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Australian Government Coat of Arms

Budget | 2015-16

Budget 2015-16
Australian Government Coat of Arms, Budget 2015-16

Welfare integrity measures

In 2015–16, the Government will spend $154 billion on welfare, which is around 35 per cent of total Government expenditure.

The Government is taking a number of actions to strengthen the integrity of our welfare system to ensure it remains fair and sustainable so that we can continue to provide support to those who need it most. These measures will return around $3.5 billion to the budget.

Transformation programme

The Department  of Human Services (DHS) is responsible for delivering welfare payments through Centrelink to 7.3 million people annually. It does this via a large information technology system which was developed in 1983 and modified to meet government policy changes. The current welfare payment system manages 40 different payments and 38 supplements. It processes around $100 billion per year and undertakes up to 1,000 transactions per second.

Changes to policy and processes over the past three decades have made the system extremely complex, inflexible, costly to maintain and difficult to ensure compliance.

In this Budget, the Government will invest an initial $60 million to kick start the Welfare Payment Infrastructure Transformation (WPIT) to replace the existing welfare payment system and modernise government service delivery to meet the demands of today’s digital world.

The new welfare payment system will save customers time and effort by offering smarter and easier online end-to-end services. It will also reduce the costs of administering welfare payments and save taxpayers money in the long run.

For example, currently it can take parents over an hour to fill out 60 pages of paperwork to apply for Family Tax Benefit. If they need to call DHS for assistance, they would have to wait on average 16 minutes. Once their claim has been submitted, they may have to wait several weeks for the claim to be processed.

The new system will allow parents to apply for these benefits online in minutes and can reduce processing time to seconds, without any need or expense to travel or wait in long telephone queues.

The need for change: the welfare payment system in 1983 and today
  1983 2015
Payments delivered 10 payment types 40 payments and 38 supplements
Payments recipients 2.5 million people 7.3 million people
Payment outlay per year $10 billion $100 billion
System speed per second Average of 13 payments Up to 1,000 transactions

The Government is upgrading the welfare information technology system, increasing compliance capability and strengthening the integrity of our welfare system.

Increasing compliance

From 1 July 2015, the Government will increase DHS’s capability to detect, investigate and deter suspected welfare fraud and non-compliance. This initiative includes improved automation of assessment processes, targeted strategies for areas of high risk, and recovery of historical debt from 2010 to 2013. This will enable an additional 200 cases to be investigated each year. It will achieve net savings of around $1.5 billion over four years.

Parental Leave Pay (PLP)

The Government will remove double-dipping in PLP from 1 July 2016.  Previously, individuals could receive taxpayer funded PLP in addition to any employer-provided parental leave entitlements.

Access to PLP will now be limited to individuals whose employer does not provide parental leave entitlements. In cases where individuals get less generous parental leave entitlements from their employer, the Government will top up the amount paid to be equal to the full amount available under the existing scheme.

Cap deductible amount for Defined Benefit Income

The Government will ensure fairer treatment of defined benefit superannuation income for pensioners. From 1 January 2016, the level of income from defined benefit superannuation that can be excluded from the pension income test will be capped at 10 per cent.

This measure mainly affects former public sector employees. However, around two-thirds  of those involved in these schemes will be unaffected. Their superannuation income will not be reduced. Department of Veterans Affairs Pensions and defined benefit income streams paid by military superannuation funds are exempt from this measure.

Income Management

Income management helps people manage their welfare payments, encourages socially responsible behaviours and protects vulnerable Australians. The Government will continue existing BasicsCard arrangements for two years while also trialling new income management arrangements and debit card echnology in a small number of locations following community and industry consultation.

Diagram summarising income management arrangments