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Friday, 5 October 1984
Page: 1323

Senator COLSTON —I direct a question to the Minister for Veterans' Affairs. In computing the income of a service pensioner for the purposes of the income test, are disability pensions disregarded as income? In the same way, are disability pensions disregarded in calculating the rate of supplementary assistance payable to a service pensioner? If not, what would be the cost of introducing this concession to those who would otherwise be eligible to receive supplementary assistance?

Senator GIETZELT —I have been asked quite a number of questions in the last year or so about the pensions paid by the Department of Veterans' Affairs. I think it has to be said that there is a degree of confusion about them. There are two substantial types of pensions. One is a social welfare pension, known as the service pension, and the other group of pensions can be described largely as compensatory, covering disability pensions, including totally and permanently incapacitated pensions, the attendant's allowance, recreation and transport allowance, war widow's pensions, et cetera. A great deal of confusion has crept into that area when issues such as the assets test, tax and other matters have been debated in the Parliament in recent months. I stress that the disability pension is completely disregarded as income in the assessment of a service pension entitlement. In addition it is paid tax free. It is free of any income test and will not be subject to the forthcoming assets test. This is in recognition of the compensatory nature of the disability pension.

The disability pension is, however, treated as income in determining a service pensioner's eligibility for supplementary assistance for rent allowance, a matter that was stressed by Senator Colston in his question. This is because the supplementary assistance is paid strictly on the basis of need to those pensioners who are identified as being in dire circumstances and therefore meet the guidelines; in particular it is paid to those whose weekly rents represent a large portion of their total financial resources. The current maximum supplementary assistance is $10 a week and as a result of the recent Budget that is to rise in November to $15 a week. About 26,000 service pensioners receive such supplementary assistance. If the disability pension were to be disregarded in determining service pensions entitlement in supplementary assistance, about 5 ,000 service pensioners would become eligible for supplementary assistance. So the annual cost of such a measure would be about $2m at current rates or about $ 3m at the new rates.