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Social Services Legislation Amendment (Portability Extensions) Bill 2021



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ISSN 1328-8091

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BILLS DIGEST NO. 69, 2020-21 16 JUNE 2021

Social Services Legislation Amendment (Portability Extensions) Bill 2021 Michael Klapdor Social Policy Section

Contents

Purpose of the Bill ........................................................... 3

Background ..................................................................... 3

Portability .................................................................... 3

COVID-19 response measures ..................................... 4

Portability extensions for other payments ................. 5 Bill before the Senate will remove pension supplement after six weeks overseas ......................... 6

Committee consideration ................................................ 6

Senate Community Affairs Legislation Committee ..... 6 Senate Standing Committee for the Scrutiny of Bills .............................................................................. 7

Policy position of non-government parties/independents...................................................... 7

Position of major interest groups..................................... 7

Financial implications ...................................................... 7

Statement of Compatibility with Human Rights................ 7

Parliamentary Joint Committee on Human Rights ..... 7 Key issues and provisions ................................................ 7

Amendments provide options for pensioners unable to return to Australia ...................................... 7

New public health crisis circumstance only applies to certain pensioners ...................................... 7

Unclear how many will benefit ................................... 8

Key provisions ............................................................. 8

Social Security Act 1991 ............................................ 8

Social Security (Administration) Act 1999 ................. 9 Social Services and Other Legislation Amendment Act 2014 ............................................. 10

Application provisions ............................................. 10

Date introduced: 27 May 2021

House: House of Representatives

Portfolio: Social Services

Commencement: 1 July 2021

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at June 2021.

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Social Services Legislation Amendment (Portability Extensions) Bill 2021 2

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Social Services Legislation Amendment (Portability Extensions) Bill 2021 3

Purpose of the Bill The purpose of the Social Services Legislation Amendment (Portability Extensions) Bill 2021 (the Bill) is to amend the Social Security Act 1991 (the SS Act), the Social Security (Administration) Act 1999 (the SS Admin Act) and the Social Services and Other Legislation Amendment Act 2014 (the SS Act 2014) to introduce a permanent discretionary power to provide extensions to portability arrangements for certain pensioners who are temporarily absent from their country of residence and unable to return home within 26 weeks for reasons such as serious illness, death of a family member, natural disaster or a public health crisis. Portability refers to a person's continuing entitlement to an Australian social security payment while outside Australia.

As part of its COVID-19 response, the Australian Government introduced temporary and discretionary portability extensions to pensioners outside Australia who were unable to return within 26 weeks of their departure.1 Some pensioner’s payment rates can be reduced after 26 weeks overseas. Extensions were also granted to some pensioners who normally live overseas but were in Australia and unable to depart because of the COVID-19 pandemic. Some pensioners in this category were grandfathered from previous portability changes but were at risk of losing their grandfathered status by being in Australia for a continuous period of 26 weeks or more. These portability extensions were made via legislative instruments and, later, via amendments to the SS Act allowing for extensions to be made until 30 June 2021.2

The Bill proposes to introduce a permanent discretionary power within the SS Act allowing for pension portability arrangements to be extended in certain circumstances. Similar provisions already exist allowing for the extension of portability periods for other payment categories in certain circumstances.

Background

Portability The portability conditions for social security payments vary depending on the payment.3 Some social security payments have limited portability and can only be received for short periods (usually up to six weeks) while a person is temporarily overseas and some may only provide portability in special circumstances.4 Other payments, such as the Age Pension, have unlimited portability and a person can continue to receive the Age Pension while living permanently outside Australia. The Disability Support Pension has different portability conditions depending on an individual’s circumstances:

• people who are permanently and severely impaired and have no future work capacity may be eligible for unlimited portability

• people with terminal illnesses who return to their country of origin to be near or with a family member may be eligible for unlimited portability or

1. Social Security (Coronavirus Economic Response—2020 Measures No. 10) Determination 2020; Social Security (Coronavirus Economic Response—2020 Measures No. 16) Determination 2020; Social Services Legislation Amendment (Strengthening Income Support) Act 2021.

2. Ibid.

3. DSS, ‘7.1.2.10 General rules of portability’, Social security guide, DSS website, last reviewed 20 March 2020. 4. DSS, ‘7.1.2.20 Application of portability rules (portability table)’, Social security guide, DSS website, last reviewed 20 March 2020.

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Social Services Legislation Amendment (Portability Extensions) Bill 2021 4

• other DSP recipients generally have a portability period of up to four weeks in any 12-month period (four-week periods separate from this general period can be granted for specific purposes such as medical treatment or family crises).5

While a pensioner may be eligible to receive their payment under the portability rules, their pension rate can be affected after a certain period of time outside of Australia depending on the time they spent residing in Australia during their working life (between the age of 16 and Age Pension age).6 This period of residence in Australia is known as their Australian Working Life Residence (AWLR). Those with less than 35 years AWLR will, after 26 weeks overseas, have their payment reduced to a rate equivalent to the proportion of 35 years their AWLR represents.7 For example, a person with 16 years of AWLR will receive around 46 per cent of the rate otherwise payable if they resided in Australia. Those with 35 years or more AWLR residence will not have their payment reduced.

Some Disability Support Pension recipients with unlimited portability may be exempt from the AWLR rate reduction.8

Some supplementary payments, such as Rent Assistance, are not payable to pensioners with unlimited portability after 26 weeks of a temporary absence from Australia.9

COVID-19 response measures In response to COVID-19-related overseas travel restrictions, the Australian Government provided extended portability periods to those pensioners with unlimited portability who were unable to return to or depart from Australia within 26 weeks.

For those pensioners unable to return to Australia, the extended period meant that their payment rate would not be affected by the AWLR proportionality rules, or the rules around payment of certain supplements, while they were unable to return home.

Some of the pensioners who faced issues with being unable to depart Australia are part of groups grandfathered from previous changes to portability (and who remain covered by previous portability rules only if they have not returned to Australia for periods of 26 weeks or more).10 One group is grandfathered from changes commencing 20 September 2000, including some with exemptions from the AWLR proportionality rules and some allowed to used their partner’s AWLR in calculating the proportional rate; and one group is grandfathered from changes commencing on 1 July 2014 that increased the AWLR period from 25 years to 35 years.11 These groups only remain covered by the grandfathering provisions if they have not returned to Australia for a continuous period of 26 weeks or more.12

The COVID-19 response measures did not change the allowable portability period for these pensioners, but the period they could remain overseas without their payment rate being affected

5. Ibid.

6. The Australian Age Pension age began increasing from 65 in July 2017 and will continue to increase by six months every two years until it reaches 67 in July 2023: Services Australia (SA), ‘Age Pension: Who can get it’, SA website, updated 4 November 2019.

7. DSS, ‘7.2.2.10 Calculating proportional portability for non-agreement pensions’, Social security guide, DSS website, last reviewed 20 March 2020. 8. Ibid.

9. DSS, ‘7.1.2.20 Application of portability rules (portability table)’, op. cit. 10. Changes made by the Social Security and Veterans’ Entitlements Legislation Amendment (Miscellaneous Matters) Act 2000 and the Social Services and Other Legislation Amendment Act 2014. 11. DSS, ‘7.1.1.10 Overview of portability legislation’, Social security guide, DSS website, last reviewed 20 March 2020. 12. Clause 128 of Schedule 1A, Social Security Act 1991; items 6 and 14, Social Services and Other Legislation Amendment Act

2014.

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Social Services Legislation Amendment (Portability Extensions) Bill 2021 5

by the AWLR rules or the period they could remain in Australia without losing their grandfathered status.

Changes were made to the portability provisions in the SS Act for those outside Australia unable to return and those in Australia unable to depart for the period 10 June 2020 to 31 December 2020 via the Social Security (Coronavirus Economic Response—2020 Measures No. 10) Determination 2020. These changes were extended until 31 March 2021 via the Social Security (Coronavirus Economic Response—2020 Measures No. 16) Determination 2020. Both instruments were made under temporary powers provided to the Minister to amend certain provisions of the SS Act via determinations—first by item 40A of Schedule 11 to the Coronavirus Economic Response Package Omnibus Act 2020, and later by Part 4 of Schedule 1 to the Social Services and Other Legislation Amendment (Extension of Coronavirus Support) Act 2020.13

Part 5 of the Social Services Legislation Amendment (Strengthening Income Support) Act 2021 amended the SS Act to allow for extensions to pension portability periods, under similar circumstances to those prescribed in the two determinations, to be made until 30 June 2021. The amendments enabled the Secretary of the Department of Social Services to determine a different portability period where the pensioner’s relevant 26-week period ends on or after 11 March 2020 and:

• the Secretary is satisfied the person’s absence from Australia is temporary and

• the Secretary is satisfied the person in unable to return to Australia before the end of the 26-week period because of the impact of COVID-19.14

The different period set by the Secretary cannot end after 30 June 2021.

Similar amendments were made for those in Australia at risk of losing their grandfathered status. These amendments allowed the Secretary to determine a different period the person can remain in Australia before they lose their grandfathered status. The Secretary must be satisfied of the same conditions listed above and cannot set a period that ends after 30 June 2021.15

Portability extensions for other payments Payment recipients subject to limited portability periods (such as Carer Payment and Parenting Payment) and those eligible for limited portability in specific circumstances (such as JobSeeker Payment and Youth Allowance) may have their portability period extended in certain circumstances. Section 1218C of the SS Act allows for discretionary extensions to be granted to a person’s portability period in specific circumstances:

• the person or a family member is:

- involved in a serious accident - seriously ill - hospitalised or - the victim of robbery or serious crime • the person is:

- involved in custody proceedings

13. For information on these temporary instrument-making powers, see M Klapdor, Social Services and Other Legislation Amendment (Extension of Coronavirus Support) Bill 2020, Bills digest, 32, 2020-21, Parliamentary Library, Canberra, 2020, pp. 10, 24-25.

14. The Secretary’s powers to make such determinations in relation to individual payment recipients is delegated to Services Australia. 15. D Arthur and M Klapdor, Social Services Legislation Amendment (Strengthening Income Support) Bill 2021, Bills digest, 55, 2020-21, Parliamentary Library, Canberra, 2021, pp. 24-25.

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- required to remain overseas in connection with criminal proceedings (other than in respect of a crime alleged to have been committed by the person) - unable to return because of war, industrial action, or social or political unrest in which the payment recipient is not willingly participating or - unable to return because of a natural disaster • if a family member dies.16

The event preventing the person’s return must be considered extreme or an emergency and must have occurred/begin during the person’s allowable portability period.17

The discretion to extend a person’s portability period belongs to the Secretary of the Department of Social Services but, according to the policy guidelines, is delegated to specific staff in Services Australia.18

Separate provisions allow for portability extensions to those receiving financial assistance under the Medical Treatment Overseas Program, including those accompanying someone receiving assistance under this program.19

Bill before the Senate will remove pension supplement after six weeks overseas The Social Services Legislation Amendment (Payment Integrity) Bill 2019, currently before the Senate, also includes a proposed change to portability arrangements.20 The Bill proposes to stop payment of the pension supplement (a payment provided in addition to certain income support payments such as the Age Pension) after six weeks of a temporary overseas absence, or immediately for permanent departures. Currently, the pension supplement can be paid for temporary absences longer than six weeks, and for permanent departures, but at a reduced rate known as the basic amount.21

Committee consideration

Senate Community Affairs Legislation Committee On 13 May 2021, the Senate passed a motion referring certain time critical Bills (which includes this Bill) to the relevant committee for inquiry and report by 11 June 2021.22

On 10 June 2021 the Senate Community Affairs Legislation Committee reported that by unanimous decision it had determined there were no substantive matters in the Bill that required examination.23

16. Section 1218C, Social Security Act 1991. 17. DSS, ‘7.1.2.10 General rules of portability’, op. cit. 18. Ibid. 19. Section 1218D, Social Security Act 1991; Department of Health (DoH), ‘Medical Treatment Overseas Program’, DoH website,

last updated 30 September 2020. 20. Parliament of Australia, ‘Social Services Legislation Amendment (Payment Integrity) Bill 2019 homepage’, Australian Parliament website. 21. See M Klapdor, Social Services Legislation Amendment (Payment Integrity) Bill 2019, Bills digest, 45, 2019-20, Parliamentary

Library, Canberra, 2019. 22. Australia, Senate, Journals, 99, 13 May 2021, p. 3475. 23. Senate Community Affairs Legislation Committee, Consideration of time critical Bills, Social Services Legislation Amendment

(Portability Extensions) Bill 2021, The Senate, Canberra, 10 June 2021.

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Senate Standing Committee for the Scrutiny of Bills At the time of writing, the Senate Standing Committee for the Scrutiny of Bills had not considered the Bill.24

Policy position of non-government parties/independents At the time of writing, the non-government parties and independents had not commented on the Bill.

Position of major interest groups At the time of writing, key stakeholders had not commented on the Bill.

Financial implications According to the Explanatory Memorandum, the measures in the Bill are estimated to cost $5.0 million over the forward estimates period.25

Statement of Compatibility with Human Rights As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible because it promotes the protection of human rights for pensioners.26

Parliamentary Joint Committee on Human Rights At the time of writing, the Parliamentary Joint Committee on Human Rights had not considered the Bill.27

Key issues and provisions

Amendments provide options for pensioners unable to return to Australia The COVID-19 pandemic exposed some of the inflexibilities in social security law in responding to international crises. Special powers had to be granted to the Minister to allow for legislative instruments to address specific problems faced by various payment recipients, including pensioners unable to return home to Australia or to their residence overseas. The proposed amendments ensure Services Australia has much more discretion in dealing with special circumstances—not just pandemics—that affect pensioners’ travel plans, ensuring these payment recipients are not worse-off due to events beyond their control.

New public health crisis circumstance only applies to certain pensioners The proposed circumstances allowing for extensions to the period a pensioner can be overseas before their payment rate is affected by the AWLR proportionality rules, or be in Australia before losing their grandfathered status, are similar to the circumstances in which other payments can have their portability period extended (see ‘Portability extensions for other payments’ section).

24. Senate Standing Committee for the Scrutiny of Bills, Index of Bills considered by the Committee, 12 May 2021. 25. Explanatory Memorandum, Social Services Legislation Amendment (Portability Extensions) Bill 2021, p. 1. 26. The Statement of Compatibility with Human Rights can be found at page 7 of the Explanatory Memorandum to the Bill. 27. Parliamentary Joint Committee on Human Rights, Index of Bills considered by the Committee, 29 April 2021.

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The Bill proposes an additional circumstance: a ‘public health crisis affecting Australia or the country in which the person is located or both’.

This public health crisis circumstance only applies to pensioners with unlimited portability. The Bill does not propose any additions to the circumstances allowing for other payment recipients to have their portability period extended. The Explanatory Memorandum notes that the inclusion of the public health crisis circumstance has been included to cover events such as the current pandemic.28 It is unclear if the pandemic would fit into the existing circumstances for these payments such as a natural disaster or social unrest.

Unclear how many will benefit The Minister’s second reading speech and the Explanatory Memorandum do not give any indication as to how many pensioners are currently unable to return home or leave Australia and will benefit from the proposed amendments.

Key provisions

Social Security Act 1991 Item 1 repeals and substitutes subsections 1216(2) and (3) of the SS Act to specify circumstances where the Secretary of the Department of Social Services can extend the 26-week absence period allowed before certain supplementary payments, including Rent Assistance, are no longer added to a person’s payment rate. The Secretary can determine an alternative absence period. The circumstances allowing for the extension are:

• a serious accident involving the person or a family member of the person

• a serious illness of the person or a family member of the person

• the hospitalisation of the person or a family member of the person

• the death of a family member of the person

• the person’s involvement in custody proceedings in the country in which the person is located

• a legal requirement for the person to remain outside Australia in connection with criminal proceedings (other than criminal proceedings in respect of a crime alleged to have been committed by the person)

• robbery or serious crime committed against the person or a family member of the person

• a natural disaster in the country in which the person is located

• a public health crisis affecting Australia or the country in which the person is located or both

• political or social unrest in the country in which the person is located

• industrial action in the country in which the person is located or

• a war in the country in which the person is located.

The relevant event must have occurred or began during the absence period for the Secretary to determine a longer period. If the relevant event is political or social unrest, industrial action or war, then the payment recipient must not be willingly involved or a willing participant.

Section 1220A of the SS Act sets out the application of the AWLR proportionality rules for Age Pension recipients where they have been continuously absent from Australia for longer than

28. Explanatory Memorandum, op. cit., p. 4.

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26 weeks. Item 2 inserts proposed subsections 1220A(1A)-(1D) which will allow the Secretary to determine a different period from the 26-week period currently specified in paragraph 1220A(1)(a) where the pensioner is unable to return to Australia before the end of the 26-week period because of a certain event. The events are specified in proposed subsection 1220A(1B) and are the same as those listed above (at proposed subsection 1216(3) inserted by item 1), with the same conditions applying.

Item 4 inserts proposed subsections 1220B(1A)-(1D) which provide for extensions to the 26-week temporary absence period before the AWLR proportionality rules are applied to certain Disability Support Pension recipients.

Item 7 inserts proposed subclauses 128(1A)-(1D) to Schedule 1A to allow for those covered by saving/grandfathering provisions protecting them from the portability changes introduced by the Social Security and Veterans’ Entitlements Legislation Amendment (Miscellaneous Matters) Act 2000 to remain in Australia for periods longer than 26 weeks, in certain situations, and remain covered by the saving provisions. The Secretary can determine a different period than 26 weeks where the person is unable to leave Australia due to one of the following events:

• a serious accident involving the person or a family member of the person

• a serious illness of the person or a family member of the person

• the hospitalisation of the person or a family member of the person

• the death of a family member of the person

• the person’s involvement in custody proceedings in Australia

• a legal requirement for the person to remain in Australia in connection with criminal proceedings (other than criminal proceedings in respect of a crime alleged to have been committed by the person)

• robbery or serious crime committed against the person or a family member of the person

• a natural disaster in Australia or

• a public health crisis affecting Australia or the country to which the person intends to return to or both.

The event must have occurred or begun during the period in which the person had returned to Australia.

Social Security (Administration) Act 1999 Item 9 amends the SS Admin Act to insert proposed section 114A. Currently section 114 provides that a favourable determination made by the Secretary of the Department of Social Services (such as a determination extending the period pensioners can be outside Australia before the AWLR proportionality rules apply) can only take effect on or after the day the determination is made, or not earlier than 13 weeks before the day the determination is made.29

The Explanatory Memorandum foreshadows that given the Bill’s commencement date of 1 July 2021, it may not be possible for relevant determinations to be made within the 13-week timeframe to ensure that pensioners’ payment rates remain uninterrupted.30 Proposed section 114A will allow the relevant determinations to take effect retrospectively without any limit on the retrospective application.

29. Section 114 applies to favourable determinations not covered by sections 109, 109A, 110 and 110A of the SS Admin Act. 30. Ibid., p. 5.

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Social Services and Other Legislation Amendment Act 2014 Schedule 4 to the SS Act 2014 sets out amendments to the SS Act with respect to the period of the AWLR used in the calculation of a pensioner’s payment rate under the proportionality rules: the relevant AWLR period was increased from 25 years to 35 years. Some pensioners were saved or grandfathered from this change if they were residing in another country or were outside Australia and have not returned to Australia for a consecutive period longer than 26 weeks since 1 July 2014.

Item 10 amends Schedule 4 of the SS Act 2014 to insert proposed subitems 6(6)-(11) to allow for those covered by saving/grandfathering provisions protecting them from the portability changes set out in items 1-4 of Schedule 4 to remain in Australia for periods longer than 26 weeks, in certain situations, and remain covered by the saving provisions. The Secretary can determine a different period than 26 weeks where the person is unable to leave Australia due to one of the following events:

• a serious accident involving the person or a family member of the person

• a serious illness of the person or a family member of the person

• the hospitalisation of the person or a family member of the person

• the death of a family member of the person

• the person’s involvement in custody proceedings in Australia

• a legal requirement for the person to remain in Australia in connection with criminal proceedings (other than criminal proceedings in respect of a crime alleged to have been committed by the person)

• robbery or serious crime committed against the person or a family member of the person

• a natural disaster in Australia or

• a public health crisis affecting Australia or the country to which the person intends to return to or both.

The Secretary can determine a different period than 26 weeks where the person is unable to leave Australia due to one of the events listed. The event must have occurred or begun during the period in which the person had returned to Australia.

Item 11 inserts similar provisions as item 10 which will apply to those with pensions affected by an international social security agreement who were covered by savings provisions at item 14 of Schedule 4 of the SS Act 2014.

Application provisions Items 12-15 provide that the amendments to sections 1216, 1220A, 1220B and clause 128 of Schedule 1A of the SS Act apply to:

• periods of absence from Australia or return to Australia starting on or after the commencement of the amendments (1 July 2021) or

• periods of absence or return starting before commencement of the amendments, where the person is absent from Australia or in Australia immediately before commencement and:

- the person’s relevant 26-week period had not ended immediately before commencement or - the person had an extended period determined by the Secretary under the COVID-19. The application provisions also provide that where the Secretary has made a determination for a period of absence or return under the temporary COVID-19 arrangements, then references to 26 weeks in the amended sections are taken to be references to the extended period.

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This means the proposed changes can apply to those pensioners who had the relevant portability extended under the COVID-19 arrangements until 30 June 2021 (the maximum extension allowable under the current arrangements). Those already granted an extension under the COVID-19 arrangements can have this period extended under the discretionary powers proposed in the Bill.

Similar application provisions are included in the amendments to SS Act 2014.31

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31. See Items 10 and 11 of the Bill.