Save Search

Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Family and Community Services Legislation Amendment (Further Simplification of International Payments) Bill 2002

Bill home page  


Download WordDownload Word


Download PDFDownload PDF

2002

 

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

FAMILY AND COMMUNITY SERVICES LEGISLATION AMENDMENT (FURTHER SIMPLIFICATION OF INTERNATIONAL PAYMENTS) BILL 2002

 

 

 

 

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Family and Community Services, Senator the Hon Amanda Vanstone)

 

FAMILY AND COMMUNITY SERVICES LEGISLATION AMENDMENT (FURTHER SIMPLIFICATION OF INTERNATIONAL PAYMENTS) BILL 2002

 

 

OUTLINE AND FINANCIAL IMPACT STATEMENT

 

This Bill gives effect to the 2001-2002 Budget initiative to further simplify international payments and will also equalise the treatment of debts that result from overpayments of Australian pensions to people who receive lump sum payments from overseas.

 

The required period of “Australian working life residence” that people must meet in order to continue to receive a full Australian social security pension while overseas on a long-term basis, will be more closely aligned with international standards.  The required residence period is extended from 25 years to 30 years.

 

The Bill also allows people to accrue Australian working life residence after they reach age pension age.  People registered with the Pension Bonus Scheme will be able to add bonus periods under the Scheme to their Australian working life residence accrued before they reached age pension age.

 

The Australian working life residence initiative only applies to a person who leaves Australia after the commencement day of the amendments — 1 April 2002 if the Bill receives the Royal Assent by then, otherwise 1 July 2002.  It will apply to people who are overseas on the commencement day only if they return to Australia for a continuous period of 26 weeks or more and then again depart Australia.

 

The Bill will also standardise the recovery of debts that result from the overpayment of an Australian social security payment to a person who receives an arrears payment of foreign income.  Debt recovery currently only occurs when a person receives a lump sum payment of foreign pension from a country with which Australia has an international social security agreement.

 

The changes to standardise the recovery of debts only apply from the commencement day.

 

 

Financial impact:

 

If the commencement day is 1 April 2002:

 

2001-02   -   $0.3m (savings)

2002-03   -   $6.1m (savings)

2003-04   -   $6.6m (savings)

 



If the commencement day is 1 July 2002:

 

2001-02   -   $1.4m (costs)

2002-03   -   $6.1m (savings)

2003-04   -   $6.6m (savings)

 

The measures in this Bill impact on the Social Security Act 1991 .

 



PRELIMINARY

 

 

Clause 1 of the Family and Community Services Legislation Amendment (Further Simplification of International Payments) Bill 2002 sets out how the Act is to be cited.

 

Clause 2 provides that sections 1, 2 and 3 of the Act commence on the day the Bill receives the Royal Assent and that Schedule 1 of the Act commences on 1 April 2002 if the Royal Assent is received on or before 1 April 2002 or if not, 1 July 2002.

 

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

 



Schedule 1—Amendment of the Social Security Act 1991

 

 

Part 1—Extension of Australian working life residence

 

 

Summary of proposed changes

 

The following amendments are made by Part 1 of Schedule 1 :

 

·         point 1221-C1 of the Social Security Act 1991 (the Social Security Act) is amended to extend the period of Australian working life residence (AWLR) from 25 years to 30 years; and

 

·         point 1221-C2 of the Social Security Act is repealed and substituted to extend a person’s residence factor from 25 years to 30 years.

 

The proposed amendments will achieve the required extension of a person’s AWLR from the current 25 years to 30 years in the calculation of a person’s residence factor.

 

 

Explanation of the changes

 

Module C of section 1221 of the Social Security Act provides for the calculation of a person’s residence factor.  The residence factor is calculated by determining the period of the person’s AWLR.  If a person’s residence factor is 1 then that person receives a full social security pension if that person departs Australia and remains overseas for longer than 26 weeks.

 

Item 1 amends point 1221-C1 of the Social Security Act by omitting 300 months (25 years) and substituting 360 months (30 years).  This means that the residence factor is 1 if the period of AWLR is 30 years.

 

Item 2 repeals and substitutes point 1221-C2 of the Social Security Act to provide that the calculation of a person’s residence factor is the period of that person’s AWLR divided by 360 (being 30 years converted to months) but only if the person’s AWLR is less than 30 years.

 

These measures commence on 1 April 2002, if the Bill receives the Royal Assent on or before that day or if not, 1 July 2002.

 



Part 2—Accrual of Australian working life residence if pension bonus applies

 

 

Summary of proposed changes

 

Part 2 of Schedule 1 makes amendments to the Social Security Act to include any bonus periods accrued by the person under Part 2.2A of the Social Security Act (the pension bonus scheme) in the period of AWLR that would normally apply, that is, from the age of 16 years to pension age (see subsection 23(5A), (5B), (5C) and (5D) of the Social Security Act).

 

In addition, an application provision is added to Schedule 1A of the Social Security Act to clarify when the amendments made by Schedule 1 apply.

 

 

Explanation of the changes

 

Item 3 amends point 1221-B2 of the Social Security Act so that the number of months to be calculated in determining a person’s AWLR includes not just the number of months over a person’s working life during which the person has been an Australian resident but also the number of months in bonus periods that have accrued to the person under Part 2.2A.

 

Item 4 adds an application provision to the end of Schedule 1A of the Social Security Act ensuring that the amendments of points 1221-B2, 1221-C1 and 1221-C2 only apply to a person after the commencement day (either 1 April 2002 or 1 July 2002 depending upon when the Royal Assent is given).  If a person is absent from Australia on the commencement day, that person will need to return to Australia for a continuous period of 26 weeks or more since the commencement day for the amendments that have been made to apply.

 

These measures commence on 1 April 2002, if the Bill receives the Royal Assent on or before that day or if not, 1 July 2002.

 



Part 3—Comparable foreign payment debt recovery

 

 

Summary of proposed changes

 

Part 3 of Schedule 1 makes amendments to the Social Security Act to allow a debt incurred because of the receipt by a person of a comparable foreign payment, to be legally recoverable.

 

 

Explanation of the changes

 

Item 5 repeals superfluous notes at the end of subsection 1221(1) of the Social Security Act.

 

Item 6 inserts a new table item (15A) in the table at subsection 1222(2) of the Social Security Act to specify that a debt under new section 1228A (see item 7 ) is recoverable by deductions, legal proceedings, garnishee notice or repayment by instalments.

 

New subsection 1228A of the Social Security Act is inserted by item 7 .  This section enables a debt to arise if a person receives a lump sum arrears of a comparable foreign payment that would have resulted in a reduction of that person’s social security payment if that lump sum payment had been paid by way of periodical payments.  The amount by which the social security payment would have been reduced over the period represented by the lump sum arrears payment is a debt due to the Commonwealth.

 

These measures commence either on 1 April 2002, if the Bill receives the Royal Assent on or before that day or 1 July 2002.