May’s Federal Budget brought a few new changes to some parts of the social security system

Paid Paternity Leave scheme delayed

Date of effect: 1 January 2013

The implementation of Paid Paternity Leave will now take effect from 1 January 2013. The measure will provide eligible working fathers, and other partners who are providing full-time care or sharing the child's care, with two weeks paternity leave paid at a rate equivalent to the national minimum wage where children are born on or after 1 January 2013.

Disability Support Pension changes

Date of effect: Various

These changes include:

• Allowing people who were granted the Disability Support Pension (DSP) after 10 May 2005 to work up to 30 hours a week and remain eligible for a part-pension for up to two years.

• From 1 July 2012, requiring all unemployed DSP recipients under 35 and assessed as having a partial work capacity of eight or more hours per week to attend Centrelink interviews. They will also be required to create a participation plan to engage in community interaction and, potentially, employment.

• DSP claimants to provide evidence they have tested their future work capacity by participating in training or work related activities (from 3 September 2011). This activity test will, however, not apply to claimants who are clearly unable to work due to, for example, profound disability.

• Indefinite portability of DSP from 1 July 2012 where a recipient has a severe and permanent disability and no future capacity to work. This will allow eligible DSP recipients to continue to receive payments while living overseas.

Changes to Child Support income assessment

Date of effect: 1 July 2011

Under new arrangements, Child Support payers who are late lodging or fail to lodge a tax return for two years or more will have their income assessment based on their last known taxable income, indexed by growth in average wages during the period since their last return.

Currently, for such clients, the assessment is based on a default income of two thirds of Male Total Average Weekly Earnings (MTAWE), often resulting in an underestimation of their actual income.

Encouraging workforce participation

Date of effect: various

A number of measures will be introduced to encourage workforce participation by many people receiving Government benefits. These include:

• From 1 July 2012, the parental means test for Youth Allowance (Other) recipients will be extended to 21 years of age (currently 20). Newstart Allowance will be closed to new applicants under 22 years of age (currently under 21). To improve returns from work, this measure will also raise the Youth Allowance (Other) income free area from $62 to $143 per fortnight and the maximum available Working Credit bank limit will increase from $1,000 to $3,500.

• From 1 January 2013, the income test rates will be reduced for single principal carers on Newstart with a youngest child under 16. The new rate will reduce payments by 40 cents for every dollar of income earned above $62 per fortnight. Recipients currently have payments reduced by 50 cents in the dollar for income from $62 dollars per fortnight and 60 cents for income above $250 per fortnight.

Several DVA changes

Date of effect: various

• From 20 September 2011, a new Prisoner of War Recognition supplement of $500 per fortnight will be paid to eligible former World War 2 POWs of Japan and Europe, as well as former Korean War POWs. This new non-taxable payment will complement existing special benefits available to former POWs. It will not be assessed as income for means test purposes.

• From 1 January 2012, a Pharmaceutical Reimbursement Scheme will be introduced. An annual tax exempt payment will be provided to eligible veterans with qualifying service for ‘out of pocket’ expenses relating to pharmaceutical prescriptions.

The so-called pause in indexation of welfare payments to families with combined incomes of around $150,000 has sparked a debate over who is rich and whether any welfare benefits should go to households earning more than twice average incomes.

Treasurer Wayne Swan said the freeze in his latest Budget would affect some two per cent of families on tax benefits and was necessary to help produce a $3.5 billion surplus in 2012-13.