30-Jun-10 30-Jun-11 30-Jun-12 30-Jun-13 30-Jun-14 Selected
In selecting class movement assumptions for Parenting, we have taken into account the flow-on effect of this in moving to Non-IS Family and Working Age payments. We consider that the latest 2014 movements for moving to Parenting, Non-IS Family and Working Age are most reflective of the future, after policy changes settled down in 2013. Movements to other smaller classes such as Studying and Carers do not seem to have been affected by policy changes, and we have relied on 3-year average historical rates.
For the payment utilisation assumptions, the majority of people receive both FTB and family payments and some others receive the new parents’ payments, all alongside their main income support and other living and pension supplements.
The FTB and family payments make up around half of the overall cost, with the main parenting payment representing around 35% to 40% of the overall cost. For the main parenting payment the average size reduces slightly with age. This may simply be a reflection of older people being more likely to be partnered.
Risk based assumptions
We refined both the class movement and payment assumptions through consideration of the risk factors that influence the experience.
For the assumptions for movements out of this class, we observed that most people stay in the class from year to year and then leave when their youngest child is between five and eight. This reflects the parenting payment eligibility conditions and also changes in behaviour once the children reach school age. Those leaving are most likely to move to the Working Age class or the Non IS Family class, although the detail of this is strongly age dependent. Forming an exception to this pattern were those who also received a carer’s supplement. These people were significantly more likely to move to one of the carer’s classes and less likely to leave the welfare system altogether.
The model uses a combination of terms relating to the age, gender and indigeneity of the recipient, how long they've been in the class, their partnership status, education level, the age of their youngest child, and detail of other payment types and supplements previously received. The most significant terms are those covering the age of youngest child (specifically for ages between five and eight inclusive), whether the recipient received a non-income support carer or a family tax benefit payment previously, and their partnership status in the following year.
For the payment models we focussed on modelling the payment levels for the primary income support payment category and included information on partner status.
What does the model show for current Parenting payment recipients?
Lifetime costs
432,000 of the people who were in the class during the 2014/15 year were included in the model population (having survived from the time of receipt of payment to 30 June 2015).
We estimated the lifetime cost for this class to be $191bn (or 4.0% of the total lifetime cost).
Results for current welfare recipient classes
Figure 41: Average lifetime cost by age and gender (Class 3)
700 L - Other - Health & Disability M - Other - Carer N - Other - Study & Skills O - Other Remote & Regional P - Other General Allowances Q - All Other
There is significant variation by age and gender illustrated in the figure above.
For men the average lifetime cost is much lower than for women ($340,000 vs. $450,000). This reflects the previous observation, that women typically receive higher annual payments as a result of receiving more FTB and family payments.
The average lifetime costs are higher for the younger people in the class, especially the younger women. This is because they are more likely to stay on the parenting payments for longer and also may be more likely to transition to other types of income support.
The average lifetime costs also have small but clear contributions from both disability support and carer payments. These reflect the likelihood of people in the parenting class to move into these classes in future years.
Future outcomes
In developing the valuation results the projection model also produces information on the expected transitions for people out of each class, as shown below.
Figure 42: Expected future trajectory for people in Class 3
0%
12 Rest of Aust. Population
We can see the expectations are that:
• There is a steady reduction in numbers of current parenting payment recipients remaining on those payments.
– Most of the reduction takes place over the next 10 years
– This is related to the current and future family composition of the people in this class and specifically the link between parenting payment eligibility and the age of a person’s youngest child.
Results for current welfare recipient classes
• As people exit this class a significant proportion move first to the Non IS family class (i.e. they receive only FTB or child care payments)
• Perhaps 30% of people currently in the class will move into another income support class when they exit parenting payment. The most common next income support destination is working age, followed by carer or DSP.
• In 2050, after 35 years, around 55% of the original group are projected to be on some form of income support payment
Results for current welfare recipient classes
9.4 Carers (Income Support)
This class includes people receiving the Carer Payment in 2014/15. People receiving Carer Allowance, an income supplement, are in the Non income support carers class, Class 9.