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Social Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014
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2013-2014

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

SOCIAL SERVICES AND OTHER LEGISLATION AMENDMENT

(2014 BUDGET MEASURES No. 1) BILL » 2014

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by the authority of the

Minister for Social Services, the Hon Kevin Andrews MP)



 



SOCIAL SERVICES AND OTHER LEGISLATION AMENDMENT

(2014 BUDGET MEASURES No. 1) « BILL » 2014

 

OUTLINE

 

Budget measures

This « Bill » will introduce several 2014 Budget measures in Schedules to the « Bill » numbered as set out below.

  1. From 20 June 2014, cease payment of the seniors supplement for holders of the Commonwealth Seniors Health Card or the Veterans’ Affairs Gold Card.
  2. From 1 July 2014, rename the « clean » « energy » supplement as the « energy » supplement, and permanently cease indexation of the payment.
  3. Implement the following changes to Australian Government payments:

·            from 1 July 2014 - pause indexation for three years of the income free areas and assets value limits for all working age allowances (other than student payments), and the income test free area and assets value limit for parenting payment single;

·            from 20 September 2014 - index parenting payment single to the Consumer Price Index only, by removing benchmarking to Male Total Average Weekly Earnings; and

·            from 1 July 2014 - pause indexation for three years of several family tax benefit free areas.

  1. From 1 July 2014 review disability support pension recipients under age 35 against revised impairment tables and apply the Program of Support requirements. 
  2. From 1 October 2014, limit the six-week overseas portability period for student payments.
  3. Extend and simplify the ordinary waiting period for all working age payments from 1 October 2014.

7.     From 1 July 2014, maintain the family tax benefit Part A and family tax benefit Part B standard payment rates for two years. 

Social and Community Services Pay Equity Special Account

Schedule 8 to the « Bill » will add the Western Australian Industrial Relations Commission decision of 29 August 2013 as a pay equity decision under the Social and Community Services Pay Equity Special Account Act 2012 , allowing payment of Commonwealth supplementation to service providers affected by the decision.



Financial impact statement

MEASURE

FINANCIAL IMPACT OVER THE FORWARD ESTIMATES

Budget measures

 

1.       Cessation of seniors supplement

Saving of 1,059.4 million

2.       « Clean » « energy » supplement renamed « energy » supplement and indexation ceased

Saving of $479.2 million

3.       Changes to Australian Government payments:

CPI-only indexation for parenting payment single from September 2014.

Maintaining the eligibility thresholds for Australian Government payments (Family Tax Benefit, working age allowance payments (excluding student payments) and Parenting Payment Single) for three years.

 

Saving of $134.2 million

 

Saving of $1,055.2 million

 

4.       Disability support pension - ability to work

Expense of $46.4 million over five years

5.       Limit the six-week portability period for student payments

Saving of $153.1 million

6.       Extend the ordinary waiting period for working age payments

Saving of $ 231.7 million

7.       Family payment reforms - maintain family tax benefit payment rates for two years

Saving of $2,598.6 over five years

Social and Community Services Pay Equity Special Account

No further financial impact from this « Bill » ($104 million was set aside in the contingency reserve in the 2013 Budget to cover the cost of supplementation until 2020-21).

 

 

REGULATION IMPACT STATEMENTS

 

Several measures in the « Bill » have a regulatory impact.   The Office of Best Practice Regulation agreed to the regulatory costings and offsets for the proposals.

 

STATEMENTS OF COMPATIBILITY WITH HUMAN RIGHTS

The statements of compatibility with human rights appear at the end of this explanatory memorandum.

 

 



SOCIAL SERVICES AND OTHER LEGISLATION AMENDMENT

(2014 BUDGET MEASURES No. 1) « BILL » 2014

 

 

NOTES ON CLAUSES

Abbreviations used in this explanatory memorandum

  • Family Assistance Act means the A New Tax System (Family Assistance) Act 1999
  • Family Assistance Administration Act means the A New Tax System (Family Assistance) (Administration) Act 1999
  • Farm Household Support Act means the Farm Household Support Act 2014
  • Military Rehabilitation and Compensation Act means the Military Rehabilitation and Compensation Act 2004
  • Social Security Act means the Social Security Act 1991
  • Social Security Administration Act means the Social Security (Administration) Act 1999
  • Veterans’ Entitlements Act means the Veterans’ Entitlements Act 1986

 

Clause 1 sets out how the new Act is to be cited, that is, as the Social Services and Other Legislation Amendment (2014 Budget Measures No. 1) Act 2014.

Clause 2 provides a table setting out the commencement dates of the various sections in, and Schedules to, the new Act.

Clause 3 provides that each Act that is specified in a Schedule is amended or repealed as set out in that Schedule.

 



Schedule 1 - « Energy » supplement replacing seniors supplement

 

 

Summary

From 20 June 2014, this Schedule will cease payment of the seniors supplement for holders of the Commonwealth Seniors Health Card or the Veterans’ Affairs Gold Card.

Background

Under this measure, the seniors supplement will be abolished for holders of the Commonwealth Seniors Health Card.  Veterans who hold a Commonwealth Seniors Health Card or Gold Card would also no longer receive the seniors supplement.  Commonwealth Seniors Health Cardholders will continue to be paid the « clean » « energy » supplement, renamed the « energy » supplement by this « Bill » (Schedule 2).   Cardholders will receive their last quarterly seniors supplement payment in June 2014.

Under the Social Security Act, qualification for the seniors supplement is currently provided by Part 2.25B.  The Veterans’ Entitlements Act provisions are in Part VIIAD.  The supplement is payable quarterly, based upon accrued days for which the person qualified for the supplement during the quarter ending on the test day.  The seniors supplement test days are 20 March, 20 June, 20 September and 20 December.  Qualification is based upon the person being the holder of a seniors health card or being an eligible Gold Cardholder under the Veterans’ Entitlements Act.

« Clean » « energy » supplement is currently added to the rate of seniors supplement.   As the result of these amendments, « energy » supplement under Part 2.25B of the Social Security Act or Part VIIAD of the Veterans’ Entitlements Act will become payable to people who are seniors health cardholders or eligible Gold Cardholders as a free-standing payment.  

The amendments made by this Schedule commence on 20 June 2014, although the amendments will generally only affect payment of the supplement from 20 September 2014, which is the next relevant quarter.  Even if the commencement is retrospective in time, no person’s interests will be adversely affected because of the retrospectivity.  In the few cases where payment of the supplement has been made prior to Royal Assent (that is, where the person was qualified for the supplement after 20 June 2014 but ceased to be qualified for the supplement prior to Royal Assent), the rate of the supplement means that the amount of any debt resulting will be less than $200, it would not be cost effective for the Commonwealth to take action to recover the debt, and hence the debt must be waived under section 1237AAA of the Social Security Act or section 206 of the Veterans’ Entitlements Act.

Explanation of the changes

Amendments to the Social Security Act

Items 1 to 6 are incidental to the main measure, and omit references to seniors supplement, substituting reference to « energy » supplement where appropriate.



Item 7 repeals Part 2.25B, which provides for qualification, payability and rate of seniors supplement.  It then substitutes new Part 2.25B, providing for the qualification, payability and rate of « energy » supplement, representing the former rate of « clean » « energy » supplement which was added to seniors supplement.   The new sections of new Part 2.25B mirror the sections and effect of repealed Part 2.25B.  However, substituted section 1061UB, providing for the rate of « energy » supplement in dollar terms, no longer includes provisions rounding the rate generated per instalment to a multiple of $2.60.  This is because an instalment of « energy » supplement will be rounded by section 54 of the Social Security Administration Act, providing for rounding to the nearest cent, or up to $1.00 if the amount would otherwise be less than $1.00.

Items 8 and 9 are consequential to the main measure, and remove references to seniors supplement.

Amendments to the Social Security Administration Act

Items 10 to 24 substitute reference to « energy » supplement for the existing references to seniors supplement, to apply provisions previously applying to seniors supplement to « energy » supplement.   « Energy » supplement will be generally payable as a component of rate of a range of social security payments, as the result of amendments in Schedule 2 to this « Bill » .   Rules relating to « energy » supplement under Part 2.25B of the Social Security Act will at times differ from rules relating to « energy » supplement more generally, because « energy » supplement under Part 2.25B of the Social Security Act is a free-standing payment.   Because of this, in some cases it is made clear that the type of « energy » supplement to which the provision will apply is « energy » supplement under Part 2.25B of the Social Security Act.

Item 25 sets out saving and transitional provisions.  Subitem 25(1) relates to the application of paragraph 916D(3)(c), amended by item 3 above to omit the requirement that a person not have received seniors supplement in order to qualify for an essential medical equipment payment.  Qualification for the essential medical equipment payment is based upon a person’s circumstances during a past income year.  In order to maintain qualification for years after commencement, which will look at a person’s circumstances during periods prior to commencement, reference to the « energy » supplement is taken to include reference to the seniors supplement.

Subitem 25(2) maintains the operation of former Part 2.25B of the Social Security Act and section 48B of the Social Security Administration Act in relation to seniors supplement for instalment periods ending before the commencement of these measures.

Subitem 25(3) provides for an election, in force prior to commencement of these amendments and referred to in subparagraph 1061UA(2)(a)(i) of the Social Security Act, to remain in force.  This means that, where a seniors health cardholder had elected not to be covered by former Part 2.25B and not receive seniors supplement, that election will continue to apply to new « energy » supplement without requiring further action on the part of the card holder.

Amendments to the Veterans’ Entitlements Act

Items 26 to 34 are incidental to the main change substituting or omitting current references to seniors supplement with references to « energy » supplement.

Items 35 to 48 amend, repeal and replace various provisions of Part VIIAD, which provides for qualification, payability and rate of seniors supplement.  The revised Part VIIAD provides for the qualification, payability and rate of « energy » supplement, representing the former rate of « clean » « energy » supplement which was added to seniors supplement.  

However, substituted section 118PB, providing for the rate of « energy » supplement, no longer includes provisions rounding the rate generated to a multiple of $2.60.  This is because an instalment of « energy » supplement will be rounded by section 58A of the Veterans’ Entitlements Act, providing for rounding to the nearest cent.

Item 49 makes consequential amendments to subsections 122A(1A) and (1C) to replace references to seniors supplement with references to « energy » supplement.

Item 50 makes saving and transitional arrangements for these amendments.  Subitem 50(1) provides that, despite the amendments to Part VIIAD of the Veterans’ Entitlements Act, the provisions remain in force in relation to an instalment period ending before the amended provisions commenced.  This will mean that any seniors supplement in relation to the quarters prior to the 20 June 2014 quarter which have not been paid remain payable despite the amendments.

Subitem 50(2) provides for an election, in force prior to commencement of these amendments and referred to in subparagraph 118PA(2)(a)(i) of the Veterans’ Entitlements Act, to remain in force.  This means that where a cardholder had elected not to be covered under Part VIIAD and not receive seniors supplement, that election will continue to apply to new « energy » supplement without requiring further action on the part of the cardholder.

Part 2 - Consequential amendments

Amendments to the Income Tax Assessment Act 1997

Items 51 to 54 make consequential amendments to sections 52-10, 52-40, 52-65 and 52-75 of the Income Tax Assessment Act 1997 to replace references to seniors supplement payable under Part 2.25B of the Social Security Act or Part VIIAD of the Veterans’ Entitlements Act with references to payment of « energy » supplement under the new Parts.

Item 55 is a saving provision applicable to the amendments to sections 52-10 and 52-65 of the Income Tax Assessment Act.  It provides that payments of seniors supplement made before, on or after the commencement of the amendments will continue to be tax exempt for the purposes of the Income Tax Assessment Act 1997 .

Amendments to the Military Rehabilitation and Compensation Act

Items 56 and 57 make consequential amendments to repeal and substitute paragraphs 222(5)(d) and 246(4)(d) of the Military Rehabilitation and Compensation Act to replace references to payment of seniors supplement under Part 2.25B of the Social Security Act and Part VIIAD of the Veterans’ Entitlements Act with references to payments of « energy » supplement under the new Parts.

 



Schedule 2 - « Energy » supplement replacing « clean » « energy » supplement

 

 

Summary

This Schedule ceases indexation of the « clean » « energy » supplement, and renames the « clean » « energy » supplement as the « energy » supplement from 1 July 2014.  The « energy » supplement is then set at the amount of « clean » « energy » supplement, as applicable immediately before 1 July 2014.  This Schedule also makes minor changes to the partner income free area from 20 September 2014.

 

Background

 

The « clean » « energy » supplement is a component of the former Government’s « clean » « energy » package, and paid as compensation to offset the impact of the carbon tax.   The « clean » « energy » supplement is being renamed as the « energy » supplement and retained to provide ongoing assistance to government payment recipients.   The value of the renamed « energy » supplement will not be subject to indexation from 1 July 2014.  These changes commence on 1 July 2014.

Minor amendments are also made to the partner income free area (PIFA), which is part of the income testing arrangements for social security benefits.  In broad terms, the PIFA is the amount of income that would preclude payment of the relevant allowance or benefit to a person’s partner.  If the partner's ordinary income exceeds the PIFA, the amount of the excess reduces the person’s rate of social security benefit.  The amendments ensure that, where the partner is not receiving a social security benefit, the PIFA is calculated taking into account partner’s maximum basic rate, « energy » supplement and pension supplement (if relevant).  This will better align the legislation with existing policy which disregards other rate components, such as pharmaceutical allowance, rent assistance and youth disability supplement (as applicable), when calculating the PIFA.  These amounts are disregarded as it is not possible to establish reasonably whether the partner would meet the qualification requirements for these components while the partner is not receiving a social security benefit.   These changes commence on 20 September 2014.

 

Explanation of the changes

 

Part 1 - « Energy » supplement under the social security law

Amendments to the Social Security Act

 

Subsection 17(8) of the Social Security Act provides a formula that is used to define the income cut-out amount for the purposes of the compensation provisions in the social security law.   The formula refers to a « clean » « energy » supplement component and defines that term.   Item 1 recasts subsection 17(8) to reflect the changed name of the « clean » « energy » supplement.

 



Subsection 23(1) of the Social Security Act defines « clean » « energy » pension rate by reference to section 20B, which then provides a formula for working out the amount.   The « clean » « energy » pension rate is effectively the amount of « clean » « energy » supplement to be added to a pensioner’s rate of payment.   These provisions become redundant because the amount of « energy » supplement will be specified in the relevant pension rate calculator by other amendments made by this Schedule (see, for example, the amendments to point 1064-C3 made by item 46 ).  Item 2 therefore repeals section 20B and item 6 repeals the definition.  

The definitions of « clean » « energy » (under pension age) rate and « clean » « energy » (youth disability) rate are similarly repealed by items 8 and 9 because the relevant amounts of « energy » supplement will be specified in the applicable rate calculator by other amendments made by this Schedule.  

Items 3, 4, 5, 7, 10, 11 and 12 also amend, or repeal and replace, various « clean » « energy » -related definitions in subsection 23(1) of the Social Security Act to reflect the renaming.

Items 13 to 26 amend various payment modules to reflect the renaming.  Existing references to quarterly « clean » « energy » supplement are replaced with references to quarterly « energy » supplement.

Division 2 of Part 2.18A sets out the circumstances in which a person can be paid their « clean » « energy » supplement as a quarterly payment and a method for working out the amount of the quarterly payment.   The same rules will apply in relation to the « energy » supplement.   Items 27 to 38 replace existing references to « clean » « energy » supplement and quarterly « clean » « energy » supplement in Division 2 with references to « energy » supplement and quarterly « energy » supplement.

 

Items 39 and 40 omit references to « clean » « energy » supplement in paragraph 916D(5)(c) and in the method statement in subsection 1061ECA(2), and substitute references to « energy » supplement.

 

The Pension Rate Calculator at the end of section 1064 is used to calculate the rate of age, wife and carer pensions, disability support pension for a person who has turned 21 or is under 21 with a dependent child, mature age allowance in certain circumstances and mature age partner allowance.  Under the current rules, an amount of « clean » « energy » supplement, calculated by reference to formulas and definitions, is added in working out a person’s rate of pension.  

 

Items 41 to 45 amend various provisions in the Rate Calculator at the end of section 1064 to omit existing references to « clean » « energy » supplement and quarterly « clean » « energy » supplement and substitute references to « energy » supplement and quarterly « energy » supplement.  

 

Item 46 repeals point 1064-C3, which currently provides for the calculation of the « clean » « energy » supplement, and replaces it with a table setting out the amount of the « energy » supplement, depending on the person’s family situation.   The amounts in the table are current as at 30 June 2014 and will not be subject to indexation.

 

The Rate Calculator at the end of section 1065 is used to calculate the rate of age pension for a person who is permanently blind and disability support pension for a blind person who has turned 21 or is under 21 with a dependent child.  The Rate Calculator at the end of section 1066 is used to calculate the rate of bereavement allowance and widow B pension. 

 

Items 47 to 58 amend these pension rate calculators in the same way as section 1064 is amended (as described above).

 

The Rate Calculator at the end of section 1066A is used to calculate the rate of disability support pension for a person who has not turned 21 and has no dependent children. 

 

Items 59 to 63 amend various provisions in the Rate Calculator at the end of section 1066A to omit existing references to « clean » « energy » supplement and quarterly « clean » « energy » supplement and substitute references to « energy » supplement and quarterly « energy » supplement.  

 

Item 64 repeals points 1066A-BA2 and BA3, which currently provide for the calculation of the « clean » « energy » supplement.   These provisions are replaced by new point 1066A-BA2, which includes a table setting out the amount of a person’s « energy » supplement, depending on their family situation.   The family situations in the table refer to the family situations relevant in determining the person’s maximum basic rate, rather than reproducing all relevant family situations.  The amounts in the table are current as at 30 June 2014 and will not be subject to indexation.

 

The Rate Calculator at the end of section 1066B is used to calculate the rate of disability support pension for a permanently blind person who has not turned 21 and has no dependent children. 

 

Items 65 to 70 amend this rate calculator in the same way as section 1066A is amended (as described above).

 

The Youth Allowance Rate Calculator in section 1067G is used to calculate the rate of youth allowance. 

 

Items 71 to 75 amend various provisions in the Youth Allowance Rate Calculator toomit existing references to « clean » « energy » supplement and quarterly « clean » « energy » supplement, and substitute references to « energy » supplement and quarterly « energy » supplement.  

 

Item 76 repeals points 1067G-BA2 to BA6, which currently provide for the calculation of the « clean » « energy » supplement.   These provisions are replaced by two new tables in new points 1067G-BA2 and BA4, the first applicable where an amount of youth disability supplement is not added to the person’s rate, and the second where youth disability supplement is added.  The tables set the amount of a person’s « energy » supplement, depending on their family situation.   Again, the family situations in the tables refer to the family situations relevant in determining the person’s maximum basic rate, rather than reproducing all relevant family situations.

Item 76 also inserts a new point 1067G-BA3, which sets the amount of « energy » supplement for certain people whose maximum basic rate is worked out by reference to parenting payment single.   The amounts in the tables and new point 1067G-BA3 are current as at 30 June 2014, and will not be subject to indexation. 

 

The Austudy Payment Rate Calculator in section 1067L is used to calculate the rate of austudy payment. 

 

Items 77 to 81 amend various provisions in the Rate Calculator in section 1067L to omit existing references to « clean » « energy » supplement and quarterly « clean » « energy » supplement, and substitute references to « energy » supplement and quarterly « energy » supplement.  

 

Item 82 repeals points 1067L-BB2 to BB4, which currently provide for the calculation of the « clean » « energy » supplement.   These provisions are replaced by two new tables in new points 1067L-BB2 and BB3.  The table in new point 1067L-BB2 sets out the amount of « energy » supplement for a person who has reached pension age, by reference to the same family situations that are relevant in determining the amount of « energy » supplement for age pension.   The table in new point 1067L-BB3 sets out the amount of « energy » supplement for a person who has not reached pension age, by reference to their family situation for maximum basic rate.   The amounts set out in these tables are current as at 30 June 2014 and will not be subject to indexation.

 

The Rate Calculator at the end of section 1068 is used to calculate the rate of newstart, sickness, partner and widow allowances and mature age allowance in some circumstances. 

 

Items 83 and 85 to 88 amend various provisions in the Rate Calculator at the end of section 1068 to omit existing references to « clean » « energy » supplement and quarterly « clean » « energy » supplement, and substitute references to « energy » supplement and quarterly « energy » supplement.  

 

Item 84 makes a technical correction to the method statement in point 1068-A1.

 

Item 89 repeals points 1068-C2 to C5, which currently provide for the calculation of the « clean » « energy » supplement.   These provisions are replaced by two new tables (in new points 1068-C2 and C3) and a new point 1068-C4.  The table in new point 1068-C2 sets out the amount « energy » supplement for a person who has reached pension age, by reference to the same family situations that are relevant in determining the amount of « energy » supplement for age pension.   The table in new point 1068-C3 sets out the amount of « energy » supplement for a person who has not reached pension age, by reference to their family situation for maximum basic rate.   However, if the person’s maximum basic rate is determined by reference to parenting payment (single), then their amount of « energy » supplement is the amount specified in new point 1068-C4.  The amounts set out in these new provisions are current as at 30 June 2014 and will not be subject to indexation.

 

The Rate Calculator at the end of section 1068A is used to calculate the rate of parenting payment - pension (PP) single.

 

Items 90 to 94 amend various provisions in the Rate Calculator at the end of section 1068A to omit existing references to « clean » « energy » supplement and quarterly « clean » « energy » supplement, and substitute references to « energy » supplement and quarterly « energy » supplement.  

 

Item 95 repeals points 1068A-BB2 to BB4, which currently provide for the calculation of the « clean » « energy » supplement.   These provisions are replaced by new point 1068A-BB2, which sets the amount of « energy » supplement for a person who has reached pension age, and new point 1068A-BB3, which sets the amount of « energy » supplement for a person who has not reached pension age.   These amounts are current as at 30 June 2014 and will not be subject to indexation.

 

The Rate Calculator at the end of section 1068B is used to calculate the rate of parenting payment - benefit PP (partnered). 

 

Items 96 to 101 amend various provisions in the Rate Calculator in section 1068B to omit existing references to « clean » « energy » supplement and quarterly « clean » « energy » supplement, and substitute references to « energy » supplement and quarterly « energy » supplement.  

 

Item 102 repeals points 1068B-DB2 to DB4, which currently provide for the calculation of the « clean » « energy » supplement.   These provisions are replaced by two new tables in new points 1068B-DB2 and DB3.  The table in new point 1068B-DB2 sets out the amount of « energy » supplement for a person who has reached pension age, by reference to the same family situations that are relevant in determining the amount of « energy » supplement for age pension.   The table in new point 1068B-DB3 sets out the amount of « energy » supplement for a person who has not reached pension age, by reference to their family situation for maximum basic rate.   The amounts set out in these tables are current as at 30 June 2014, and will not be subject to indexation.

 

Items 1AD to 1AI in the indexed and adjusted amounts table in section 1190 of the Social Security Act identify the « clean » « energy » amounts that are indexed or adjusted and provide a relevant abbreviation.   That abbreviation is then used in the CPI indexation table in section 1191 to identify amounts that are to be indexed in accordance with movements in the Consumer Price Index (CPI).  The « clean » « energy » amounts are listed in items 1D to 1J of the CPI indexation table.   Items 103 to 107 remove these items from the tables, and make some amendments consequential on the removal of these items.  The new « energy » amounts specified in the relevant Rate Calculators will not be subject to indexation.

 

Section 1210 sets out the order in which relevant components of rate, including the « clean » « energy » supplement, are affected by means testing and how the reduction works if a person elects to receive certain payments on a quarterly basis.   Items 108 to 119 make consequential amendments to reflect the renaming.  Existing references to « clean » « energy » supplement and quarterly « clean » « energy » supplement are replaced with references to « energy » supplement and quarterly « energy » supplement.   References to CE Module are changed to ES Module. 

 

There are some references to « clean » « energy » supplement in clauses 146 and 149 of Schedule 1A to the Social Security Act (savings and transitional provisions).   Items 120 to 123 make consequential amendments to reflect the renaming.  Existing references to « clean » « energy » supplement are replaced with references to « energy » supplement.  

 

Amendments to the Social Security Administration Act

 

There are a number of references to the « clean » « energy » supplement and quarterly « clean » « energy » supplement in the Social Security Administration Act.   An example is section 48, which sets out the payment rules for a quarterly « clean » « energy » supplement.  

 

Items 124 to 137 make consequential amendments to reflect the renaming.  Existing references to « clean » « energy » supplement and quarterly « clean » « energy » supplement are replaced with references to « energy » supplement and quarterly « energy » supplement.   Otherwise, the operation of amended provisions would not change. 

 

Item 138 sets out the application and transitional rules that apply in relation to the amendments made by Part 1.  These rules facilitate the transition from « clean » « energy » supplement to « energy » supplement on 1 July 2014.  This item includes provisions which ensure that an « energy » supplement or quarterly « energy » supplement is paid (as appropriate) in relation to days occurring on or after 1 July 2014 and that the existing provisions continue to apply, despite the amendments, after commencement, in relation to days occurring before commencement.   Also included is provision to ensure that an election by a person to receive their « clean » « energy » supplement as a quarterly payment has effect as if it were an election to receive their « energy » payments quarterly.  

 

Part 2 - « Energy » supplement under the family assistance law

Amendments to the Family Assistance Act

An approved care organisation’s « clean » « energy » supplement for an individual is worked out under subsection 58(2B).   Item 140 repeals this provision and sets the annual rate of « energy » supplement.   The specified rate is current as at 30 June 2014, and is not subject to indexation.   Item 139 makes a consequential amendment to paragraph 58(2)(b) to reflect the renaming of « clean » « energy » supplement to « energy » supplement.

 

Section 58A allows certain individuals to elect to receive their « clean » « energy » supplements quarterly.   There is a reference to « clean » « energy » supplement quarterly in the heading of the section and other references to « clean » « energy » supplement in note 1 at the end of subsection 58A(1).   Items 141 and 142 update these references to reflect the renaming of « clean » « energy » supplement as « energy » supplement.   Item 143 repeals a spent note. 

 

There are numerous references to « clean » « energy » supplement in Schedule 1 to the Family Assistance Act.   There are also terms and definitions that refer to « clean » « energy » (such as the « clean » « energy » supplement amount referred to in step 4A of the method statement in clause 24N and the base FTB « clean » « energy » child amount referred to in clause 38AB of Schedule 1).   With the renaming of « clean » « energy » supplement to « energy » supplement, consequential changes are required to these provisions, terms and definitions to reflect the new name.   The relevant amendments are made by items 144 to 159, 161 to 164, 166 to 179 and 181 to 183

 

Clause 31B of Schedule 1 to the Family Assistance Act provides a method for determining the amount of « clean » « energy » supplement (Part B) to be added in working out an individual’s Part B rate.   Item 160 repeals subclauses 31B(1) and (2), and substitutes a new subclause 31B(1), which sets the amount of « energy » supplement (Part B) to be added in working out an individual’s Part B rate, depending on whether the individual’s youngest child is aged under five years or five years and over.   The specified amounts are current as at 30 June 2014 and will not be subject to indexation. 

 

Clause 38AA of Schedule 1 provides a method for determining the amount of « clean » « energy » supplement (Part A) to be added in working out an individual’s Part A rate under Method 1.  Item 165 repeals subclauses 38AA(1) and (2), and substitutes a new subclause 38AA(1).   The new provision specifies an FTB « energy » child amount for each category of FTB child and provides a method for calculating an individual’s « energy » supplement (Part A).   An individual’s « energy » supplement (Part A) is the sum of the relevant FTB « energy » child amounts for each FTB child of the individual.   The specified amounts are current as at 30 June 2014, and will not be subject to indexation. 

 

Clause 38AF of Schedule 1 provides a method for determining the amount of « clean » « energy » supplement (Part A) to be added in working out an individual’s Part A rate under Method 2.  Item 180 repeals subclause 38AF(2), and substitutes a new provision, which specifies the FTB « energy » child amount.   An individual’s « energy » supplement (Part A) is the sum of the FTB « energy » child amounts for each FTB child of the individual.   The specified amount is current as at 30 June 2014 and will not be subject to indexation. 

 

Item 184 makes a consequential amendment to paragraph 7(j) of Schedule 3 to reflect the renaming of the « clean » « energy » supplement as the « energy » supplement.

 

Items 185 to 188 repeal provisions in Schedule 4 to the Family Assistance Act that currently apply to index the various « clean » « energy » supplement amounts.   The equivalent « energy » amounts will not be subject to indexation.

 

Amendments to the Family Assistance Administration Act

Section 32A of the Family Assistance Administration Act sets out the FTB reconciliation conditions that must be satisfied before the FTB Part A and Part B supplements can be added in working out an individual’s rate of family tax benefit.  However, existing subsection 32A(2) ensures that this rule does not apply in working out the amount of an individual’s « clean » « energy » advance, « clean » « energy » supplement (Part A) or « clean » « energy » supplement (Part B).   As the renamed « energy » supplement (Part A) and « energy » supplement (Part B) will be specified amounts, they do not need to be mentioned in subsection 32A(2).   Item 189 makes the required amendment. 

 

The heading of section 105B and a note at the end of subsection 105B(1) refer to « clean » « energy » supplement.   Items 190 to 191 change these references to « energy » supplement.   Item 192 repeals a spent note. 

 

Item 193 sets out the application and transitional rules that apply in relation to the amendments made by Part 2.  These rules facilitate the transition from « clean » « energy » supplement to « energy » supplement on 1 July 2014. 

 

Subitems 193(1) and (2) ensure that the amendments made to rate provisions for approved care organisations apply in working out their « energy » supplement for days on or after commencement (1 July 2014).   The old rules would continue to apply after commencement in relation to days occurring before commencement.  

 

Subitems 193(3) and (4) ensure that amendments to rate provisions in Schedule 1 to the Family Assistance Act apply in working out an individual’s « energy » supplement (Part A) or « energy » supplement (Part B) for days on or after commencement (1 July 2014).   The old rules would continue to apply after commencement in relation to days occurring before commencement.

 

Subitem 193(5) provides that the specified amendments apply in working out an individual’s maintenance income ceiling day on or after commencement.

 

Subitem 193(6) provides that the amendment made to the definition of tax free pension or benefit applies in relation to a payment made on or after commencement.

 

Subitem 193(7) provides that an election under section 58A of the Family Assistance Act (to receive « clean » « energy » payments quarterly) that was in force before commencement continues to be in force on and after commencement.  

 

Part 3 - « Energy » supplement under the Veterans’ Entitlements Act

 

Amendments to the Veterans’ Entitlements Act

 

Item 197 repeals section 5GB.   Section 5GB of the Veterans’ Entitlements Act defines and provides the formula for working out the « clean » « energy » pension rate for recipients of a service pension and the various rates of « clean » « energy » supplement that are payable to disability pensioners and war widows and war widowers.

 

The provisions of section 5GB become redundant because the amount of « energy » supplement will be specified in the service pension rate calculators by other amendments made by this Schedule (see, for example, the amendments to point SCH6-BB3 made by item 260 ). 

 

The rates of « energy » supplement for disability pensioners are set out in amendments to subsection 62A(3) (made by item 216 ).

 

The rates of « energy » supplement for war widows and war widowers are set out in amendments to subsection 62B(3) (made by item 221 ). 

 

Items 194, 195 and 196 make consequential amendments to the section 5 (index of definitions) by omitting the references to the determination of the CES 22(3), CES 22(4), CES 23(4), CES 24(4) and the CES 30(1) rates of « clean » « energy » supplement in subsection 5GB(1) and omitting the references to « clean » « energy » pension rate , « clean » « energy » supplement and quarterly « clean » « energy » supplement in subsections 5GB(6) and 5Q(1).

 

Items 198, 199, 200, 201, 202, 203 and 204 also amend, or repeal and replace, various « clean » « energy » -related definitions in subsection 5Q(1) of the Veterans’ Entitlements Act to reflect the renaming of « clean » « energy » payments.

 

Item 205 makes consequential amendments to subparagraphs 58A(6)(a)(ii) and 58A(6)(c)(ii) to reflect the renaming of « clean » « energy » supplement as « energy » supplement.

 

Item 206 amends the indexed and adjusted amounts table in section 59A of the Veterans’ Entitlements Act to remove table item 2C referring to the « clean » « energy » pension rate.

 

Item 207 amends the CPI indexation table in subsection 59B(1) to remove table item 2, referring to the « clean » « energy » pension rate.

 

Item 208 repeals subsection 59C(2AC), referring to the initial indexation of the « clean » « energy » pension rate on 20 September 2013.

 

The new amounts of the « energy » supplement specified in the relevant Rate Calculators and the provisions of Part IIIE will not be subject to indexation.

 

Item 209 is a consequential amendment to the definition of point SCH6-BB3 amount in paragraph 59Q(7)(b) to replace a reference to « clean » « energy » supplement with a reference to « energy » supplement.

 

Subdivision A of Division 2 of Part IIIE provides for the payment of « clean » « energy » supplement to recipients of a disability pension or a war widow or war widower pension.   Items 210 to 215 and 217 to 220 replace existing references to « clean » « energy » supplement in the headings and sections 62A and 62B of Subdivision A of Division 2 of Part IIIE with references to « energy » supplement.

 

Item 216 repeals subsection 62A(3), and substitutes a new subsection, including a table which sets out the fortnightly rate of « energy » supplement payable to recipients of a disability pension.

 

Item 221 repeals subsection 62B(3), and substitutes a new subsection, which sets out the fortnightly rate of « energy » supplement payable to a person in receipt of a war widow or war widower pension.

 

Items 222 to 225 replace existing references to « clean » « energy » supplement in section 62D with references to « energy » supplement.

 

Subdivision B of Division 2 of Part IIIE sets out the circumstances in which a person in receipt of a service pension can be paid their « clean » « energy » supplement as a quarterly payment and a method for working out the amount of the quarterly payment.   The same rules will apply in relation to the « energy » supplement.   Items 226 to 233 replace existing references to quarterly « clean » « energy » supplement in Subdivision B of Division 2 of Part IIIE with references to quarterly « energy » supplement.

 

Division 4 of Part IIIE sets out the circumstances in which a person who is dissatisfied with a decision of the Repatriation Commission in relation to a « clean » « energy » payment, except quarterly « clean » « energy » supplement, may request the Repatriation Commission to review the decision.   Items 234 to 236 replace existing references to quarterly « clean » « energy » supplement in Division 4 of Part IIIE with references to quarterly « energy » supplement.

 

Items 237 to 241 amend section 121, which provides for the payment of pensions and other benefits under the Veterans’ Entitlements Act by instalments.  The amendments replace existing references to « clean » « energy » supplement and quarterly « clean » « energy » supplement with references to « energy » supplement and quarterly « energy » supplement.

 

Items 242 and 243 replace the heading to section 198, and repeal subsections 198(9), (9A) and (11) to remove the reference to the indexation of « clean » « energy » supplements and the provisions that indexed the rates payable to recipients of disability pension and war widow or war widower pension under Part IIIE.

 

There are some references to « clean » « energy » supplement in clauses 30 and 34 of Schedule 5 to the Veterans’ Entitlements Act (which houses savings and transitional provisions).   Items 244 to 248 make consequential amendments to reflect the renaming.  Existing references to « clean » « energy » supplement are replaced with references to « energy » supplement.

 

Items 249 to 252 are minor consequential amendments to subclauses 1(1) and 4(5) of Schedule 6 to replace existing references to « clean » « energy » supplement and quarterly « clean » « energy » supplement with references to « energy » supplement and quarterly « energy » supplement.

 

Items 253 to 259 amend payment modules A and BB of Schedule 6 to reflect the renaming.  E xisting references to « clean » « energy » supplement and quarterly « clean » « energy » supplement are replaced with references to « energy » supplement and quarterly « energy » supplement.

 

Item 260 repeals and substitutes point SCH6-BB3 of Schedule 6, which currently provides for the calculation of the « clean » « energy » supplement and replaces it with a table setting out the amount of « energy » supplement payable to a person in receipt of a service pension, depending on the person’s family situation.   The amounts in the table are current as at 30 June 2014 and will not be subject to indexation.

 

Item 261 sets out the application and transitional rules that apply in relation to the amendments made by Part 3.  These rules facilitate the transition from « clean » « energy » supplement to « energy » supplement on 1 July 2014.  This item includes provisions which ensure that an « energy » supplement or quarterly « energy » supplement is paid (as appropriate) in relation to days occurring on or after 1 July 2014, and that the existing provisions continue to apply, despite the amendments, after commencement, in relation to days occurring before commencement.   Also included is provision to ensure that an election by a person to receive « clean » « energy » supplement as a quarterly payment has effect as if it were an election to receive their « energy » payments quarterly.  

 

Part 4 - « Energy » supplement under the Military Rehabilitation and Compensation Act

 

Amendments to the Military Rehabilitation and Compensation Act

 

Items 262 to 266 amend, or repeal and replace, various « clean » « energy » -related definitions in subsection 5(1) of the Military Rehabilitation and Compensation Act to reflect the renaming of the « energy » supplement.

 

Section 83A provides for the payment of « clean » « energy » supplement to recipients of permanent impairment compensation under Part 2 of Chapter 4 of the Military Rehabilitation and Compensation Act.   Items 267 to 269 replace existing references to « clean » « energy » supplement in the heading and in subsection 83A(1) with references to « energy » supplement.

 

Item 270 repeals subsection 83A(3), and substitutes a new subsection, which sets out the daily rate of « energy » supplement payable to a person in receipt of permanent impairment compensation.

 

Item 271 is a consequential amendment to subsection 204(2) to replace a reference to a person in receipt of a « clean » « energy » supplement under section 83A with a reference to the receipt of an « energy » supplement.

 

Section 209A provides for the payment of « clean » « energy » supplement to recipients of a Special Rate Disability Pension under Part 6 of Chapter 4 of the Military Rehabilitation and Compensation Act.   Items 272 to 274 replace existing references to « clean » « energy » supplement in the heading and in subsection 209A(1) with references to « energy » supplement.

 

Item 275 repeals subsection 209A(2), and substitutes a new subsection, which sets out the daily rate of « energy » supplement payable to a person in receipt of a Special Rate Disability Pension under Part 6 of Chapter 4.

 

Section 238A provides for the payment of « clean » « energy » supplement to wholly dependent partners of deceased members under Part 2 of Chapter 5 of the Military Rehabilitation and Compensation Act.   Items 276 to 278 replace existing references to « clean » « energy » supplement in the heading and in subsection 238A(1) with references to « energy » supplement.

 

Item 279 repeals subsection 238A(3), and substitutes a new subsection, which sets out the daily rate of « energy » supplement payable to wholly dependent partners of deceased members.

 

Items 280 and 281 replace the heading to section 404, repeal subsections 404(1A) and (2), and substitute a new subsection 404(2), to remove the reference to the indexation of « clean » « energy » supplements and the provision that indexed the rate of « clean » « energy » supplement payable to recipients of permanent impairment compensation under section 83A.

 

Item 282 is a consequential amendment to subsection 430(3AA) to replace the reference to the payment of quarterly « clean » « energy » supplement into a bank account with a reference to the payment of quarterly « energy » supplement.

 

Item 283 sets out the application and transitional rules that apply in relation to the amendments made by Part 4.  These rules facilitate the transition from « clean » « energy » supplement to « energy » supplement on 1 July 2014.  This item includes provisions which ensure that an « energy » supplement or quarterly « energy » supplement is paid (as appropriate) in relation to days occurring on or after 1 July 2014, and that the existing provisions continue to apply, despite the amendments, after commencement, in relation to days occurring before commencement.   Also included is provision to ensure that an election by a person to receive « clean » « energy » supplement as a quarterly payment has effect as if it were an election to receive their « energy » supplement quarterly.

 

Part 5 - « Energy » supplement consequential amendments

 

Amendments to the Farm Household Support Act

 

Items 284 to 288 make consequential amendments to various provisions in the Farm Household Support Act to reflect the renaming of « clean » « energy » supplement.   References to « clean » « energy » supplement and quarterly « clean » « energy » supplement are replaced with references to « energy » supplement and quarterly « energy » supplement.

 

Amendments to the Income Tax Assessment Act 1997

 

Items 289 to 293 make consequential amendments to various provisions in the Income Tax Assessment Act 1997 to replace existing references to « clean » « energy » supplement with references to « energy » supplement.  

 

Item 294 sets out the necessary application and transitional rules that apply in relation to the tax amendments.  These ensure that the tax provisions, as amended, apply on and after commencement as if they also still referred to the « clean » « energy » supplement.

 

Part 6 - « Energy » supplement under schemes

 

Military Rehabilitation and Compensation Act Education and Training Scheme 2004

 

Items 295 to 297 make consequential amendments to paragraphs 3A.13.1 and 3A.18.1 to remove references to the indexation of payments of « clean » « energy » supplement under the Scheme.

 

Veterans’ Children Education Scheme

 

Items 298 to 300 make consequential amendments to paragraphs 3A.13.1 and 3A.18.1 to remove references to the indexation of payments of « clean » « energy » supplement under the Scheme.

 

Part 7 - Other amendments

 

Amendments to the Social Security Act

 

The partner income free area (PIFA) is part of the income testing arrangements for social security benefits.  If a person’s partner is receiving a social security benefit, the PIFA is the amount of income that would preclude payment of the relevant allowance or benefit to the partner.  If a person’s partner is not receiving a social security benefit, then the PIFA is the amount of income that would preclude payment to the partner of newstart allowance or youth allowance (depending on the partner’s age), assuming that the partner were qualified for that payment.

 

Point 1067G-H26 defines the PIFA for the purposes of youth allowance.  Item 301 inserts two new provisions (new points 1067G-H26A and 1067G-H26B), which set out how the PIFA is to be calculated in situations where the recipient’s partner is not receiving a social security benefit.  These provisions ensure that partner’s maximum basic rate, « energy » supplement and pension supplement (if relevant) are taken into account in calculating the PIFA, by disregarding other possible components of the maximum payment rate.

 

Item 302 inserts similar provisions after point 1067L-D25, which defines the PIFA for the purposes of austudy payment.

 

Item 303 inserts similar provisions after point 1068-G9, which defines the PIFA for the purposes of newstart allowance and the other social security benefits calculated using Benefit Rate Calculator B.

 

Item 304 inserts similar provisions after point 1068B-D22, which defines the PIFA for the purposes of benefit (PP) partnered.

 

These changes apply for the purposes of working out the rate of a person’s social security payment for days on or after 20 September 2014 ( item 305 refers).  

 

 



Schedule 3 - Indexation

 

 

Summary

This Schedule implements the following changes to Australian Government payments:

·          from 1 July 2014 - pause indexation for three years of the income free areas and assets value limits for all working age allowances (other than student payments), and the income test free area and assets value limit for parenting payment single;

·          from 20 September 2014 - index parenting payment single to the Consumer Price Index (CPI) only, by removing benchmarking to Male Total Average Weekly Earnings;

·          from 1 July 2014 - pause indexation for three years of several family tax benefit free areas.

Background

Pause indexation of various income and asset thresholds

This Schedule pauses for three years the indexation that occurs on 1 July each year of various income and asset thresholds that apply across the family assistance law and payments of some social security benefits and allowances.  There are comparable provisions in the Farm Household Support Act, which are also paused.  When indexation recommences, it will apply to the (paused) thresholds and there will be no catch-up in respect of indexation that would otherwise have occurred during the three-year pause.

Schedule 4 to the Family Assistance Act provides for indexation and adjustment of amounts in line with the CPI.  This affects various amounts set out in clause 2, and applies acronyms for the purposes of the table in clause 3, Part 2 of Schedule 4, which describes the rules and timing for the relevant indexation.

Part 3.16 of the Social Security Act provides for the indexation and adjustment of amounts.  Division 2 deals with CPI indexation, which affects various amounts set out in section 1190, and applies acronyms for the purposes of the table in section 1191, which describes the rules and timing for the relevant indexation.

Index parenting payment single by the CPI  

Parenting payment single is described as pension PP (single) within the Act, and is treated in part as a pension (although parenting payment partnered is treated as a benefit).  Pension PP (single) is indexed to the CPI , under item 1 of the CPI table in subsection 1191(1) and Division 2 of Part 3.16, and then benchmarked against 25 per cent of the annualised MTAWE and the rate is increased to meet the benchmark if CPI indexation resulted in a lower rate (see section 1195).  This benchmarking will cease from 1 July 2014, such that the next indexation of pension PP (single) will only be by reference to the CPI.



This Schedule takes effect from 1 July 2014.

Explanation of the changes

Pausing indexation

Amendments to the Family Assistance Act

Item 1 inserts new subclause 3(7A) into Schedule 4, providing that the FTB free area (A1 and A3), the FTB free area (B), the FTB basic MIFA (A1) the FTB double basic MIFA (A1) and the FTB additional MIFA (A1) are not to be indexed on 1 July 2014, 1 July 2015 and 1 July 2016.  These terms are abbreviations, with their meaning described in Schedule 4, Part 1. 

Amendments to the Farm Household Support Act

Item 2 amends table item 5 of section 95, omitting 1 July 2015 and substituting 1 July 2017, to mirror the amendments to the Social Security Act.

Amendments to the Social Security Act

Item 5 repeals table items 21A, 21B and 21C from subsection 1191(1) because they are redundant.  The relevant indexation will be effected by section 1204 (see item 10).

Item 6 relates to the benefits and allowances ‘payment free area’ (defined in item 20AAA of the table in section 1190).  Current subsection 1192(4AB) provides that the first indexation of amounts to which item 14AAA of the CPI Indexation Table in subsection 1191(1) relates is to take place on 1 July 2015.  This item omits ‘1 July 2015’ and substitutes ‘1 July 2017’.

Item 7 adds further subsections to section 1192.  New subsection (5AA) affects indexation provided for by item 14 in the CPI Indexation Table in subsection 1191(1).  Item 14 deals with the pension free area (which is an abbreviation for the ordinary income free area for social security pension - see item 20 of the table in subsection 1190(1)).  To the extent the pension free area relates to the Pension PP (Single) Rate calculator in point 1068A-E14, new subsection (5AA) provides it is not to be indexed on 1 July 2014, 1 July 2015 and 1 July 2016.

New subsection (5AB) affects indexation provided for by items 21, 22 and 23 (benefit ‘single’ and ‘partnered’ assets value limit for homeowners and non-owners) of the CPI Indexation Table in subsection 1191(1).  The amounts under these items are not to be indexed on 1 July 2014, 1 July 2015 and 1 July 2016.

Item 10 repeals and replaces section 1204, which provides for the adjustment of benefit asset value limits.  The formulae in current section 1204 use the pension ‘partnered’ homeowner asset value limit, the pension ‘partnered’ non-homeowner asset value limit and the pension ‘single’ homeowner asset value limit.  It is intended instead that the benefit assets value limits will be based upon relevant other benefit asset limits from 1 July 2014.  However, the various pension asset value limits currently forming the basis for the adjusted benefit asset value limits will continue to be indexed until 1 July 2017, unlike the benefit asset value limits.  Accordingly, this item re-bases the adjustment in benefit asset value limits on related benefit asset value limits with effect from 1 July 2014.  This then means that these adjusted thresholds will not be indexed until 1 July 2017, when indexation will again resume.

The formulae in new section 1204 use the benefit ‘partnered’ homeowner asset value limit, the benefit ‘partnered’ non-homeowner asset value limit, and the benefit ‘single’ homeowner asset value limit (as relevant) in deriving an adjusted benefit asset value limit generated by other provisions of the Act. 

New subsection 1204(1) substitutes a figure for the benefit ‘single’ non-homeowner asset value limit, applying a formula which relies upon various other values as at 1 July.

The benefit ‘partnered’ (item 3) homeowner asset value limit is the current figure, as at that 1 July, for the benefit ‘partnered’ (item 3) homeowner asset value limit. 

The benefit ‘partnered’ (item 3) non-homeowner asset value limit is the current figure, as at that 1 July, for the benefit “partnered (item 3) non-homeowner asset value limit. 

The benefit ‘single’ homeowner asset value limit is the current figure, as at that 1 July, for the benefit ‘single’ homeowner asset value limit. 

These terms are abbreviations defined in section 1190.

New subsection 1204(2) substitutes a value for the benefit ‘partnered’ (item 2) homeowner asset value limit.  The formula involves adjustment based upon the value of the benefit ‘partnered’ (item 3) homeowner asset value limit as at 1 July.  This is an abbreviation defined in section 1190.

New subsection 1204(3) substitutes a value for the benefit ‘partnered’ (item 2) non-homeowner asset value limit.  The formula involves adjustment based upon the value of the benefit ‘partnered’ (item 3) non-homeowner asset value limit as at 1 July.  This is an abbreviation defined in section 1190.

Indexing parenting payment single to the CPI

Items 3 and 4 are consequential to the removal of reference to MTAWE adjustment for pension PP (single) in section 1195 (see items 8 and 9).

Items 8 and 9 remove reference to category A amounts from section 1195.  Pension PP (single) is identified as a ‘category A’ amount as the result of the current reference to section 1068A , which is the pension PP (single) rate calculator.  This will result in section 1195 applying a MTAWE comparison only to ‘category B’ amounts until it is again amended from 1 July 2017.  Category B amounts are pensions not including Pension PP (single), such as age pension, various disability support pensions and carer payment.

 



Schedule 4 - Disability support pension

 

 

Summary

This Schedule introduces changes in relation to disability support pension, from 1 July 2014, to review disability support pension recipients under age 35 against revised impairment tables, and apply program of support requirements.

Background

The Family Assistance and Other Legislation Amendment Act 2011 introduced the requirement that people who made a claim (or are taken to have made a claim) for disability support pension on or after 3 September 2011, and who do not have a severe impairment, must have actively participated in a program of support.

 

This Schedule extends the requirement to actively participate in a program of support to certain disability support pension recipients who made a claim (or are taken to have made a claim) for disability support pension before 3 September 2011 and whose pension start date was after 2007.  These recipients will need to provide evidence that they have actively engaged in activities designed to build their work capacity, including training, work-related activities and activities aimed at addressing non-vocational barriers impacting on work capacity (for example, substance dependence) through active participation in a program of support.

 

The requirement to have actively participated in a program of support will apply to a person for whom certain conditions are met - notably, that the person is under 35 at the time a notice is given in relation to review of their qualification, and that the Secretary is satisfied as a result of the review that the person does not have a severe impairment and is able to work for at least eight hours a week.

 

This Schedule also introduces a requirement that, for the Secretary to be satisfied a person has actively participated in a program of support, the person must undertake a program of support that was wholly or partly funded by the Commonwealth.

 

The amendments made by this Schedule commence on the later of the day after Royal Assent and 1 July 2014.

Explanation of the changes

Part 1 - Participation by certain persons reviewed on or after 1 July 2014

Disability support pension provides income support to people who, because of an ongoing physical, intellectual or psychiatric impairment, are prevented from working or from being re-trained for work.  The qualification for disability support pension requires, amongst other things, that a person has a continuing inability to work because of an impairment.

 



Long-term dependence on disability support pension is not the best outcome for people who have skills and capacity to participate in the labour market or who are able to build such skills with appropriate assistance.  This measure extends the requirement to actively participate in a program of support to certain people receiving disability support pension who have not had the opportunity to actively participate in such a program.

 

Presently, a person who claims disability support pension is considered to have a continuing inability to work because of an impairment if the Secretary is satisfied that, where they do not have a severe impairment, they have actively participated in a program of support, that the impairment is of itself sufficient to prevent the person from doing any work independently of a program of support within the next two years, and either:  (i) the impairment is of itself sufficient to prevent the person from undertaking a training activity during the next two years; or (ii) if the impairment does not prevent the person from undertaking a training activity - such activity is unlikely (because of the impairment) to enable the person to do any work independently of a program of support within the next two years.

 

The requirement to have actively participated in a program of support will apply to a person for whom certain conditions are met - notably, that the person is under 35 at the time a notice is given in relation to review of their qualification, and that the Secretary is satisfied as a result of the review that the person does not have a severe impairment and is able to work for at least eight hours a week.  The review will reassess a person’s level of impairment under the current Impairment Tables and also their work capacity.  People who have been granted the pension due to a severe and manifest disability will not be subject to this measure.

 

If the abovementioned review determines that a person has a severe impairment, they will not be required to actively participate in a program of support.  A person has a severe impairment if the person’s impairment has been assessed under the Impairment Tables and been assigned an impairment rating of 20 points or more, of which 20 points or more have been assigned under a single Impairment Table. 

 

Likewise, if the review determines that a person cannot work for at least eight hours a week on wages that are at or above the relevant minimum wage, they will not be required to actively participate in a program of support.

 

The intent of this measure is, where appropriate, to require a person receiving disability support pension to demonstrate that they have undertaken and actively participated in a program of support.

 

Amendments to the Social Security Act 1991

Item 4 inserts a new definition reviewed 2008-2011 DSP starter into subsection 94(5) for the purposes of the amendments made by this Schedule.

A person will be a reviewed 2008-2011 DSP starter if:

(a)   the person made (or is taken to have made) a claim for disability support pension before 3 September 2011;

(b)   a determination granting the claim took effect after 2007;

(c)   on or after 1 July 2014 the person was given a notice in relation to assessing the person’s qualification for that pension;

(d)   when the notice was given, the person was under 35 years of age;

(e)   before the notice was given, either:

                     (i)        there was a record that the Secretary was satisfied that the person was able to do work for at least 8 hours per week; or

                    (ii)        there was no record that the Secretary had considered whether the person was able to do work described in subparagraph (i);

(f)    after the notice was given, the Secretary decided not to determine that the disability support pension for the person is to be cancelled;

(g)   as a result of the assessment involving the notice, the Secretary is satisfied that the person:

(h)   does not have a severe impairment ;

(i)     is able to work for at least 8 hours per week; and

(j)     the person does not have a dependent child under six years of age.

Of note is that paragraph (a) of the new definition operates to exclude people who claimed disability support pension after 3 September 2011 from the new provisions.  This is because people who claimed disability support pension on or after 3 September 2011 are already required to actively participate in a program of support due to amendments introduced by the Family Assistance and Other Legislation Amendment Act 2011 .

Paragraph (e) of the new definition refers to the record kept of the Secretary’s decision about the person’s qualification for disability support pension before any notice as described in paragraph (c) is given to the person for the purpose of reviewing their qualification.

Paragraph (f) of the new definition refers to a decision by the Secretary after a notice is given as described in paragraph (c) in relation to assessing the person’s qualification.  That is, following review of that person’s qualification.  A person will only satisfy paragraph (f) if the person continues to be qualified for disability support pension.

Item 1 adds the words ‘or is a reviewed 2008-2011 DSP starter’ at the end of subparagraph 94(1)(da)(i).  This insertion means that a person who is a reviewed 2008-2011 DSP starter is required to meet any participation requirements that apply to the person under section 94, where existing subparagraphs 94(1)(da)(ii) and (iii) also apply in relation to the person.

Item 2 adds to paragraph 94(2)(aa), following ‘(3B)’, the words ‘or the person is a reviewed 2008-2011 DSP starter who has had an opportunity to participate in a program of support’.  This amendment means that, for the Secretary to be satisfied that a reviewed 2008-2011 DSP starter has a continuing inability to work, the person must show they have actively participated in a program of support within the meaning of subsection 94(3C).

The qualification that paragraph 94(2)(aa) applies in relation to a reviewed 2008-2011 DSP starter ‘who has had an opportunity to participate in a program of support’ ensures that a reviewed 2008-2011 DSP starter who has not yet had this opportunity (for example, by being referred to an appropriate employment assistance service provider) will not cease to be qualified for disability support pension by reason only of not having actively participated in a program of support within the meaning of subsection 94(3C) upon becoming a reviewed 2008-2011 DSP starter.

Subsection 94(3C) provides that a person has actively participated in a program of support if the person has satisfied the requirements specified in a legislative instrument made by the Minister for the purposes of that subsection.  This means that, to be satisfied that a person who is a reviewed 2008-2011 DSP starter who has had the opportunity to participate in a program of support has done so, the Secretary must have regard to whether the person has satisfied the requirements of a legislative instrument made under subsection 94(3C).

Item 3 inserts a new paragraph (c) into subsection 94(3A).  Presently, under subsection 94(3A), if a person is receiving disability support pension and the person is issued with a notice in relation to reviewing the person’s qualification, they are not required to have actively participated in a program of support as stipulated in paragraph 94(2)(aa).  The new paragraph (c) means that this exemption will not apply to a person who meets the definition of ‘reviewed 2008-2011 DSP starter’ in subsection 94(5).  The effect of the new paragraph (c) is therefore that paragraph 94(2)(aa) applies to a reviewed 2008-2011 DSP starter.

 

Item 5 inserts a new subsection 96(3).  Section 96 allows for the continuation of a person’s qualification for disability support pension if the person obtains paid work of at least 15 hours but less than 30 hours a week.

New subsection 96(3) specifies that section 96 will not apply where, in the period beginning when the person becomes a reviewed 2008-2011 DSP starter and ending when the person’s qualification is first reviewed after that occurrence, the person would, if not for subsection 96(2), cease to be qualified because the person obtains paid work that is for at least 15 hours but less than 30 hours per week.

Item 6 sets out provisions which provide for the application of the amendments made by Division 1 of this Schedule as follows:

·          Sections 94 and 96 of the Social Security Act, as amended, apply for the purposes of determining a person’s qualification for disability support pension in respect of days occurring on or after the commencement of Division 1 of this Schedule.

  • Section 94 of the Social Security Act, as amended, applies whether a person claimed disability support pension before, on or after 3 September 2011.  Section 94 operates in this way despite item 12 of Schedule 3 to the Family Assistance and Other Legislation Amendment Act 2011 , which introduced paragraph 94(2)(aa) and subsections 94(3A) to (3E) and provided for these amendments to the Social Security Act to apply to a person who claimed disability support pension on or after 3 September 2011.

Part 2 - Commonwealth-funded program of support

It is proposed that only programmes wholly or partly funded by the Commonwealth, including Disability Employment Services, Job Services Australia and Australian Disability Enterprises, will be programs of support for the purposes of active participation in a program of support under paragraph 94(2)(aa).  Generally, non-government programmes do not provide a comprehensive tailored plan for the participant, taking into account the person’s disability, designed to prepare or re-train them for work.  This reinforces the principle that people with mild to moderate disability should participate in a comprehensive tailored program of support to try to build their capacity to work.

 

Item 7 inserts in paragraph 94(2)(aa), following ‘(3C)’, the words ‘and the program of support was wholly or partly funded by the Commonwealth’.  This addition limits the definition in subsection 94(5) of program of support for the purposes of paragraph 94(2)(aa) to being one that was wholly or partly funded by the Commonwealth.

Item 8 is a saving provision, which provides that, despite the amendment made by item 7, a person is qualified for disability support pension if, before the commencement of this Part, they started a program of support that was not wholly or partly funded by the Commonwealth and would qualify if the program had been wholly or partly funded by the Commonwealth.

 

 

 



Schedule 5 - P ortability for students and new apprentices

 

 

Summary

From 1 October 2014, this Schedule limits the six-week overseas portability period for student payments.

Background

The portability rules in the Social Security Act provide for when a person can continue to receive particular social security payments while absent overseas.  Currently, a person can continue to receive youth allowance (as paid to a person undertaking full-time study) and austudy payment while absent overseas for a period of up to six weeks, irrespective of the reason for the absence.  This Schedule will limit this six-week portability rule to absences that are for the purpose of seeking eligible medical treatment or attending to an acute family crisis.

A person can also continue to receive a number of social security payments for an unlimited period while overseas if the absence is for the purpose of undertaking studies that form part of a course of education at an educational institution.  This Schedule provides that the Secretary may, by legislative instrument, make principles that must be complied with when deciding how much of a period of absence is for the purpose of undertaking studies that form part of the course of education.

This Schedule will also align the portability rules, for a person qualified for youth allowance or austudy payment on the basis that they are a new apprentice, with the portability rules for a person qualified for any of those payments on the basis that they are undertaking full-time study.

The amendments made by this Schedule commence on 1 October 2014.

Explanation of the changes

Amendments to the Social Security Act

Items 1 and 3 are consequential amendments to the insertion of section 1218BA by item 4 of this Schedule.

These items refer the reader to section 1218BA when considering the maximum portability period for youth allowance for a person who is not undertaking full-time study and for austudy payment.  New section 1218BA provides an exception to the portability rules for a person who is receiving youth allowance or austudy payment on the basis that they are a new apprentice.

Item 2 repeals the cells in column 5 of table items 13 and 14 of section 1217, and substitutes new cells.



This item limits when an absence overseas will be an allowable absence for the purpose of the portability rules for youth allowance, granted on the basis that the person is undertaking full-time study, and for austudy payment.  Currently, any absence overseas for a period of up six weeks is an allowable absence, irrespective of the reason for the absence (the repealed cells refer to ‘Any temporary absence’).  This item restricts allowable absences to those undertaken for the purpose of:

·          seeking eligible medical treatment; or

·          attending to an acute family crisis.

This item does not otherwise affect the maximum portability period of six weeks.

This item will generally align the portability rules for student payments with those that currently exist for newstart allowance and youth allowance, granted on the basis that the person is not undertaking full-time study and is not a new apprentice. 

Item 4 inserts a new subsection 1218(4).

Section 1218, as in force before these amendments, provides an exception to the portability rules.  An exception will apply if a person is receiving a specified social security payment and is absent from Australia for the purpose of undertaking studies that form part of a course of education that the person was undertaking before they left Australia. 

New subsection 1218(4) provides that the Secretary may, by legislative instrument, make principles that must be complied with when deciding how much of a period of absence is for the purpose of undertaking studies that form part of the course of education.  Such principles could, for example, provide that a short period of time before the commencement of an overseas unit of study is for the purpose of undertaking studies.  If such principles were made and a person were to travel overseas a significant time before the commencement of their overseas unit of study, then a decision-maker could decide that some of that time is not for the purpose of undertaking studies.  If this were to occur, the exception to the portability rules in section 1218 would not apply, and the social security payment may not be payable for some of the period that the person is overseas.

Item 5 inserts a new section 1218BA.

New section 1218BA applies to a person who is qualified for youth allowance or austudy payment on the basis that they are a new apprentice.  The effect of this section is that a new apprentice may continue to receive these payments for so much of a period of absence overseas that is for the purpose of undertaking the person’s full-time apprenticeship, traineeship or trainee apprenticeship.  New subsection 1218BA(3) provides that the Secretary may, by legislative instrument, make principles that must be complied with when deciding how much of a period of absence is for the purpose of undertaking a full-time apprenticeship, traineeship or trainee apprenticeship.

This item aligns the portability rules for a person qualified for youth allowance or austudy payment on the basis that they are a new apprentice with the portability rules for a person qualified for those payments on the basis that they are undertaking full-time study.

Item 6 provides that the amendments made by this Schedule apply in relation to a period of absence from Australia beginning on or after the commencement of the Schedule (from 1 October 2014).

 



Schedule 6 - Waiting periods

 

 

Summary

This Schedule makes amendments to extend and simplify the ordinary waiting period for all working age payments from 1 October 2014.

Background

Currently, a person who is qualified for newstart allowance or sickness allowance under the Social Security Act must, subject to some exceptions, serve an ordinary waiting period of seven days before either of those allowances is payable.  The exceptions include where the Secretary is satisfied that the person is in severe financial hardship.  Depending on the circumstances, an ordinary waiting period may be served concurrently with other waiting periods and preclusion periods.

This Schedule creates a new ordinary waiting period for widow allowance, parenting payment and youth allowance for a person who is not undertaking full-time study and is not a new apprentice (in this Schedule, referred to as youth allowance (other)).

This Schedule also provides that the current exception on the basis of severe financial hardship will only apply if the person is also experiencing a personal financial crisis.  The Secretary will be able to prescribe by legislative instrument circumstances for when a person is experiencing a personal financial crisis.

The Schedule further clarifies that an ordinary waiting period is to be served after certain other relevant waiting periods or preclusion periods have ended.

The amendments made by this Schedule commence on 1 October 2014.

Explanation of the changes

Amendments to the Social Security Act

Item 1 inserts a new definition of experiencing a personal financial crisis

There is currently an exemption to the ordinary waiting period for newstart allowance and sickness allowance for a person who is in severe financial hardship.  Section 19C generally provides that a person is in severe financial hardship if the value of the person’s liquid assets is less than the fortnightly amount at the maximum payment rate of the relevant social security payment.  Other items in this Schedule replace this exemption with a new concept of experiencing a personal financial crisis.

A person will still need to be in severe financial hardship in order to be experiencing a personal financial crisis.  However, the person will also need to satisfy circumstances, prescribed in a legislative instrument, before the exemption applies.  As examples, the Secretary could prescribe in a legislative instrument circumstances such as the person having incurred unavoidable or reasonable expenditure or having experienced domestic violence.



Subsection 19DA(2) clarifies that a person will not be taken to satisfy the circumstances in the legislative instrument unless he or she can produce evidence that there is a reasonable possibility that he or she satisfies the circumstances. 

Item 2 is consequential to the amendments made by item 1.

Items 3 and 4 amend the definitions of ordinary waiting period and waiting period in subsection 23(1) to refer to the new ordinary waiting periods for widow allowance, parenting payment and youth allowance (other).

Item 5 amends subsection 23(10) to clarify when a person is taken to have served an ordinary waiting period. 

Current subsection 23(10) refers to the ordinary waiting periods for newstart allowance and sickness allowance.  The amendments made by this item replace the references to ‘newstart allowance’ and ‘sickness allowance’ with references to ‘social security benefit’ and ‘social security pension’ to cover all of the payments to which an ordinary waiting period may apply.  

Items 6, 7 and 9 provide for a new ordinary waiting period for widow allowance, parenting payment and youth allowance (other), and provide for the duration of those waiting periods.

Under new subsections 408CGA(1), 500WA(1) and 549CA(1), a person will be subject to the ordinary waiting period for widow allowance, parenting payment and youth allowance (other) unless:

·          the person was receiving an income support payment at some time in the 13 weeks immediately before widow allowance, parenting payment or youth allowance (other), as applicable, would have become payable; or

·          the Secretary is satisfied that the person is experiencing a personal financial crisis (as defined in new section 19DA, inserted by item 1).

Further, subsections 408CGA(2), 500WA(2) and 549CA(2) provide that an ordinary waiting period will not apply if the person is undertaking an activity specified in a legislative instrument.  These provisions replicate a current exemption to the ordinary waiting period for newstart allowance and sickness allowance.  The legislative instrument made for the purpose of those current provisions (the Social Security (Exemptions from Non-payment and Waiting Periods - Activities) (DEEWR) Specification 2003 (No. 1) ) specifies the following activities:

·          an activity undertaken by a person as part of Stream 4 employment services provided to the person;

·          a rehabilitation programme; and

·          an activity undertaken by a person as part of the Remote Jobs and Communities Programme in certain circumstances.

Subsections 408CGA(3), 500WA(3) and 549CA(3) allow the Secretary to specify these activities in a legislative instrument.

Subsections 408CGB(1), 500WB(1) and 549CB(1) provide that, subject to subsections (2) and (3) of those provisions, the ordinary waiting period is a period of seven days that starts on the day that widow allowance, parenting payment or youth allowance (other), as applicable, would have been payable but for the ordinary waiting period.

Subsections 408CGB(2) and 500WB(2) provide for the start of an ordinary waiting period for widow allowance or parenting payment where the person is subject to a seasonal work preclusion period, a lump sum preclusion period or an income maintenance period.  Subsection 549CB(2) provides for the start of an ordinary waiting period for youth allowance (other) where a person is subject to one or more these preclusion periods, but also where the person is subject to a liquid assets test waiting period or a newly arrived resident’s waiting period.

If a person is subject to one or more of the other waiting periods or preclusion periods, then the ordinary waiting period starts on the day after all the other waiting periods and preclusion periods have ended.  The effect of this is that the ordinary waiting period cannot be served concurrently with other relevant waiting periods and preclusion periods.

Subsections 408CGB(3), 500WB(3) and 549CB(3) provide for the start of an ordinary waiting period for widow allowance, parenting payment or youth allowance (other) where:

·          a person is subject to an ordinary waiting period (the first ordinary waiting period) for any payment; and

·          during the first ordinary waiting period, the person ceases to be qualified for the payment to which the first ordinary waiting period relates; and

  • during the first ordinary waiting period, the person claims another payment which has an ordinary waiting period (the second ordinary waiting period ).

In these circumstances, the second ordinary waiting period starts on the day that the first ordinary waiting period starts.

Item 8 inserts a reference to an ordinary waiting period in section 549.

Section 549 provides that a youth allowance is not payable to a person who is subject to a waiting period.  Certain waiting periods are specified for the purpose of that provision, and it is appropriate to include a reference to an ordinary waiting period, given one of the effects of this Schedule is to create an ordinary waiting period for youth allowance (other).

Items 10 and 14 are consequential to the amendments made by items 12 and 16.

Items 11 and 15 amend paragraphs 620(1)(g) and 693(f), the effect of which is that an ordinary waiting period for newstart allowance and sickness allowance will not apply if the person is experiencing a personal financial crisis, as defined in new section 19DA (inserted by item 1 of this Schedule).

Items 12 and 16 insert new notes that are consequential to the amendments made by this Schedule.

Items 13 and 17 substitute sections 621 and 694 with new provisions that provide for the duration of the ordinary waiting period for newstart allowance and sickness allowance.

The effect of subsections 621(1) and 694(1) is that, subject to subsections (3) and (4) of those provisions, the ordinary waiting period is a period of seven days starting on the day that newstart allowance or sickness allowance, as applicable, would have been payable but for the ordinary waiting period.

Subsections 621(2) and 694(2) provide for the start of an ordinary waiting period for newstart allowance and sickness allowance where the person is disqualified for those payments because of the liquid assets test.  In these circumstances, the ordinary waiting period is the period of seven days that starts after the end of the liquid assets test waiting period.

Subsections 621(3) and 694(3) provide for the start of an ordinary waiting period for newstart allowance and sickness allowance where the person is subject to a newly arrived resident’s waiting period, a seasonal work preclusion period, a lump sum preclusion period or an income maintenance period.  If a person is subject to one or more of the other waiting periods or preclusion periods, then the ordinary waiting period starts on the day after all the other waiting periods and preclusion periods have ended.  The effect of this is that the ordinary waiting period cannot be served concurrently with other relevant waiting periods and preclusion periods.

Subsections 621(4) and 694(4) provide for the start of an ordinary waiting period for newstart allowance and sickness allowance where:

·          a person is subject to an ordinary waiting period (the first ordinary waiting period) for any payment; and

·          during the first ordinary waiting period, the person ceases to be qualified for the payment to which the first ordinary waiting period relates; and

·          during the first ordinary waiting period, the person claims another payment which has an ordinary waiting period (the second ordinary waiting period).

In these circumstances, the second ordinary waiting period starts on the day that the first ordinary waiting period starts.

Item 18 provides that the amendments made by this Schedule apply in relation to a claim for a social security payment that is made on or after the commencement of this Schedule.

 



Schedule 7 - Family tax benefit

 

 

Summary

 

From 1 July 2014, this Schedule maintains the standard FTB child rates for two years in the maximum and base rate of family tax benefit Part A and the maximum rate of family tax benefit Part B. 

 

Background

 

The FTB child rates for family tax benefit Part A (methods 1 and 2), the standard rates for family tax benefit Part B, and an approved care organisation’s standard rate are currently indexed in accordance with movements in the Consumer Price Index on 1 July each year.  From 1 July 2014, indexation of these amounts will be paused for two years.  Indexation will resume on 1 July 2016.  

 

Explanation of the changes

 

Amendments to the Family Assistance Act

 

Schedule 4 to the Family Assistance Act provides for the indexation or adjustment (as relevant) of specified amounts.

 

Item 1 repeals existing subclause 3(3), which is a spent provision, and inserts a new subclause (3).  The new provision ensures that specified amounts are not indexed on 1 July 2014 and 1 July 2015.  These amounts are the standard FTB child rates for family tax benefit Part A (methods 1 and 2); the standard rates for family tax benefit Part B; and an approved care organisation’s standard rate.

 

Items 2 and 4 repeal clauses 3A, 10 and 11 of Schedule 4, which are redundant.

 

Item 3 makes a consequential amendment to remove references to clauses 10 and 11 from subclause 5(1).

 

 



Schedule 8 - Social and Community Services Pay Equity Special Account

 

 

Summary

 

This Schedule provides that a State pay equity order (Western Australia) is a pay equity order for the purposes of the Social and Community Services Pay Equity Special Account (the Account), and amends the amounts by which the Account will be credited accordingly.

This will enable the Account to be used to fund the Commonwealth’s share of pay increases provided by a State pay equity order (Western Australia) by way of additional funding to Commonwealth programs, including those funded through the States and Territories.

Background

The State pay equity order (Western Australia)

In November 2012, the Social and Community Services Pay Equity Special Account was established (under the Social and Community Services Pay Equity Special Account Act 2012 ) to pay Commonwealth Government supplementation to service providers affected by the:

·       Fair Work Australia Social, Community and Disability Services (SACS) Industry Equal Remuneration Order (the National Case); and

·       the transitional pay equity order (Queensland).

Subsequently, the Western Australian (WA) Industrial Relations Commission made the decision on 29 August 2013 to bring the WA State SACS awards (the Social and Community Services (Western Australia) Interim Award 2011 (2013 WAIRC 00776) and the Crisis Assistance, Supported Housing Industry - Western Australian Interim Award 2011 (2013 WAIRC 00775)) into line with the National Award.

The decision was effective immediately, with 1 December 2013 being the latest date employers could implement the 2013-14 increase, with a back pay component to the date of the decision.  The Commonwealth Government has committed to paying supplementation to eligible service providers, for the life of the roll-out of the annual increases (to 2020-21), as per the National Case.

The amendments made by this Schedule commence on 1 July 2014.

Explanation of the changes

Amendments to the Social and Community Services Pay Equity Special Account Act 2012

Item 1 provides, by addition of a new paragraph (c), that a pay equity order as defined in subsection 4(1) includes ‘a State pay equity order (Western Australia)’.

 



Item 2 adds to subsection 4(1) the following definition of the term State pay equity order (Western Australia) :

(a)   the order made by the Western Australian Industrial Commission on 29 August 2013 (2013 WAIRC 00776) varying the Social and Community Services (Western Australia) Interim Award 2011; or

(b)   the order made by the Western Australian Industrial Commission on 29 August 2013 (2013 WAIRC 00775) varying the Crisis Assistance, Supported Housing Industry - Western Australian Interim Award 2011 .

Item 3 substitutes items 3 to 9 of the table set out in section 6 with new entries reflecting the revised amounts by which the Social and Community Services Pay Equity Special Account will be credited.  The revised amounts set out in column 2 of items 3 to 9 reflect the requirements of the pay equity orders as amended by items 1 and 2.

 

Items 4 and 13 add ‘Schedule 1AA’ to the headings at Part 1 of Schedule 1 and Part 1 of Schedule 2.  This amendment limits Part 1 of Schedule 1 and Part 1 of Schedule 2 to programmes listed in Schedule 1AA of the relevant regulations.

 

Items 5 and 14 insert a note into Part 1 of Schedule 1 and Part 1 of Schedule 2 to clarify that the item numbers listed in Part 1 of each of those Schedules correspond with the item numbers set out in Schedule 1AA of the relevant regulations.

 

Items 6 to 12 and 15 to 17 delete the department titles from Schedules 1 and 2 as these arrangements have been superseded by machinery of government changes.  Department titles are not required in order to identify those programmes within the scope of subclauses 7(2) and 7(3).

 



STATEMENTS OF COMPATIBILITY WITH HUMAN RIGHTS

 

Prepared in accordance with Part 3 of the

Human Rights (Parliamentary Scrutiny) Act 2011

SOCIAL SERVICES AND OTHER LEGISLATION AMENDMENT

(2014 BUDGET MEASURES No. 1) « BILL » 2014

 

Schedule 1 - « Energy » supplement replacing seniors supplement

 

This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview of the Schedule

This Schedule abolishes the seniors supplement for holders of the Commonwealth Seniors Health Card.   Veterans who hold a Commonwealth Seniors Health Card or Gold Card will also no longer receive the seniors supplement.  Cardholders will continue to be paid the « clean » « energy » supplement, renamed the « energy » supplement by this « Bill » .   Cardholders will receive their last quarterly seniors supplement payment in June 2014.

Human Rights implications

Right to social security

This Schedule removes assistance from those with higher means, and is consistent with a well-targeted income support system which is targeted at those in most financial need.

The Schedule engages the right to social security as recognised in Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR).  Eligible seniors will be paid the « energy » supplement to assist with them with the cost of general living expenses.  

The Schedule also engages Article 11 of ICESCR, which provides for the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.  Holders of a senior’s health card are entitled to a range of concessions including concessions on pharmaceutical and health services.

Conclusion

The Schedule is compatible with human rights because it maintains the right to social security and health.  The Schedule is compatible with human rights.



Schedule 2 - « Energy » supplement replacing « clean » « energy » supplement

 

This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview of the Schedule

This Schedule (in Parts 1 to 6) renames the « clean » « energy » supplement (CES) as the ‘ « energy » supplement’ and removes indexation arrangements to freeze permanently the rate of payment at the relevant amounts payable before 1 July 2014. 

 

The Schedule (in Part 7) also makes minor changes to the partner income free area from 20 September 2014.

 

Human rights implications

The Schedule engages the following human rights:

Right to social security

Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) recognises the right of everyone to social security.

The Schedule has no effect on the right to social security.

« Energy » supplement

The « energy » supplement is paid as part of the primary social security, family assistance or veterans’ entitlements payment to provide compensation to households for the cost of living impacts of the carbon tax.  

This Schedule removes indexation of the « energy » supplement from 1 July 2014.   « Energy » supplement will provide ongoing assistance to pensioners, seniors, allowees, veterans and families at a fixed rate.

Recipients will be better off because there will no longer be price pressures from the carbon tax and people will continue to receive the « energy » supplement.

There are no human rights impacts, as recipients will be better off after the carbon tax is repealed.

Partner income free area (PIFA)

The PIFA is part of the income testing arrangements for social security benefits.  The PIFA determines the impact that the income of a person’s partner has on the person’s rate of payment - partner income below the PIFA has no impact, while income above the PIFA reduces the person’s rate of payment by 60 cents in the dollar.  The PIFA is calculated based on the rate of newstart or youth allowance that the partner would receive if they were qualified for payment.

This Schedule ensures that, for the purposes of calculating the PIFA, the partner’s notional rate of newstart or youth allowance includes the maximum basic rate, the pension supplement (if relevant) and the « energy » supplement.   The inclusion of these amounts is beneficial to recipients as it increases the amount the partner can earn before payment is affected.

Other possible rate components (pharmaceutical allowance, rent assistance and youth disability supplement) are disregarded as these components have specific qualification requirements and it is not possible to determine reasonably the partner’s eligibility if they are not receiving payment.  Disregarding these rate components will not reduce the amount of the PIFA as these components are already disregarded under existing policy.  Recipients will not have their rate reduced as a result of these amendments. 

There are no human rights impacts, as recipients will not be negatively affected by the amendments. 

Conclusion

 

The amendments in the Schedule are compatible with human rights because they do not limit access to social security.



Schedule 3 - Indexation

 

This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview of the Schedule

The Schedule will have the effect of

 

1.     Fixing the value of income and assets test free areas and thresholds for certain Australian Government payments for three years.  From 1 July 2014, this measure will fix for a period of three years:

 

·          three family payment income free areas; and

  • income free areas and assets value limits for working age allowance payments and the income test free area and assets value limit for parenting payment (single).

 

Indexation using the Consumer Price Index will resume after three years.

 

2.     Amending indexation provisions for recipients of Parenting Payment Single from 20 September 2014, with the effect that payments will be indexed to movements in the Consumer Price Index only.

 

Human rights implications

The Schedule engages the following human rights:

Right to social security

Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) recognises the right of everyone to social security.

The Schedule has no effect on the right to social security.

The changes to the value of income and assets test free areas and thresholds for certain Australian Government payments assist in targeting payments according to need.  Payments will not be reduced unless customers’ circumstances change, such as their income or assets increasing in value. 

 

Parenting Payment Single will continue to be indexed to movement in the Consumer Price Index twice a year, and its purchasing power will be maintained. 

 

Conclusion

The amendments in the Schedule are compatible with human rights because they do not limit access to social security.



Schedule 4 - Disability support pension

 

This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview of the Schedule

This Schedule will amend the Social Security Act to extend program of support requirements to certain disability support pension recipients following a review of their qualification.  This measure will be targeted to those pension recipients who are under 35 years of age at the time a notice is given in relation to review of their qualification and who made a claim for disability support pension before 3 September 2011 and were granted the pension after 2007.

 

This Schedule will also introduce a requirement that, in order for the Secretary to be satisfied a person has actively participated in a program of support, the person must undertake a program of support that was wholly or partly funded by the Commonwealth.

 

Human rights implications

This Schedule engages the following human rights:

Right to social security

Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) recognises the right of everyone to social security.

Extending the requirement to undertake a program of support, as provided by Part 1 of this Schedule, will help to ensure that assistance to develop work capacity is provided to those disability support pension recipients most likely to benefit from employment assistance.  Assisting those people, who are able, to participate economically and socially will help ensure that the social security system remains sustainable and that available funds will be targeted to those recipients with the greatest need.  

Right to equality and non-discrimination

This measure engages the right to equality and non-discrimination under Article 2(2) of the ICESCR and more generally under Article 26 of the International Covenant on Civil and Political Rights.

 

The measures in this Schedule reinforce the principle that labour market participation of people with disability, including disability support pension recipients with some work capacity, should be encouraged and supported.

 

Targeting the requirement to participate in a program of support to disability support pension recipients who are under 35 years of age at the time of a review of their qualification ensures those at the greatest risk of spending extended periods of time dependent on income support and most likely to benefit from employment assistance, participate in a program of support.

 

Evidence indicates that the impairment levels of disability support pension recipients who have been receiving this pension for long periods worsen over time, so those most recently granted the pension are more likely to have more work capacity and be able to participate economically and socially.

 

Recipients assessed as having an ability to work at least eight hours a week will be provided with the support needed to assist them develop their work capacity while still receiving disability support pension.  This will assist people to build their capacity and may increase their chance of gaining employment.

 

Conclusion

This Schedule is compatible with human rights because it advances the protection of human rights and does not limit or preclude people from gaining or maintaining access to social security in Australia.

 



Schedule 5 - P ortability for students and new apprentices

 

This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview of the Schedule

This Schedule will generally align the portability rules for student payment recipients (youth allowance and austudy payment) with the portability rules for jobseekers, so that recipients of student payments will no longer be eligible for payment while overseas for a period of up to six weeks, regardless of the reason for the absence.  This Schedule limits the six-week portability period to absences that are for the purpose of seeking eligible medical treatment or attending to an acute family crisis.

The Schedule also allows the Secretary to make principles that must be complied with when deciding how much of a period of absence is for the purpose of undertaking studies that form part of the course of education.

Students and apprentices will still be able to travel overseas for other purposes, using their own resources.

The purpose of student payments is to assist students financially while they study, with additional incentives for students to work while on study breaks.

Human rights implications

Right to education

The measure is compatible with the right to education in Article 13 of the International Covenant on Economic, Social and Cultural Rights (ICESCR).  Students will remain eligible for all payments (both within Australia and overseas) while undertaking approved study or training.  Eligibility is only affected while overseas and not undertaking an approved activity, such as study.

Right to freedom of movement:

The measure engages the right to freedom of movement, which is contained in Articles 12 and 13 of the International Covenant on Civil and Political Rights Students will remain able to move freely, whether within Australia or overseas.  However, they will no longer receive youth allowance or austudy payment while overseas, unless they are undertaking eligible study, receiving eligible medical treatment or attending an acute family crisis.

Any impact on students’ freedom of movement is reasonable and consistent with the policy objectives.

Right to social security

The measure engages the right to social security contained in Article 9 of the ICESCR.

The right to social security requires that a system be established under domestic law, and that public authorities must take responsibility for the effective administration of the system.  The social security scheme must provide a minimum essential level of benefits to all individuals and families that will enable them to cover essential living costs.

The changes to eligibility for overseas payment do not affect students’ ability to access social security within Australia.  The measure ensures that social security is appropriately targeted and only affects those recipients of youth allowance and austudy payment who elect to travel overseas for a purpose other than studying, receiving eligible medical treatment or attending an acute family crisis.

Conclusion

These amendments are compatible with human rights.  To the extent that they may adversely impact on a person’s access to education, social security or freedom of movement, the limitation is reasonable and proportionate.



Schedule 6 - Waiting periods

 

This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview of the Schedule

Schedule 6 to the « Bill » amends the Social Security Act 1991 to extend and simplify the application of the ordinary waiting period.   The ordinary waiting period is a one-week waiting period that currently applies to new claimants of newstart allowance and sickness allowance.  These new claimants must serve the waiting period before they start payment, unless they are exempt or the waiting period is waived.  The ordinary waiting period reflects the general principle that people should support themselves before seeking government assistance.

The amendments in this Schedule seek to better promote self-support, and discourage a culture of automatic entitlement to income support, by ensuring that the waiting period is applied consistently and effectively across similar working age payments.

Extend the ordinary waiting period to youth allowance (other), parenting payment and widow allowance

This Schedule will extend the application of the ordinary waiting period to new claimants of youth allowance (other), parenting payment and widow allowance.  From 1 October 2014, claimants of these payments will be required to serve the one-week ordinary waiting period before they start receiving payment, unless exempt or the waiting period is waived.  The ordinary waiting period will also continue to apply to new claimants of newstart allowance and sickness allowance.  This means that the rules governing when payment commences will be more consistent across similar working age payment types.

Introducing additional evidentiary requirements to ‘severe financial hardship’ waiver

Under existing legislation, claimants can have their ordinary waiting period waived if the Secretary is satisfied that they are in ‘severe financial hardship’.  As provided by section 19C of the Social Security Act 1991 , a person is in ‘severe financial hardship’ if the value of their liquid assets is less than their fortnightly rate of payment if they are single, or less than double their fortnightly payment if they are partnered. 

This Schedule will tighten these waiver provisions by introducing an additional requirement, in addition to severe financial hardship, that the person be ‘experiencing a personal financial crisis’ and provide supporting evidence to have the ordinary waiting period waived.  A person will be ‘experiencing a personal financial crisis’ in the circumstances provided by legislative instrument to enable the flexibility to consider a range of circumstances.  Circumstances that could be prescribed in a legislative instrument may include domestic violence, reasonable or unavoidable expenditure, or prison release.  These requirements will apply to waivers of the ordinary waiting period for newstart allowance, sickness allowance, youth allowance (other), parenting payment and widow allowance.

Other existing exemptions from the ordinary waiting period will also continue to be available to claimants of the above payments who are:

·          reclaiming within 13 weeks of last receiving an income support payment; or

·          participating in certain employment services designed for vulnerable jobseekers with multiple barriers to work.

Removing the concurrent application of the waiting period

Currently, depending on individual circumstances, claimants may be able to serve the ordinary waiting period concurrently with certain other waiting periods or preclusion periods.  This may result in some claimants being treated more beneficially than others. 

The amendments in this Schedule remove the ability for claimants to serve the ordinary waiting period concurrently with certain other waiting periods and preclusion periods.  This means the ordinary waiting period will be served following the end of those other periods, including the liquid assets test waiting period, income maintenance period, seasonal work preclusion period and newly arrived resident’s waiting period.

Human rights implications

Right to social security

This Schedule engages the rights to social security contained in Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR).

The right to social security requires that a system be established under domestic law, and that public authorities must take responsibility for the effective administration of the system.  The social security scheme must provide a minimum essential level of benefits to all individuals and families that will enable them to cover essential living costs.

The United Nations Committee on Economic, Cultural and Social Rights (the committee) has stated that a social security scheme should be sustainable and that the conditions for benefits must be reasonable, proportionate and transparent (see General Comment No.19) .

Article 4 of ICESCR provides that countries may limit the rights such as to social security in a way determined by law only in so far as this may be compatible with the nature of the rights contained within the ICESCR and solely for the purpose of promoting the general welfare in a democratic society.  Such a limitation must be proportionate to the objective to be achieved.

A central principle underpinning Australia’s social security system is that support should be targeted to those in the community most in need in order to keep the system sustainable and fair.  The amendments in this Schedule do not affect eligibility for social security pensions or benefits.  Rather, they affect the rules governing when those eligible for certain payments can start receiving their entitlements.  The amendments focus on promoting self-support by requiring people to meet their own living costs for a short period where they are able.  New claimants who need immediate financial assistance will still be able to access exemptions and waivers provided they meet the relevant eligibility criteria for those exemptions and waivers.  In this way, the amendments help to ensure that immediate access to working age payments is targeted to those most in need.

To the extent that the changes in this Schedule may limit the right to social security , those limitations are reasonable and proportionate to the policy objective of ensuring a sustainable and well-targeted payment system.

Right to an adequate standard of living, including food, water and housing

This Schedule engages the right to an adequate standard of living, including food, water and housing, contained in Article 11 of the ICESCR.  The right to an adequate standard of living, including food, water and housing provides that everyone is entitled to adequate food, clothing and housing and to the continuous improvement of living conditions.

To the extent that there is an impact on a person’s right to an adequate standard of living, including food, water and housing, by virtue of this Schedule, the impact is limited.  The ordinary waiting period is a period of one week only during which those claimants with the means to support themselves are expected to do so.  Those who are unable to accommodate their own living costs for that one-week period because they are in severe financial hardship and have experienced a personal financial crisis will be able to have the waiting period waived.

Therefore, this Schedule is compatible with the right to an adequate standard of living as the potential limitations on this right are proportionate to the policy objective of encouraging self-support, while providing a safety net, as eligible people can be exempted from serving the ordinary waiting period or can have the ordinary waiting period waived. 

Right to equality and non-discrimination

To avoid doubt, this Schedule is compatible with the right to equality and non-discrimination contained in Articles 2 and 26 of the International Covenant on Civil and Political Rights (ICCPR).

Article 2(1) of the ICCPR obliges each State party to respect and ensure that all persons within its territory and subject to its jurisdiction have the rights recognised in the Covenant without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status (see CCPR General Comment No. 18).

Article 26 not only entitles all persons to equality before the law as well as equal protection of the law, but also prohibits any discrimination under the law and guarantees to all persons equal and effective protection against discrimination on any ground such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status (see CCPR General Comment No. 18) .

It is important to note, however, that not all differential treatment will be considered discriminatory.  The committee has provided the following commentary on when differential treatment will be considered discriminatory:

Differential treatment based on prohibited grounds will be viewed as discriminatory unless the justification for differentiation is reasonable and objective.  This will include an assessment as to whether the aim and effects of the measures or omissions are legitimate, compatible with the nature of the Covenant rights and solely for the purpose of promoting the general welfare in a democratic society.  In addition, there must be a clear and reasonable relationship of proportionality between the aim sought to be realised and the measures or omissions and their effects.  A failure to remove differential treatment on the basis of a lack of available resources is not an objective and reasonable justification unless every effort has been made to use all resources that are at the State party’s disposition in an effort to address and eliminate the discrimination, as a matter of priority (CESCR, General Comment No. 20).

This Schedule will extend and simplify the application of the ordinary waiting period.  There will be no differential treatment on the basis of race, colour, sex, language, religion, political or other opinion, national or social origin, property or birth as the ordinary waiting period will apply equally to claimants of affected working age income support payments. 

The application of the ordinary waiting period to youth allowance (other), parenting payment and widow allowance, in addition to newstart allowance and sickness allowance, will ensure that the waiting period is applied consistently to working age payments which have a similar purpose.  While the ordinary waiting period is not being extended to all social security payments, this will not be a limitation on the right to equality and non-discrimination as the differential treatment is for a reasonable and objective purpose.

The above working age payments are generally intended to be shorter-term payments which provide support, while also offering incentives to return to work.  Claimants of these payments are also more likely to be able to support themselves for a time before needing income support as they may have transitioned from employment or had other means of support.  In contrast, pension payments, such as age pension and disability support pension, provide longer-term support and are designed to acknowledge ongoing barriers that make it difficult for claimants to support themselves through paid employment.  Additionally, claimants of student payments generally have up-front expenses associated with their study which may substantially reduce any means of self-support.

It is therefore reasonable and objective to apply an ordinary waiting period with respect to the above mentioned types of working age payments to ensure that claimants of these payments support themselves where they are able before calling on the Government for income support.  Claimants will be able to access exemptions and waivers to receive assistance sooner, if they are eligible.

For these reasons, this Schedule is compatible with the right of equality and non-discrimination .

Conclusion

This Schedule is compatible with human rights.  To the extent that it may have limited adverse impact on a person’s right to social security, an adequate standard of living and equality and non-discrimination, the limitation is reasonable, proportionate to the policy objective and for legitimate reasons.



Schedule 7 - Family tax benefit

 

This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview of the Schedule

Schedule 7 makes amendments to the A New Tax System (Family Assistance) Act 1999 .  From 1 July 2014, this Schedule maintains the standard FTB child rates for two years in the maximum and base rate of family tax benefit Part A and the maximum rate of family tax benefit Part B.

This reform will improve the sustainability of the family payments system over the long term, while continuing to provide assistance to families in need.

Human rights implications

These amendments engage the following human right:

Right to social security

Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR), recognises the right of everyone to benefit from social security.

Article 26 of the Convention on the Rights of the Child (CRC) requires countries to recognise the right of the child to benefit from social security.  Benefits should take into account the resources and the circumstances of the child and persons having responsibility for the maintenance of the child.

The United Nations Committee on Economic, Cultural and Social Rights has stated that a social security scheme should be sustainable and that the conditions for benefits must be reasonable, proportionate and transparent.

To the extent that maintaining the family tax benefit standard payment rates limits the right to social security, this is reasonable and proportionate.  The standard rates are not being reduced, and families will continue to receive assistance at current rates for another two years.  Certain elements of family tax benefit, namely rent assistance, newborn supplement, large family supplement and multiple birth allowance, will continue to be indexed.

This reform will help ensure the sustainability of the family payments system.

Conclusion

These amendments are compatible with human rights because they advance the protection of human rights and, to the extent that these changes limit access to family payments, these limitations are reasonable and proportionate.

 



Schedule 8 - Social and Community Services Pay Equity Special Account

 

This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview of the Schedule

This Schedule provides that the State pay equity order (Western Australia) is a pay equity order for the purposes of the Social and Community Services Pay Equity Special Account (the Account), and amends the amounts by which the Account will be credited accordingly.

This will enable the Account to be used to fund the Commonwealth’s share of pay increases provided by the State pay equity order (Western Australia) by way of additional funding to Commonwealth programs, including those funded through the States and Territories.

Human rights implications

This Schedule engages and promotes the human right, Right to work and rights in work.

Fair Work Australia determined that Social and Community Service industry workers historically received significantly less remuneration for performing comparable work to public sector employees.  Equal remuneration is set out under Article 7 of the International Covenant on Economic, Social and Cultural Rights , and includes remuneration which provides all workers, as a minimum, with fair wages and equal remuneration for work of equal value without distinction of any kind - in particular, women being guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal work.

The Social and Community Services Pay Equity Special Account essentially facilitates the administration of funding to affected Commonwealth-funded employers with Social and Community Services workers, and enhances transparency to government.  This Schedule extends these arrangements to workers affected by the State pay equity order (Western Australia).

Conclusion

This Schedule is compatible with human rights as it does not raise any human rights issues.

 

 

 

Minister for Social Services, the Hon Kevin Andrews MP