Older Australians will be working for longer and young welfare recipients will be forced to wait for support under widespread changes to the welfare sector.
- Age Pension qualifying age will increase by six months every two years from July 2025
- Pensions and equivalent payments to be indexed to the CPI
- Eligibility tightened for Family Tax Benefit payments
- Budget 2014: Hockey outlines federal budget
The Abbott Government will begin increasing the qualifying age for the age pension from 2025, while changes to Youth Allowance and Newstart payments will mean Australians under 30 years of age will be “earning or learning”.
The Age Pension qualifying age will increase by six months every two years from July 2025, reaching 70 years by 2035.
People born before July 1958 will not be affected.
The government also outlined intentions to index pensions and equivalent payments by the Consumer Price Index, estimated to save $449 million over five years.
The measure will impact on Parenting Payment Single recipients from July and the following recipients from September 17: Age Pension, Disability Support Pension, Carer Payment and Veterans’ Affairs pensions.
Family payment reform
The government is expecting major savings through changes to the Family Tax Benefit scheme.
Made as part of the Family Payment Reform, the measures are expected to save the government more than $6 billion over five years.
Eligibility for the Family Tax Benefit Part B will be tightened, reducing the primary earner income limit from $150,000 to $100,000 per year from July 2015. Payments will also be limited to families whose youngest child is younger than six years old, in an attempt to increase workforce participation among parents.
The government has also frozen the rate of Family Tax Benefit for two years from July, while the Family Tax Benefit Part A per child add-on is to be axed from July 2015.
A new annual payment of $750 will be made to low-income families who have a child aged between 6 and 12.
The measures follow changes to the Family Tax Benefit Part A in the 2013-14 Budget, which scrapped an increase worth $1.8 billion.
The cut was part of $10.6 billion savings from family payments changes including replacing the baby bonus; freezing means testing on family tax benefits and freezing the child care rebate cap.
The government also outlined major changes to income support for young people, with Mr Hockey saying Australians under 30 years of age “should be earning or learning”.
Unemployed people under 25 will get Youth Allowance instead of Newstart, while all recipients of both payments aged under 30 will have to wait six months before receiving payments.
The changes, which come into effect on January 1, also mean young people must demonstrate that they have spent six months trying to find work before payments will be approved.
Once approved, they will have to participate in the Work for the Dole scheme at a minimum rate of 25 hours a week.
Existing recipients will also be subject to the changes, expected to save the government $1.2 billion over four years.
Untaxed superannuation will be included in income test for new recipients of Commonwealth Seniors Health Card, and the Annual Seniors Supplement will be abolished from July 1.
The government will also scrap the “Supporting Senior Australians – Housing Help for Seniors” pilot measure announced in the previous budget.
The budget measures follow a report from the Commission of Audit, which recommended raising age pension age to 70 by 2053 and scrapping Family Tax Befit Part B.
It also recommended measures to force young job-seekers to relocate or lose welfare benefits, stating that “it reasonable to expect young long-term unemployed people to improve their job prospects by requiring those aged 22 to 30 to relocate to a high employment area, once they have been unemployed for more than 12 months”.