01.Commission of Audit report cracks down on entitlements
The wholesale re-shaping of the federal government’s social contract with its citizens that’s recommended in the National Commission of Audit report will only be partially implemented, but some measures will be particularly painful for consumers of average means should they make their way into the federal budget on 13 May.
Among other things, the forecast takes aim at range of existing entitlements in health, family support, childcare, unemployment and aged care.
CHOICE has checked the numbers and looked at some recommendations that will likely have a particular impact on everyday consumers who already face high living costs in housing, energy, and consumer goods.
The report’s authors claim such cuts are necessary to ensure the county’s ongoing fiscal health, but some have argued that the budget crisis was largely manufactured in order to push through a different vision of the state’s responsibility to its citizens.
What will change if the report is implemented?
Families could be hit hard should the the auditors get their way. The report recommends the cutting of Family Tax Benefit Part B and the significant reduction of eligibility for Family Tax Benefit Part A for higher income families.
More about the family tax benefits:
- The Department of Human Services describes the entitlement as “a two part payment that helps with the cost of raising children”.
- The current income threshold for Part B is $150,000 for single parents or a family's primary earner.
- The current maximum payment rates for Part B are: Under 5 years, $146.44 per fortnight; 5-18 years, $102.20 per fortnight.
- The income test for Part A doesn’t apply to Australians earning less than $47,815 a year, and benefits are reduced progressively between $47,815 and $94,316.
- The current maximum payment rates for Part A are: 0-12 years, $172.20 per fortnight; 13-19 years, $224.00 per fortnight.
The Audit has recommended that the child care rebate and child care benefit should be cut and replaced with a one-off means-tested payment for parents who are working, training or studying.
More about child care:
- CHOICE found in 2012 that average childcare costs were $78.50 per day, though they have increased over the last two years.
- For city parents, costs were about $84 per day; for parents in a regional or country area, about $62 per day.
- The rebate currently covers 50% of out of pocket child care expenses, up to a maximum amount per child per year. The maximum rebate is currently $7,500 per child.
“High-income” earners would have to take out private health insurance and no longer have access to the private health insurance rebate, if the auditors got their way. The maximum rebate is currently 29.04% of your insurance premiums for consumers under age 65, and costs have risen sharply in recent years.
And instead of the previously predicted $6 co-payment for bulk-billed doctor visits, co-payments for all Medicare services would go to $15 per service for general patients and $5 per service for concession holders. Payments would be reduced to $7.50 after 15 visits.
Additionally, a $5 increase on co-payments would be imposed for all medicines in the Pharmaceutical Benefits Scheme, though there would be no increase for concession card holders below the safety net threshold. Current co-payments are a maximum of $36.90 for most PBS medicines or $6.00 if you have a concession card.
Age pension and aged care
The report also recommended an increase to the pension age. Australians currently become eligible to start receiving the pension at 65, but the report recommends gradually increasing this age to around 70 by 2053. The Audit also said that the family home should be included in the assets test for new pensioners, and after 15 years, the age pension would be limited to 28% of average weekly earnings.
Unemployment and minimum wage
The report also recommends the abolishing of the national minimum wage, allowing states to set their own minimum wage, and setting a new minimum benchmark of 44% of average weekly earnings.
More about the minimum wage:
- Currently the full-time minimum wage is $16.37 per hour or $622.20 per week.
- The recommendation would cut this to about $488 a week, or 44% of average weekly earnings.
- If you’re single and 22 to 30 years old, you’ll have to move to a higher employment area or lose benefits after a year if this recommendation makes in into the mid-May budget.