2016-2017

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

SOCIAL SERVICES LEGISLATION AMENDMENT

(PAYMENT INTEGRITY) BILL 2017

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (Circulated by the authority of the

Minister for Social Services, the Hon Christian Porter MP)

SOCIAL SERVICES LEGISLATION AMENDMENT

(PAYMENT INTEGRITY) BILL 2017

 

 

OUTLINE

 

This Bill introduces the following measures:

 

• Enhanced residency requirements for pensioners
• Stopping the payment of pension supplement after six weeks overseas
• Taper rate for Part A rate of family tax benefit (Method 2)
• Liquid assets test waiting period

 

Schedule 1 - Enhanced residency requirements for pensioners

 

This measure enhances the residency requirements for the Age Pension (AP) and the Disability Support Pension (DSP) by changing certain timeframes which need to be met before claims will be deemed payable to eligible recipients.

 

Schedule 1 amends the Social Security Act 1991.

 

The amendments made by this schedule strengthen the residence connection required for eligibility to ensure that people have established a significant connection with Australia during their working life or are self-sufficient for a reasonable period of time before qualifying for the AP or DSP.

 

The amendments made by this schedule commence on 1 July 2018 or on the first

1 January or 1 July after the Bill receives Royal Assent in circumstances where the Bill does not receive Royal Assent before 1 July 2018.

 

Schedule 2 - Stopping the payment of pension supplement after six weeks overseas

 

This measure stops the payment of pension supplement after six weeks temporary absence overseas and immediately for permanent departures.

 

Schedule 2 amends the Social Security Act 1991 and the Veterans’ Entitlements Act 1986.

The amendment made by Schedule 2 stops the payment of pension supplement basic amount after six weeks overseas and stops the payment of pension supplement basic amount immediately for permanent departures from Australia. The amendments made in this schedule apply prospectively to all pension recipients overseas before, on or after commencement of the schedule.

The amendments made by this schedule commence on 1 January 2018. However, if the Act receives Royal Assent after 1 January 2018, this schedule will commence on the next 1 April, 1 July, 1 October or 1 January that occurs after Royal Assent.

 

Schedule 3 - Taper rate for Part A rate of family tax benefit (Method 2)

 

This measure aligns the income test taper rates so that all income above the higher income free area is treated equally when calculating an individual’s rate of family tax benefit Part A.

 

Schedule 3 amends the A New Tax System (Family Assistance) Act 1999 .

 

The amendments commence on the first July after the day this Bill receives the Royal Assent (anticipated to be 1 July 2018).

 

Schedule 4 - Liquid assets test waiting period

 

This measure extends the maximum liquid assets waiting period to 26 weeks.

 

Schedule 4 amends the Social Security Act 1991 .

 

The amendments made by Schedule 4 will increase the maximum liquid assets waiting period from 13 weeks to 26 weeks. The new maximum liquid assets waiting period applies to claims for Youth Allowance, Austudy, Newstart Allowance or Sickness Allowance that are made after commencement of the schedule.

 

Schedule 4 commences on 20 September 2018.

 

Financial impact statement

 

MEASURE	FINANCIAL IMPACT OVER THE FORWARD ESTIMATES
Schedule 1- Enhanced residency requirements for pensioners	Savings of $119.1 million
Schedule 2 - Stopping the payment of pension supplement after six weeks overseas	Savings of $150.2 million*
Schedule 3 - Taper rate for Part A rate of family tax benefit (Method 2)	Savings $415.4 million
Schedule 4 - Liquid assets test waiting period	Savings of $138.5 million

 

* Estimation based on Department of Social Services savings only.

 

REGULATION IMPACT STATEMENT

 

The Office of Best Practice Regulation (OBPR) has advised that the changes proposed by this Bill do not appear to have regulatory impact on business, community organisations or individuals.

 

 

 

STATEMENTS OF COMPATIBILITY WITH HUMAN RIGHTS

 

The statements of compatibility with human rights appear at the end of this explanatory memorandum.

 

 

 

SOCIAL SERVICES LEGISLATION AMENDMENT

(PAYMENT INTEGRITY) BILL 2017

 

 

NOTES ON CLAUSES

 

Abbreviations used in this explanatory memorandum

 

• Social Security Act means the Social Security Act 1991

 

• Veterans’ Entitlements Act means the Veterans’ Entitlements Act 1986

 

• Family Assistance Act means the A New Tax System (Family Assistance) Act 1999

 

Clause 1 sets out how the new Act is to be cited - that is, as the Social Services Legislation Amendment (Payment Integrity) Act 2017.

 

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

 

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

Schedule 1 - Enhanced residency requirements for pensioners

 

 

Summary

 

This Schedule amends the Social Security Act to implement a 2017-18 Budget measure to enhance the residency requirements for the Age Pension (AP) and the Disability Support Pension (DSP) by changing certain timeframes which need to be met before claims will be deemed payable to eligible recipients.

 

Background

 

The amendments made by this Schedule strengthen the residence connection required for eligibility to ensure that people have established a significant connection with Australia during their working life or are self-sufficient for a reasonable period of time before qualifying for the AP or DSP.

 

Currently, the residency requirements for eligibility to receive payment are set out in sections 7 (AP and DSP), 43 (AP), 94 and 95 (DSP) of the Social Security Act. Subsection 7(5) requires that in order to satisfy ‘10 years qualifying Australian residence ’, referred to in sections 43, 94 and 95, a person must either have been an Australian resident for a continuous period of at least 10 years or, alternatively, for an aggregate period (comprising separate periods of residency) in excess of 10 years but including a continuous period of at least 5 years within that aggregate.

Sections 43, 94 and 95 each also make provision for a qualifying residence exemption which is defined in subsection 7(6) to include a refugee or former refugee residing in Australia. Current exemptions to eligibility requirements based on residency will continue to apply and the amendments made by this Schedule will not affect existing pensioners, including pensioners who apply after commencement of the new measure where they have previously been in receipt of AP or DSP (for example, a person who re-applies on or after 1 July 2018 subsequent to cancellation of their previous pension at any time, will be subject to the old residency requirements).

 

Amendments made by this Schedule will enhance the current residency requirements and introduce a self-sufficiency test. Under the enhanced residency requirements, at least 5 years of the 10 years continuous Australian residency period must be during a person’s working life (currently between 16 years of age and AP age). Alternatively, where that 5 years working life test is not met then in order to demonstrate self-sufficiency a person would be required to have 10 years continuous Australian residency with greater than 5 years (in aggregate) relating to periods in which a person has not been in receipt of an activity tested income support payment (currently Austudy, Newstart, Youth Allowance and Special Benefit but including any predecessor payments superseded by these).

 

For the purpose of calculating the greater than 5 years not in receipt of an activity tested income support payment period, the amendments made by this Schedule would include any periods in which a person is receiving an activity tested income support payment but is subject to a nil-rate or an assurance of support, as these would be deemed to be periods of self-sufficiency.

 

Otherwise, if a person does not meet the 10 years continuous Australian residency period, with 5 years during that person’s working life, or has not demonstrated self-sufficiency, then at least 15 years of continuous Australian residency will satisfy residency requirements for AP and DSP under the measure implemented by the amendments made by this Schedule.

Access to Special Benefit will remain for those people who experience financial hardship, and existing exemptions will remain, such as for refugees or where a person incurs a continuing inability to work after arrival in Australia for DSP.

 

The amendments made by this Schedule would commence on 1 July 2018 or on the first 1 January or 1 July after the Bill receives Royal Assent in circumstances where the Bill does not receive Royal Assent before 1 July 2018.

 

Explanation of the changes

 

Amendments to the Social Security Act

 

Item 1 repeals and substitutes paragraph 43(1)(a) to remove reference to the existing ‘10 years qualifying Australian residence’ requirement as defined in section 7(5) and replace it with a cross reference to the new section 43A (Qualifying residency requirements) to be inserted by this Schedule.

 

Item 2 repeals Note 1 at the end of subsection 43(1) which referred the reader to ‘qualifying Australian residence’ as defined in subsection 7(5).

 

Item 3 is a consequential amendment which omits Note 2 and substitutes Note in its place.

 

Item 4 inserts a new section 43A (Qualifying residency requirements) at the end of Subdivision A of Division 1 of Part 2.2 to implement the measure in relation to the AP.

 

A person will satisfy the AP residency requirements in sub section 43A(2) if they have been an Australian resident for 10 continuous years, with 5 of those 10 years during a person’s working life between 16 years of age and AP age. Alternatively, sub section 43A(3) provides that if a person has 10 continuous years of Australian residency and greater than 5 years of Australian residency (while aged 16 years or over) not in receipt of an activity tested income support payment then they will meet the residency requirements . Otherwise, paragraph 43A(1)(b) provides that a person would require a period of 15 years continuous Australian residency if they do not satisfy subsection (2) or (3).

 

Subsection 43A(4) provides that a person who receives a specified activity tested income support payment while subject to an assurance of support is taken not to be receiving an activity tested payment for the purpose of calculating the greater than 5 years self-sufficiency period for AP.

 

As a matter of interpretation, a person who receives a specified activity tested income support payment while subject to a nil-rate is taken not to be receiving an activity tested payment for the purpose of calculating the greater than 5 years self-sufficiency period for AP.

 

Item 5 is a technical amendment which omits the word “either” from paragraph 94(1)(e) to correct a grammatical error.

 

Item 6 repeals and substitutes subparagraph 94(1)(e)(ii) to remove reference to the existing ‘10 years qualifying Australian residence’ requirement as defined in subsection 7(5) and replace it with a cross reference to the new section 95A (Qualifying residency requirements) to be inserted by this Schedule.

 

Item 7 is a consequential amendment which omits “, qualifying Australian residence ” from Note 1 in subsection 94(1).

 

Item 8 repeals and substitutes subparagraph 95(1)(c)(ii) to remove reference to the existing ‘10 years qualifying Australian residence’ requirement as defined in subsection 7(5) and replace it with a cross reference to the new section 95A (Qualifying residency requirements) to be inserted by this Schedule.

 

Item 9 is a consequential amendment which omits “and qualifying Australian residence ” from the Note in subsection 95(1).

 

Item 10 inserts a new section 95A (Qualifying residency requirements) after section 95 to implement the measure in relation to DSP. A person will satisfy the DSP residency requirements in sub section 95A(2) if they have been an Australian resident for 10 continuous years, with 5 of those 10 years during a person’s working life between 16 years of age and AP age. Alternatively, sub section 95A(3) provides that if a person has 10 continuous years of Australian residency and greater than 5 years of Australian residency (while aged 16 years or over) not in receipt of an activity tested income support payment then they will meet the residency requirements . Otherwise, paragraph 95A(1)(b) provides that a person would require a period of 15 years continuous Australian residency if they do not satisfy subsection (2) or (3).

 

Subsection 95A(4) provides that a person who receives a specified activity tested income support payment while subject to an assurance of support is taken not to be receiving an activity tested payment for the purpose of calculating the greater than 5 years self-sufficiency period for DSP.

 

As a matter of interpretation, a person who receives a specified activity tested income support payment while subject to a nil-rate is taken not to be receiving an activity tested payment for the purpose of calculating the greater than 5 years self-sufficiency period for DSP.

 

Item 11 is an application provision which provides that the measure applies prospectively to new pension applicants who have never previously been in receipt of AP or DSP and who only qualify on or after 1 July 2018, whether they lodged their claim before or after that date.

 

Subitem (1)(b) provides that a person, who lodges a claim prior to 1 July 2018 but is not determined by the Secretary to qualify until on or after that date, will not be subject to the amendments made by this Schedule if they actually qualified at any time between when the claim was lodged and 1 July 2018.

 

Example 1 A person who claims and qualifies for AP or DSP prior to 1 July 2018 will be assessed under the old residency rules even where that person’s claim is determined by the Secretary on or after 1 July 2018. For instance, if a person lodges a claim on 5 June 2018 and they qualify on 29 June 2018 but their claim is not determined until 15 July 2018 then because the person claimed and qualified prior to 1 July 2018 the person will be assessed under the old residency requirements (that is, the rules in force prior to commencement of the amendments made by this Schedule).

 

Example 2 A person who claims for AP or DSP prior to 1 July 2018 but does not actually qualify until on or after that date will be assessed under the new residency rules where that person’s claim is determined by the Secretary prior to 1 July 2018. For instance, if a person lodges a claim on 1 June 2018 and it is determined on 30 June 2018 but they do not qualify until 20 July 2018 then the person will be assessed under the new residency requirements (that is, the rules in force after commencement of the amendments made by this Schedule).

 

Sub item (2) is a savings provision which provides that any person in receipt of AP or DSP at any time prior to 1 July 2018 would be subject to the old residency requirements which applied prior to that date if they re-apply on or after 1 July 2018 subsequent to cancellation of their previous payment for any reason.

Schedule 2 - Stopping the payment of pension supplement after 6 weeks overseas

 

 

Summary

 

This Schedule stops the payment of pension supplement after six weeks temporary absence overseas and immediately for permanent departures.

 

 

Background

 

This schedule amends the Social Security Act and the Veterans’ Entitlements Act .

The pension supplement combined the former telephone allowance, utilities allowance, pharmaceutical allowance and Goods and Services Tax (GST) supplement into a single payment. Currently, the pension supplement is payable at the full domestic rate to Australian residents for the first six weeks of a temporary absence overseas.

Currently, the pension supplement basic amount remains payable where a recipient permanently departs Australia or after six weeks temporary absence overseas. The pension supplement basic amount is equivalent to the former GST supplement and was originally paid to offset the cost increases associated with the introduction of the GST in Australia. Pensioners who leave Australia permanently or who are temporarily absent from Australia for more than six weeks are unlikely to be impacted by the Australian GST and it is therefore not appropriate to continue to pay them the pension supplement basic amount.

The amendments made by this schedule stop the payment of pension supplement basic amount after six weeks overseas and stop the payment of pension supplement basic amount immediately for permanent departures from Australia. The amendments made in this schedule apply prospectively to all pension recipients overseas before, on or after commencement of the schedule.

The amendments made by this schedule commence on 1 January 2018. However, if the Act receives Royal Assent after 1 January 2018, this schedule will commence on the next 1 April, 1 July, 1 October or 1 January that occurs after Royal Assent.

 

 

Explanation of the changes

 

Amendments to the Social Security Act

 

Item 1 amends the definition of pension supplement amount in subsection 23(1) of the Act to clarify that there may be no amount added under the pension supplement Module (if there is such a module) of the Rate Calculator when working out the rate of the person’s social security payment.

 

Items 2, 7, 12, and 17 amend the method statements in points 1064-A1, 1065-A1, 1066-A1 and 1068A-A1 respectively to clarify that there may be no amount of pension supplement worked out in accordance with Modules 1064-BA, 1065-BA, 1066-BA and 1068A-BA.

 

Items 3, 8 and 13 repeal and replace current points 1064-BA1 and 1064-BA2, 1065-BA1 and 1065-BA2 and 1066-BA1 and 1066-BA2, respectively. These points have been redrafted in Module 1064-BA, 1065-BA and 1066-BA to clarify that a pension supplement is only to be added to the person’s maximum basic rate where the person is residing in Australia and the person is either, in Australia or temporarily absent for a continuous period of up to 6 weeks.

 

Items 4. 5, 9, 10, 11, 14, 15, 16 19, 20 and 21 are technical amendments.

 

Items 6, 11 and 16 repeal points 1064-BA5, 1065-BA5 and 1066BA5. These points currently provide that where a recipient is not in Australia or is temporarily absent from Australia for a period exceeding 6 weeks, the person’s pension supplement amount is the pension supplement basic rate. Repealing these points gives effect to the policy that the payment of pension supplement should stop immediately for permanent departures from Australia or after six weeks of temporary absence from Australia.

 

Item 18 repeals and replaces current points 1068A-BA1 and 1068A-BA2.

These points have been redrafted in Module 1068A-BA to clarify that a pension supplement is only to be added to the person’s maximum basic rate where the person is residing in Australia, has reached pension age and the person is either, in Australia or temporarily absent for a continuous period of up to 6 weeks.  If the person has not reached pension age, and is either in Australia or temporarily absent for a continuous period of up to 6 weeks, the person’s pension supplement amount is the pension supplement basic rate.

 

Item 22 clarifies that point 1068A-BA5 applies to persons who have not reached pension age.

 

Item 23 inserts new section 1216A to clarify that where portability of a payment exists or is extended under Division 2 of Part 4.2 of Chapter 4 of the Act, the rate of payment must still be determined by reference to the rate calculators in Chapter 3. The amendment includes a note to refer the reader to the rate calculators in Chapter 3. This provision applies is relation to all ancillary payments.

 

Example A recipient of DSP (who is not severely impaired or terminally ill) undertakes ten weeks of study overseas for the purpose of their Australian course of education. They have a right to continue to be paid DSP for the duration of their overseas study. However, their rate of payment must still be determined in accordance with the rate calculators in Chapter 3. This means that after six weeks overseas, the recipient will no longer be paid the pension supplement.

 

Items 24 and 25 repeal and replace the method statements in subclauses 147(3) and 147(4) of Schedule 1A to clarify that the pension supplement basic amount will no longer be payable outside Australia indefinitely. 

 

Item 26 is an application provision which provides that the amendments made to the Social Security Act by this Schedule apply in relation to permanent or temporary absences from Australia, whether the absence commenced before, on or after commencement. This means that payment of the pension supplement basic amount will cease immediately for recipients that are permanently overseas and that have been temporarily overseas for a period exceeding six weeks on commencement.

 

Amendments to the Veterans’ Entitlements Act

 

Item 27 amends the definition of pension supplement amount in subsection 5Q(1) of the Veterans’ Entitlements Act to clarify that there may be no amount added under pension supplement Module of the Rate Calculator when working out the rate of the person’s income support payment.

 

Item 28 inserts new paragraph 58K(1A) of the Veterans’ Entitlements Act.  Subsection 58K(1) refers to the general portability of the various service pensions and income support supplement and states that once granted, eligibility for the payments will not be affected by the fact that the person has left Australia.

 

New subsection 58K(1A) refers to the impact of the proposed amendments on the payment of the basic pension supplement and provides that the reference in subsection 58K(1) to the right of a person to continue to be paid a service pension or income support supplement is not a reference to the fact that the rate of the payment cannot be impacted by an absence from Australia.

 

The Note to new subsection 58K(1A) refers the reader to the rate of pension or supplement as being that which was worked out under the Rate Calculator.

 

Items 29 and 30 repeal and substitute the method statements located in subclauses 31(3) and 31(4) of Schedule 5 of the Veterans’ Entitlements Act to clarify that the pension supplement basic amount will no longer be payable outside Australia indefinitely.

 

Clause 31 of Schedule 5 provides for the payment of a transitional rate of service pension to a person who would have been adversely affected by the amendments made by the Veterans’ Affairs and Other Legislation Amendment (Pension Reform) Act 2009 (the Pension Reform Act).

 

Subclause 31(3) determines the transitional rate of service pension for a person who is not a member of a couple, or is otherwise paid at a single rate of pension because they are a member of an illness separated couple or a member of a respite care couple in the circumstances where the transitional rate is not determined under subclause 31(1) because the person is not residing in Australia or because the person has been absent from Australia for a period of more than 6 weeks.

 

The repealed method statement in subclause 31(3) had provided for the calculation of the transitional rate by reference to the maximum basic rate of service pension payable if the amendments made by the Pension Reform Act had not been made; and the pension supplement that would be payable to the person had the amendments not been made.

 

The substituted method statement has been revised to remove the reference to amount of the pension supplement that would have been payable if the Pension Reform Act had not been enacted.

 

Subclause 31(4) determines the transitional rate of service pension for a person who is a member of a couple, but who is not a member of an illness separated couple or respite care couple in the circumstances where the transitional rate is not determined under subclause 31(2) because the person is not residing in Australia or because the person has been absent from Australia for a period of more than 6 weeks.

 

The repealed method statement in subclause 31(4) had provided for the calculation of the transitional rate by reference to the maximum basic rate of service pension payable if the amendments made by the Pension Reform Act had not been made; and the pension supplement that would be payable to the person had the amendments not been made.

 

The substituted method statement has been revised to remove the reference to amount of the pension supplement that would have been payable if the Pension Reform Act had not been enacted.

 

Items 31, 32 and 33 amend steps 1A, 2A and 1A respectively of the method statements in subpoints SCH6-A1(2), SCH6-A1(3) and SCH6-A1(6) of the Veterans’ Entitlements Act to clarify that there may be no amount of pension supplement included in the rate of service pension or income support supplement as worked out in accordance with Module BA in Schedule 6 of the Veterans’ Entitlements Act.

 

Item 34 repeals and replaces points SCH6-BA1 and SCH6-BA2.  These points have been redrafted in Module BA to clarify that a pension supplement is only to be added to the person’s maximum basic rate of service pension or income support supplement where the person is residing in Australia and the person is either, in Australia or temporarily absent for a continuous period of up to 6 weeks.

 

Items 35 and 36 are technical amendments that reflect the impact of the changes.  The amendments repeal and replace the headings to points SCH6-BA3 and SCH6-BA4.  The current headings “Residents in Australia etc.-no election in force” and “Residents in Australia- election in force” are replaced respectively with the new headings “Amount if no election in force” and “Amount if election in force”.

 

Item 37 repeals point SCH6-BA5. The point currently provide that where a recipient is not in Australia or is temporarily absent from Australia for a period exceeding 6 weeks, the person’s pension supplement amount is the pension supplement basic amount.  The repeal of the point gives effect to the policy that the payment of pension supplement should stop after 6 weeks of temporary absence from Australia.

 

Item 38 is an application provision.  It provides that the amendments to the Veterans’ Entitlements Act made by Items 27 to 37 of this Schedule apply in relation to permanent or temporary absences from Australia, whether the absence commenced before, on or after the commencement of the amendments.  This means that payment of the pension supplement basic amount will cease immediately for recipients who on commencement are permanently overseas or who have been temporarily overseas for a period exceeding six weeks.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schedule 3 - Taper rate for Part A rate of family tax benefit (Method 2)

 

 

Summary

 

This Schedule amends the Family Assistance Act to align the income test taper rates so that all income above the higher income free area is treated equally when calculating an individual’s rate of family tax benefit Part A. The amendments commence on the first July after the day this Bill receives the Royal Assent (anticipated to be 1 July 2018).

 

Background

 

Clause 1 of Schedule 1 of the Family Assistance Act broadly provides for the calculation of an individual’s rate of family tax benefit (FTB).  There are 3 different methods of working out an individual’s FTB Part A rate that depend, in part, on whether or not the individual’s adjusted taxable income (ATI) exceeds a specific threshold (the higher income free area, as specified in clause 2). 

 

Method 1 (in Part 2 of Schedule 1 to the Family Assistance Act) applies where the individual’s ATI does not exceed the higher income free area or where the individual or their partner is receiving certain welfare payments.  The income test for method 1 applies a 20% taper in relation to ATI above the lower income free area (clause 38M of Schedule 1 refers).  However, an individual’s Part A rate cannot reduce below the base rate (see step 4 of the method statement in clause 3 of Schedule 1).

 

Method 2 (in Part 3 of Schedule 1 to the Family Assistance Act) applies where the individual’s ATI exceeds the higher income free area, where neither the individual nor their partner is receiving certain welfare payments.  The income test for method 2 applies a 30% taper for ATI above the higher income free area.  The income test for method 2 can reduce an individual’s Part A rate to nil.  However, the method 2 income test also requires a comparison between the method 2 rate and what would be the individual’s Part A rate under method 1 (as slightly modified).  This comparison is required under the method statement in clause 25 of Schedule 1.

 

The Schedule alters the way in which the method 1 rate is worked out for the purposes of comparison under method 2 so that a 30% taper applies in relation to ATI that exceeds the higher income free area, (consistent with the taper rate that applies under method 2). 

 

This measure would commence on 1 July 2018 and apply in calculating an individual’s Part A rate from that date.

 

 

Explanation of the changes

 

 

Amendments to the Family Assistance Act

 

Clause 25 provides the method statement that is to be used in calculating an individual’s Part A rate where Method 2 applies.  Under step 3 of the method statement, an individual’s income and maintenance tested rate is worked out under step 3 of the method statement in clause 3 of Schedule 1 as if the individual’s Part A rate were worked out using Method 1 (but disregarding clause 24G).  The result is the Method 2 income and maintenance tested rate .

 

Item 1 is a consequential amendment that makes the method statement in clause 25 of Schedule 1 subject to the new clause 25D. 

 

Item 2 inserts a note at the end of the method statement in clause 25 referring the reader to new clause 25D which modifies the application of step 3 of the method statement in clause 25.

 

Item 3 then inserts a new clause 25D which sets out those modifications.  In effect, the income test that applies in working out an individual’s Part A rate under method 1 (step 2 of the method statement in clause 3) is modified for the purposes of working out the individual’s Method 2 income and maintenance tested rate so that a taper of 30% applies in relation to an individual’s ATI that exceeds the higher income free area.  A taper of 20% would continue to apply in relation to ATI that exceeds the individual’s income free area and does not exceed the higher income free area.

 

Clause 25D provides that in applying step 3 of the method statement in clause 25, step 2 of the method statement in clause 3 is replaced by new steps 2 to 2D.

 

Step 2 requires the individual’s income free area to be subtracted from the individual’s higher income free area.

 

Step 2A applies a 20% taper to the result in step 2.

 

Under step 2B, the individual’s higher income free area is subtracted from their ATI.

 

Step 2C applies a 30% taper to the result in step 2B.

 

Under step 2D, the sum of the amounts at steps 2A and 2C is the individual’s reduction for adjusted taxable income .  This amount is then deducted from the individual’s maximum rate to arrive at the individual’s income tested rate .

 

Step 3 of the method statement in clause 3 then applies, as modified, to work out the individual’s Method 2 income and maintenance tested rate for the purposes of step 3 of clause 25. 

 

Item 4 provides for the application of the amendments made by this Schedule.  The amendments apply in relation to working out an individual’s FTB Part A rate for days on or after commencement.

Schedule 4 - Liquid assets test waiting period

 

 

Summary

 

This measure extends the maximum liquid assets waiting period to 26 weeks.

 

 

Background

 

This schedule amends the Social Security Act 1991 .

 

The amendments made by this schedule increase the maximum liquid assets test waiting period from 13 weeks to 26 weeks. The longer maximum liquid assets test  waiting period applies to claims for Youth Allowance, Austudy, Newstart Allowance or Sickness Allowance that are made after commencement of this schedule.

 

This schedule commences on 20 September 2018.

 

 

Explanation of the changes

 

 

Amendments to the Social Security Act

 

Items 1 - 4 substitute references to 13 weeks with 26 in paragraphs 549C(1)(a), 549C(1)(b), 575C(1)(a) and 575C(1)(b) and subsections 598(2B) and 676(3B). This will change the liquid assets waiting test period for Youth Allowance, Austudy, Newstart Allowance and Sickness Allowance from 13 weeks to 26.

 

Item 5 provides that the amendments made by Schedule 4 apply prospectively to applications for Youth Allowance, Austudy, Newstart Allowance and Sickness Allowance that are made on or after commencement.

 

STATEMENTS OF COMPATIBILITY WITH HUMAN RIGHTS

 

 

Prepared in accordance with Part 3 of the

Human Rights (Parliamentary Scrutiny) Act 2011

SOCIAL SERVICES LEGISLATION AMENDMENT

(PAYMENT INTEGRITY) BILL 2016

 

 

SCHEDULE 1 - Resident requirement for Australian pensions

 

This Schedule 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 Schedule

This Schedule strengthens the residence connection required for eligibility to the Age Pension and Disability Support Pension. It ensures that people have established a significant connection with Australia during their working life or are self-sufficient for a reasonable period of time before qualifying for the Age Pension or Disability Support Pension.

Human rights implications

This Bill has considered the human rights implications particularly with reference to the right to social security contained within Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR).  It is concluded that the schedule Bill does not place limitations on human rights.

This measure strengthens the residency requirement for Age Pension and the Disability Support Pension for all migrants (except for permanent humanitarian entrants).

Permanent humanitarian entrants will continue to be exempt from all social security payment waiting periods.

 

Right to Social Security:

The measure engages the right to social security contained in Article 9 of the ICESCR.

The right to social security requires that a system be established under domestic law, and that public authorities must take responsibility for the effective administration of the system.  The social security scheme must provide a minimum essential level of benefits to all individuals and families that will enable them to cover essential living costs.

Access to Special Benefit will remain for those people who experience financial hardship, and current exemptions will remain, such as for humanitarian entrants or where a person incurs a continuing inability to work after arrival in Australia for Disability Support Pension.

Conclusion

These amendments are compatible with human rights.  To the extent that they may limit a person’s access to social security, the limitation is reasonable and proportionate.

 

 

 

SCHEDULE 2 - Stopping the payment of pension supplement after six weeks overseas

 

This Schedule 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 Schedule

This schedule reduces the period that the Basic Amount of the Pension Supplement will be payable outside of Australia from indefinitely to six weeks for a temporary absence from Australia or immediately if the recipient has permanently departed Australia. The measure will commence from 1 January 2018 if the Bill receives Royal Assent before that date or from the first 1 April, 1 July, 1 October or 1 January after 1 January 2018 after the Bill receives Royal Assent. It will apply to both recipients already overseas and recipients departing Australia after this date.

From the commencement date, recipients of the Basic Amount of the Pension Supplement currently overseas permanently will no longer receive the Pension Supplement. Recipients who are currently overseas temporarily will be subject to the six week rule. The Pension Supplement is a payment designed to assist income support recipients with the cost of living in Australia. The Basic Amount of the Pension Supplement is equivalent to the former GST Supplement.

Human rights implications

The human rights implications for this measure have been considered, particularly with reference to the right to social security contained within article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR).  It is concluded that this measure does not place limitations on human rights.

This measure is not stopping a person from receiving a social security payment where they meet domestic eligibility and qualification requirements, nor is it stopping a person from moving freely within Australia or overseas (Article 12 and 13 of the International Covenant on Civil and Political Rights ).

Right to social security

This measure engages the right to social security contained in article 9 of the ICESCR.

The right to social security requires that a system be established under domestic law, and that public authorities must take responsibility for the effective administration of the system. The social security system must provide a minimum essential level of benefits to all individuals and families who meet the eligibility and qualification requirements.

The change to the rate a recipient can receive after being outside Australia for more than six weeks does not affect their ability to access social security within Australia.  This measure ensures that social security is appropriately targeted and that those outside Australia for any longer than a short absence are not inappropriately remunerated for domestic expenses.

Right to freedom of movement

This measure engages the right to freedom of movement, which is contained in articles 12 and 13 of the International Covenant on Civil and Political Rights .  Pensioners will remain able to move freely, whether within Australia or overseas.

This schedule reduces the period that the Basic Amount of the Pension Supplement will be payable outside of Australia from indefinitely to six weeks for a temporary absence from Australia or immediately if the recipient has permanently departed Australia. This measure does not change the portability rules of social security payments.

Conclusion

It is concluded that the measure does not place limitations on human rights. This schedule does not limit right to social security payments or freedom of movement.

SCHEDULE 3 - Taper rate for Part A rate of family tax benefit (Method 2)

 

This Schedule 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 Schedule

The Schedule will introduce a consistent 30 cents in the dollar income test taper for Family Tax Benefit Part A families with a household income in excess of the Higher Income Free Area (currently $94,316).

From 1 July 2018, the maximum rate income test taper will increase from 20 to 30 cents for each dollar beyond the Higher Income Free Area. This will bring it into line with families assessed under the base rate income test, who are already subject to a 30 cent taper.

This reform will ensure that all families are treated equally once their income exceeds the Higher Income Free Area . It will improve the sustainability of the family payments system over the long term, while continuing to provide assistance to families in need.

Human rights implications

The human rights implications for this measure have been considered . Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) recognises the right of everyone to benefit from social security, while article 11 recognises the right to an adequate standard of living for an individual and their family, including adequate food, clothing and housing, and the continuous improvement of living conditions.

Article 26 of the Convention on the Rights of the Child (CRC) requires countries to recognise the right of the child to benefit from social security.  Benefits should take into account the resources and the circumstances of the child and persons having responsibility for the maintenance of the child.

The United Nations Committee on Economic, Cultural and Social Rights has stated that a social security scheme should be sustainable and that the conditions for benefits must be reasonable, proportionate and transparent.

This change ensures families, whether they are assessed under the base rate or maximum rate income test, are treated equally once their income exceeds the Higher Income Free Area. The maximum rate income test taper will remain at 20 cents in the dollar for the assessment of all income between the Lower Income Free Area (currently $51,903) and the Higher Income Free Area.

This change targets higher income families, who receive a lower rate of payment than lower income families, and have the ability absorb the effects of the changes. As a result, to the extent that this change limits the right to social security, the change is reasonable and proportionate, and does not limit the right to an adequate standard of living.

This reform will help ensure the sustainability of the family payments system.

Conclusion

These amendments are compatible with human rights because they advance the protection of human rights and, to the extent that these changes limit access to family payments, these limitations are reasonable and proportionate.

 

SCHEDULE 4 - Liquid assets test waiting period

 

This Schedule 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 Schedule

Schedule 4 proposes to increase the maximum Liquid Assets Waiting Period for Newstart Allowance, Sickness Allowance, Youth Allowance and Austudy from 13 weeks to 26 weeks, to encourage those with greater means to support themselves for longer before receiving payment.

Human rights implications

Right to social security

This Schedule engages the rights to social security contained in article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR).

The right to social security requires that a system be established under domestic law, and that public authorities must take responsibility for the effective administration of the system. The social security scheme must provide a minimum essential level of benefits to all individuals and families that will enable them to cover essential living costs.

The United Nations Committee on Economic, Cultural and Social Rights (the Committee) has stated that a social security scheme should be sustainable and that the conditions for benefits must be reasonable, proportionate and transparent (see General Comment No.19).

Article 4 of ICESCR provides that countries may limit the rights such as to social security in a way determined by law only in so far as this may be compatible with the nature of the rights contained within the ICESCR and solely for the purpose of promoting the general welfare in a democratic society. Such a limitation must be proportionate to the objective to be achieved.

A central principle underpinning Australia’s social security system is that support should be targeted to those in the community most in need in order to keep the system sustainable and fair. The Liquid Assets Waiting Period plays a key role in this by ensuring that people with liquid assets above certain thresholds support themselves in the first instance before receiving taxpayer-funded income support payments.

The amendments in this Schedule do not affect eligibility for social security pensions or benefits, rather they affect the rules governing when those eligible for certain payments can start receiving their entitlements. The amendments focus on promoting self-support by requiring claimants to meet their own living costs for a longer period where they are able to do so. In this way, the amendments help to ensure that immediate access to working age payments is targeted to those most in need.

Those with low to modest levels of liquid assets, who either are not subject to a Liquid Assets Waiting Period or have a Liquid Assets Waiting Period of 13 weeks or less, will not be affected by this measure. Only those with higher levels of liquid assets (at or above $11,500 if single with no dependent children or $23,000 if partnered and/or a person with dependent children) will be affected.

New claimants who need immediate financial assistance will still be able to access exemptions and waivers provided they meet the relevant eligibility criteria.  The existing exemptions from the Liquid Assets Waiting Period, including for people who find themselves in severe financial hardship due to reasonable or unavoidable expenditure, will remain in place. This will ensure that people are still able to access income support in the event that their financial circumstances change and they are no longer in a position to support themselves.

To the extent that the changes in this Schedule may limit the right to social security, those limitations are reasonable and proportionate to the policy objective of ensuring a sustainable and well-targeted payment system into the future.

Right to an adequate standard of living, including food, water and housing

This Schedule engages the right to an adequate standard of living, including food, water and housing, contained in article 11 of the ICESCR. The right to an adequate standard of living, including food, water and housing provides that everyone is entitled to adequate food, clothing and housing and to the continuous improvement of living conditions.

The existing thresholds at which the Liquid Assets Waiting Period applies remain as per current rules. These thresholds ensure that claimants are able to retain an appropriate level of savings to meet the costs of finding/securing work, as well as unexpected expenses that may arise.

To the extent that this schedule impacts on a person’s right to an adequate standard of living, including food, water and housing, by virtue of this Schedule, the impact is limited.

 

This Schedule will increase the maximum Liquid Assets Waiting Period by up to 13 weeks during which those claimants with the means to support themselves are expected to do so. Only those with substantial levels of liquid assets who would currently serve the maximum Liquid Assets Waiting Period of 13 weeks will serve an increased Liquid Assets Waiting Period. The liquid assets held on average by a person serving the maximum 13 week Liquid Assets Waiting Period in 2015-16 was around $63,000.

 

People with these levels of liquid assets have the financial means to support their own living costs, including food, water and housing, and it is reasonable to expect them to do so for a longer period rather than drawing on the general resources of the community through income support. Those with no or modest levels of liquid assets will not be affected.

 

The Liquid Assets Waiting Period only applies in respect of claims for Newstart Allowance, Sickness Allowance, Austudy and Youth Allowance. It does not apply to Family Tax Benefit. Families with dependent children who are subject to a Liquid Assets Waiting Period in respect of a claim for income support will still be able to access Family Tax Benefit where eligible. This will ensure that families continue to receive support with the cost of raising children while they are serving the Liquid Assets Waiting Period .

This Schedule is compatible with the right to an adequate standard of living as the potential limitations on this right are proportionate to the policy objective of encouraging self-support in order to keep the system sustainable while providing a safety net for eligible people with less capacity to support themselves.

 

Right to equality and non-discrimination

To avoid doubt, this Schedule is compatible with the right to equality and non-discrimination contained in articles 2 and 26 of the International Covenant on Civil and Political Rights (ICCPR).

Article 2(1) of the ICCPR obligates each State party to respect and ensure to all persons within its territory and subject to its jurisdiction the rights recognised in the Covenant without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status (see CCPR General Comment No. 18).

Article 26 not only entitles all persons to equality before the law as well as equal protection of the law, but also prohibits any discrimination under the law and guarantees to all persons equal and effective protection against discrimination on any ground such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status (see CCPR General Comment No. 18).

It is important to note, however, that not all differential treatment will be considered discriminatory. The Committee has provided the following commentary on when differential treatment will be considered discriminatory:

Differential treatment based on prohibited grounds will be viewed as discriminatory unless the justification for differentiation is reasonable and objective. This will include an assessment as to whether the aim and effects of the measures or omissions are legitimate, compatible with the nature of the Covenant rights and solely for the purpose of promoting the general welfare in a democratic society. In addition, there must be a clear and reasonable relationship of proportionality between the aim sought to be realised and the measures or omissions and their effects. A failure to remove differential treatment on the basis of a lack of available resources is not an objective and reasonable justification unless every effort has been made to use all resources that are at the State party’s disposition in an effort to address and eliminate the discrimination, as a matter of priority (CESCR, General Comment No. 20).

This Schedule extends the maximum length of the Liquid Assets Waiting Period . Under this measure, the maximum 26 week Liquid Assets Waiting Period will apply if claimants liquid assets are equal to or exceed $18,000 for a single person (up from the current $11,500) or $36,000 for a couple or person with dependent children (up from the current $23,000). There will be no differential treatment on the basis of race, colour, sex, language, religion, political or other opinion, national or social origin, property or birth. The Liquid Assets Waiting Period will apply equally to claimants of affected working age income support payments according to their level of liquid assets.

 

Under existing rules the Liquid Assets Waiting Period only applies to claimants of certain payments: Newstart Allowance, Sickness Allowance, Austudy and Youth Allowance. This reflects that these payments are generally intended to be shorter-term payments which provide support for people seeking to transition back into work or undertaking study or training to aid this transition. Claimants of these payments are also more likely to be able to support themselves for a time before needing income support as they may have transitioned from employment or had other means of support. In contrast, pension payments, such as age pension and disability support pension, provide longer-term support and are designed to acknowledge ongoing barriers that make it difficult for claimants to support themselves through paid employment.

 

To the extent that the Liquid Assets Waiting Period (and therefore the amendments to the LAWP in this Schedule) treats claimants of the above payments differently to claimants of other payments, this is reasonable and proportionate to the objective of the above payments, noting that claimants will be able to access exemptions and waivers to receive assistance sooner, if they are eligible.

 

As the majority of claimants who serve a Liquid Assets Waiting Period are older Australians, the changes in this Schedule may more significantly impact on older men and women; however, to the extent that these changes may limit the right to non-discrimination (including indirect discrimination), this is reasonable and proportionate to achieving the legitimate objective of ensuring that new claimants meet their own living costs for a short period before receiving Government assistance, where they are able, in order to keep the system sustainable into the future. It is also important to note that superannuation assets are exempt from the Liquid Assets Waiting Period and therefore these changes will not impact the resources of older Australians set aside to support them during retirement

 

For these reasons, this Schedule is compatible with the right of equality and non-discrimination .

 

 

Conclusion

This Schedule is compatible with human rights. To the extent that it may limit a person’s right to social security, an adequate standard of living and equality and non-discrimination, the limitation is reasonable, proportionate to the policy objective and for legitimate reasons. The measure will directly ensure that people with the means to support themselves for longer do so before receiving taxpayer-funded income support. Encouraging self-support will help to keep the system sustainable into the future.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Circulated by the authority of the Minister for Social Services, the Hon Christian Porter MP]