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Federal Magistrates Amendment (Disability and Death Benefits) Bill 2007

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2004-2005-2006

 

 

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

FEDERAL MAGISTRATES Amendment (DISABILITY

AND dEATH bENEFITS) Bill 2006

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Attorney-General,

the Honourable Philip Ruddock, MP)

 



FEDERAL MAGISTRATES AMENDMENT (DISABILITY AND dEATH bENEFITS) Bill 2006

 

OUTLINE

 

The purpose of this Bill is to amend the Federal Magistrates Act 1999 (the Act) to provide statutory disability cover and death benefits for Federal Magistrates.

 

Federal Magistrates are currently entitled, by a determination made by the Governor-General under the Act, to a superannuation contribution by the Commonwealth of an amount equal to 13.1 per cent of salary to a complying superannuation fund or a retirement savings account

 

The current arrangements provide no specific entitlements covering retirement on disability grounds or in the event of death. 

 

The lack of insurance against disability for Magistrates is potentially problematic.  Magistrates hold office until age 70 unless they resign, die in office or are removed by the Parliament on the ground of proven misbehaviour or incapacity before this age.  In the absence of adequate protection in the event of serious disability, a Magistrate whose performance is significantly impaired for medical reasons may nonetheless be unwilling to resign.

 

Disability Cover

 

The Bill would amend the Act to provide that where the Attorney-General certifies that the resignation of a Magistrate is due to permanent disability or infirmity, a pension of 60 per cent of salary would be payable to the Magistrate until he or she attains age 65 or dies, whichever comes first. 

 

The Commonwealth would also make contributions to the Magistrate’s superannuation while the disability pension was being paid.  This would ensure that Commonwealth provided superannuation support for an incapacitated Magistrate would be the same as if the Magistrate had continued to work to age 65 or, if the former Magistrate dies before this age, to the date of death.

 

Death Benefits

 

The Bill would also provide death benefits for Federal Magistrates.  The Bill would amend the Act to provide that, where a Magistrate dies in office or a former Magistrate in receipt of a disability pension dies before reaching age 65, a lump sum, covering the period between the date of death and age 65, is payable to the Magistrate’s spouse and dependent children.

 

The lump sum would be equal to the superannuation contributions the Magistrate would have received during the period between the Magistrate’s death and the Magistrate’s 65 th birthday, based on the salary payable to a Magistrate at the time of the Magistrate’s death or, where a former Magistrate was in receipt of a disability pension prior to death, the salary of a serving Magistrate at the time of death.

 

Financial impact statement

 

The Australian Government Actuary has costed the proposed disability cover and death benefits at three per cent of salaries on average.  There are currently 35 Magistrates including the Chief Federal Magistrate.  For 35 Magistrates, the total cost would currently be on average some $250,000 per annum. 

 

It is proposed that the new benefits be funded through a special appropriation authorised by the Act, as it would not be possible to predict when such benefits would need to be paid.

 

 

 

 

 

 

 

 

 

 

 

 

 



federal magistrates amendment (disability and death benefits) bill 2006

NOTES ON CLAUSES

Clause 1: Short title

1.       Clause 1 is a formal provision specifying the short title of the Bill .

Clause 2: Commencement

2.       The Bill will commence on the day after it receives royal assent.

Clause 3: Schedule(s)

3.       This clause provides that each Act that is specified in a Schedule is amended or repealed as set out in that Schedule, and any other item in a Schedule has effect according to its terms.

Schedule 1 - Amendment of the Federal Magistrates Act 1999

Items 1-9

4.       Items 1-9 amend section 5 of the Act to insert a number of new definitions.

5.       The term “Commonwealth superannuation contribution” is defined as being the Commonwealth’s contribution to a complying superannuation fund or retirement savings account, whichever is nominated by a Federal Magistrate or retired Federal Magistrate.  This definition is relevant to the entitlement created by new clause 9C of Schedule 1 to the Act for superannuation to be paid for retired disabled Federal Magistrates.

6.       The term “prior judicial service” is defined to include earlier service by a Federal Magistrate as a federal judge, a Federal Magistrate, a State or Territory judge or a State or Territory magistrate.  A pension payable to a retired disabled Federal Magistrate under new clause 9B of Schedule 1 to the Act may be reduced where pension or retiring allowance is payable in respect of such service.

7.       The term “retired disabled Federal Magistrate” is defined to mean a person certified as such under new paragraph 9A(2)(a) of Schedule 1 to the Act.

8.       The term “retires” is defined to mean where a Federal Magistrate ceases, otherwise than by death, to hold office.  This covers both resignation and removal by the Parliament under section 72 of the Constitution.

9.       A number of other new terms are defined by reference to definitions in other new provisions added by the Bill.  Those definitions are each dealt with under the relevant new provision below.

Item 10

10.     Item 10 inserts new section 5A of the Act.  Section 5A assists with the definition of “prior judicial service” by making it clear that where a person held office as a Federal Magistrate on more than one occasion any service before the person’s most recent appointment falls within the definition.  This ensures that, if the person becomes a retired disabled Federal Magistrate, pension payable under new clause 9B of Schedule 1 to the Act is not reduced if the person drew on their Commonwealth superannuation contributions from their earlier service while receiving the pension.  This is consistent with the objective of paying the disability pension to age 65 and providing Commonwealth superannuation support for the person as if he or she had worked to age 65. 

Item 11

11.     Item 11 inserts a heading before clause 1 of Schedule 1 to the Act.  The heading is included as part of introducing a structural framework to the Schedule.  The heading will create a new Part 1 of the Schedule and cover existing clauses 1-3, which deal with the appointment of Federal Magistrates.

Item 12

12.     Item 12 inserts new headings after clause 3 of Schedule 1 to the Act.  The new headings will create both a new Part 2 of the Schedule covering Federal Magistrates’ terms and conditions and new Division 1 of that Part dealing with the terms and conditions of serving Magistrates.

Item 13

13.     Item 13 inserts new Division 2 of Part 2 into Schedule 1 to the Act to provide disability and death entitlements for Federal Magistrates.

Clause 9A

14.     Clause 9A allows the Minister to certify that a Federal Magistrate who retires before attaining age 65 is a retired disabled Federal Magistrate.  The Minister can only so certify following a request to do so and if he or she is satisfied that the retirement was due to permanent disability or infirmity.  Where a retired disabled Federal Magistrate was incapacitated to the extent that he or she was unable to make such a request, the request could be made by another person. 

15.     The Administrative Appeals Tribunal has jurisdiction to review a decision by the Minister to refuse to certify that a person is a retired disabled Federal Magistrate.

Clause 9B

16.     Clause 9B provides that a retired disabled Federal Magistrate is entitled to a pension until he or she attains age 65 or dies, whichever happens first.  The pension is 60 per cent of the salary the person would have received if he or she had not retired.  The salary on which the pension is based is defined to be the annual rate of remuneration (ie salary and allowances) set by the Remuneration Tribunal but excluding any allowances that can be taken in lieu of other entitlements, such as for vehicle entitlements.  This ensures any such allowances are not pensionable.

17.     The pension is reduced by the amount of any pension or retiring allowance payable to the retired disabled Federal Magistrate out of money provided (in full or in part) by the Commonwealth, a State or a Territory and which was payable by reason of prior judicial service.

18.     The pension is not reduced if the person draws on his or her Commonwealth contributed superannuation while the pension is being paid.  This is consistent with the objective of paying the disability pension to age 65 and providing Commonwealth superannuation support for the person as if he or she had worked to age 65.  The fact that superannuation is drawn down would merely reflect a decision by the person to access his or her superannuation sooner rather than later.

19.     Subclause 9B(6) deems pension payable to a retired disabled Federal Magistrate to be pension payable under a superannuation scheme for the purposes of Division 3 of Part II of the Safety, Rehabilitation and Compensation Act 1988 .  That Division provides for workers’ compensation payments for injuries resulting in incapacity for work.  Any such payments are reduced by pension payments from a Commonwealth superannuation scheme.

Clause 9C

20.     Clause 9C provides that a retired disabled Federal Magistrate is also entitled to Commonwealth superannuation contributions until he or she attains age 65 or dies, whichever happens first.  Any such contributions would be payable as if the person had not retired.  Federal Magistrates are currently entitled, by a determination made by the Governor-General under existing subclause 8(1), to a superannuation contribution by the Commonwealth of an amount equal to 13.1% of salary to a complying superannuation fund or a retirement savings account.

Clause 9D

21.     Clause 9D provides death benefits in respect of a Federal Magistrate, or a retired disabled Federal Magistrate, who dies before attaining age 65 where the person leaves one or more eligible spouses or eligible children.  Where there is more than one beneficiary, the Minister is to apportion the death benefit having regard to the respective circumstances of each beneficiary.

22.     The amount of a death benefit payable in respect of a Federal Magistrate or a retired disabled Federal Magistrate is equivalent to the amount of superannuation the Commonwealth would have contributed for the person to age 65 if the person had neither died nor retired before attaining that age, calculated from the date of death and on the basis of the amount of superannuation contributions payable for the person at that date.

23.     Where a payment is payable to an eligible child, the Minister can be requested to direct that some of all of the payment be paid to a specified person for the benefit of the child.  This would allow, for example, the Minister to direct that an amount payable to an eligible child be paid to the deceased Magistrate’s former spouse, with whom the eligible child lives, for the benefit of the child.  The Minister can alternatively direct that the payment be spent in a specified manner for the benefit of the child.

24.     The Administrative Appeals Tribunal has jurisdiction to review a decision by the Minister:

·          Apportioning a death benefit payment where there is more than one beneficiary.

·          Directing that a death benefit payment payable to an eligible child be paid instead to a specified person, or be spent in a specified manner, for the child’s benefit.

Clause 9E

25.     Clause 9E defines certain relationships for the purpose of establishing status as a beneficiary for a death benefit payment.  These definitions, and that included by clause 9F, are generally consistent with the definitions used in legislation establishing Commonwealth superannuation and pension schemes, including those contained in the Judges’ Pensions Act 1968 .

26.     A person is an “eligible spouse” of a Federal Magistrate, or a retired disabled Federal Magistrate, who dies if any of the following three circumstances apply:

·          The person had a marital relationship with the Federal Magistrate at the time of the Magistrate’s death.

·          The person had a marital relationship with the retired disabled Federal Magistrate at the time of the Magistrate’s death and that relationship began before the Magistrate (i) retired or (ii) attained age 60.

·          The person had previously had a marital relationship with the Federal Magistrate or the retired disabled Federal Magistrate, as the case may be, and did not, at the time of the Magistrate’s death, have such a relationship but was legally married to the Magistrate and was, in the Minister’s opinion, wholly or substantially dependent on the Magistrate.  Where the marital relationship of a retired disabled Federal Magistrate began after the Magistrate had retired, the relationship has to have begun before the Magistrate attained age 60.

27.     A person has a “marital relationship” with another person at a particular time if they have been living as husband and wife:

·          for a continuous period of at least three years up to that time, or

·          for a continuous period of less than three years up to that time and the Minister, having regard to any relevant evidence, is of the opinion that they ordinarily lived with each other as husband and wife on a permanent and bona fide domestic basis at that time,

whether or not they are legally married.

28.     Relevant evidence for the Minister in making a decision whether a person ordinarily lived with another person as husband and wife on a permanent and bona fide domestic basis at a particular time would include evidence:

·          That the person was wholly or substantially dependent on the other person at the time.

·          That they were legally married to each other at the time.

·          That they had a child or had adopted a child during their relationship.

·          That they jointly owned a home which was their usual residence.

29.     The Administrative Appeals Tribunal has jurisdiction to review a decision by the Minister:

·          Whether a person was wholly or substantially dependent on a Magistrate. 

·          Whether a Magistrate and another person ordinarily lived with each other as husband and wife on a permanent and bona fide domestic basis at a particular time.

Clause 9F

30.     Clause 9F defines “eligible child” for the purpose of establishing status as a beneficiary for a death benefit payment. 

31.     A person is an eligible child of a Federal Magistrate or of a retired Federal Magistrate if the person:

·          is under 16 years of age, or under 25 years of age and in full-time education, and

·          either is a child or adopted child of the Magistrate or, in the Minister’s opinion, was or would have been wholly or substantially dependent on the Magistrate.

32.     The Administrative Appeals Tribunal has jurisdiction to review a decision by the Minister whether a person was or would have been wholly or substantially dependent on the Magistrate.

Clause 9G

33.     Clause 9G establishes a special appropriation for:

·          Pensions payable to retired disabled Federal Magistrates under clause 9B.

·          Superannuation contributions payable for retired disabled Federal Magistrates under clause 9C.

·          Death benefits payable under clause 9D.

34.     The establishment of a special appropriation is necessary as it is not possible to predict when such benefits will need to be paid.

Reorganisation of existing provisions

35.     Item 13 also reorganises certain existing provisions in Schedule 1 to the Act in line with the introduction of a structural framework in the Schedule.  A new heading introduces new Division 3 of Part 2 of Schedule 1, dealing with the protection of Federal Magistrates’ remuneration from reduction.

36.     Clause 9H replicates existing clause 11 which, consistent with paragraph 72(iii) of the Constitution, prohibits a Federal Magistrate’s remuneration being diminished while in office.  Clause 11 is repealed by Item 15.

Item 14

37.     Item 14 introduces a new heading establishing Part 3 of Schedule 1, which deals with the appointment of an acting Chief Federal Magistrate.  The heading will appear before existing clause 10, which allows the Minister to appoint an acting Chief Federal Magistrate in certain circumstances.

Item 15

38.     Item 15 repeals existing clause 11, protecting Federal Magistrates’ remuneration from reduction, as part of the reorganisation of existing provisions within the new structural framework.  This protection is instead in new clause 9H.

Item 16

39.     Item 16 provides that the amendments to the Act only apply to persons who are Federal Magistrates at the time the amendments commence or are appointed after that time.