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Social Security (Disability and Sickness Support) Amendment Bill 1991



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House: House of Representatives

Portfolio: Social Security

<BREAK> </BREAK> Purpose

To replace the invalid pension with a disability support pension and the sickness benefit with a sickness allowance.

Background

This Bill proposes to give effect to a package of reforms to Commonwealth income support arrangements for persons with disabilities announced in the 1990- 91 Budget. The main features of the reform package include: the replacement of the invalid pension by a disability support pension (DSP) (the eligibility criteria for the proposed DSP will include a minimum impairment threshold, replacement of the concept of "permanent incapacity" by a concept of "continuing inability to work" and a requirement that people referred to rehabilitation or training programs participate as a condition of DSP eligibility); and the replacement of the sickness benefit by a sickness allowance (SA) (the proposed SA will be generally limited to 12 month duration).

The reasons given for the proposed changes include to remove anomalies and encourage greater participation by disabled persons in the labour market. The proposed reforms to the invalid pension and sickness benefit are estimated to achieve savings of $41.1 million in 1991- 92, rising to $139.6 million in 1993-94. These savings are estimated to be offset by assistance measures totalling $48.6 million 1991- 92, rising to $88.0 million in 1993- 94. 1

An invalid pension may be paid to a person provided they meet certain criteria, including that: they have turned 16; they are at least 85% incapacitated for work; and at least 50% of their incapacity is directly caused by a physical or mental incapacity. The number of person who received the invalid pension in 1989- 90 totalled 316 713. The total amount paid to invalid pensioners in 1989- 90 was $2.679 billion. A sickness benefit may be paid to a person provided they meet certain criteria, including that: they are incapacitated for work because of sickness or an accident; the incapacity is, or is likely to be, temporary; they have suffered, or are likely to suffer, a loss of income because of their incapacity for work; and they have turned 16. The number of persons who received a sickness benefit in 1989- 90 totalled 79 341. The total amount paid to sickness beneficiaries in 1989- 90 totalled $611.167 million. 2

The major changes proposed by this Bill are based, according to the Minister in the Second Reading Speech to this Bill, on recommendations of the report of the Social Security Review, Towards Enabling Policies: Income Support for People with Disabilities. The Review raised a number of concerns about the current income support arrangements for people with disabilities, including:

increases in the numbers of people dependent on invalid pension and sickness benefit;

the debate about the meaning of the concept of 'permanent incapacity' for work and how impairment is to be measured; and

the extent to which socio- economic factors should be taken into account in combination with impairment in affecting employment capacity. 3

The recommendations of the Review included the introduction of:

a short- term disability payment based on the existence of a medically recognised condition

which severely disrupts employment, job search, the intention to enter the labour force or other customary activities of adult life;

a long- term disability support program payable to people who are not able to participate in any substantial employment, and also providing ongoing income augmentations for those who are

Social Security (Disability and Sickness Support) Amendment Bill 1991able to undertake part- time employment, supported employment, or employment at reduced levels of productivity; and

a disability allowance which recognises some of the increased costs incurred by people with disabilities participating in the customary activities of adult life, such as education, training, job search, child care and household work. 4

The Age of 26 July 1991, reports that more than 40 of Australia's largest community welfare and disability groups (including the Salvation Army, the Australian Pensioner's and Superannuant's Federation, the Youth Affairs Council of Australia and the Australian Council of Social Services) have attacked this Bill and that the Victorian Trades Hall Council described it as an attack on people with disabilities. The principal objections of welfare groups to the Bill are reported as including that it will: restrict access to income support for people with illness and disabilities; impose cruel and unjustifiable penalties; and drastically reduce payments for young people.

ACROD (Australian Council for the Rehabilitation of the Disabled) is reported in a Media Release of 25 July 1991 as saying "that after consultation with the Government on the Disability Reform Package ACROD members believe the new initiatives should be supported because the good aspects for people with disabilities outweigh the bad". While supporting the general thrust of the Government's reform package, ACROD did have a number of reservations, including: that it believed that the incentive allowance should be retained until a carefully constructed disability allowance, which recognises the extra costs of disability, is introduced; and that payments for 16- 20 year olds will drop as they become linked to the Common Youth Allowance.

The Australian Democrats, while not to date announcing that they reject the Bill outright, have stated that they have a number of specific concerns about it. For example, Senator Meg Lees in a Media Release of 8 July 1991 states that her specific concerns with the Bill included the prevention of claiming sickness allowance in respect of the same medical condition within two years and moving of people onto job search and newstart regardless of the availability of relevant employment or training opportunities where they live.

ACADA (the Australian Council of Alcohol other Drug Associations), in a Media Release of 28 July 1991, is reported as supporting the Bill, in so far as it seeks to remove work barriers for those with disability and long- term illness. However, ACADA like other welfare lobby groups, has a number of reservations about Bill. ACADA believes that the Bill, in its current form could severely restrict and even prevent people from achieving a full recovery from drug dependency (e.g. ACADA believes that the proposed process under the Bill of deciding eligibility for the SA does not allow for the special circumstances involving drug and alcohol treatment, which sometimes exceeds 12 months).

Main Provisions

Disability Support Pension

A new Part 2.3, dealing with the DSP, will be inserted into the Social Security Act 1991 (the Principal Act) by clause 13 which will also repeal the current invalid pension provisions. Proposed Part 2.3 will have effect from 1 October 1991 (clause 2). To be eligible for the DSP, a person will have to satisfy a number of criteria, including that:

they have a physical, intellectual or psychiatric impairment;

their impairment is of 20% or more under the Impairment Tables (these are contained in Schedule 2 of this Bill and are basically a system that assigns impairment ratings in proportion to the severity of a condition. For example, alcohol or drug abuse sufficient to cause intermittent or temporary absence from work is assigned an impairment rating of 10%, whereas alcohol or drug abuse with gross functional disability and non- reversible end organ damage is assigned an impairment rating of 45);

they have a continuing inability to work;

they meet certain Australian residence requirements;

and they have turned 16 (proposed section 94).

A person will have a 'continuing inability to work' if the Secretary is satisfied that: (a) the person's impairment is of itself enough to prevent them from doing their usual work, or work for which they are currently skilled; and (b) either their impairment is of itself enough to prevent them from doing educational or vocational training during the next two years, or their impairment, while not preventing them from doing educational or vocations training, is such training that is not likely to enable them, within the next two years, to do work for which they are currently unskilled. A person will not be

eligible for the DSP on the basis of a continuing inability to work if they brought about that inability to get the DSP or the SA (proposed section 94).

A person receiving or claiming the DSP will not be eligible for the DSP if they fail to take reasonable steps to comply with a notice of the Secretary requiring them to: contact a specified officer of the Department; attend an interview at a specified location; complete a questionnaire; attend a

medical, psychiatric or psychological examination; or provide the Secretary with a practioner's report if they have undergone an examination (proposed section 96).

The effect of proposed section 104 will be to allow the Secretary, where of the opinion that it would improve a DSP recipients ability to work, to direct them to receive treatment, complete a questionnaire, undertake a program of assistance or rehabilitation, or do or apply for work that in the opinion of the Secretary is suitable for them. Where a person fails to take reasonable steps to comply with a direction and non- compliance occurs after 1 October 1993, the DSP may be deferred for a period set by the Secretary up to a maximum of six weeks after which time the Secretary is to cancel the DSP where not satisfied a person has taken reasonable steps to comply with a direction.

DSP claimants will have to be examined by a medical practioner who is to provide the Secretary with an opinion on whether the claimant has a physical, intellectual or psychological impairment; or is permanently blind; and if a claimant has an impairment, the effect of the impairment on the claimant's ability to work. A medical examination will not be required in certain instances, including where it is manifest that: the claimant has a physical, intellectual or psychiatric impairment of 20% or more under the Impairment Tables and has a continuing inability to work; or the claimant is permanently blind (proposed section 116).

Proposed sections 136- 140 provide for the termination or suspension of the DSP in certain circumstances, including: termination where, in addition to the DSP, a person is receiving another social security pension or benefit, or service pension; termination where a DSP recipient does not comply with a direction of the Secretary; and suspension up to a maximum of two years where a person obtains work for at least 30 hours per week at award wages or more, or wages that in the Secretary's opinion are reasonable for the work done.

Proposed sections 146T and 146U provide for a 12 month extension to fringe benefit (e.g. health benefit concessions) eligibility where a DSP recipient gets work, or ceases to satisfy the fringe benefits ordinary income test because of employment earnings.

Sickness Allowance

A new Part 2.14, dealing with the SA, will be inserted into the Principal Act by clause 17 which will also repeal the current sickness benefit provisions. Proposed Part 2.14 will have effect from 1 October 1991 (clause 2). To be eligible for the SA, a person will have 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;

the incapacity is, or is likely to be, temporary; and

they have turned age 16 (proposed section 666).

The term 'work' is defined to include work a person had contracted to perform (of at least 8 hours per week, at award wages, or at wages that are in the Secretary's opinion reasonable) before they became incapacitated; or work of a kind that they could, in the Secretary's opinion, be reasonably expected to do. Where a person becomes ineligible to claim the SA for a particular medical condition because of the operation of proposed sections 669 or 670 (see below), they will not be eligible to claim the SA in respect of that condition for two years, unless their incapacity is caused by a different medical condition, or a significantly more serious medical condition. Persons over 18 receiving job search allowance immediately before they became incapacitated for work will not be eligible for the SA for six weeks from the day they became incapacitated. Persons receiving newstart allowance immediately before they became incapacitated for work will not be eligible for the SA for 13 weeks from the day they became incapacitated. A person will also be ineligible for the SA if the Secretary is satisfied they brought about their incapacity in order to get the SA or the DSP (proposed section 666).

Where immediately before a person became incapacitated they were receiving a job search or newstart allowance and were doing a rehabilitation program to enhance their ability to work, they may be eligible for the SA provided they meet certain criteria, including that: the length of their participation in the rehabilitation program is, or is likely to be, at least 6 weeks; they have turned 16; and meet certain Australian residence requirements. A person will be ineligible for the SA if the Secretary is satisfied they brought about their incapacity to get the SA or the DSP (proposed section 667).

A person will cease to be eligible for the SA if their maximum allowance period ends. The maximum allowance period will be the period specified in the determination granting them the SA. The period specified in a determination is not to be more: where a claim for SA is supported by a medical certificate, than the period specified in the medical certificate, or 13 weeks, whichever is the lesser; or where a claim is not supported by a medical certificate because of the claimant's participation in a rehabilitation program, the period of the person's participation in the program, or in any other case, four weeks. The maximum allowance period may be extended by a maximum of 13 weeks where a recipient provides a new medical certificate and the Secretary is satisfied the claimant's incapacity for work will continue past the maximum allowance period. The maximum allowance period may also be extended, by four weeks, where a recipient gives the Secretary written evidence, other than a medical certificate, that their incapacity for work will continue past the maximum allowance period and the Secretary is satisfied the recipient's incapacity will continue past the maximum allowance period (proposed section 668).

A recipient of the SA will cease to be eligible to receive the SA after 52 weeks. However, the Secretary may extend a person's entitlement beyond 52 weeks if satisfied that: their incapacity will end during the next 52 weeks; or the medical condition causing their incapacity is a new medical condition, or is significantly more serious than the medical condition for which they were originally granted the SA (proposed section 669). Where the Secretary has extended a person's SA beyond the original 52 week period, that person's eligibility will cease at the end of the second 52 week period. However, the Secretary may extend a person's entitlement beyond the second 52 week period if satisfied that: their incapacity will end during the next 52 weeks; or the medical condition causing their incapacity is a new medical condition, or is significantly more serious than the medical condition for which they were granted the SA in the preceding 104 weeks (proposed section 670). In relation to persons eligible for the SA under proposed section 667 (see above), their eligibility for the SA will cease after 208 weeks (proposed section 671).

A claim for the SA is to be accompanied by a medical certificate which states: the medical practioner's diagnosis and prognosis; that the person is incapacitated for work; the period for which the person is incapacitated for work; and whether the person's condition is likely to benefit if they receive treatment or undertake a rehabilitation program. The above requirements may be waived by the Secretary in special circumstances (in the Explanatory Memorandum to this Bill, 'exceptional circumstances' is defined to include 'unusual, uncommon or exceptional' circumstances) (proposed section 702).

Mobility Allowance

The effect of clause 18 will be to increase the mobility allowance from $22 to $40. The proposed increase will have effect from 1 October 1991. Basically, the mobility allowance is a payment which may be made to people with disabilities who are employed or in vocational training for a minimum of 20 hours a week and who are unable to use public transport without substantial assistance.)

Amendment of the Health Insurance Act 1973

The effect clause 28 will be to extend eligibility for the Health Care card to children eligible for a child disability allowance. Basically, the Health Care card entitles the holder to receive a range of pharmaceuticals at a concessional rate and a range of non- Commonwealth benefits.

References

1. Budget Statements 1990- 91, Budget Paper No. 1, p. 3.133.

2. Department of Social Security, Annual Report 1989- 90, pp. 46, 55, 197 and 207.

3. Social Security Review - Department of Social Security, Towards Enabling Policies: Income Support for People with Disabilities, 1988, pp. 95 and 96.

4. ibid., pp. 216 and 217.

Bills Digest Service 2 August 1991

Parliamentary Research Service

For further information, if required, contact the Education and Welfare Group on 06 2772413.

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Commonwealth of Australia 1991

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Published by the Department of the Parliamentary Library, 1991.