Social Security in Australia: Time to Review

By Davidson, Peter | Impact, Spring 2008 | Go to article overview

Social Security in Australia: Time to Review


Davidson, Peter, Impact


ACOSS has called on the Government to overhaul Australia's social security system, which is currently unfair and too complex. People reliant on social security have struggled with sharp increases in the costs of essential items over the last two years. For example, 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% and fuel has risen by 41%.

The Government's Economic Security Strategy package announced on 14 October 2008 extends lump sum payments of $1,400 for singles and $2,100 for couples to most pensioners, carers and families. The payment for pensioners extends to most pensioners except sole parents on Parenting Payment Single. Carers will also receive $1,000 for each eligible person being cared for and the Government will give a one-off payment to families eligible for Family Tax Benefit of $1,000 for each eligible child in their care.

ACOSS welcomes these payments, which will help most pensioners and families cope with risings costs and boost the economy at a time when this is likely to be needed. The idea of substantial one-off payments for this purpose is consistent with ACOSS' call for a financial relief package for low income people.

Unfortunately unemployed people, who would be most affected in the event of an economic downturn, missed out on financial assistance and sole parents will only get the payment for each child, not the lump sum payment for pensioners. These two groups of income support recipients are among the most financially disadvantaged in the community and they have missed out on benefits such as Utilities Allowance that was extended to other social security recipients.

Long term reform of the social security system remains a key concern and is the subject of two Government reviews. Announced in May 2008, the Pension Review will consider levels of pensions, the frequency of payments, and the concessions or other entitlements to improve the financial circumstances of Australia's five million social security recipients.

Dr Jeff Harmer, Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs, is due to report back to the Government by 28 February 2009. The review will also inform the broader inquiry into Australia's Future Tax System, headed by Treasury Secretary Dr Ken Henry, which is examining the social security system as a whole and will conclude by the end of 2009.

ACOSS submitted its recommendations in September 2008 to the Pension Review and called for two key measures--a $2 billion financial relief package and a fundamental reform of the social security system with payments based on an Australian Minimum Standard of Living.

An overview of ACOSS' submission

ACOSS recommended that a $2 billion financial relief package be implemented as soon as possible after the 2009 Federal Budget for those social security recipients (including pensioners and those on other payments) who have been most affected by recent increases in the costs of basic essentials. The package included increases in Rent Assistance, Utilities Allowance and Pharmaceutical Allowance and the extension of Utilities Allowance to unemployed people and sole parents.

We proposed that any wider policy changes, including adjustments to base rates of payment, be implemented as part of the broader Henry Review of the tax-transfer system and proposed a policy framework for these wider reforms. This has three dimensions: reform of the social security payment structure based on an Australian Minimum Standard of Living, reform of the system of public support for retirement incomes (including payments and tax concessions), and reform of concessions.

Social security payments are inadequate

Social security payments are inadequate to meet basic living costs:

* The maximum single rate of pension is just $281 per week. …

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