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Veterans' Entitlements (Clarke Review) Bill 2004

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2002-2003-2004

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 Veterans’ Entitlements

(Clarke Review)

Bill 2004

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Veterans’ Affairs,

The Honourable Danna Vale MP)



 

Table of Contents

 

 

Outline and Financial Impact …………………………………………………….  ii

           

Part 1 - Preliminary

 

1                     Short Title  .......................................................................................... v

2                     Commencement  ................................................................................. v

3                     Schedule(s)  ........................................................................................ v

 

 

Part 2 - Compensation payments for North Korean internment      ..………….  1

 

Schedule 1 - Indexation of above general rate disability pensions  ....................  5

 

Schedule 2 - Defence Force Income Support Allowance   ....................................  8

           

            Part 1 - Amendment of the Veterans’ Entitlements Act 1986  .....................  8

 

            Part 2 - Amendment of the Social Security Act 1991  .................................. 12

 

Schedule 3 - Rent assistance for war widows and war widowers ....................... 13

 

Schedule 4 - Funeral benefits   ................................................................................ 17

 

Schedule 5 - Minesweeping and bomb/mine clearance service   ......................... 18

           

 

 



 

OUTLINE AND FINANCIAL IMPACT

 

Outline and Financial Impact

This Bill gives effect to the Government’s response to the Review of Veterans’ Entitlements, chaired by the Honourable John Clarke QC.  The measures include the creation of a new allowance, new indexation arrangements for certain disability pensions, and a once-only payment to former prisoners-of-war of the North Koreans or their surviving spouse.

 

 

 

Part 2 - Compensation payments for North Korean internment

 

 

Outline

This Part provides for a once only payment to veteran prisoners of war interned by North Korea or their widows or widowers.

 

Date of Effect

Royal Assent

 

Financial Impact

2003-04          $0.5 m

2004-05          $0.0 m

2005-06          $0.0 m

2006-07          $0.0 m

2007-08          $0.0 m

 

 

 

Schedule 1 - Indexation of above general rate disability pensions

 

 

Outline

These amendments to the Veterans’ Entitlements Act 1986 (VEA) will index the amount of intermediate rate, special rate and extreme disablement adjustment disability pension that is paid above the general rate, by the same percentage as increases in the maximum basic rate of service pension.  The maximum basic rate of service pension increases in response to both the Consumer Price Index (CPI) and Male Total Average Weekly Earnings (MTAWE).

 

Date of Effect

20 March 2004

 

 
Financial Impact

 

2003-04          $2.0 m

2004-05          $9.9 m

2005-06        $19.1 m

2006-07        $24.6 m

2007-08        $31.6 m           

 

 

 

 

Schedule 2 - Defence Force Income Support Allowance

 

 

Outline

These amendments to the VEA provide for the payment of a taxable income support allowance described as being a “Defence Force Income Support Allowance (DFISA).

 

The DFISA will address the longstanding concern caused by payments of disability pension under the VEA being counted as income in assessing the amount of some income support payments.

 

Date of Effect

20 September 2004

 

Financial Impact

2003-04          $6.6 m

2004-05        $24.3 m

2005-06        $23.0 m

2006-07        $23.1 m

2007-08        $22.9 m              

 

 

Schedule 3 - Rent assistance for war widows and war widowers

 

 

Outline

These amendments to the VEA will ensure that rent assistance is provided in addition to the ceiling rate of service pension or income support supplement that may be payable to a war widow/war widower - pensioner.

 

Date of Effect

1 January 2005

 

Financial Impact

2004-05          $11.5 m

2005-06          $21.4 m

2006-07          $22.3 m

2007-08          $23.1 m

2008-09          $23.8 m             

 

 

 

 

 

 

Schedule 4 - Funeral benefits

 

 

Outline

These amendments to the VEA increase the maximum amount of funeral benefit payable from $572 to $1000.

 

Date of Effect

1 July 2004

 

Financial Impact

2003-04          $0.0 m

2004-05          $5.6 m

2005-06          $5.6 m

2006-07          $5.6 m

2007-08          $5.6 m

 

Schedule 5 - Minesweeping and bomb/mine clearance service

 

 

Outline

These amendments to the VEA will extend operational service to persons who have been awarded or are eligible to be awarded the minesweeping or bomb/mine clearance awards specified in the subparagraph 7A(1)(a)(ii) for qualifying service.

 

Date of Effect

1 April 2004

 

Financial Impact

2003-04          $0.0 m

2004-05          $0.1 m

2005-06          $0.1 m

2006-07          $0.1 m

2007-08          $0.1 m

 

            

                         



 

Part 1 - Preliminary

 

 

Short Title

Clause 1 sets out how the Act is to be cited.

 

Commencement

Clause 2 sets out the various commencement dates of the provisions in the Act.

 

Schedules

Clause 3 provides that the Act specified in a Schedule to this Act is amended as set out in the items of that Schedule.



 

Part 2 - Compensation payments for North Korean internment

 

Overview

 

This Part provides for a once only payment to veteran prisoners of war interned by North Korea or their widows or widowers.

 

Background

 

In response to the Report of the Review of Veterans’ Entitlements - the Clarke Report, the Government has proposed a once only payment to or in respect of certain persons who had been interned by North Korea.

 

The persons eligible for the payment are:

 

·          a veteran who was a prisoner of war of North Korea between 27 June 1950 and 19 April 1956; or

 

·          a widow or widower of a veteran who was a prisoner of war of North Korea between 27 June 1950 and 19 April 1956.

 

Explanation of the clauses

Clause 4 defines a number of terms for the purposes of this Part.  The definitions are self-explanatory.

 

Clause 5 sets out the eligibility criteria to be applied to determine whether a person is eligible for a compensation payment. There are two different categories of eligible person under this Part: 

 

Veteran

 

To be an eligible person as a ‘veteran’ as set out in subclause 5(1) the following conditions must be met:

 

·          the veteran must have been interned by the North Korean military forces at any time between 27 June 1950 and 19 April 1956 inclusive; and

·          the veteran was alive at the beginning of 1 July 2003



 

Partner of deceased veteran

 

To be an eligible person as a ‘partner of a deceased veteran’ as set out in subclause 5(2) the following conditions must be met:

 

·          the person must be alive at the beginning of 1 July 2003, and

·          the person must be the partner of a veteran who died before 1 July 2003; and

·          the person must have been the partner of the veteran immediately before the veteran’s death; and

·          the veteran must have been interned by the North Korean military forces at any time between 27 June 1950 and 19 April 1956, inclusive. 

 

Subclause 5(3) provides that an eligible person is only entitled to one payment under this Part regardless of whether they meet the criterion for an eligible person under more than one subclause in this Part.

 

Clause 6 provides that the compensation payment is a one-off payment of $25,000.

 

Clause 7 provides that the Secretary may determine procedures in the event that claims are made.

 

Subclause 7(1) provides that a claim for a compensation payment must be made in accordance with procedures determined by the Secretary under subclause 7(2) of this Part.

 

Subclause 7(2) provides that the Secretary may make a written determination setting out the procedures for making a claim for a compensation payment under this Part.

 

This will enable the Secretary to set in place procedures that will assist persons wishing to establish their eligibility for a payment to provide sufficient information to confirm eligibility and arrangements for payment.

 

A Note has been inserted after subclause 7(1) to make it clear that compensation payments will be made automatically to those eligible persons the Department is aware of.

 

Clause 8 provides for the determination of claims.

 

Subclause 8(1) provides that claims are to be determined by the Commission.

 

Subclause 8(2) provides a review right for a person who is dissatisfied with a decision of the Commission in relation to the claim for a compensation payment under this Part.  Subclause 8(2) provides such a person with a right of merit review by the Administrative Appeals Tribunal.

 

Clause 9 provides that if an eligible person dies before receiving a compensation payment, then the payment will be made to the eligible person’s estate.   A Note has been inserted after clause 9 to make it clear that a payment cannot be made unless a claim has been received.   So for a payment to be made to an eligible person’s estate, a claim must have been received in respect of that person’s payment.  The claim may be made by another person on behalf of that person.

 

 

 

Clause 10 provides that certain provisions of the Veterans’ Entitlements Act 1986 (VEA) apply to this Part as if this Part was part of the VEA.  The provisions that will apply are:

 

·          Subsection 119(1) - Commission not bound by technicalities;

·          Section 128 - Secretary may obtain information etc.;

·          Section 208 - Offences;

·          Section 213 - Delegation by Commission;

·          Section 214 - Delegation by Secretary; and

·          any other provisions that are incidental to the provisions mentioned above.

 

Subsection 119(1) of the VEA provides a context for the consideration, hearing and determination of a claim or application by the Commission.   The same circumstances will apply

to the Commission when determining a claim for a compensation payment.  Briefly, this means that the Commission:

 

·          is not bound by any rules of evidence, but may inform itself on any matter it thinks just;

·          shall act according to substantial justice and the substantial merits of the case without regard to legal form and technicalities; and

·          shall take into account any difficulties in ascertaining the existence of any fact, matter, cause or circumstance including the passage of time and any deficiency in relevant official records.

 

Section 128 of the VEA authorises the Secretary to require a person capable of supplying information which might affect the grant or payment of a pension, benefit or allowance under the VEA, to produce that information or give evidence.  Clause 10 extends this power to a claim for a compensation payment under this Part.

 

Section 208 of the VEA provides for offences and penalties in relation to the intentional making of a false claim or statement in connection with a claim or application for a pension, allowance or benefit under the VEA.  Clause 10 extends these offences and penalties to a claim for a compensation payment under this Part.

 

Sections 213 and 214, respectively, of the VEA provide that the Commission and the Secretary may delegate all or any of their powers under the VEA, other than the power of delegation, to certain persons as specified in subsection (4) of the respective provisions. Clause 10 means that the Secretary or Commission will also be able to delegate their powers authorised by this Part in relation to determining a claim for a compensation payment.

 

Clause 11 provides for the recovery of any overpayments. An overpayment may be recovered in a court of competent jurisdiction.

 

Clause 12 provides that compensation payments made under this Part are exempt from income tax.

 

Clause 13 provides that the compensation payment will not be affected by the assets test under the VEA and the social security law.

 

Subclause 13(1) provides that, for the purposes of the assets test under the VEA, the value of a person’s assets is to be reduced by the amount of a compensation payment received by the

 

person under this Part.  The reduction is a permanent $25,000 reduction in the value of the person’s assets.

 

Subclause 13(2) provides for the same reduction in the value of the person’s assets for the purposes of the social security law.

 

Clause 14 provides that the Consolidated Revenue Fund is appropriated for the purposes of the compensation payments.

 

Commencment

 

Subclause 2(1) provides that this Part commences on Royal Assent.

 



 

Schedule 1 - Indexation of above general rate disability pensions

Veterans Entitlements Act 1986

Overview

 

These amendments to the VEA will index the amount of intermediate rate, special rate and extreme disablement adjustment disability pension that is paid above the general rate, by the same percentage as increases in the maximum basic rate of service pension.  The maximum basic rate of service pension increases in response to both the Consumer Price Index (CPI) and Male Total Average Weekly Earnings (MTAWE).

 

Background

 

Pensions paid under Parts II and IV of the VEA are generally referred to as disability pensions.  Disability pensions are paid to veterans and Australian mariners for incapacity from injuries or diseases (disabilities) that are accepted as war or defence-caused.  The disability pension is non-taxable and non means tested.  It is payable for life unless there ceases to be any incapacity from the disability or if the pension is obtained by fraud or misrepresentation.  Currently, all disability pensions are indexed twice annually in line with movements in the CPI.

 

The general rate is payable in increments of 10 per cent, up to 100 per cent.  The level of general rate payment relates to the level of service-related incapacity, so the greater the incapacity, the greater the disability pension.

 

An extreme disablement adjustment is paid to a veteran aged over 65 years who is severely disabled and is entitled to a disability pension at the 100 per cent general rate, but only where the veteran is ineligible for either the special rate of the intermediate rate.

 

For veterans whose employability is affected by their war or defence caused disabilities alone, there are two higher rates of disability pension.   Briefly, the special rate is paid to veterans assessed as unable to undertake remunerative work for more than eight hours a week as a result of their service-related incapacity alone.  The intermediate rate is paid to veterans assessed as unable to undertake remunerative work for more than 20 hours a week as a result of their service-related incapacity alone.

 

Explanation of the Changes

 

These changes will index the amount of intermediate rate, special rate and extreme disablement adjustment disability pension that is paid above the general rate by the same percentage as increases in the maximum basic rate of service pension.  The maximum basic rate of service pension increases in response to both the Consumer Price Index (CPI) and Male Total Average Weekly Earnings (MTAWE).   If the CPI increase to maximum rate service pension results in a new rate that is less than 25% of MTAWE, then the new rate for maximum rate service pension is increased to equal 25% of MTAWE.   The resultant percentage increase between the old rate of maximum basic rate service pension and the new maximum basic rate of service pension is the

factor that will be applied to the indexation of the amount of disability pension paid above the general rate.



 

Explanation of the Items

 

Item 1 amends subsection 22(4) by omitting “increased by 50% of the maximum rate set out in subsection (3)” and substituting “$433.65) per fortnight”.   The new indexation arrangements will mean that the extreme disablement adjustment rate provided for in subsection 22(4) may be increased by more than 50% of the maximum general rate set out in subsection 22(3).

 

Item 2 amends paragraph 98B(1)(a) by omitting the words “a rate that had been increased under” and substituting “the rate specified in”.   This is a consequential amendment due to the change in indexation arrangements.  Paragraph 98B(1)(a) referred to a rate that had been increased under subsection 22(4).   The amendment caters for the change to subsection 22(4) made by item 1 as the rate is no longer increased by 50% of the maximum general rate, but is instead now a rate specified in subsection 22(4).

 

Item 3 amends subparagraph 99(2)(a)(i) by omitting the word “increased” and substituting the words “worked out”. This is a consequential amendment due to the change in indexation arrangements.  Subparagraph 99(2)(a)(i) referred to a rate that is increased under subsection 22(4).   This amendment caters for the change to subsection 22(4) made by item 1 as the rate is no longer increased by 50% of the maximum general rate, but is instead now a rate specified in subsection 22(4).

 

Item 4 amends subparagraph 113(2)(b)(i) by omitting the word “increased” and substituting the words “worked out”. This is a consequential amendment due to the change in indexation arrangements.  Subparagraph 113(2)(b)(i) referred to a rate that is increased under subsection 22(4).   This amendment caters for the change to subsection 22(4) made by item 1 as the rate is no longer increased by 50% of the maximum general rate, but is instead now a rate specified in subsection 22(4).

 

Item 5 amends subsection 198(1) by inserting a definition for above general rate .  The new definition provides that above general rate means the following rates:

 

·          the rate applicable under subsection 22(4);

·          the rate applicable under subsection 23(4); and

·          the rate applicable under subsection 24(4). 

 

Item 6 amends the definition of relevant rate in subsection 198(1).  Paragraphs (b) and (c) of the definition of relevant rate in subsection 198(1) are repealed as the rates specified in those paragraphs are now defined as above general rate by item 5. 

 

Item 7 adds a note to the end of subsection 198(4).  The note states that for indexation of each above general rate, see subsection 5E.

 

Item 8 amends the note currently at the end of subsection 198(4) and renames it Note 2.

 

Item 9 amends subsection 198 by inserting new subsection 198(5E) after subsection 198(5D).

 

New subsection 198(5E) sets out the method statement for the new indexation arrangements to apply to above general rate disability pensions.

 

 

 

New subsection 198(5E) provides that the VEA has effect as if, on the first day (the adjustment day ) of each relevant period, there were substituted, for each above general rate, the rate worked out in accordance with the Method statement. 

 

The Method statement provides that the new rate is to be worked out using the following steps:

 

Step 1 - Work out the general rate applicable on the adjustment date (which may be a rate that is worked out under subsection 198(4)). 

 

This is the new indexed general rate. 

 

Step 2 - Work out the general rate applicable on the day before the adjustment day. 

 

This is the general rate applicable immediately prior to indexation.

 

Step 3 - Work out the above general rate applicable on the day before the adjustment day. 

 

This is the rate for extreme disablement adjustment, intermediate rate or special rate applicable immediately prior to indexation. 

 

Step 4 - Subtract the rate at step 2 from the rate at step 3. 

 

This will give the difference between the pre-indexation general rate and the pre-indexation above general rate.  The result will be the amount of pension that is paid at above the general rate for extreme disablement adjustment, intermediate rate disability pension and special rate disability pension.   It is this amount that will be indexed by the same percentage increase as applies to basic rate service pension.

 

Step 5 - Multiply the amount worked out in step 4 by the pension MBR factor specified in section 59LA (rounding the result up to the nearest $0.10). 

 

The pension MBR factor specified in section 59LA is the indexed single pension maximum basic rate amount divided by the previous single pension maximum basic rate amount.  The result is worked out to three decimal places.  The resultant amount is then rounded up to the nearest $0.10.

 

Step 6 - Add the rate worked out at step 1 to the amount worked out at step 5: the result is the rate substituted for the above general rate on the adjustment day.

 

Item 10 amends subsection 198(10) by inserting the words “or an above general rate” after the words “relevant rate”.  This amendment ensures that if an above general rate pension is granted with effect from a date before the date of grant, arrears of that pension are to be calculated on the basis of the maximum rate of pension in force during each indexation period to which the arrears relate.



 

Commencement

 

Subclause 2(1) provides that Schedule 1 commences on 20 March 2004.  The retrospective commencement is beneficial as the increased rate of  pension will be backdated to

20 March 2004.



 

 

Schedule 2 - Defence Force Income Support Supplement Allowance

 

Part 1  - Amendment of the Veterans’ Entitlements Act 1986

 

Overview

 

These amendments to the VEA provide for the payment of a taxable income support allowance described as being a “Defence Force Income Support Allowance (DFISA).

 

The DFISA will address the longstanding concern caused by payments of disability pension under the VEA being counted as income in assessing the amount of some income support payments.

 

Background

 

Disability pensions are paid by the Department of Veterans’ Affairs under Parts II and IV of the VEA.  Under the VEA, disability pension is not counted as income in assessing the rate of service pension payable under Part III of the VEA, but is included in assessing the rate of  rent assistance payable.

 

To be eligible for service pension, a veteran must have qualifying service and meet age or incapacity requirements.  Veterans without qualifying service, or who are otherwise not eligible for service pension, receive their income support payments through social security law, eg. age pension, disability support pension, newstart allowance.

 

Disability pension is included as income in assessing social security payments and its effect on the rate of social security payments has been a longstanding concern to the veteran community.

 

Explanation of the Changes

DFISA will be payable to those persons whose primary payment under social security law is reduced, or is not payable, because disability pension has been included as income in assessing the amount of the primary payment.

 

The amount of DFISA will be equal to the difference between the primary payment of social security a person receives under social security law and the social security payment the person would receive if disability pension was not counted as income in the assessment of their social security payment, and the disability pension income test for rent assistance was applicable.

 

For the purposes of DFISA, a disability pension will be defined as being a disability pension payable under Parts II and IV of the VEA, certain pensions payable under the Repatriation Act 1920 that have been saved and payments of temporary incapacity allowance under section 107.

 

Disability pensions will not include war widow/ widower’s pensions paid under subsection 30(1) or payments made by other governments as compensation for war or service related injuries.

 

 

 

The amendments set out the provisions referring to the eligibility for and calculation of the payment of DFISA in new Part VIIAB.

 

The payment of the allowance is automatic and not as the result of a claim made by or on behalf of the claimant.

 

The amendments provide that a person will be eligible for DFISA if a disability pension is payable to the person or the person’s partner; and the person has either made a claim for a social security payment; or a social security payment was payable to the person; and either the social security payment is not payable to the person, or the amount is reduced because of the disability pension.

 

Explanation of the Items

 

Item 1 amends subsection 5H(8) by inserting new paragraph (g).  Subsection 5H(8) sets out the payments that are to be regarded as being an “excluded amount” for the purposes of determining the income of a person.

 

Item 2 inserts a definition for “Defence Force Income Support Allowance into the general definitions provision, subsection 5Q(1).  A “Defence Force Income Support Allowance” is defined as being payable under Part VIIAB.

 

Item 3 inserts new Part VIIAB into the VEA.

 

New Part VIIAB is titled “Defence Force Income Support Allowance.

 

New section 118N provides a simplified outline stating that the purpose of the allowance is to make a payment to a person whose payment under the Social Security Act has been reduced, or is not payable, because of the payment of a disability pension to the person or the person’s partner.

 

Payment of the allowance will be automatic with no need for a claim.

 

New section 118NA includes the definition of “disability pension” that is to be used only for the purposes of the new Part.  A disability pension is defined as:

 

(a)                 a disability pension payable under Parts II and IV of the VEA, to veterans as compensation for injuries or diseases caused or aggravated by war or defence service (other than a pension payable under section 30 to a dependent of a deceased veteran); or

(b)                payments of temporary incapacity allowance under Part VI; or

(c)                 a pension payable because of subsection 4(6) or (8B) of the Veterans’ Entitlements (Transitional Provisions and Consequential Amendments) Act 1986 (other than a pension payable in respect of a child).

 

Section 118NA also defines a “partner” as having the same meaning as it has in subsection 4(1) of the Social Security Act.



 

New section 118NB provides that DFISA will be payable to a person if, on or after

20 September 2004:

 

(a)                 a disability pension is payable to the person or the person’s partner; and

(b)                either:

(i)                  the person has qualified and made a claim for a social security payment (referred to as the “primary payment”) that is not payable or has been reduced because of the payment of disability pension; or

(ii)                a social security payment (the “primary payment”) is payable to the person but it has been reduced because of the payment of disability pension.

 

Notes 1 and 2 to section 118NB refer the reader to section 118NA for the definitions of “disability pension” and “partner” and to section 5Q for the definition of “social security payment”.

 

New section 118NC provides that DFISA will be payable on a “pension payday” as the term is defined in section 5Q.

 

New section 118ND provides the Method Statement for calculating the amount of DFISA.  The Method Statement comprises the following steps:

 

Step 1.              A calculation of the amount (if any) of the “primary payment” (the social security payment affected by the inclusion of disability pension) that is payable to the person on a day that is on or after 20 September 2004.

 

Step 2.              A calculation of the amount (if any) of the “notional payment” of the social security payment that would have been payable to the person on the day referred to in Step 1 if two assumptions are made:

 

First Assumption

 

Disability pension payable to the person or the person’s partner is to be regarded as being an “excluded amount” for the purposes of determining the ordinary income of the person.

 

Second Assumption

 

The amount (if any) of “rent assistance” included in the “primary payment” has been reduced (but not to less than nil) by the “rent reduction amount”.

 

Step 3.              Subtract the “primary payment” as determined in Step 1 from the “notional payment” determined at Step 2.  The difference between the two payments will be the amount of the Defence Force Income Support Allowance for the day concerned.

 

Subsection 118ND(2) defines the terms used in the subsection 118ND(1) Method Statement.

 

An “excluded amount” is defined as being an amount that is not income for the purposes of the Social Security Act because of subsection 8(8) of that Act.

 

 

“Rent assistance” is defined as having the same meaning as it has in the Social Security Act.

 

The “rent reduction amount” is defined as being the amount that would be the person’s income reduction under the Social Security Act if that income reduction were worked out by applying the same income test or ordinary income test that was used under the Social Security Act in calculating the primary payment, but applying that test on the basis that the disability pension were the person’s only ordinary income for the purposes of that Act.

 

Commencement

 

Subclause 2(1) provides that this Schedule commences on 20 September 2004



 

Part 2 - Amendment of the Social Security Act 1991

 

Overview

 

These amendments to the Social Security Act 1991 are consequential amendments arising from the amendments to the VEA that provide for the payment of a taxable income support allowance described as being a “Defence Force Income Support Allowance (DFISA).

 

Background

 

Disability pensions are paid by the Department of Veterans’ Affairs under Parts II and IV of the VEA.  Under the VEA, disability pension is not counted as income in assessing the rate of service pension payable under Part III of the VEA.

 

To be eligible for service pension, a veteran must have qualifying service and meet age or incapacity requirements.  Veterans without qualifying service receive their income support payments through social security law, eg. age pension, disability support pension, newstart allowance.

 

Disability pension is included as income in assessing social security payments and its effect on the rate of social security payments has been a longstanding concern to the veteran community.

 

Explanation of the Changes

These minor amendments to the Social Security Act 1991 are to include references to the “Defence Force Income Support Allowance”.

 

Explanation of the Items

Item 4 inserts new paragraph (x) referring to the “Defence Force Income Support Allowance” in the listing of the payments in subsection 8(8) that are to be regarded as an “excluded amount” for the purposes of determining income under the Act.

 

Item 5 inserts a reference to the “Defence Force Income Support Allowance” in the listing of general definitions in subsection 23(1).

 

Commencement

 

Subclause 2(1) provides that this Schedule commences on 20 September 2004.

 



 

Schedule 3 - Rent assistance for war widows and war widowers

 

Veterans’ Entitlements Act 1986

 

Overview

 

These amendments to the Veterans’ Entitlements Act 1986 (VEA) will ensure that rent assistance is provided in addition to the ceiling rate of service pension or income support supplement that may be payable to a war widow/war widower - pensioner.

 

Background

 

War widows or war widowers with limited means may receive an income support payment in addition to their war widow or war widower pension.  This income support payment is in either the form of a service pension (WWSP) for those war widows or war widowers who are also veterans with qualifying service or an income support supplement to the partners of deceased veterans.  The legislative basis for payment and eligibility of WWSP and income support supplement are set out in

Part III and Part IIIA of the VEA respectively.

 

The rate of WWSP is dealt with in sections 36N and 37N of the VEA that reflects the basis of the claimant’s eligibility and refers to the Rate Calculator in Part 2 of Schedule 6 of the VEA.  That is, whether the claimant is eligible for service pension due to age or invalidity.

 

The rate of WWSP for a person who is not permanently blind is worked out under subpoint SCH6-A1(4) using m ethod statement 3 and the rate for a person who is permanently blind is worked out under subpoint SCH6-A1(5) using m ethod statement 4

 

The rate of income support supplement is dealt with in section 45S of the VEA and refers to the Rate Calculator in Part 2 of Schedule 6 of the VEA.

 

The rate of income support supplement for a person who is not permanently blind is worked out under subpoint SCH6-A1(6) using m ethod statement 5 and the rate for a person who is permanently blind is worked out under subpoint SCH6-A1(7) using m ethod statement 6.

 

Currently, both the rate of WWSP and income support supplement are subject to a ceiling rate of $3585.40 per annum.  The ceiling amount is indexed each March and September.  The ceiling rate provisions for WWSP and income support supplement are set out in points SCH6-A4 to A9 of Schedule 6. 

 

A war widow or war widower who receives WWSP or income support supplement and privately rents may also be eligible to receive rent assistance.  Rent assistance is an allowance that is paid fortnightly to assist in meeting the cost of private rental accommodation.  Eligibility for and the amount of rent assistance payable are set out in Module C of Schedule 6 of the VEA.

 

Under the current arrangements, a war widow or war widower who privately rents receives the amount of rent assistance they are entitled to within the income support ceiling.  That is, in many

 

 

cases the income support component is reduced to enable the rent assistance to be paid within the ceiling rate. 

 

Explanation of the Changes

 

These amendments to the VEA will result in the assessed rate of rent assistance being paid in addition to the income support ceiling rate.

 

The relevant method statements in Schedule 6 are being amended to allow for the payment of the assessed rate of rent assistance in addition to the ceiling rate. 

 

Subclauses 4(3) and (4) of Schedule 6 are to be repealed.  Clause 4 deals with the application of the income and assets test reductions for income tax purposes.  Subclauses 4(3) and (4) provide that in the event that the person is permanently blind and is eligible for service pension or income support supplement, then the person’s ceiling rate is taken to include an amount for rent assistance that they are eligible to receive that is worked out under Module C of the Rate calculator.  As it is intended to allow for the payment of rent assistance in addition to the income support ceiling rate, subclauses 4(3) and (4) are no longer relevant and are being repealed.  Subclauses 4(1) and (2) will provide the order of reduction for income tax purposes in respect of service pension and income support supplement.

 

Amendments to allow rent assistance to be paid in addition to ceiling rate service pension or income support supplement to permanently blind pensioners will be made to method statement 4 in subpoint SCH6-A1(5) and method statement 6 in subpoint SCH6-A1(7). 

 

At present, there is only reference in Module C to rent assistance being added to the maximum basic rate to help cover the cost of rent and when considering eligibility for rent assistance.  The proposed amendments to Module C will allow for the payment of rent assistance to be added to the ceiling rate as well.

 

Explanation of the Items

Item 1 repeals subclauses 4(3) and (4) of Schedule 6.  These subclauses are no longer relevant as rent assistance is being paid in addition to the income support ceiling.

 

Item 2 inserts a new Step 2A after Step 2 of method statement 3 in subpoint SCH6-A1(4).  New Step 2A directs the reader to work out the amount per year of rent assistance using Module C. 

 

Item 3 repeals and substitutes a new Step 5 of method statement 3 in subpoint SCH6-A1(4).  New Step 5 sets out the method for working out the revised rate.  This amount is arrived at by adding the ceiling rate and any amount that is payable per year for rent assistance, pharmaceutical allowance and remote area allowance.  This amendment allows for rent assistance to be added to the ceiling rate when calculating the revised rate.

 

Item 4 omits the word “ceiling” wherever it occurs in Step 6 of method statement 3 in subpoint SCH6-A1(4).  This amendment reflects the new terminology “revised rate” which is inserted in new Step 5.   

 

 

 

Item 5 inserts a new Step 1A after Step 1 of method statement 4 in subpoint SCH6-A1(5).  New Step 1A directs the reader to work out the amount per year of rent assistance using Module C.

 

Item 6 inserts a new paragraph (aa) after paragraph (a) of Step 4 of method statement 4 in subpoint SCH6-A1(5).  New paragraph (aa) ensures that the amount of rent assistance calculated under new Step 1A is added to the ceiling rate when calculating the amount of a person’s rate of service pension.

 

Item 7 repeals Step 9 of method statement 5 in subpoint SCH6-A1(6) and substitutes a new Step 9 and Step 9A.

 

New Step 9 directs the reader to work out the person’s ceiling rate in accordance with points SCH6-A4 to SCH6-A9.

 

New Step 9A sets out the method for working out the increased rate.  This amount is arrived at by adding the ceiling rate and the amount that is payable per year for rent assistance and pharmaceutical allowance. This amendment ensures that rent assistance is added to the ceiling rate in calculating the increased rate.

 

Item 8 omits reference to the words “ceiling rate” in Step 10 of method statement 5 in subpoint SCH6-A1(6) and substitutes the words “rate (see Step 9A)”.  This amendment reflects the new terminology “increased rate” which is inserted in new Step 9A.

 

Item 9 inserts a new Step 1A after Step 1 of method statement 6 in subpoint SCH6-A1(7).  New Step 1A directs the reader to work out the amount per year of rent assistance using Module C.

 

Item 10 inserts a new paragraph (aa) after paragraph (a) of Step 4 of method statement 6 in subpoint SCH6-A1(7).  New paragraph (aa) ensures that the amount of rent assistance calculated under new Step 1A is added to the ceiling rate when calculating the amount of a person’s rate of income support supplement.

 

Item 11 amends point SCH6-C2 by inserting the words “or ceiling rate” after the words “maximum basic rate”. This amendment provides for rent assistance to be added to the ceiling rate to help cover the cost of rent.

 

Item 12 amends point SCH6-C3 by inserting the words “or ceiling rate” after the words “maximum basic rate”. This amendment provides for rent assistance to be added to the ceiling rate where a person is eligible for rent assistance.

 

Item 13 amends point SCH6-C4 by inserting the words “or ceiling rate” after the words “maximum basic rate”. This amendment will prevent the payment of an additional amount of rent assistance being added to the person’s ceiling rate under point SCH6-C3 where the person is a member of a couple whose partner receives an incentive allowance under the Social Security Act 1991 and the couple are living in the same home.

 

Item 14 amends point SCH6-C4A by inserting the words "or ceiling rate" after the words "maximum basic rate".

 

 

 

Point SCH6-C4A is a new provision being inserted in the Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Bill 2004 .

 

This amendment ensures that once this Act commences no additional amount is to be added to a person's ceiling rate under point SCH6-C3 if the person chooses to receive a Special Rate Disability Pension under section 200 of the Military Rehabilitation and Compensation Act 2004.

 

The note to this amendment provides that this amendment will not take effect if the amendment relating to point SCH6-C4A in the Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Act 2004 does not commence .

 

Commencement

 

Subclause 2(1) provides that this Schedule commences on 1 January 2005.



 

Schedule 4 - Funeral benefits

 

Veterans’ Entitlements Act 1986

 

Overview

 

These amendments to the VEA increase the maximum amount of funeral benefit payable from $572 to $1000.

 

Background

 

Funeral benefit is paid to assist with meeting funeral expenses.  Funeral benefit is paid to the estate of a deceased veteran if, immediately before the veteran died, the veteran was being paid an extreme disablement adjustment, special rate, a pension increased by items 1 to 8 of section 27 or had been a prisoner of war.

 

Other circumstances where funeral benefit may be paid include for a veteran whose death was war-caused, for a veteran who died in indigent circumstances and for certain dependants of veterans where the dependant died in indigent circumstances. 

 

Explanation of the Changes

 

These changes to the VEA will increase the maximum amount of funeral benefit payable from $572 to $1000. 

 

Explanation of the Items

 

Item 1 amends subsection 98B(2) by omitting “$572” and substituting “$1,000”. 

 

Item 2 amends paragraph 99(4)(a) by omitting “$572” and substituting “$1,000”. 

 

Item 3 amends subsection 100(2) by omitting “$572” and substituting “$1,000”. 

 

Items 4 and 5 are application provisions and provide that the increased funeral benefit applies only in respect of persons whose death occurs on or after the commencement date of items 1 to 3.

 

Commencement

 

Subclause 2(1) provides that Schedule 4 commences on 1 July 2004.



 

Schedule 5 - Minesweeping and bomb/mine clearance service

Veterans’ Entitlements Act 1986

 

Overview

These amendments to the VEA will extend operational service to persons who have been awarded or are eligible to be awarded the minesweeping or bomb/mine clearance awards specified in the subparagraph 7A(1)(a)(ii) for qualifying service.

 

Background

 

Minesweeping and bomb or mine clearance work after the cessation of hostilities is qualifying service where a veteran is awarded an appropriate minesweeping or bomb/mine clearance medal for that service.  However, there are a small number of personnel with the appropriate medal who do not have qualifying service as they are not veterans as defined in the VEA because their minesweeping service is not operational service as it occurred after the cut off date provided for in subsections 6A(3) and (4).

 

Explanation of the Changes

 

These changes will extend operational service to minesweeping and bomb/mine clearance service after World War 2 that meets the qualifying service requirements of subparagraph 7A(1)(a)(ii).  This extension of operational service will give a number of persons veteran status under the VEA.  Under the VEA, veteran status grants access to benefits including disability pension, service pension and treatment. 

 

A veteran is defined (in part) in subsection 5C(1) of the VEA as:

 

a person (including a deceased person) who is, because of section 7, taken to have rendered eligible war service. 

 

Subsection 7(1) provides that a person who has rendered operational service shall be taken to have been rendering eligible war service while the person was rendering operational service. 

 

Thus, by extending operational service to include those persons awarded or eligible to be awarded the minesweeping or bomb/mine clearance awards specified in the subparagraph 7A(1)(a)(ii) (for qualifying service), the person gains veteran status for the purposes of the VEA.

 

Explanation of the Items

 

Item 1 amends the table in section 6 by inserting a new entry 6DA - Operational service - minesweeping and bomb/mine clearance service.

 

Item 2 inserts new section 6DA after section 6D. 



 

New section 6DA provides that a member of the Defence Force is taken to have been rendering operational service during any period of service in respect of which the member has been awarded, or has become eligible to be awarded one of the following awards:

 

·          the Naval General Service Medal with the Minesweeping 1945-51 Clasp;

·          the Naval General Service Medal with the Bomb and Mine Clearance 1945-53 Clasp;

·          the Naval General Service Medal with the Bomb and Mine Clearance 1945-56 Clasp;

·          the General Service Medal with the Bomb and Mine Clearance 1945-49 Clasp;

·          the General Service Medal with Bomb-Mine Clearance 1945-56 Clasp;

 

Commencement

 

Subclause 2(1) provides that Schedule 5 commences on 1 April 2004.  The retrospective commencement date is beneficial because, in certain circumstances, disability pension may be payable from 1 April 2004.