Recent social security changes you should know about

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From 1 July 2015, there were a number of good, and not so good changes than may impact on some of the 7.3 million Australians who receive assistance from Centrelink or the Family Assistance office or who are looking for work. 

Social Security and related changes from 1 July 2015:

Amalgamation of commonwealth tribunals

The Tribunals Amalgamation Act 2015 passed the Parliament in May 2015. It combines the Administrative Appeals Tribunal, Social Security Appeals Tribunal, Migration Review Tribunal and Refugee Review Tribunal into a single tribunal, still called the Administrative Appeals Tribunal. 

It preserves the essential features of the Social Security Appeals Tribunal as a first tier review Tribunal (to be known as “AAT first review”) as well as the right to second tier review (“AAT second review”).

Amendments to the original bill ensure that matters at the second tier may be decided on the papers but only with the consent of the parties.

Changes to family tax benefit payments for large families and income testing 

The following changes have been made to family tax benefit from 1 July 2015:

  • The family tax benefit (Part A) large family supplement to families with three children has been abolished, and is now available only to families with four or more children; 
  • Lowering the income test cut-off point for family tax benefit (part B), which applies to single parents or the higher income earner in two parent families, from $150,000 per year to $100,000 per year; and 
  • Remove variations to the income test for family tax benefit (part A) based on number of children. 

Changes to the medical assessment process for the disability support pension 

  • Changes to DSP claim process

Until recently, a person claiming the disability support pension (DSP) was issued with a Centrelink medical report form for their treating doctor (“treating doctor’s report or “TDR”). The form asked a range of questions about the diagnosis, treatment, clinical history and functional impact of a person’s medical conditions designed to elicit information relevant to assessing medical qualification for the disability support pension. 

Since 1 January 2015 the TDR has been abolished for all new DSP claimants who are under 35 and living in metropolitan areas.

From 1 July 2015, there will be no treating doctor’s report for any DSP claim. Instead, new claimants will be given a checklist of types of primary medical evidence (such as hospital records or x-rays) that they may wish to supply with their claim.
Our members are developing resources to assist people to obtain information from their doctors which will be available shortly on our website.

  • Government Contracted Doctors

From 1 July 2015, all new claimants for the disability support pension may have medical eligibility reviewed by a medical professional contracted by the Department of Human Services for this purpose.

Under the current process, medical assessment of disability support pension claims is conducted by Department of Human Services staff employed as “job capacity assessors”. In practice, they make the decision about a person’s medical eligibility for the disability support pension.

The second review by the new “government-contracted doctors” (GCDs) will be called a “disability medical assessment” and will be undertaken if the job capacity assessor determines that a person is medically eligible for the disability support pension.

This measure has applied to new claimants under 35 in metropolitan areas since 1 January 2015.

Changes to the pension assets test

The assets test free areas have increased and the taper rate (ie the rate at which a pension is reduced once the free areas are exceeded) has been increased from $1.50 for every $1000 above the assets threshold to $3 for every $1000. This will take effect from 1 January 2017. This effectively lowers the amount of assets a person can have and still receive a part pension. The change to the asset taper rate will result in the cancellation of some pensions due to the operation of the asset test.

People whose pension is nil on 1 January 2017 as a result of the assets test changes will automatically be issued with a Commonwealth Senior’s Health Card or a Health Care Card.

This measure saves 2.4 billion dollars over four years. Unfortunately, the savings from this measure were not redirected to areas of greater need within the social security system.

Debts, data-matching and fraud

From 1 July 2015, the Department of Human Services (DHS), in cooperation with the Department of Social Services, will begin a 5-year program of data-matching and compliance reviews, with expected savings of $1.7 billion.

DHS will undertake around 900,000 reviews, using data from the Australian Tax Office for the three year period over 2010 to 2013, and it will raise and recover overpayments during this period. The average overpayment are relatively small, at about $1,500, though there will also be larger overpayments detected, and these could be the subject of prosecution action.

These debts highlight the need for real time data matching. Had the departments had the resources to investigate these debts earlier, some of the debts may have been reduced.

The second part of the measure is the creation of a taskforce targeting areas by geographic concentration of fraud/debt hotspots. There is little information available about this measure at this time. 

Welfare Payment Infrastructure Transformation

The government is replacing Centrelink’s outdated computer system in a process known as the Welfare Payment Infrastructure Transformation (WPIT). The Government says the new system will:

  • provide customers with faster, more connected and automated digital services;
  • give staff a modern ICT platform that makes it easier for them to do their jobs; and
  • position the department to meet future policy needs of government.

Redevelopment of the IT system was also one of the recommendations of the Report of the Reference Group on Welfare Reform to the Minister for Social Services (the McClure Review). NWRN supports this IT measure. The current system is inflexible and service delivery issues which should be easily solved can be thwarted by current system’s limitations. There is also great potential for reduction in complexity and to relieve some of the burden of reporting eg via real-time data matching for income with the ATO. There will be a competitive procurement process. The government is currently in the early stages of consultation, both directly with consumer groups and with stakeholders such as the NWRN.

Cheques and Electronic Benefits Transfers being phased out

Centrelink has begun phasing out payment by cheques, instead payments will be made directly to people’s bank accounts. The aim is to complete this process by 1 January 2016.

Since 1984, most social security payments have been paid directly into nominated accounts. Centrelink will be making efforts to assist people with the transition, by assisting with Proof of Identity to open accounts, helping people to be comfortable using debit cards, addressing safety concerns, etc.

Electronic Benefits Transfers cards (EBTs), which enable Centrelink to provide immediate access to money in certain circumstances, will also be phased out once Centrelink has the capacity through the Reserve Bank to make same day deposits to a person’s bank account.

Better regulation of Centrepay

The Minister for Human Services has announced new criteria for people who use Centrepay, the free bill-paying service that is used by about 600,000 people who receive a Centrelink payment, which start from 1 July 2015.

Minister for Human Services has set new criteria for consumer leases. Leases that run for an indefinite period, or have a duration of four months or less, will be excluded from Centrepay and only those which are regulated under the National Consumer Credit Protection Act 2009 will be allowed.

Funeral insurance will also be excluded from Centrepay. Some businesses had been preying on people who were vulnerable, and have taken advantage of their low levels of financial literacy. Some Indigenous remote communities were particularly at risk. NWRN has urged Centrelink to closely monitor the activities of Centrepay operators and to cancel contracts if they are found to act against the interests of people using their services. The good news is that Centrepay will still be available for scheduled repayments of funeral expenses and pre-paid funeral plans.

Changes to reporting arrangements

Currently people required to report their income on a fortnightly, 4 weekly, 6 weekly, 8 weekly, 10 weekly or 12 weekly basis, depending on their circumstances. From 1 July 2015 DHS is making changes to variable reporting arrangements so that 6, 8 and 10 weekly reporting is abolished, and more people will be required to report fortnightly. People in remote areas will generally report on a 4 weekly basis. A Centrelink summary of the changes can be found here

Visa changes for victims of human trafficking

Currently trafficked people are granted a “Criminal Justice Stay Visa” to help them stay while they assist authorities with investigations (this is also the visa that is generally granted to others involved in the criminal justice system, including offenders). Victims of trafficking will now have their own bridging visa subclass and will continue to qualify for special benefit. Minister Morrison has also announced that the government will improve social security access for trafficked people who are granted a permanent visa by providing an exemption from waiting periods.

Freeze on indexation of asset test limits

From 1 July 2015, the asset test cut off point for allowances, student payments and parenting payment single has been frozen for two years. From 1 July 2017, the asset test free area limit for pensions has been frozen for three years.

Changes to assessment of defined benefit income streams

For income test purposes, the deductible amount for defined benefit income streams, excluding military defined benefits schemes, will be capped at a maximum 10 per cent of the gross payments to an individual for the income year. This measure has passed parliament and will take effect 1 January 2016.

Early access to superannuation for people with terminal illness

The Government has made it easier to access superannuation for people suffering a terminal illness.

Currently, patients must have two medical practitioners (including a specialist) certify that they are likely to die within one year to gain unrestricted tax free access to their superannuation balance. The Government has amended the regulations to change the life expectancy period to 24 months, taking effect from 1 July 2015.

Cessation of the Seniors Supplement

This payment has been abolished, and the last payment was made on 20 June 2015.

Employment Changes from 1 July 2015

Jobactive gets the job

The new $6.8 billion employment services system, jobactive, began operating across Australia from 1 July 2015. It’s not just the name that has been changed – there are a number of new programs, including new wage subsidies for single parents. One of the most significant initiatives is the major expansion of Work For The Dole, and tougher new job seeker compliance rules. One of the most significant changes is that all job seekers must deal directly with their employment service provider when developing their jobs plan or undertaking activities.

Information about the change from Jobs Services Australia to jobactive, and what it means for people looking for work, can be found here.

Changes to remote job services

A new Community Development Program (CDP) replaces the previous Remote Jobs and Communities Program, the scheme that exists to support people in remote areas to get a foothold in the paid workforce.

The vast majority of people in the new program are of Indigenous backgrounds, who make up 83 per cent of unemployed people from remote areas. About 30,000 people aged between 18 and 49 from remote communities across Australia will be required to undertake full-time Work For the Dole (WFTD) of 25 hours per week, for every week of the year, for the rest of their working life, until they are employed.

This is to be contrasted with other, non-remote areas, where job seekers generally will only be required to undertake WFTD for 15 hours per week for up to 26 weeks of the year, and the WFTD requirements are usually only triggered after 6 or 12 months of unemployment (depending on age). The NWRN, along with other organisations, has raised concerns about the scheme, and the Minister for Minister for Indigenous Affairs Nigel Scullion, has promised that the new arrangements will be flexible, and that they will be based on previous schemes like the CDEP, which was popular and effective in many locations, here

Penalties for missing appointments

From 1 July 2015 people with activity requirements who do not attend appointments with their jobactive provider will no longer get back-pay once they restart attending meetings if they do not have a reasonable excuse for missing the appointment.
A penalty may be imposed for each day following a missed appointment, starting from the day the person is notified of the suspension of their payments (which may be later than the day the appointment was missed) and ending when the suspension is lifted (by attending a rescheduled appointment).

Both Centrelink and the Department of Employment have produced factsheets explaining the changes which you can find here and here

Job Seeker Classification Instrument “recalibrated”

The Department of Employment (DOE) has reviewed the Job Seeker Classification Instrument (the JSCI). The JSCI is a tool in the form of a questionnaire which DHS and Jobactive staff run to determine what employment services stream a person should be placed in.

The JSCI tool has been criticised in the past for the weightings given to certain answers, and for problems with its administration (usually over the phone at the time a person contacts Centrelink about claiming a payment).

The DOE has made adjustments to the weightings given to the answers a person gives to the questionnaire. It has also made some changes to the subcategories of questions and to the processes for DHS and Jobactive staff administering the tool.