Portfolio Budget Statements 2009-10

Department of Families, Housing, Community Services and Indigenous Affairs

Section 1: Agency overview and resources

1.1 Strategic direction

About FaHCSIA

FaHCSIA is a major player in the delivery of the Australian Government's social policy agenda. FaHCSIA's purpose is improving the lives of Australians by creating opportunities for economic and social participation by individuals, families and communities.

For these PB Statements, FaHCSIA has refocused its outcomes around the seven core areas where the Department seeks to assist people. They are:

Families
Housing
Community Capability and the Vulnerable
Seniors
Disability and Carers
Women
Indigenous

The detailed outcome statements for these seven outcome areas can be found in Section 2 of these PB Statements. In respect of these seven outcomes, FaHCSIA has four key modes of business delivery. They are:

Payments to individuals - FaHCSIA makes direct payments to individuals through Centrelink and other agencies. Primary examples include the Age Pension, the Disability Support Pension (DSP) and the FTB.
Working with the states and territories - FaHCSIA works with the states and territories to achieve outcomes in a number of shared policy areas including housing, disability services, Indigenous reform, concessions, and the welfare of children.
Payments for community services - FaHCSIA funds community based organisations to deliver a range of local services including Family Relationship Services, Emergency Relief and Disability Employment Services.
Policy development, leadership, advice and coordination - FaHCSIA supports its Ministers in their policy roles by providing advice on social policy, building the evidence base for action, and in whole of government policy coordination for Indigenous affairs and for women.

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Key priorities for 2009-10

The 2009-10 Budget contains substantial reform of the pension system, starting from 20 September 2009. In the 2008-09 Budget, the Government requested Dr Jeff Harmer, Secretary of FaHCSIA, to undertake a detailed review of the pension system and the adequacy of support it provided to pensioners. Informed by the findings of the Review, the Government has developed the Secure and Sustainable Pensions package which will improve adequacy, security, and flexibility for people receiving Age Pension, DSP and Carer Payment and related payments (including related Department of Veterans' Affairs payments).

In particular, the reforms will deliver improved relativities between rates paid to single and couple pensioners and an appropriate basis for indexation of pensions to reflect the cost of living faced by pensioners. The package will also simplify payments to pensioners, and provide more flexibility for them so that they have a secure basis for effective planning and budgeting.

Key elements of the Secure and Sustainable Pensions package are:

a $32.49 per week increase for single pensioners on the full rate of pension and $10.14 per week (combined) for couple pensioners on the full rate of pension
a new cost of living index, the Pensioner and Beneficiary Living Cost Index, to ensure that indexation of the base rates of pension reflect the changes in the cost of living experienced by pensioner households
a new Pension Supplement that incorporates and builds on the value of the GST Supplement, Pharmaceutical Allowance, Utilities Allowance and Telephone Allowance at the higher (internet) rate, and which from July 2010 provides pensioners with the choice of receiving part of the supplement quarterly
a new guaranteed annual Carer Supplement for recipients of Carer Payment and Carer Allowance.

As well as improving support for today's pensioners, the package contains reforms which respond to current fiscal constraints and seek to ensure that the pension system remains sustainable into the future given the ageing of the population. These are:

measures to better target pension payments through tightening the income test, while protecting current pensioners by maintaining their existing entitlements in real terms and providing an increase of $10.14 per week for singles or couples combined
introducing additional incentives for age pensioners to increase their incomes through paid work
closure of the Pension Bonus Scheme
a gradual two-year increase to the qualifying age for Age Pension, commencing in 2017
improvements to the assessment processes for DSP to reduce unnecessary assessments, and provide more thorough assessments for claimants in accordance with the eligibility criteria where required
more support for workforce re-engagement for disability support pensioners.

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The 2009-10 Budget also contains the introduction of a Paid Parental Leave (PPL) scheme to commence on 1 January 2011. In February 2008 the Government asked the Productivity Commission to conduct an inquiry into the economic and social costs and benefits of PPL. This new scheme is in response to the Productivity Commission's final inquiry report, which was provided to the Government on 2 March 2009. The scheme will enhance maternal and child health and development, facilitate workforce participation, and promote gender equity and family work/life balance. It is estimated that up to 148,000 eligible families will be eligible for the new scheme each year.

On 30 April 2009, COAG endorsed the first National Framework for Protecting Australia's Children. FaHCSIA has, and will continue to play, a significant leadership role in the area of supporting the role of the states and territories in child protection. In addition to the significant existing investment in early intervention and prevention services through the Family Support Program ($1.2 billion over four years) which supports vulnerable families and children, there are two FaHCSIA measures in this Budget flowing from the National Framework, these are Communities for Children Plus, and National Leadership Activities.

This Budget includes a number of measures that will help people with disability and address the sustainability of the DSP in light of the economic outlook and the increased rate of pension decided as part of the Secure and Sustainable Pensions package. The assessment process for DSP will be improved to better reflect up-to-date medical rehabilitation advice and practice. This will ensure that people applying for DSP receive the income support and employment assistance package which reflects both their level of impairment and their work capacity. A new strategy will be introduced to provide more advice and information to disability support pensioners on the availability of support services for and the benefits of employment. These measures will be complemented by the Government's National Mental Health and Disability Employment Strategy.

FaHCSIA will continue to work with state and territory governments to improve community participation among people with disability and their carers through implementing nationally consistent disability parking and companion card schemes and extending the Outside School Hours Care for Teenagers with Disability Program by providing an additional 250 places.

The Government is maintaining its strong commitment to closing the gap in Indigenous disadvantage with $1.3 billion in new funding in the 2009-10 Budget. This builds on the investment by the Commonwealth, state and territory governments in 2008 of $4.6 billion for National Partnership Agreements on early childhood development, health, jobs, remote housing and remote service delivery. The new funding will support the Government's closing the gap agenda of:

making a sustained investment and undertaking fundamental reforms to improve delivery and accountability of government services, including the appointment of a Coordinator-General for Remote Indigenous Services
resetting the relationship with Indigenous people through engagement and partnerships
restoring personal responsibility at the individual level and expanding economic opportunities for Indigenous communities to reduce disadvantage and intergenerational poverty
acting and intervening when the circumstances demand.

The portfolio will continue to take a lead role in coordinating the Australian Government's response to assist the Victorian Government with the bushfire recovery and reconstruction effort. In addition, the portfolio will continue to provide assistance for other disaster recovery activities.

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Economic and fiscal context for the 2009-10 Budget

The global financial crisis provides a significant context for framing this Budget. FaHCSIA is working to ensure that program settings are sustainable in the longer term. The decisions reflected in these PB Statements have been reached in the context of anticipated reductions in Commonwealth revenues at a time when the call for services to assist those most in need can be expected to increase. They were based on responsible financial management, a thorough scrutiny of existing effort, and a prioritisation of new spending. Where savings have been made, they have sought to balance short-term fiscal constraints, longer-term sustainability of outlays and the needs of disadvantaged Australians.

FaHCSIA is playing a key role in implementing the Australian Government's response to the global financial crisis by delivering a number of initiatives. The first of these was the Economic Security Strategy, announced by the Government on 14 October 2008, delivering assistance to pensioners, seniors, people with disability, carers, veterans and families. The Nation Building - Economic Stimulus Plan was announced by the Government on 3 February 2009 to support Australian households and economic activity. The plan included stimulus payments to some recipients of FTB and construction of new social housing to assist low-income households to have access to affordable housing.

Additional funding to the Financial Management Program was also announced in February 2009 to provide more help to vulnerable individuals and families to build financial capability and resilience.

There have also been adjustments to the social security system in order to ease some of the financial pressure on pensioners.

Key changes since the 2008-09 Budget

The requirements of Operation Sunlight have driven the refinement of FaHCSIA's outcome structure and performance reporting framework. Future reporting will focus mainly at the program level and concentrate on whether each program has achieved its objective.

The key changes in FaHCSIA's PB Statements as a result of Operation Sunlight are:

the replacement of a four outcome structure with a seven outcome structure
the introduction of statements of purpose for each outcome, and of program and program component objectives
a robust performance management framework under which the performance of government appropriations can be assessed.

Reporting against new performance indicators will require investment in changes to the Department's information systems to facilitate the collection of the necessary data. These changes will be undertaken during the 2009-10 year. The reporting outlined in these PB Statements is therefore an interim step towards improved reporting in 2010-11.

A final significant change since the 2008-09 FaHCSIA PB Statements has been the implementation of the COAG Reform Agenda from 1 January 2009. Under this agenda, funds that were previously paid to the states and territories by FaHCSIA will now be appropriated to the Treasury. In the interest of reporting total Commonwealth efforts in these areas, the PB Statements will now contain tables that combine appropriations to FaHCSIA with payments that the Treasury will make in respect of three National Agreements and six National Partnership Agreements. These agreements involve significant reforms in the areas of: housing; disabilities; and closing the gap on Indigenous disadvantage, particularly in remote areas.

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