Summary of ACOSS proposals, Henry Review recommendations and the government’s response: social security reform

07 May 2010 | On the whole, the Henry Review’s proposals regarding working age payments are disappointing, according to this ACOSS paper. Although the review identifies the key flaws in the present payment structure – that people in similar circumstances are paid at different rates, that these gaps are growing, that the system is too complex, and that people on pension payments are discouraged from seeking employment by the risk of a large drop in income support – the proposals fall well short of a reform agenda to resolve these problems. The report does, however, call for gaps between payments to be reduced and for all working age payments to be indexed in the same way (above inflation) to keep in touch with community living standards and ensure the gaps do not widen.

The report’s recommendations are much closer to ACOSS’s proposals for reform of family payments and child care assistance. It argues for increases in payments for older children and dependent young people to reflect the higher costs of raising them, that payments to assist parents to care for a child at home (beyond income support for those on the lowest incomes) should be targeted towards families with preschool age children, that the child care rebate should be absorbed into the better-targeted Child Care Benefit, and that overlaps between family income tests that lead to high effective tax rates should be removed. One area of concern is that low income sole parent families, who are already highly vulnerable to poverty, could lose their existing family payment supplement.