2013-2014

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

SOCIAL SERVICES AND OTHER LEGISLATION AMENDMENT

(SENIORS SUPPLEMENT CESSATION) BILL 2014

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by the authority of the

Minister for Social Services, the Hon Kevin Andrews MP)

 

SOCIAL SERVICES AND OTHER LEGISLATION AMENDMENT

(SENIORS SUPPLEMENT CESSATION) BILL 2014

 

 

OUTLINE

 

This Bill will reintroduce the following measure, originally introduced as Schedule 1 to the Social Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014:

·          from 20 September 2014, cease payment of the seniors supplement for holders of the Commonwealth Seniors Health Card or the Veterans’ Affairs Gold Card.

 

Financial impact statement

The indicative financial impact of the measure over the forward estimates is a saving of $999.4 million .

 

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

The statement of compatibility with human rights appears at the end of this explanatory memorandum.

 

 

SOCIAL SERVICES AND OTHER LEGISLATION AMENDMENT

(SENIORS SUPPLEMENT CESSATION) BILL 2014

 

 

NOTES ON CLAUSES

Abbreviations used in this explanatory memorandum

• Military Rehabilitation and Compensation Act means the Military Rehabilitation and Compensation Act 2004
• Social Security Act means the Social Security Act 1991
• Social Security Administration Act means the Social Security (Administration) Act 1999
• Veterans’ Entitlements Act means the Veterans’ Entitlements Act 1986

 

Clause 1 sets out how the new Act is to be cited - that is, as the Social Services and Other Legislation Amendment (Seniors Supplement Cessation) Act 2014.

Clause 2 provides a table setting out the commencement dates of the various sections in, and the Schedule to, the new Act.

Clause 3 provides that legislation that is specified in a Schedule is amended or repealed as set out in that Schedule.

 

Schedule 1 - Energy supplement replacing seniors supplement

 

 

Summary

From 20 September 2014, this Schedule will cease payment of the seniors supplement for holders of the Commonwealth Seniors Health Card or the Veterans’ Affairs Gold Card.

Background

Under this measure, the seniors supplement will be abolished for holders of the Commonwealth Seniors Health Card.  Veterans who hold a Commonwealth Seniors Health Card or Gold Card would also no longer receive the seniors supplement.  Commonwealth Seniors Health Cardholders will continue to be paid the clean energy supplement, renamed the energy supplement by the Social Services and Other Legislation Amendment (2014 Budget Measures No. 6) Bill 2014.  Cardholders will receive their last quarterly seniors supplement payment in September 2014.

Under the Social Security Act, qualification for the seniors supplement is currently provided by Part 2.25B.  The Veterans’ Entitlements Act provisions are in Part VIIAD.  The supplement is payable quarterly, based upon accrued days for which the person qualified for the supplement during the quarter ending on the test day.  The seniors supplement test days are 20 March, 20 June, 20 September and 20 December.  Qualification is based upon the person being the holder of a seniors health card or being an eligible Gold Cardholder under the Veterans’ Entitlements Act.

Clean energy supplement is currently added to the rate of seniors supplement.  As the result of these amendments, energy supplement under Part 2.25B of the Social Security Act or Part VIIAD of the Veterans’ Entitlements Act will become payable to people who are seniors health cardholders or eligible Gold Cardholders as a free-standing payment. 

The amendments made by this Schedule commence on 20 September 2014, although the amendments will generally only affect payment of the supplement from 20 December 2014, which marks the next relevant quarter.  No person’s interests will be adversely affected because of the apparent retrospective commencement of Schedule 1, noting that a transitional provision will prevent any debts arising if seniors supplement is paid on or after 20 September 2014 but before passage of the Bill.

Explanation of the changes

Part 1 - Main amendments

Amendments to the Social Security Act

Items 1 to 6 are consequential to the main measure, and omit references to seniors supplement, substituting reference to energy supplement where appropriate.

Item 7 repeals Part 2.25B, which provides for qualification, payability and rate of seniors supplement.  It then substitutes new Part 2.25B, providing for the qualification, payability and rate of energy supplement, representing the former rate of clean energy supplement which was added to seniors supplement.  The new sections of new Part 2.25B mirror the sections and effect of repealed Part 2.25B.  However, substituted section 1061UB, providing for the rate of energy supplement in dollar terms, no longer includes provisions rounding the rate generated per instalment to a multiple of $2.60.  This is because an instalment of energy supplement will be rounded by section 54 of the Social Security Administration Act, providing for rounding to the nearest cent, or up to $1.00 if the amount would otherwise be less than $1.00.

Items 8 and 9 are consequential to the main measure, and remove references to seniors supplement.

Amendments to the Social Security Administration Act

Items 10 to 24 substitute reference to energy supplement for the existing references to seniors supplement, to apply provisions previously applying to seniors supplement to energy supplement.  Energy supplement will be generally payable as a rate component of a range of social security payments, as the result of amendments in the Social Services and Other Legislation Amendment (2014 Budget Measures No. 6) Bill 2014.  Rules relating to energy supplement under Part 2.25B of the Social Security Act will at times differ from rules relating to energy supplement more generally, because energy supplement under Part 2.25B of the Social Security Act is a free-standing payment.  Because of this, in some cases it is made clear that the type of energy supplement to which the provision will apply is energy supplement under Part 2.25B of the Social Security Act.

Item 25 sets out saving and transitional provisions.  Subitem 25(1) relates to the application of paragraph 916D(3)(c), amended by item 3 above to omit the requirement that a person not have received seniors supplement in order to qualify for an essential medical equipment payment.  Qualification for the essential medical equipment payment is based upon a person’s circumstances during a past income year.  In order to maintain qualification for years after commencement, which will look at a person’s circumstances during periods prior to commencement, reference to the energy supplement is taken to include reference to the seniors supplement.

Subitem 25(2) maintains the operation of former Part 2.25B of the Social Security Act and section 48B of the Social Security Administration Act in relation to seniors supplement for instalment periods ending before the commencement of these measures.

Subitem 25(3) provides for an election, in force prior to commencement of these amendments and referred to in subparagraph 1061UA(2)(a)(i) of the Social Security Act, to remain in force.  This means that, where a seniors health cardholder had elected not to be covered by former Part 2.25B and not receive seniors supplement, that election will continue to apply to new energy supplement without requiring further action on the part of the card holder.

Amendments to the Veterans’ Entitlements Act

Items 26 to 34 are incidental to the main change substituting or omitting current references to seniors supplement with references to energy supplement.

Items 35 to 48 amend, repeal and replace various provisions of Part VIIAD, which provides for qualification, payability and rate of seniors supplement.  The revised Part VIIAD provides for the qualification, payability and rate of energy supplement, representing the former rate of clean energy supplement which was added to seniors supplement. 

However, substituted section 118PB, providing for the rate of energy supplement, no longer includes provisions rounding the rate generated to a multiple of $2.60.  This is because an instalment of energy supplement will be rounded by section 58A of the Veterans’ Entitlements Act, providing for rounding to the nearest cent.

Item 49 makes consequential amendments to subsections 122A(1A) and (1C) to replace references to seniors supplement with references to energy supplement.

Item 50 makes saving and transitional arrangements for these amendments.  Subitem 50(1) provides that, despite the amendments to Part VIIAD of the Veterans’ Entitlements Act, the provisions remain in force in relation to an instalment period ending before the amended provisions commenced.  This will mean that any seniors supplement in relation to the quarters prior to the 20 September 2014 quarter which have not been paid remain payable despite the amendments.

Subitem 50(2) provides for an election, in force prior to commencement of these amendments and referred to in subparagraph 118PA(2)(a)(i) of the Veterans’ Entitlements Act, to remain in force.  This means that where a cardholder had elected not to be covered under Part VIIAD and not receive seniors supplement, that election will continue to apply to new energy supplement without requiring further action on the part of the cardholder.

Part 2 - Consequential amendments

Amendments to the Income Tax Assessment Act 1997

Items 51 to 54 make consequential amendments to sections 52-10, 52-40, 52-65 and 52-75 of the Income Tax Assessment Act 1997 to replace references to seniors supplement payable under Part 2.25B of the Social Security Act or Part VIIAD of the Veterans’ Entitlements Act with references to payment of energy supplement under the new Parts.

Item 55 is a saving provision applicable to the amendments to sections 52-10 and 52-65 of the Income Tax Assessment Act.  It provides that payments of seniors supplement made before, on or after the commencement of the amendments will continue to be tax exempt for the purposes of the Income Tax Assessment Act 1997 .

Amendments to the Military Rehabilitation and Compensation Act

Items 56 and 57 make consequential amendments to repeal and substitute paragraphs 222(5)(d) and 246(4)(d) of the Military Rehabilitation and Compensation Act to replace references to payment of seniors supplement under Part 2.25B of the Social Security Act and Part VIIAD of the Veterans’ Entitlements Act with references to payments of energy supplement under the new Parts.

Part 3 - Transitional provisions

Item 58 inserts a transitional provision, which provides that, if a person has been paid seniors supplement in relation to a day on or after 20 September and before 20 December 2014, then the amendments made by this Schedule do not apply in relation to the person and that day.  This ensures that any person who is paid seniors supplement prior to passage of the Bill remains qualified for the amount, such that no debt of the amount paid is raised.  It also ensures the person does not qualify for energy supplement in respect of the days for which they have already been paid seniors supplement.

 

 

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

Prepared in accordance with Part 3 of the

Human Rights (Parliamentary Scrutiny) Act 2011

SOCIAL SERVICES AND OTHER LEGISLATION AMENDMENT

(SENIORS SUPPLEMENT CESSATION) BILL 2014

 

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview of the Bill

This Bill abolishes the seniors supplement for holders of the Commonwealth Seniors Health Card.  Veterans who hold a Commonwealth Seniors Health Card or Gold Card will also no longer receive the seniors supplement.  Cardholders will continue to be paid the clean energy supplement, renamed the energy supplement by the Social Services and Other Legislation Amendment (2014 Budget Measures No. 6) Bill 2014.  Cardholders will receive their last quarterly seniors supplement payment in September 2014.

The Bill will commence on 20 September 2014, although it will generally only affect payment of the seniors supplement from 20 December 2014, which marks the next relevant quarter.  No person’s interests will be adversely affected because of the apparent retrospective commencement of the Bill, noting that a transitional provision will prevent any debts arising if seniors supplement is paid on or after 20 September 2014 but before passage of the Bill.

Human Rights implications

Right to social security

This Bill removes assistance from those with higher means, and is consistent with a well-targeted income support system which is targeted at those in most financial need.

The Bill engages the right to social security as recognised in Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR).  Eligible seniors will be paid the energy supplement to assist with them with the cost of general living expenses. 

The Bill also engages Article 11 of ICESCR, which provides for the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.  Holders of a senior’s health card are entitled to a range of concessions including concessions on pharmaceutical and health services.

Conclusion

The Bill is compatible with human rights because it maintains the right to social security and health.  The Bill is compatible with human rights.

Minister for Social Services, the Hon Kevin Andrews MP