Concession cards

5.102 Where eligibility for concession cards is directly linked to the receipt of income support, the concessions available to cardholders enhance the total value of these payments. The loss of support when paid work is undertaken can therefore be greater than the withdrawal of primary income support payments. Reluctance to lose, or fear of losing, a concession card can act as a disincentive to work.

5.103 Holding a concession card entitles a person to Australian Government concessions, including price subsidies for Pharmaceutical Benefits Scheme medicines and a lower threshold for the Medicare safety net. In addition, state and local governments provide a range of concessions to cardholders, such as discounts on council rates, utilities charges and public transport fares.^[174]

5.104 The main concession cards available to income support recipients are the Health Care Card and the Pensioner Concession Card. The Health Care Card is available to recipients of Newstart Allowance and certain other payments.^[175] The Pensioner Concession Card is available to those who receive a pension (including Age Pension, Disability Support Pension and Carer Payment) and to some recipients of other payments.^[176]

5.105 The Tax Review noted that, for persons who are heavy users of a concession card, the incentives to retain it may be especially high. As a consequence, persons ‘may be reluctant to jeopardise the concessions they receive … by testing their ability to work’.^[177]

5.106 Stakeholders in this Inquiry emphasised that mature age persons place a high value on eligibility for a concession card and argued that the desire to retain the card influences decisions about taking up paid work.^[178] For example, NWRN reported that ‘the Pensioner Concession Card is highly valued and … people often make decisions on the basis of whether they will receive or lose the card’.^[179] COTA noted, similarly, that mature age persons ‘highly value their concession cards and their retention is a major consideration in all aspects of their financial situations’.^[180]

5.107 To address this possible disincentive to work, concession cards may be retained for a period after taking up employment.^[181] In addition, alternative concession cards may be available to those who do not qualify for income support. For example, the Health Care Card is available to low income earners meeting an income test.^[182] The Commonwealth Seniors Health Card is available to those who have reached Age Pension age, do not qualify for Age Pension or a pension from the Department of Veterans’ Affairs and meet a separate income test.^[183]

5.108 However, NWRN submitted that the rules about the retention of concession cards upon taking up paid work are too complex, and that this works against their policy intent:

Welfare Rights Centres receive many enquiries from people confused by the current rules that apply to determine how long a person can retain their concession card … many social security recipients are incredibly confused by the rules.^[184]

5.109 One possible way to remove any disincentive to take up paid work caused by loss of a concession card is to broaden eligibility for the card. However, as availability of a concession card widens, ‘its value as an indicator of financial need can be diminished’.^[185] The increasing unwillingness of general practitioners to bulk-bill card holders as the proportion of their patients in possession of a card increases is one example of this diminution in value.^[186] Widening the availability of a concession card also runs counter to the principle of targeting support to those in most need.

5.110 The concessions available to cardholders are provided by all three levels of government. Extending eligibility would have cost implications across all these levels. The Tax Review has noted that it is difficult to determine the total expenditure on concessions, ‘because the value of the concession used in some transactions may not be recorded’.^[187] It would also be difficult to quantify the cost implications of any change to concession card qualification rules.

5.111 The Tax Review recommended that concessions be reviewed across all levels of government.^[188] It considered that the current approach to concession card eligibility may create disincentives to work.^[189] The Tax Review also found that the concession card system is complex and may be inequitable. For example, concessions on local government rate payments benefit home-owning but not renting cardholders. In addition, different state governments may provide different levels of concessions to cardholders.^[190]

5.112 While the ALRC does not make a specific proposal about this issue, the ALRC agrees that a review of the concession card system may be desirable, given stakeholder comments about the complexity of the system and its potential effect on workforce participation. Such a review would consider factors beyond mature age workforce participation—including general workforce participation. Consequently, proposing a review of the concession card system is beyond the scope of this Inquiry.

5.113 However, the ALRC suggests that any such review, as previously recommended by the Tax Review, could consider how the concession card system might be reformed to remove or minimise disincentives to mature age workforce participation. Examples of issues that could be considered include: reducing complexity; the basis for eligibility for a card; the concessions associated with different cards and income support payment types; and the periods of time that cards are retained after losing qualification for income support.