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Social Security Amendment (Further Simplification) Bill 2004

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2002-2003

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

SOCIAL SECURITY AMENDMENT (FURTHER SIMPLIFICATION) BILL 2003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

(Circulated by authority of the Minister for Family and Community Services,

Senator the Hon Kay Patterson)



SOCIAL SECURITY AMENDMENT (FURTHER SIMPLIFICATION) BILL 2003

 

 

OUTLINE AND FINANCIAL IMPACT STATEMENT

 

 

The Social Security Amendment (Further Simplification) Bill 2003 forms a part of the measures being undertaken to give effect to the Government’s commitment to implement a simpler and more coherent social security system that more effectively meets its objectives of adequacy, equity, incentives for self provision, customer service and administrative and financial sustainability.

 

The Bill repeals the existing provisions in Chapter 3 of the Social Security Act 1991 that deal with rent assistance and substitutes a new Part 3.7 that consolidates and simplifies the provisions that relate to rent assistance as one of the 2003-2004 Budget measures.

The Bill also gives effect to a number of minor simplification measures that were outlined in the 2003-2004 Budget including:

·          Clarifying the payments recoverable when customers receive economic loss compensation payments; and

·          Applying the definition of independence to disability support pension youth customers to be consistent with that applied to youth allowance customers.

 

 

 

Date of effect:

 

Schedule 1—1 July 2004.

 

Items 1-17, 35 and 36 of Schedule 2—1 July 2004.

 

Items 18-34 and 37 of Schedule 2—Royal Assent.

 

 

Financial Impact:

 

The Bill is expected to result in savings of $2.2 million over four years as follows:

 

 

 

2003-04

2004-05

2005-06

2006-07

Measure

Administered

Departmental

Total

0.000

0.000

0.000

-0.821

0.000

-0.821

-0.701

0.000

-0.701

-0.688

0.000

-0.688

 



SOCIAL SECURITY AMENDMENT (FURTHER SIMPLIFICATION) BILL 2003

 

 

NOTES ON CLAUSES

 

 

Clause 1—Short title

 

This clause specifies that the short title of the Bill, when enacted, will be the Social Security Amendment (Further Simplification) Act 2003 .

 

 

Clause 2—Commencement

 

This clause specifies that:

 

·          clauses 1 to 3 of the Bill commence on Royal Assent;

 

·          Schedule 1 commences on 1 July 2004;

 

·          Items 1 to 17, 35 and 36 of Schedule 2 commence on 1 July 2004; and

 

·          Items 18 to 34 and 37 of Schedule 2 commence on Royal Assent.

 

 

Clause 3 Schedules

 

This clause gives effect to the Schedules to the Bill.

 

 



Schedule 1—Rent assistance

 

Amendments of the Social Security Act 1991

 

 

 

Item 22 inserts a new Part 3.7 after Part 3.6A.

 

 

Part 3.7—Rent Assistance

 

Proposed Division 1—Operation of this Part

 

 

Proposed section 1070 When this Part applies

 

This proposed section provides that the Part applies if the rate of a person’s social security payment is calculated in accordance with:

(a)     Pension Rate Calculator A that relates to age pension, disability support and wife pension (people who are not permanently blind), disability wage supplement (people who are not permanently blind) and carer payment;

(b)    Pension Rate Calculator C that relates to bereavement allowance and widow B pension;

(c)     Pension Rate Calculator D that relates to certain disability support pensions;

(d)    Youth Allowance Rate Calculator;

(e)     Benefit Rate Calculator B that relates to mature age allowance under Part 2.12 B and newstart, partner, sickness and widow allowance;

(f)     Pension PP (Single) Rate Calculator or Benefit PP (Partnered) Rate Calculator that relate to parenting payments.

 

Proposed section 1070A—Effect of this Part

 

Essentially, if a person qualifies for rent assistance in accordance with new Division 2 then the amount worked out in accordance with Division 3 is added to the person’s maximum basic rate for the person’s social security payment.  All amounts of rent assistance are calculated on a fortnightly basis, but if the maximum basic rate of a person’s payment is calculated on an annual basis, this fortnightly amount needs to be multiplied by 26.

 

 

Proposed Division 2 Qualification for rent assistance

 

Proposed section 1070B—Qualification—general rule

 

A person qualifies for rent assistance if the person satisfies the common requirements set out in section 1070C and any specific requirement set out in the Division that applies in relation to the particular social security payment that the person receives.

 



Proposed section 1070C—Common requirements (about aged care residence, homeownership and rent)

 

This section lists four common requirements.

 

The first is that the person is not an aged care resident, or is not taken to be an aged care resident, for the purposes of the relevant Rate Calculator.

 

The second is that person is not an ineligible homeowner.

 

The third is that the person is pays, or is liable to pay, rent in respect of a period for the person’s premises. The premises must be in Australia. In addition, the rent cannot be Government rent.

 

The fourth is that the person’s threshold fortnightly rent is more than the rent threshold amount. The rent threshold amount is set out in section 1070T.

 

Proposed section 1070D Specific requirement (carer payments and certain age, disability support and wife pensions)

 

This section sets out the specific requirement that applies if the rate of the person’s social security payment is to be calculated in accordance with Pension Rate Calculator A. The specific requirement only applies in the event that the person, or their partner, is entitled to be paid family tax benefit.

 

Proposed section 1070E—Specific requirement (bereavement allowance, widow B pension and certain parenting payments)

 

This section sets out the specific requirement that applies for bereavement allowance, widow B pension and certain parenting payments. The specific requirement only applies in the event that the person is entitled to be paid family tax benefit.

 

Proposed section 1070F—Specific requirement (certain disability support pensions)

 

This section sets out the specific requirement that applies for disability support pension.

 

Proposed section 1070G—Specific requirement (youth allowance)

 

This section sets out the specific requirement that applies for youth allowance.

 

Proposed section 1070H—Specific requirement (mature age allowance under Part 2.12B, newstart allowance, partner allowance, sickness allowance or widow allowance)

 

This section sets out the specific requirement that applies for mature age allowance under Part 2.12B, newstart allowance, partner allowance, sickness allowance or widow allowance.



 

Proposed section 1070J—Specific requirement (certain parenting payments)

 

This section sets out the specific requirement that applies for certain parenting payments.

 

Proposed Division 3 Rate of rent assistance

 

Proposed section 1070K Rate depends on social security payment and family situation

 

This section provides that a person’s rate of rent assistance depends on the person’s social security payment and the person’s family situation.

 

Proposed section 1070L Rate for carer payments, and certain age, disability support and wife pensions

 

This section sets out the rate of rent assistance for a person if the person’s social security payment is worked out using Pension Rate Calculator A.

 

Proposed section 1070M Rate for bereavement allowance, widow B pension and certain parenting payments

 

This section sets out the rate of rent assistance for a person if the person’s social security payment is worked out using Pension Rate Calculator C or the Pension PP (Single) Rate Calculator.

 

Proposed section 1070N Rate for disability support pension (person aged under 18)

 

This section sets out the rate of rent assistance for a person if the person’s social security payment is worked out using Pension Rate Calculator D and the person is under 18 years of age.

 

Proposed section 1070P Rate for disability support pension (person aged between 18 and 21)

 

This section sets out the rate of rent assistance for a person if the person’s social security payment is worked out using Pension Rate Calculator D and the person has turned 18 but is under 21 years of age. 

 

Proposed section 1070Q Rate for youth allowance, mature age allowance under Part 2.12B, newstart allowance, partner allowance, sickness allowance and widow allowance

 

This section sets out the rate of rent assistance for a person if the person’s social security payment is worked out using the Youth Allowance Rate Calculator or Benefit Rate Calculator B.

 

Proposed section 1070R Rate for certain parenting payments

 

This section sets out the rate of rent assistance for a person if the person’s social security payment is worked out using the Benefit PP (Partnered) Rate Calculator.

 

Proposed Division 4 Certain concepts used in this Part

 

Proposed section 1070S—Division has effect for purposes of Part

 

This section provides that the Division has effect for the purposes of Part 3.7 that deals with rent assistance.

 

Proposed section 1070T—Rent threshold amount

 

Subsection (1) sets out that a person’s rent threshold amount is $82.80 if that person’s social security payment is to be worked out using Pension Rate Calculator C or the Pension PP (Single) Rate Calculator. This rent threshold amount is indexed under Part 3.16 of the Social Security Act 1991 .

 

Subsection (2) provides that if a person’s social security payment is worked out using rate calculators other than those mentioned in subsection (1) then the person’s rent threshold amount should be worked out using subsection (3).

 

Subsection (3) provides that to work out a person’s rent threshold amount, you need to first to work out which of sections 1070L, 1070N, 1070P, 1070Q and 1070R applies to the person. Then work out which family situation the person falls into, as set out in Column 2 of the table in the appropriate section. Then look in column 3 of the table at the item corresponding to the person’s family situation; the amount which, as a part of the formula, is deducted from the person’s fortnightly rent is the person’s rent threshold amount.

 

Proposed section 1070U—Fortnightly rent

 

This section defines the meaning of fortnightly rent for the purposes of this Part.

 

Proposed section 1070V—Rent paid by a member of certain couples

 

Subsection (1) provides that where a person is a member of a couple, living with his or her partner in their home, then for the purposes of working out the person’s rent assistance entitlement, any rent paid, or liable to be paid, by the person’s partner, in relation to the house the couple is living in, is to be treated as paid or payable by the person.

 

Subsection (2) provides that if a person is a member of an illness separated couple, respite care couple or temporarily separated couple then, for the purposes of working out the person’s rent assistance entitlement, any rent paid, or liable to be paid, by the person’s partner, in relation to the residence of the person, is to be treated as paid or payable by the person.

 

Proposed section 1070W—Partner with a rent increased pension

 

This section sets out when a person has a partner with a rent increased pension.

 



Proposed section 1070X—Partner with a rent increased benefit

 

This section sets out when a person has a partner with a rent increased benefit.

 

Proposed Division 5 Transitional indexation of rent assistance and rent threshold amounts

 

Proposed section 1070Y—Indexation of certain amounts for CPI increases before commencement

 

This section provides for the indexation of certain amounts included in this Part between the time of the drafting of the legislation and its commencement. As explained in the note to new subsection 1070Y(1), those indexed amounts will then be used as the basis for further indexation under Division 2 of Part 3.16.

 

Other Amendments in Schedule 1

 

Items 1 to 5 of Schedule 1 are technical amendments that are consequential on the changes made in the new Part 3.7.

 

Item 6 repeals Module D of Pension of Pension Rate Calculator A in section 1064 as a consequence of the insertion of new Part 3.7.

 

Items 7 and 8 are technical amendments that are consequential on the changes made in the new Part 3.7.

 

Item 9 repeals Module D of Pension of Pension Rate Calculator C in section 1066 as a consequence of the insertion of new Part 3.7.

 

Item 10 is a technical amendment that is consequential on the changes made in the new Part 3.7.

 

Item 11 repeals modules EA and EB of Pension Rate Calculator D in section 1066A as a consequence of the insertion of new Part 3.7.

 

Item 12 is a technical amendment that is consequential on the changes made in the new Part 3.7.

 

Item 13 repeals Module D of the Youth Allowance Rate Calculator in section 1067G as a consequence of the insertion of new Part 3.7.

 

Item 14 is a technical amendment that is consequential on the changes made in the new Part 3.7.

 

Item 15 repeals Module D of the Benefit Rate Calculator B in section 1068 as a consequence of the insertion of new Part 3.7.

 

Items 16 and 17 are technical amendments that are consequential on the changes made in the new Part 3.7.

 

Item 18 repeals Module D of the Pension PP (Single) Rate Calculator in section 1068A as a consequence of the insertion of new Part 3.7.

 

Items 19 and 20 are technical amendments that are consequential on the changes made in the new Part 3.7.

 

Item 21 repeals Module D of the Benefit PP (Partnered) Rate Calculator in section 1068B as a consequence of the insertion of new Part 3.7.

 

Items 23 to 31 are technical amendments that are consequential on the changes made in the new Part 3.7.

 

Item 32 specifies that changes made by provisions of this Schedule only apply in respect of instalment periods which begin on or after 1 July 2004.

 

 



Schedule 2—Miscellaneous

 

Amendments to the Social Security Act 1991

 

Item 1 repeals the definition of “homeless person” in subsection 5(1) as a consequence of the amendment of the definition of “independent” in item 2.

 

Item 2 amends the definition of “independent” in subsection 5(1) so it also includes references to Parts 3.4A, 3.4B and 3.7 of the Social Security Act 1991 . This brings the definition of “independent” for disability support pension for a person who is aged 16 and over and less than 20 into line with the definition of “independent” applicable to youth allowance.

 

Item 3 repeals the definition of “independent young person” in subsection 5(1) as a consequence of the amendment of the definition of “independent” in item 2.

 

Items 4, 35 and 36 make amendments to the compensation recovery regime.  Broadly, the changes expand the existing list of recoverable payments by including certain supplementary or ‘add-on’ payments that, while not making up part of the rate of income support payment payable to a person, might still be payable along with the person’s income support payment.  The relevant payments are:

·          advance pharmaceutical allowance;

·          telephone allowance (other than a telephone allowance payable to the holder of a seniors health card);

·          employment entry payment;

·          education entry payment;

·          pensioner education supplement;

·          fares allowance;

·          CDEP Scheme Participant Supplement.

 

The combined basic effect of the changes can be described as follows:

 

1.       If a person’s entitlement to one or more of the existing compensation affected payments is impacted on due to a compensation payment or payments; and

2.       the result is that, for a period, the compensation affected payment was/is not payable or was/is (or should have been) reduced to nil;

3.       then any amount of the supplementary or ‘add-on’ payments identified in these changes that have been, or that otherwise would have been, paid in that same period are not payable (and are recoverable if already paid).

 

The changes are also relevant in the context of partners.

 

For ease of reference, a compensation affected payment referred to in No.1 above is described as an ‘underlying compensation affected payment’ while a payment referred to in No.3 is described as a ‘supplementary compensation affected payment’.

 

Item 4 lists the payments which are affected by the amendments (ie the supplementary compensation affected payments).

 

Item 35 specifies certain ‘time’ requirements that must be met before Part 3.14 can apply to the payments listed in item 4.  The first requirement is that a relevant compensation payment (or payments) is received on or after 1 July 2004.  The other requirement is met if one of the following two scenarios applies.  If the supplementary compensation affected payment is one which requires a claim in order for the person to be qualified for the payment (eg employment entry payment - see section 665 of the Social Security Act 1991 ), that claim is made on or after 1 July 2004.  Alternatively, if no claim is required, the supplementary compensation affected payment must have been received on or after 1 July 2004.

 

Item 36 inserts new section 1161A which ensures that supplementary compensation affected payments can be included in the calculation of what amounts are recoverable when a compensation payment (or payments) is made or received.  It also provides for the inclusion of those amounts in relevant notices.  Subsection 1161A(1) provides that the term ‘supplementary compensation affected payment’ refers to a compensation affected payment mentioned in paragraphs 17(1)(l), (m) or (n).  It also highlights for the reader the concept of an ‘underlying compensation affected payment’ to which a supplementary compensation affected payment relates.  In effect, the reader’s attention is drawn back to the changes made by item 4 where the concept of an ‘underlying compensation affected payment’ is first raised.

 

Significantly, subsection 1161A(2) provides that Part 3.14 does not apply to any of the payments listed in item 4 except as set out in new section 1161A.

 

The broad combined effect of new paragraphs 1161A(3)(a) and (e) is that where an underlying compensation affected payment is not payable due to the receipt of a lump sum compensation payment, any associated supplementary compensation affected payment is also not payable.

 

Paragraph 1161A(3)(b) deals with the situation where, due to periodic compensation payments, an underlying compensation affected payment is reduced to nil.  Again, the effect of paragraph (e) in those circumstances is that any associated supplementary compensation affected payment is not payable.

 

Currently, the Secretary has the power to give a written notice to a person or body under which the person or body is liable to pay an amount (referred to as the recoverable amount) to the Commonwealth in connection with a compensation payment.  There are express provisions already in the social security law which set out how the recoverable amount is to be calculated.  For example, the basic combined effect of sections 1180 and 1181 is that, where a compensation affected payment has not been reduced to nil due to the operation of section 1173 but it should/would have been, the Secretary can give the person a written notice requiring the person to repay the amount that should/would not have been paid (assuming that amount is the smaller of the amounts mentioned in section 1181).  The broad effect of paragraphs 1161A(3)(c) and (e) is that, where any instalment of an underlying compensation affected payment would/should have been reduced to nil but this did not occur, any supplementary compensation affected payment which related to that payment is not payable.

 

Paragraph 1161A(3)(d) is concerned with certain situations where an amount of arrears of periodic compensation payments is paid.  If the effect of the arrears payment is that an underlying compensation affected payment is cancelled or reduced to nil, any associated supplementary compensation affected payment is not payable (and is a debt due to the Commonwealth).  Consistent with the approach currently adopted in section 1184I, where paragraph 1161A(3)(d) applies in relation to a supplementary compensation affected payment, paragraph 1161A(3)(f) provides that the amount is a debt due to the Commonwealth.

 

As indicated above, the Secretary has the power to give a written notice to a person or body under which the person or body is liable to pay an amount (referred to as the recoverable amount) to the Commonwealth in connection with a compensation payment.  There are also express provisions which determine how the recoverable amount is to be worked out.  The broad effect of subsections 1161A(4) to (6) is that the recoverable amount that can be specified in the relevant notices will now be able to include amounts of supplementary compensation affected payments in the circumstances specified.  The safeguard that the recoverable amount cannot exceed the sum of the amounts of compensation payment is retained.

 

Items 5 to 17 are consequential changes to the amendments to the definition of “independent” in item 2.

 

Items 18 and 19 are technical amendments to bring subsections 1083(1) and 1083(2) into line with the definition of ordinary income in section 8.

 

Item 20 inserts a new subsection 1106(3) that provides that paragraph 1106(1)(a) does not apply if the source of the income is a deprived asset or the income is earned, derived or received from a transaction involving a deprived asset. This will clarify the application 1106(a) in relation to deprived assets to avoid any possibility of double counting.

 

Items 21 to 23 are technical amendments.

 

Item 24 repeals section 1110 which is redundant.

 

Items 25 to 28 clarify that the scope of operation of subsections 1118(1), 1118(2), 1118B(1) and 1121(1) does not extend to the deemed income provisions of Division 1B of Part 3.10.

 

Items 29 to 34 are technical amendments.

 

Item 37 provides for the application of the amendments made by items 1 to 17 in Schedule 2.