allowance) the basic rates would be the same for all, based on the Australian Minimum Standard of Living.
  • Those with extra costs such as rents, costs of disability or caring, would receive supplements to help with those costs.

A full copy of the submission is available by clicking here

Media Contact: Clare Cameron – 0419 626 155

Facts at a glance:

• There are 5 million social security recipients – including 2 million aged and service pensioners, 700,000 disability support pensioners, 400,000 sole parents and 500,000 unemployed people on Newstart and Youth Allowances and 100,000 carers.

Current payments are inadequate to meet basic living costs:

• The maximum single rate of pension is just $273 per week.

• The maximum level of Newstart Allowance is just $219 per week.

• A sole parent with two school age children must get by on $433 per week.

• Students aged 18 to 64 years receive just $178 per week.

• The highest level of Rent Assistance for low income tenants (for families with three or more children) is $71 per week, a small fraction of the escalating rents across most of Australia.

• Since June 2005 the average price of food has risen by 15%, rents have risen by over 17%, household energy bills have risen by 17%.

The current system is too complex and unfair

• People in similar situations receive different levels of payment. Forexample, people with a disability on NewStart Allowance receive $54 a week less than those on the Disability Support Pension, which discourages people on the pension from searching for a job and leaves people on NewStart Allowance with very low levels of income.

• Utility Allowance of $500 per year doesn’t extend to sole parents, unemployed people or students living away from home.