Low-income couples and the carbon-compensation rip-off

No pictures in this post I'm afraid.  I'm not really sure how to draw a rip-off...

If the Government persists with the new rates and income test thresholds it announced on 2 March it looks to me like some couples are going to be getting $7.20 a fortnight less than they should, and less than they were led to believe in the Government’s Household Compensation information packages of a couple of years ago.  Affected couples are those where one partner is getting a social security benefit (eg, Newstart allowance or Austudy payment) and the other has a low income which prevents them from getting a benefit.

I don’t have access to stats detailed enough to say exactly how many couples are in this position, but if it’s in the order of 100,000, that amounts to almost $19 million a year that these couples are losing.  

Tax thresholds - so tasty you can't stop at one

How exciting can a tax threshold get!  Over the last few weeks I've come across a few "discussions" on the subject, largely driven by speculation about what will happen to the tax scales if the Coalition wins September's federal election. 

Last year the Government increased the tax threshold from $6,000 to $18,200 as part of a package of measures associated with putting a price on carbon pollution.  The Coalition is intent on abolishing the "carbon tax" and, apparently, the household compensation measures that went with it, including the tax changes.  This obviously provides much scope for polite discourse on how people would be affected by winding back the changes.  I've even read some entertaining stuff questioning whether the Government's changes really did much at all, or in fact made people worse off.

None of this is made easier by the fact that tax-threshold apparently means different things to different people and is also rather dependent on the context in which it's used.  So, let's have a look at tax thresholds and how they've changed over the last 4 Parliaments.  A chart first, and if that makes no sense to you an explanation follows.

A new rate component is born

In an earlier series of posts I wrote about how income support payment rates are indexed, using the September 2012 indexation round as an example.  Calculations for the next round of increases will kick off on 23 January when the Australian Bureau of Statistics (the ABS) releases the CPI figure for the December 2012 quarter.  This is the starting point for working out the rates that will apply from 20 March 2013.

However, this time round the indexation process will differ from the standard arrangement described in my earlier posts.  That’s because part of the rate increase that would usually flow from increases in the CPI (and also the pensioner and beneficiary living cost index – PBLCI - for most pensioners) is going to be siphoned off to help form a new income support rate component – the clean energy supplement.

The ups and downs of Parliament 43

I was looking at the stats for this blog and was intrigued to see that the most popular post so far was one of my 4 Parliament efforts, looking at single parents.  For this blog, popular usually just means someone other than me looked at it, but that post actually does stand out.

While I like the 4 Parliament comparisons, one of the problems with them is that they become dated.  Being written at different times doesn't help either, as that can make it hard to compare the various households I've covered, particularly the results from Parliament 43 (the current period).  With that in mind I thought I'd update just the Parliament 43 results for all the households I've covered so far, plus a few extras.  That will make comparisons between household types easier and also allow gossip about which ones are in and out of favour.

Being partnered is not much of a bonus

[Warning: A commenter has suggested this post is boring enough to provoke actual self-harm]

Considering the amount of attention paid to the findings of the recent Senate enquiry into Newstart allowance (and similar) payment rates, it's perhaps surprising that the introduction next year (from 20 March) of an income support bonus has received little coverage.  The bonus provides up to $175 a year to a member of a couple and up to $210 a year to a single person.  This is in addition to the usual CPI based rate increases.

It's not a straightforward increase in rates, however, and the chosen approach seems to me to be particularly unfair to some couples.

January changes for single parents

Soon it will be 1 January 2013, with its attendant changes to some of the arrangements for single parents.  I've done quite a few posts on this over the last year but I thought it was worth updating the figures using the rates, etc, that will actually apply on that date.

The changes I'll be focusing on are:

• the removal of the "grandfathering" provisions that have so far prevented single parents who have been on parenting payment (PPS) since before 1 July 2006 from being subject to the so-called age-8 transition; and
• the relaxation of the Newstart allowance income test for single parents with the principal care of at least one child aged under 16.

Handily, both of these can be looked at in the context of the age-8 transition.

Good news for some single parents...

As 1 January 2013 approaches, the changes in the eligibility conditions for parenting payment continue to receive attention.  These changes will result in the loss of entitlement to parenting payment for existing recipients whose youngest child is aged 8 or more.  However, there's another change affecting single/sole parents that has so far had very minimal coverage - and this time it's actually a gain.

For so-called "principal carer" single parents in receipt of Newstart allowance, the income test is being relaxed.  The rate at which payment is reduced by income will change from the current 50 (or 60) cents in the dollar to 40 cents in the dollar.  For Newstart recipients whose rate is currently reduced due to their income, these changes will lead to an increase in payment.  It will also allow some sole parents who currently earn too much to get Newstart allowance to receive a part-rate.

Here's a chart that shows the gain (expressed in yearly terms) the income test change produces.