Media Release by The Hon Christian Porter MP

Simple and fair changes to further strengthen Australia’s welfare system

The Turnbull Government will today introduce legislation to simplify and strengthen a number of government payments.

“The measures contained in the Payment Integrity Bill and Better Targeting Student Payments Bill will help ensure the welfare system is targeted to those with the greatest need and remains sustainable into the future,” Minister for Social Services, Christian Porter, said.

The majority of the measures in these two Bills were announced in the 2017-18 Budget.

The proposed changes in the Payment Integrity Bill are:

  • To require future pension applicants to have a stronger connection with Australia before being granted the Age Pension or DSP
  • To cease payment of the Pension Supplement after six weeks overseas
  • More consistent treatment of income for families receiving Family Tax Benefit Part A, and
  • To expand the maximum Liquid Assets Waiting Period from 13 weeks to 26 weeks.

“Strengthening the residence requirements will require future pension applicants to have 10 years continuous residence, as well as five years of this residency being during their working life or being self-reliant. Alternatively, claimants can receive the pension with 15 years continuous residence. This will ensure that people have some reasonable connection to the Australian economy and society before being granted a permanent pension payment,” Minister Porter said.

“Aligning the Pension Supplement with the portability arrangements of most other income support payments will also reinforce and strengthen the residence-based nature of Australia’s social security system.

“And, by aligning the Family Tax Benefit Part A income test taper rates so that families with income above the higher income free area (currently $94,316) are treated equally helps ensure that the payment goes to those who need it most in a sustainable way.

“The expansion of the Liquid Assets Waiting Period will ensure that people are reasonably required to draw upon their own financial resources before entering the welfare system.”

The proposed changes in the Better Targeting Student Payments Bill are:

  • Restricting access to the Relocation Scholarship to students whose parental home is in Australia and who are studying in Australia
  • Aligning Pensioner Education Supplement and Education Entry Payment rates to study loads and time spent studying.

“The Relocation Scholarship is primarily intended to assist students from regional and remote Australia who need to move away from home to continue their studies,” the Minister said.

“This measure will ensure those students continue to receive the scholarship, but will mean students relocating from or studying overseas will no longer be eligible for the scholarship.

“The rates of Pensioner Education Supplement and Education Entry Payment will be better aligned with study loads so that the maximum amount is paid for full-time study and proportionate amounts are then paid for decreasing study loads. Additionally, the Pensioner Education Supplement will be paid only during the actual time students spend in education, aligning the payment to study periods.”

These changes will not affect recipients’ primary income support payments.

The measures in these Bills are estimated to provide a total savings of $893.2 million over four years.

Summary of measures

Pensions

Increasing the residence requirements for Australian pensions

From 1 July 2018, the residence requirement to qualify for the Age Pension and Disability Support Pension (DSP) will be strengthened.

In order to qualify for Age Pension or DSP this measure will require a person to have 10 years continuous Australian residence, and either:

  • five years of this residence being during their working life (16 years of age to Age Pension age), or
  • greater than five years not in receipt of an activity tested income support payment.

In circumstances where the person does not meet these requirements, they will be required to have 15 years continuous Australian residence.

At present, the Age Pension and DSP can be granted with 10 years of residency, of which only five years must be continuous and with no requirement that any of that be during their working life.

Existing exemptions to Age Pension and DSP residency requirements will be maintained for Humanitarian entrants and for those whose inability to work happened while they were an Australian.

This measure, announced in the 2017-18 Budget, is estimated to save $119.1 million over the forward estimates.

Stopping payment of the Pension Supplement after six weeks overseas

This measure will stop the payment of Pension Supplement after six weeks temporary absence overseas and immediately for permanent departures. This measure will take effect from 1 January 2018.

The Pension Supplement will be aligned with the portability arrangements of most other income support payments, which cease at six weeks.

This measure was originally costed as providing savings of $123.6 million over forward estimates with a start date of 1 July 2017.

Families

Consistent treatment of income for families receiving Family Tax Benefit Part A

From 1 July 2018, changes to the maximum rate income test taper of Family Tax Benefit Part A will apply.

This measure will increase the maximum rate income test taper of Family Tax Benefit Part A beyond the Higher Income Free Area. The maximum rate income test taper will increase from 20 cents to 30 cents for each dollar once a family’s income has exceeded the value of the Higher Income Free Area (currently $94,316).

This measure provides consistent treatment of income testing arrangements for all Family Tax Benefit Part A recipients with income above the Higher Income Free Area, and produces savings from improved targeting of the benefit to those who need it most.

This measure, announced in the 2017-18 Budget, is estimated to save $415.4 million over the forward estimates.

Students

Restricting access to the Relocation Scholarship

From 1 January 2018, access to the Relocation Scholarship will be restricted to students studying in Australia, and those whose parental family home or usual place of residence is located in Australia.

This means that students relocating from or studying overseas will no longer be eligible for the scholarship.

Where a student’s parents return to Australia to live or the student returns to Australia to continue studying after undertaking part of their course overseas, the student’s eligibility for the Relocation Scholarship will be retested and depending on the circumstances, the student may become eligible for the Scholarship.

Students receiving the Relocation Scholarship prior to 1 January 2018 with a parental home overseas will continue to receive the Relocation Scholarship after this date if, on the day they started their current course, their parental home was overseas.

This measure, announced in the 2017-18 Budget, is estimated to save $1.9 million over the forward estimates.

Aligning Pensioner Education Supplement (PES) and Education Entry Payment (EdEP) rates to study loads and only pay PES when students are studying

From 1 January 2018, the rates of PES and EdEP will align with the study loads of recipients. Four payment tiers will be introduced as follows:

PES:

  • $62.40 per fortnight (current full rate) for study loads of 76% to 100%
  • $46.80 per fortnight (new rate) for study loads of 51% to 75%
  • $31.20 per fortnight (current part rate) for study loads of 26% to 50%
  • $15.60 per fortnight (new rate) for study loads of 25%
  • nil for study loads under 25%, as at present.

EdEP:

  • $208 per annum (current rate) for study loads of 76% to 100%
  • $156 per annum (new rate) for study loads of 51% to 75%
  • $104 per annum (new rate) for study loads of 26% to 50%
  • $52 per annum (new rate) for study loads of 25%
  • nil for study loads under 25%, as at present.

In addition, PES will be paid only during study periods, and not during semester breaks and holidays. Payments will continue over public holidays unless the public holidays coincide with semester holiday periods.

This measure, announced in the 2017-18 Budget, is estimated to save $94.7 million over the forward estimates.

Other

Increasing the Liquid Assets Waiting Period

The Liquid Assets Waiting Period is the period of time someone has to wait to access Newstart Allowance, Sickness Allowance, Youth Allowance and Austudy if they have liquid assets (such as cash) above certain thresholds.

The Liquid Assets Waiting Period increases in one week increments depending on how much assets the person has available to them. It only applies currently if single people with no dependants have more than $5,499 and if members of a couple have more than $10,999.

For example, a single person with no dependants and $5,500 in liquid assets has to wait one week, while a single person with no dependants and $6,000 in liquid assets has to wait two weeks.

At present, the maximum waiting period is 13 weeks for singles with more than $11,500 and members of a couple with more than $23,000.

From 20 September 2018, the maximum length of the Liquid Assets Waiting Period will increase from 13 weeks to 26 weeks.

Under this change:

  • A single person with no dependants and more than $18,000 in liquid assets would have to wait the maximum 26 weeks before being eligible for payment
  • A partnered person, or single with dependent children with more than $36,000 would have to wait the maximum 26 weeks before being eligible for payment.

This measure, announced in the 2017-18 Budget, is estimated to save $138.5 million over four years.