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Social Security Legislation Amendment Bill 1992
House: House of Representatives Portfolio: Social Security
Purpose To give the telephone rental concession scheme a legislative basis; allow certain pensioners to receive the single person rate of pension from the day on which his/her partner died; give effect at Australian law to an unscheduled reciprocal social security agreement between Australia and Austria; make certain persons who are subject to an assurance of support ineligible for the job search or newstart allowance; exclude from a persons ordinary income, income derived from the realisation of certain unlisted property trusts; exempt, in certain circumstances, from the assets test the value of any right or interest of a person in a sale leaseback home; and allow data-matching to indicate that a person was, or is, entitled to a benefit.
Background As there is no central theme to this Bill, the background to each major amendment will be discussed below.
Main Provisions Telephone Allowance: The telephone rental concession (TRC) provides for a reduction in the rental charges for subscribers to a telephone service. To be eligible for a TRC a person has to live where a telephone service is connected, satisfy the household income limit requirements and be either: blind and receive an age or invalid pension; qualify for a pensioner health benefits card and receive a social security pension, or widowed persons, sheltered employment or rehabilitation allowance; or be over 60 years of age and receiving newstart allowance. Subject to certain exceptions, a person cannot qualify for a TRC if they are living with someone who receives a gross weekly income of more than $228.00. The exception operates if the other person is: a war widow pensioner; permanently blind; a Veterans' Affairs totally and permanently incapacitated war disability pensioner; or a person receiving a pension or allowance and qualifies for a pensioner health benefit card. In 1991, the value of the TRC was $49.00 a year. Eligible persons are issued telephone rental concession vouchers each year. Each voucher provides the person with a $12.25 reduction of their quarterly telephone rental charge when presented to Telecom. TRC vouchers are produced by the Department of Social Security and are bulk- issued to eligible persons in December for use in the following year. The administration of the TRC scheme does not have a basis in legislation.
It was announced in the 1991- 92 Budget, that from July 1992 the voucher system for the delivery of the TRC will be replaced by direct payment to eligible persons. This Bill will give effect to that announcement and gives the TRC scheme a legislative basis. The intention of the Government in introducing the new TRC scheme is to provide an allowance that "... will be more user friendly in that under the old concession scheme vouchers were sometimes misplaced or lost and pensioners were put to the inconvenience of obtaining replacements. It will also be much simpler to administer". 1
A new Part 2.25 (proposed sections 1061Q- 1061Z), which will be inserted into the Social Security Act 1991 (the Principal Act) by clause 6, deals with the qualifications for, rate of, payment of, and obligations of recipients of the telephone allowance. In order for a person to qualify for a telephone allowance he/she will have to meet certain qualifying criteria, including either: * receiving a social security pension; and either satisfying the fringe benefits ordinary income test and fringe benefits assets test, or being permanently blind; and are a telephone subscriber; * receiving a newstart allowance; have turned 60; and are a telephone subscriber; * receiving a jobsearch allowance or special benefit; receiving a social security pension, benefit or service pension for the last 12 months; have turned 60; and are a telephone subscriber (proposed section 1061Q).
Even though a person may qualify under proposed section 1061Q for a telephone allowance, the telephone allowance will not be payable in certain circumstances, including if he/she is absent from Australia, or is receiving a telephone allowance under the Veterans' Entitlements Act or the Seamen's War Pensions and Allowances Act 1940 (proposed section 1061R). Proposed section 1061S deals with the rate of telephone allowance. The rate of allowance will depend on an applicants circumstances. For example, the maximum allowance of $51.80 per year will be payable to a person who is not a member of a couple, whilst $25.90 per year will be payable to an applicant whose partner is getting a social security pension/benefit and the telephone allowance. The telephone allowance will be payable in quarterly instalments (proposed section 1061U). Except with a recipients consent, or as a deduction payable to the Commissioner of Taxation, telephone allowance will be inalienable (proposes section 1061W). Proposed sections 1061Y and 1061Z provide that the Secretary of the Department of Social Security (the Department) may require a telephone allowance recipient to inform or provide a statement to the Department of certain matters, including specified events or changes of circumstances, or matters that might affect the payment of the telephone allowance. It will be an offence, attracting a maximum penalty of $1000, six months imprisonment, or both, for a person to refuse or fail to comply with such a requirement without reasonable excuse. Information provided knowingly or recklessly that is false or misleading will attract a maximum penalty of two years imprisonment. The telephone allowance will be indexed and adjusted annually in line with changes in the CPI (clauses 7- 10).
Bereavement Payments: In 1990 a new scheme of bereavement payments was introduced. Basically, where a member of a pensioner couple dies, the survivor is entitled to receive, for the next seven pay days, the married rate of pension. The new scheme also provides for the calculation of the difference between this rate and the single rate and the payment of the difference between those rates over the period as a lump sum. The person must make an election as to which benefit to receive. Similarly, a person in receipt of a carers pension continues to be eligible to receive the pension for a period of 14 weeks after the death of the person being cared for. The rate of pension is dependant on the carers actual circumstances and this can result in a reduction in the rate of pension. The 1990 scheme also provided for the continuing receipt of supporting parents benefit for 14 weeks after the death of a child if this means that the person would otherwise cease to be eligible for the benefit. Again, the rate of benefit will depend on the persons actual circumstances and an election may have to be made. Similar provisions apply in respect of the death of a child where the person was in receipt of a child- related payment. Where a single pensioner dies, an amount equal to the amount that the pensioner would have received on the next pay day had they not died, is payable to such persons as the Secretary of the Department determines.
Clauses 12, 13, 15, 20 and 37 will be to allow age pensioners, disability support pensioners, carer pensioners, sole parent pensioners and special needs pensioners to receive the single person rate of pension from the day on which the partner died where: * the pensioner has received a favourable determination from the Secretary of the Department; * prior to death, the former partner was not receiving a social security or service pension and was not a long- term social security recipient; and * within four weeks of the death of the former partner, the pensioner notifies the Department of the death, or the Secretary of the Department becomes aware of the death. This will bring their date of eligibility forward.
The effect of clauses 22, 26 and 30 will be to exempt certain job search, newstart and sickness allowance claimants from having to wait the ordinary waiting period (one week), following the death of his/her former partner, before becoming eligible in their own right to receive job search, newstart or sickness allowance.
Persons receiving a wife pension or carer pension will not have to make a claim for the sole parent pension where: * the person's partner dies; * immediately before the bereavement period he/she qualified for a wife/carer pension; and * immediately after the bereavement period he/she qualified for a sole parent pension (clause 19).
Clauses 23, 27, 31 and 34 provide for bereavement payments to partners of deceased job search allowance, newstart allowance, sickness allowance and special benefit recipients where the recipient was a long- term social security recipient and the surviving partner was a benefit increase partner (i.e. the deceased recipient received a higher payment because his/her partner was not a social security recipient). `Long- term social security recipient' is defined by clause 11 to mean a person who as at a particular time, a social security recipient status continuously for the previous 52 weeks, or who has not at that time had social security recipient status continuously for the previous 52 weeks, but did have such status at the start of the previous 52 weeks and did not loose that status for more than six weeks of that previous 52 weeks. The proposed provisions relating to the rate of allowance/benefit and lumpsum payments are standard bereavement provisions.
Job Search Allowance and Newstart Allowance: The job search and newstart allowances replaced unemployment benefits. The job search allowance is available for the first 12 months of unemployment and after this period the newstart allowance becomes available. To be eligible for the job search allowance a number of criteria have to be met, including: the Secretary of the Department is satisfied the person is unemployed; the person satisfies the activities test or is excluded from the test; and the person is registered with the CES. The eligibility criteria for the newstart allowance are similar to those for the job search allowance, with the major differences of only being available to persons who have been registered as unemployed for 12 months and recipients having to be prepared to enter a Newstart Activity Agreement.
An assurance of support is "... a legal commitment to repay support costs for some relatives who migrate under the current parent and preferential family category of the Migration Program". 2 An assurance of support is designed to ensure that the general community does not have to take responsibility for providing financial support for people covered by the assurance during their first five years in Australia.
New sections 517A and 596A, which will be inserted into the Principal Act by clauses 40 and 41, will make a person ineligible for the job search or newstart allowance where the Secretary is satisfied that throughout a period: a person (the assuree) was subject to an assurance of support; the person who gave the assurance of support was willing and able to provide an adequate level of support to the assuree; and it was reasonable for the assuree to accept the support.
Sickness Allowance: To be eligible for the sickness allowance (SA) a person has to satisfy a number of criteria, including that: they are incapacitated for work because of sickness or an accident; the incapacity is caused wholly, or virtually wholly, by a medical condition arising from the sickness or accident; they meet certain Australian residence requirements; and the incapacity is, or is likely to be, temporary. Persons over 18 receiving the job search allowance immediately before they became incapacitated for work are not eligible for the SA for six weeks from the day they became incapacitated (subsection 666(7)). Persons receiving the newstart allowance immediately before they became incapacitated for work are ineligible for the SA for 13 weeks from the day they became incapacitated (subsection 666(8)). The current phrasing of subsection 666(7) has resulted in an anomaly whereby a job search allowee who has turned 18 and who becomes incapacitated for work for a period expected to be longer than six weeks is entitled to neither the job search allowance or SA. A similar anomaly currently operates in relation to subsection 666(8). The amendment proposed by clause 47 is intended to current these anomalies and where the person is expected to be incapacitated for longer than four weeks, or 13 weeks for a newstart recipient, they will be eligible for the SA.
New subsections 666(7) and 666(8) will be substituted into the Principal Act by clause 47. Proposed subsection 666(7) provides that persons over 18 receiving the job search allowance immediately before they became incapacitated for work, and the Secretary does not expect them to be incapacitated for longer than six weeks, will not be eligible for the SA for six weeks from the day they became incapacitated. Proposed subsection 666(8) provides that persons receiving newstart allowance immediately before they became incapacitated for work, and the Secretary does not expect them to be incapacitated for longer than 13 weeks, will not be eligible for the SA for 13 weeks from the day they became incapacitated.
Mark Fitzpatrick Trust: The Mark Fitzpatrick Trust is a trust established by the Commonwealth to provide financial support to people with medically acquired HIV infection and AIDS, their dependants, and supporters. The trust was established in 1989 with a grant of $13.2 million.
Generally, social security recipients are subject to an income test. Items that constitute `income' for social security purposes are subject to an income test. The term `income' is defined in section 8 of the Principal Act to mean: an income amount earned, derived or received by the person for the person's own use or benefit; a periodical payment by way of gift or allowance; or a periodical benefit by way of gift or allowance. The Principal Act specifically excludes a number of items from the definition of income, including any return actually received by a person from an accruing return; an amount paid to, or on behalf of, a person under a home equity conversion agreement; and the value of emergency relief or like assistance. As the Act currently stands, a payment received by a person from the Mark Fitzpatrick Trust constitutes income for the purposes of the income test. This could result in a person suffering from HIV or AIDS, who is also a social security recipient, having their pension, benefit or allowance reduced.
The principal effect of clause 49 will be to exclude from the definition of income assistance payments made by the Mark Fitzpatrick Trust to a person who has medically acquired HIV infection.
Unlisted Property Trusts: Basically, a unit trust is "... an arrangement whereby property is held on trust for a large number of investors. It is constituted by a deed regulating their rights, powers and duties of the parties to the arrangement." 3 Generally, unit trusts invest in property or shares. The units of some trusts, `listed' trusts, can be bought and sold on the stockmarket. Where a unit holder has units in an `unlisted' trust, there is no open market for the units, however, the trust manager is obliged to buy the units back, or redeem them, at any time.
On 2 December 1991, the then Minister for Social Security announced that: the Department of Social Security would not assess as income any capital growth on pre 9 September investments in unlisted property trusts to be terminated; the Department would only assess income in merged trusts following restructurings as it accrues; and that these rules would only apply where unlisted property trusts are restructured before 23 July 1992 by paying out investors in trusts with units in another trust. 4 The Government's aim in introducing these measures is to aid the restructuring of the property trust industry.
The effect of subclause 49(b) and clause 50 will be to exclude from a persons ordinary income, income derived from the realisation of certain unlisted property trust units. The exclusion will only operate where a unit is realised due to a restructuring of the trust (a restructuring is defined to be an exchange of a unit in one trust for a unit in another trust, and where the same manager manages both trusts). In addition, the exclusion will only apply to investments in or acquisitions of units before 9 September 1988, and units realised on or after 24 July 1991 and before 23 July 1992.
Sale Leaseback Agreements: Section 1118 provides that the value of certain assets are not to be taken into account under the assets test. Assets exempted under section 1118 include the principal home and certain property held by residents of retirement villages. Basically, a pensioner in a retirement village is considered a homeowner where they, on entering the village, buy an interest or right to accommodation which can be sold or redeemed. Part 3.12 contains specific provisions for determining the status of residents of retirement villages and granny flats as homeowners.
The principal effect of clause 55 will be to exempt from the assets test the value of any right or interest of a person in a sale leaseback home (i.e. the home is subject to a `sale leaseback agreement'). This is defined in clause 54 to apply where a person: * under the agreement agrees to sell his/her principal home; * the persons principal home is a residence; * under the agreement the person retains a right to accommodation in the residence; and * under the agreement the buyer is to pay an amount when the person vacates the residence or when the person dies. An agreement will also be taken to be a sale leaseback agreement if the Secretary to the Department is satisfied the agreement is similar in effect to an agreement which meets the above criteria.
International Agreements: The Commonwealth has entered into a number of international reciprocal social security agreements aimed at allowing persons who would not other wise qualify for a social security payment (generally because of residence requirements) to do so. Australia has entered into a number of reciprocal agreements, including with New Zealand, Italy, Spain and the United Kingdom. Once an agreement is scheduled in the Principal Act, the provisions of the agreement override the provisions of the Principal Act (section 1208). A benefit payable under a scheduled agreement is not payable to a person outside Australia unless provided for by the terms of the agreement (section 1209). Certain social security benefits are not payable to a person outside Australia, including job search allowance; newstart allowance; sickness allowance; special benefit; and family allowance supplement. Social security benefits payable outside Australia include: age pension; disability support pension; wife pension; sole parent pension; widowed person allowance; widow B pension; and special needs pension (section 1212).
As noted in the Explanatory Memorandum to this Bill, negotiations on a reciprocal social security agreement between Australia and Austria have recently been completed. However, at the date of introduction of this Bill certain formalities such as signing of the agreement and exchange of notes had yet to be completed. It is anticipated that these formalities will be completed by late April 1992 and that the agreement will legally come into effect in late 1992. As noted above, in order for an agreement to have effect at Australian law, and inparticularly, override the provisions of the Principal Act, it has to be scheduled. The effect of clause 81 will be to give the agreement between Australia and Austria the status of a scheduled agreement even though the provisions of the agreement have not been scheduled. The reason given by the Government in the Explanatory Memorandum for doing this is that "... it is likely that the Agreement will come into force before another opportunity arises to amend the Principal Act".
Debt Recovery: The Principal Act contains a number of provisions providing for the recovery by the Department of various types of debt. The statutory recovery methods available include recovery by deductions; recovery by legal proceedings; and recovery by garnishee notice. In relation to recovery by deductions, an overpayment or debt is required, under the Principal Act, to be deducted from a social security payment unless it is waived or recovered by other means. A non- statutory means of debt recovery is the making of deductions from social security payments of persons other than the debtor. Typically, this situation arises in the case of a debtor who no longer receives a social security benefit. Another person, such as a spouse or relative, can agree to deductions being made from their social security payments in satisfaction of such a debt.
The principal effect of clauses 82- 111 will be to allow the Department to recover social security debts from the pension, benefit or allowance of a person other than the debtor. A recovery of this nature will only be able to occur where: a person incurs a debt under the Principal Act or the Social Security Act 1947; another person is receiving a pension, benefit or allowance under the Principal Act (the consenting person); and for the purpose of the recovery, the consenting person consents to the deduction of an amount from his/her pension, benefit or allowance. The consenting person may revoke his/her consent at any time (proposed section 1234A).
Review of Decisions: Under section 1240 of the Principal Act, a person affected by a decision of the Department may apply to the Social Security Appeals Tribunal (SSAT) for a review of the decision. Section 1257 of the Principal Act sets out how a person is to apply for an SSAT review. An application for a review by the SSAT can be made in writing and sent or delivered to an office of the SSAT or the Department. Alternatively, an application for a review can be made orally in person to an office of the SSAT or by telephone to an office of the SSAT. Where an application is sent to the Department, the Secretary is responsible for sending it to the SSAT as soon as practicable but no later than seven days after receipt (section 1261).
A new subsection 1257(1A), which will be inserted into the Principal Act by clause 112, will allow a person to apply to the SSAT for a review of a decision by sending or delivering a written application to an office of the CES if the decision is about a job search allowance or newstart allowance, and was made by an officer of the Department of Employment, Education and Training.
Privilege Against Self- Incrimination: The Principal Act contains a number of provisions which abrogate the common law privilege against self- incrimination. The common law privilege against self- incriminating provides that persons who are facing criminal prosecution cannot be compelled to incriminate themselves. In respect to each pension, benefit or allowance provided under the Principal Act, the Secretary of the Department is given power to require a social security recipient to provide certain information relevant to a payment, and a recipient is not excused from giving the information on the ground that the information may incriminate them. However, under the Principal Act, the abrogation is coupled with a provision which provides that information obtained is not admissible in evidence in a criminal proceeding, except in proceedings for offences for a refusal or failure to comply with a requirement to give particular information. These provisions have led to difficulties in criminal prosecutions. Clause 115 provides for the repeal of those sections of the Principal Act dealing with self- incrimination.
Amendments to the Data- matching Program (Assistance and Tax) Act 1990: The purpose of the Data- matching Program (Assistance and Tax) Act 1990 (the Act) is to regulate data- matching between the Departments of Community Services and Health, Employment, Education and Training, Social Security, Veterans' Affairs and the Australian Taxation Office. The rationale for the Act, which has a two year sunset clause (section 21), is that social security and taxation fraud can be eliminated by matching data on income, family structure and tax file numbers. The Act seeks to regulate data- matching by imposing certain steps to be followed in data- matching cycles. The Act permits no more than nine data- matching cycles in any one year and only one matching cycle is allowed to be in progress at any one time (section 6). A data- matching cycle is a six- step procedure required to be followed by data- matching agencies in searching for discrepancies in information. The Act prevents unrestrained data- matching through a number of prohibitions, including, for example, section 8 which provides that data is not to be transferred between agencies by on- line computer connections. Section 10 requires agencies which have obtained information in a cycle but which have not made a decision to examine or investigate that information within 90 days to destroy the information.
The proposed Amendments to the Act are set out in Schedule 2 of this Bill. The amendments include: * adding the surname, any other name, initial of any other name, sex and date of birth of any other child of a parent of a person, provided the child has not turned 25 and is a dependant of a parent of the person, to the list of data which may be included as family identity data; * allow the Australian Taxation Office to give the Department of Social Security information containing the surname and any other name or initial of a spouse in respect of whom a spouse rebate is claimed; * allow the Department of Social Security to give other matching agencies the results of data- matching under earlier cycle steps that indicate that a person was, or is, entitled to a benefit; * allow a source agency to correct personal identity data it holds about a person in relation to assistance that is being given, has been given, or is being claimed; and * allow for successive 12 month extensions of the 12 month period allowed for a source agency to take action on the basis of information it has received.
References 1. Social Security Legislation Amendment Bill 1992, Second Reading Speech, 2 April 1992, p. 1. 2. Minister for Immigration, Local Government and Ethnic Affairs, Media Release, 20 August 1991. 3. Ford, Unit Trusts, 23 Modern Law Review, p. 120. 4. Joint Statement, Minister for Social Security and Minister for Veterans' Affairs, 2 December 1991.
Bills Digest Service 16 April 1992 Parliamentary Research Service
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Commonwealth of Australia 1992.
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Published by the Department of the Parliamentary Library, 1992.