Federal Budget 2021 | Aged Care and Social Security - MGD
12 May 2021

Federal Treasurer, Mr Josh Frydenberg, handed down the 2021/ 22 Federal Budget at 7:30 pm (AEST) on Tuesday, 11 May 2021.

A stronger than expected economic recovery from the COVID-19 recession has resulted in a budget deficit of $161 billion, $52.7 billion lower than the government’s expected deficit. With the virus still a threat to the global and domestic economy, the Budget contains various measures to support businesses and individuals with job creation, incentives, tax relief and superannuation changes.

The full Budget papers are available at www.budget.gov.au and the Treasury ministers’ media releases are available at ministers.treasury.gov.au.

The aged care and social security highlights are set out below.


Increased funding for aged care

A total of $17.7 billion in funding will be provided for aged care initiatives in response to the Royal Commission on Aged Care Quality and Safety.

Key measures include:

  • Home care measures:
    • $6.5 billion over 4 years to release 80,000 additional home care packages over 2 years from 2021–22. This will bring the total number of home care packages to 275,598 by June 2023
    • $798.3 million to provide greater access to respite care services and payments to support carers
    • $272.5 million over 4 years to support senior Australians to access information about aged care, navigate the aged care system and connect to services through the introduction of dedicated face-to-face services
    • $28.5 million in 2021–22 to ensure the continued operation of My Aged Care.
  • Residential care measures:
    • $365.7 million to improve access to primary care and other health services in residential aged care, and additional investment in digital and face-to-face assistance to make it easier to navigate the aged care system
    • $200.1 million to introduce a new star rating system to provide senior Australians, their families and carers with information to make comparisons on quality and safety performance of aged care providers
    • $3.9 billion over 4 years from 2021–22 to increase the amount of front line care (care minutes) delivered to 240,000 aged care residents and 67,000 who access respite services, by 1 October 2023. This will be mandated at 200 minutes per day, including 40 minutes with a registered nurse
    • $3.2 billion to support aged care providers to deliver better care and services through a new government-funded basic daily fee supplement of $10 per resident per day, while continuing the 30% increase in the homelessness and viability supplements
    • $189.3 million over 4 years from 2020–21 to implement the new funding model, the Australian National Aged Care Classification (AN-ACC)
    • $49.1 million for the current independent hospital pricing authority to help ensure that aged care funding is directly related to the cost of care.

There will also be funding allocated to increase the aged care workforce and improve access to aged care services for individuals in regional and remote areas.

Source: Budget Paper No 2, pp 99–103.


Changes to the pension loans scheme

The following changes to the pension loans scheme are intended to improve uptake:

  • participants in the scheme will be allowed to access up to 2 lump sum advances in any 12 month period, up to a total value of 50% of the maximum annual rate of the age pension
  • a “no negative equity guarantee” will be introduced so borrowers will not have to repay more than the market value of their property.

Source: Budget Paper No 2, p 182.


Childcare subsidy to increase

The childcare subsidy will be increased up to a maximum of 95% from 1 July 2022.

Under the current arrangements the maximum childcare subsidy payable is 85% of childcare fees. For families with more than one child in childcare, the level of subsidy received will increase by 30% to a maximum subsidy of 95% of fees paid for their second and subsequent children.

From 1 July 2022, the annual $10,560 cap on childcare fee rebates will also be abolished. Currently families with combined incomes above $189,390 are subject to a childcare subsidy cap of $10,560 per child per year.

The government estimates that, under these changes

  • a family earning $110,000 a year will have the subsidy for their second child increase from 72% to 95%, and they would also be $95 per week better off for 4 days of care
  • a family earning $80,000, with 3 children, will have the subsidy increase from 82% to 95% for their second and third children and would also be $108 per week better off for 4 days of care.

Source: Budget Paper No 2, p 81; Treasurer’s media release “Making childcare more affordable and boosting workforce participation”, 2 May 2021.


Unemployment benefits to increase

The base rate of certain benefits will increase by $50 per fortnight from 1 April 2021. This increase applies to JobSeeker Payment, Youth Allowance, Parenting Payment, Austudy, ABSTUDY Living Allowance, Partner Allowance, Widow Allowance, Special Benefit, Farm Household Allowance and for certain Education Allowance recipients under the Department of Veterans’ Affairs Education Scheme.

Other changes include:

  • The income-free area of certain benefits will increase to $150 per fortnight from 1 April 2021. This applies to JobSeeker Payment, Youth Allowance, Parenting Payment Partnered, Widow Allowance and Partner Allowance.
  • The temporary waiver of the Ordinary Waiting Period for certain payments will be extended for a further 3 months to 30 June 2021.
  • The expanded eligibility criteria for the JobSeeker Payment and Youth Allowance will be extended for a further 3 months to 30 June 2021 for those required to self-isolate or care for others as a result of COVID-19.
  • The $2,000 relocation assistance payment will be paid upfront, with eligibility expanded to enable job seekers to access the incentive when they take up ongoing work of more than 20 hours per week.

Source: Budget Paper No 2, p 181.


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