The model population split by class is as follows.
Figure 15: Model population by welfare class
0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000
All in class exited >10 years exited 4-10 years exited 1-3 years
Note: Class 12, the rest of the Australian population is much larger than other classes and has not been shown in full in the chart.
It contains 11.95 million people
It is interesting to consider how the current welfare recipients relate to the whole population i.e. which groups of the population are people in receipt of Commonwealth welfare payments. We have used a population pyramid which shows the composition of the population by age and gender to illustrate which people fall into each class and to show the proportion of each group who are current welfare recipients.
Model population
Figure 16: Model population with class utilisation (June 2015)
Male Female
0.2 m 0.1 m 0.0 m 0.1 m 0.2 m
0 10 20 30 40 50 60 70 80 90 100
People by year of age
Studying Working Age Parents Carers Disability support Pension Age Non IS Family Non IS Carer Non IS Other
Previous Welfare Recipient Rest of Aust. Population
We can see that:
• a large proportion of over 65’s are people in receipt of Commonwealth welfare payments (as would be expected)
• people only generally access the payment system directly from their late teens onwards
• there is a significant group of females and a smaller group of males receiving Parenting payments or ‘Non IS Family’ payments (which is primarily FTB and/or child care payments)
• there is a slight increase in payment utilisation in the years leading up to retirement age
• there are other differences in payment system utilisation between genders – which may relate to the variation in roles performed by each gender, differences in longevity and differences in lifetime incomes.
4.5 Approved care organisations
The welfare recipient data provided by the Department included records for 18,700 Approved Care Organisations (ACOs) which receive some FTB payments.
An ACO is eligible for FTB for a child if:
• the child is an Australian resident who is a client of the organisation, and
• the child is not claiming a pension, benefit, labour market program payment or prescribed educational scheme payment themselves, and
• no one else is claiming FTB for that child, and
• the child is either aged under 16 years or aged 16 to 19 years (up to the end of the calendar year in which they turn 19) and a senior secondary school child.
The vast majority of these organisations (99%) are not current welfare recipients, having exited in 2009 or 2010. The total payments to them reduced from approximately $1.5 billion per annum in 2008 and prior to the much lower figure of approximately $2 million per annum in recent years.
Following discussions with the Department and recognising the very low ongoing expenditure on payments to these organisations we have excluded them from the results developed and presented in this report.
Scope and categorisation of payments
5 Scope and categorisation of payments
5.1 Scope of payments
During the 2014/15 year the Department was responsible for $109.1 billion of entitlements.
PwC have worked together with the Department’s staff to define which payments should be in scope. There are around 100 payment types in the data of which around 80 were determined to be in-scope. These represent the vast majority of the recent payments, with $108.8 billion included in the scope of this valuation.
Payment types were excluded if they were for payments that have been discontinued or replaced, for example the Baby Bonus and Back to School bonus were excluded as were some supplements that have been out of use for many years.
The list of in-scope payments being valued is provided in Table 6 and Table 7 in Section 5.2 and generally includes payments for which the Department has policy responsibility as at 30 June 2015; including income support payments to both working age people and age pensioners, family payments, and various
supplementary payments and allowances.
The scope does not include veterans’ payments, concession card benefits, aged care payments or payments under the National Disability Insurance Scheme (NDIS) (note this list is not exhaustive).
The main recent payment types excluded are the Baby Bonus6 and Seniors supplement7 both of which are discontinued and flexible support payments which are outside of the policy responsibility of the Department.
The total amount of in scope payments paid in each of the last five financial years is shown below.
Figure 17: In scope payments by financial year 2010/11 – 2014/15
-20bn 40bn 60bn 80bn 100bn 120bn
2010/11 2011/12 2012/13 2013/14 2014/15
Note: the payments are slightly understated for the most recent year as some of the family tax benefit payments and much of the child care benefit payments are made after the end of the financial year.
5.2 Payment type categorisation
The payment types have been grouped into 17 broader payment categories for modelling in the valuation. The amounts of payments received by each person within each category are considered in building the valuation models and setting the assumptions. This categorisation is intended to achieve a balance between the benefit of the valuation model capturing the different features of each payment and the costs of having the additional
6 Only available for children born or placed for adoption before 1 March 2014 7 Ceased 20 September 2014
Scope and categorisation of payments
complexity of more payment categories in the model. We considered the following criteria for grouping payment types into categories:
• The purpose of the payment
• The eligibility criteria and target group
• The indexation regime applying
• The importance of the payment within the whole system: its relative size in terms of expenditure and the number of people receiving payments
In general we have separated supplements from the main pension payments as these are often subject to different indexation and, as not all pension recipients will receive all the supplements, it allows for cleaner modelling (especially of the main payment). The resultant payment categories are as follows:
Table 5: Payment categories
Income support (IS) A - IS Studying
B - IS Working Age C - IS Parents D - IS Carer E - IS Disability F - IS Age G - IS Dependent
Non income support (Non-IS) H - Other FTB
I - Other Family J - Other New Parent
K - Other Living (for specific supplements such as Energy Supplement and Rent Assistance) L - Other Health & Disability
M - Other Carer N - Other Study & Skills O - Other Remote & Regional
P - Other General Allowances (for general pension supplements) Q - All Other
Note that whilst people are in a single class for each year they may receive payments from a number of different payment categories during that year.
The details of how the individual payment types have been grouped into each payment category are shown in Table 6 and Table 7 overleaf:
Scope and categorisation of payments