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Wednesday, 16 October 1996
Page: 4209

Senator CAMPBELL (Parliamentary Secretary to the Minister for the Environment and Parliamentary Secretary to the Minister for Sport, Territories and Local Government)(9.42 a.m.) —I table the explanatory memorandum relating to this bill, and move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard .

Leave granted.

The speech read as follows—

This bill contains several important measures announced in the 1996 Budget for the social security portfolio.

Madam President, in most cases, single people who share accommodation face lower costs through economies of scale, compared with the costs of living alone. The Government has decided to set a new maximum rate of rent assistance for single people who share accommodation from 1 July 1997. The new maximum rate for single sharers will be two-thirds of the maximum rate for singles living independently.

However, a number of groups will be exempt from the new rate. These groups comprise the following:

single people with dependent children;

boarders and lodgers;

nursing home residents; and

people who live alone in caravans, mobile homes or vessels.

In certain situations, people who live only with their non-dependent children will also be excluded.

Madam President, the second measure contained in the bill deals with the treatment of assets held in superannuation and rollover funds.

Before March 1993, compulsorily preserved superannuation and rollover assets were exempt from the social security income and assets tests until age pension age. From March 1993, all superannuation benefits held in superannuation or rollover funds have been exempted from these tests until age pension age. This initiative involved estimated additional outlays of $4.1m in 1992-93, increasing to $17.1m in 1995-96.

Given that superannuation savings are generally not subject to compulsory preservation after a person reaches the age of 55 and retires, people in these circumstances (including people who may not wish to retire but who have poor prospects of returning to work) can access their superannuation savings if they choose to do so. Consistent with the treatment of other savings, the Government considers that a person's superannuation savings should be taken into account in working out how much income support can be paid.

Accordingly, from 20 September 1997, the assets test exemption of assets held in superannuation and rollover funds by social security pensioners and allowees under age pension age will be removed for people aged between 55 and age pension age after 39 weeks on income support since turning 55. For income test purposes, affected customers' superannuation and rollover assets will be added to their other financial assets and assessed under extended deeming rules.

The anticipated savings from this measure are much greater than the estimated costs of the 1993 initiative. One reason why the latter estimated costs are significantly smaller is because they reflected only the additional costs of exempting non-compulsorily preserved superannuation and rollover assets from the social security assets and income tests until age pension age. However, a significant reason for the difference is because of the extent to which customers who are effectively retired, invested in superannuation and rollover funds as a means of avoiding the operation of the assets and income tests.

Neither the assets nor income test treatment of annuities and pensions, including allocated annuities and pensions, will change. These products will continue to be assessed under existing rules. This situation is, however, presently under review.

Madam President, the Government is committed to ensuring that social security customers receive their rightful entitlement. At the same time, the Government considers that the Australian taxpayer has a right to expect that the Government will do all it can to minimise the scope for overpayments.

Overpayments often arise during holiday periods such as Easter when social security allowance payments are programmed in advance to be paid automatically on predetermined days that are earlier than usual if the customer's normal payday falls on a holiday. This can result in overpayments for the holiday period, some of which are not recoverable.

To that end, the third measure contained in the bill provides for a modified application form for certain social security and youth training allowances to be submitted before payment. The modified form will require a declaration of any changes anticipated for the remainder of the payment period. If any overpayments arise for the payment period, they will be recoverable.

I commend the bill to the Senate.

Ordered that further consideration of the second reading of this bill be adjourned until the first day of sitting in 1997, in accordance with the order agreed to on 29 November 1994.