Wednesday, 14 September 2016
Social Services Legislation Amendment (Simplifying Student Payments) Bill 2016; Second Reading
That this bill be now read a second time.
This bill will introduce a package of measures announced in the 2016-17 budget that will simplify student payments by:
Youth allowance, Austudy and Abstudy living allowances are income support payments that provide financial assistance to full-time students and apprentices. The payments are designed to encourage people to undertake further education and training to enhance their employment and career prospects.
In the 2015-16 budget, the government committed over $60 million to commence the replacement of the ageing Centrelink IT system to support future welfare reform.
The measures in this bill support payment simplification and future welfare reform by aligning payments settings, simplifying the administration of payments and making eligibility for student payments and concessions fairer and easier to understand.
The government will continue to provide assistance for students and those most in need. The changes will not affect the overall value of student payments.
Aligning means testing rules
The first measure, aligning means testing rules, aims to simplify means testing and remove anomalies between student payments and other welfare payments. This measure is set to commence from 1 January 2017 and will be achieved through a number of means.
Firstly, the family tax benefit income test and the youth parental income test will be harmonised, so that family tax benefit income details can be automatically reused for the youth parental income test. Parents will no longer be required to resubmit their income information to support a youth payment claim by one of their children.
Secondly, the integrity of the student payments means test will be improved by removing an anomaly that allows some partnered youth allowance and Austudy recipients to be subject to a more generous assets test than applies to all other youth allowance and Austudy recipients.
Integrity will also be improved by extending the trust and company rules that already apply to all other income support payments, to student payments. As a result, all of the income or assets held by students through a trust or company will be taken into account when establishing their entitlement to a payment.
Lastly, the pension income test exemption for regular gifts from immediate family members will be aligned across the social security system so that it also applies for student payments and other social security benefits.
Extending this exemption will remove a disincentive for families to provide support to family members. For dependent students, the parental means test already reduces a dependent child's youth payment where a parent has the ability to provide support, and it is simply not logical or equitable to further reduce the youth payment when the parent provides the expected support.
This measure will result in savings of $778,000 over the forward estimates.
Simplifying eligibility for the h ealth c are c ard issued to students
The second measure in this bill will ensure that from 1 January 2019 all students receiving income support will receive a concession card.
This change will allow all students receiving youth allowance (student), Austudy and Abstudy living allowances to automatically receive a healthcare card. This will guarantee that around 240,000 students will receive Pharmaceutical Benefits Scheme prescriptions at the concessional rate and access to the lower threshold of the extended Medicare safety net when they receive a student payment. It will also provide greater access to bulk billing allowing students to focus on their studies without worrying about their medical costs.
This measure will improve consistency by aligning access to concession cards for students with other income support recipients.
Under the current rules, students are the only income support recipients not to qualify for an automatic issue healthcare card. Instead, students can make a claim for a low income healthcare card if their income is below a certain limit. This process is burdensome for students and costly for the Department of Human Services to administer. The automatic issue healthcare card and the low income healthcare card provide the same Australian government benefits to cardholders.
In 2016, holders of the healthcare card and low income healthcare card pay only $6.20 for each Pharmaceutical Benefits Scheme prescription. Without a concession card these prescriptions could cost students up to $38.30 each. Access to a concession card means that once these students and their families' total out-of-pocket expenses for prescriptions reach the concessional Pharmaceutical Benefits Scheme safety net of $372 or 60 prescriptions, they may receive Pharmaceutical Benefits Scheme prescription items free of charge for the rest of the calendar year. These free Pharmaceutical Benefits Scheme prescriptions are not available to people without a concession card.
In 2016, the annual threshold for both healthcare card and low income healthcare card holders for the extended Medicare safety net is $647.90, instead of $2,030 for non-cardholders. Once the threshold has been met, Medicare will pay for 80 per cent of any further out-of-pocket costs for the rest of the calendar year for services including general practitioner and specialist attendances, as well as many pathology and diagnostic imaging services.
Currently, the application for the low income healthcare card requires students to meet a more stringent income test, with the student needing to earn slightly less than the income limit for youth allowance over an eight-week period. This measure will also extend these benefits to around 4,000 students who previously were not eligible for a concession card.
Currently, in most circumstances, student payment recipients must wait eight weeks to become eligible for a low income healthcare card. This measure will ensure concessions are available to all students as soon as they start receiving an income support payment.
In order to avoid waiting eight weeks to become eligible for a low income healthcare card, currently an applicant of a student payment can provide proof that their income was below the relevant limit in the previous eight weeks. Following introduction of this measure, students will no longer be required to produce this proof to be eligible for a concession card. Not only does this measure guarantee that student payment recipients will receive health-related concessions, it will cut red tape and reduce reporting requirements for these students.
The financial impact of this measure over the forward estimates will be a cost of $726,000.
Automatically updating the geographical classification
The third measure in this bill will, from 1 January 2017, simplify the process for adopting the latest version of the Australian Statistical Geography Standard remoteness structure published by the Australian Statistician which is used in the assessment of eligibility for student payments under the Social Security Act 1991.
Currently, youth allowance recipients whose family home is in a location geographically categorised under the remoteness structure as inner regional Australia, outer regional Australia, remote Australia or very remote Australia can access additional benefits or concessional qualification requirements under the Social Security Act that are not available to students from major city areas. These additional benefits are:
These additional benefits are in recognition that students from regional and remote areas are more likely to have to relocate to study and therefore have significantly lower participation rates in higher education than students from major city areas.
The geographical remoteness structure currently used in the Social Security Act to determine eligibility for these additional benefits is the 2006 Australian Standard Geographic Classification published by the Australian Bureau of Statistics. The 2006 remoteness structure has been used to determine eligibility for student payments since 2011. However, the 2006 remoteness structure is out of date and was subsequently superseded, in January 2013, by the 2011 Australian Statistical Geography Standard remoteness structure. The remoteness structure is updated every five years by the Australian Bureau of Statistics, following each census. The next update, which will be to the 2016 remoteness structure, is due in January 2018.
This measure will introduce amendments to the Social Security Act so that qualification for student payments will automatically draw upon the updated remoteness structure without the need for future legislative amendment when a new Australian Statistical Geography Standard remoteness structure or any replacement remoteness structure is published by the Australian Bureau of Statistics. The 2011 Australian Statistical Geography Standard remoteness structure will apply from 1 January 2017, with the 2016 version having effect from the first 1 January or 1 July to occur after the day of its publication. This will ensure that the assessment of qualification for youth allowance and the relocation scholarship is based on the latest available information on geographical classification.
This measure will result in some students, who were previously ineligible for payment, being able to qualify for youth allowance under the concessional workforce participation arrangements and the relocation scholarship, and they may qualify for a higher rate of the relocation scholarship.
It is expected that the numbers of students who are found ineligible for youth allowance under the concessional workforce participation independence criteria due to a change in the remoteness structure will be very small, and they may still qualify for youth allowance as a dependent or under one of the other independence criteria.
Students who are no longer eligible for the relocation scholarship due to their family home being reclassified as located in a major city area rather than a regional location will still retain access to youth allowance provided they continue to meet the qualification criteria.
Students who had previously qualified for youth allowance under the concessional workforce participation independence criteria using an earlier remoteness structure will not have their qualification for youth allowance reassessed if their family home is classified as in a major city location of Australia under an updated remoteness structure. These students will retain their independent status.
The reclassification of areas is unlikely to have lasting or recurrent effects on students' payment eligibility given the cycle of five-yearly updates of the geographical classification document and that on average tertiary courses are completed in three to four years.
This measure is expected to have a cost-neutral effect on the budget over the forward estimates.
Together these measures will assist in simplifying the payment system and support future welfare reform.
I commend the bill to the House.