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Social Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014

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2013-2014

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

SOCIAL SERVICES AND OTHER LEGISLATION AMENDMENT

(2014 BUDGET MEASURES No. 2) 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

(2014 BUDGET MEASURES No. 2) BILL 2014

 

OUTLINE

 

Budget measures

This Bill will introduce several 2014 Budget measures in Schedules to the Bill numbered as set out below.

  1. Implement the following changes to Australian Government payments:

·            from 1 January 2015 - pause indexation for three years of the income free areas and assets value limits for student payments, including the student income bank limits;

·            from 1 July 2017 - pause indexation for three years of the income and assets test free areas for all pensioners (other than parenting payment single) and the deeming thresholds for all income support payments;

·            from 20 September 2017 - ensure all pensions are indexed to the Consumer Price Index only, by removing:

o   benchmarking to Male Total Average Weekly Earnings;

o   indexation to the Pensioner and Beneficiary Living Cost Index;

·            from 20 September 2017 - reset the social security and veterans’ entitlements income test deeming thresholds to $30,000 for single income support recipients, $50,000 combined for pensioner couples, and $25,000 for a member of a couple other than a pensioner couple.

  1. Generally limit the overseas portability period for disability support pension to 28 days in a 12-month period from 1 January 2015.
  2. Exclude from the social security and veterans’ entitlements income test any payments made under the new Young Carer Bursary Programme from 1 January 2015.
  3. Include untaxed superannuation income in the assessment for the Commonwealth Seniors Health Card (with products purchased before 1 January 2015 by existing cardholders exempt from the new arrangements), and extend from six to 19 weeks the portability period for cardholders.
  4. From 1 January 2015, remove relocation scholarship assistance for students relocating within and between major cities.
  5. Cease pensioner education supplement from 1 January 2015.
  6. Cease the education entry payment from 1 January 2015.
  7. From 1 January 2015, extend youth allowance (other) to 22 to 24 year olds in lieu of newstart allowance and sickness allowance.
  8. Require young people with full capacity to learn, earn or Work for the Dole from 1 January 2015.

10. Implement the following family payment reforms from 1 July 2015:

·            limit the family tax benefit Part A large family supplement to families with four or more children;

·            remove the family tax benefit Part A per-child add-on to the higher income free area for each additional child after the first;

·            revise the family tax benefit end-of-year supplements to their original values and cease indexation;

·            improve targeting of family tax benefit Part B by reducing the primary earner income limit from $150,000 a year to $100,000 a year;

·            limit family tax benefit Part B to families with children under six years of age, with transitional arrangements applying to current recipients with children above the new age limit for two years; and

·            introduce a new allowance for single parents on the maximum rate of family tax benefit Part A for each child aged six to 12 years inclusive, and not receiving family tax benefit Part B. 

  1. Increase the qualifying age for age pension, and the non-veteran pension age, to 70, increasing by six months every two years and starting on 1 July 2025.
  2. From 1 January 2015, remove the three months’ backdating of disability pension under the Veterans’ Entitlements Act 1986 .


Financial impact statement

MEASURE

FINANCIAL IMPACT OVER THE FORWARD ESTIMATES

Budget measures

 

1.       Changes to Australian Government payments:

CPI-only indexation for pensions from September 2017.

Maintaining the eligibility thresholds for Australian Government payments (student payments and pensions) for three years.

 

Saving of $314.70 million

 

Saving of $191.60 million

2.       Disability support pension - portability

Saving of $12.3 million

3.       Young Carer Bursary Programme - income exemption

The programme will cost $3.0 million over four years

4.       Commonwealth Seniors Health Card - include untaxed superannuation in assessment

Saving of $20.9 million

5.       Remove relocation scholarship assistance for certain students

Saving of $290.1 million

6.       Pensioner education supplement

Saving of $281.2 million over five years

7.       Education entry payment

Saving of $65.4 million over five years

8.       Extension of youth allowance (other) to 22 to 24 year olds in lieu of newstart allowance and sickness allowance

Saving of $508.4 million

9.       Require young people with full capacity to learn, earn or Work for the Dole

Saving of $1,247.3 million

10.    Family payment reforms, starting 1 July 2015

Saving of $4,777.3 over five years

11.    Pension age increased from 67 to 70

No impact on forward estimates

12.    Date of effect for veterans’ disability pension

Saving of $40.0 million

 

 

REGULATION IMPACT STATEMENTS

 

Several measures in the Bill have a regulatory impact.  The Office of Best Practice Regulation agreed to the regulatory costings and offsets for the proposals.

 

STATEMENTS OF COMPATIBILITY WITH HUMAN RIGHTS

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

 



 



SOCIAL SERVICES AND OTHER LEGISLATION AMENDMENT

(2014 BUDGET MEASURES No. 2) BILL 2014

 

 

NOTES ON CLAUSES

Abbreviations used in this explanatory memorandum

  • Family Assistance Act means the A New Tax System (Family Assistance) Act 1999
  • Family Assistance Administration Act means the A New Tax System (Family Assistance) (Administration) Act 1999
  • Farm Household Support Act means the Farm Household Support Act 2014
  • 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 (2014 Budget Measures No. 2) Act 2014.

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 - Indexation and deeming thresholds

 

 

Summary

This Schedule implements the following changes to Australian Government payments:

·          from 1 January 2015 - pause indexation for three years of the income free areas and assets value limits for student payments, including the student income bank limits;

·          from 1 July 2017 - pause indexation for three years of the income and assets test free areas for all pensioners (other than parenting payment single) and the deeming thresholds for all income support payments;

·          from 20 September 2017 - ensure all pensions are indexed to the Consumer Price Index (CPI) only, by removing:

  • benchmarking to Male Total Average Weekly Earnings (MTAWE);
  • indexation to the Pensioner and Beneficiary Living Cost Index (PBLCI);

·          from 20 September 2017 - reset the social security and veterans’ entitlements income test deeming thresholds to $30,000 for single income support recipients, $50,000 combined for pensioner couples, and $25,000 for a member of a couple other than a pensioner couple.

Background

Pause indexation of various rates and various income and asset thresholds

This Schedule pauses for three years the indexation that occurs on 1 July or 1 January each year of various income and asset test thresholds that apply to some social security payment types.  There are comparable provisions in the Veterans Entitlements Act which are also paused.  When indexation recommences, it will apply to the (paused) thresholds and there will be no catch-up in respect of indexation that would otherwise have occurred during the three-year pause.

Part 3.16 of the Social Security Act provides for the indexation and adjustment of amounts.  Division 2 deals with CPI indexation, which affects various amounts set out in section 1190, and applies acronyms for the purposes of the table in section 1191, which describes the rules and timing for the relevant indexation.

This measure takes effect from 1 January 2015 and 1 July 2017 respectively.



Index social security pensions by the CPI

Pensions other than pension PP (single) are indexed currently by the greater of the change in the CPI and the change in the All Groups PBLCI (see Division 3 of Part 3.16).  The combined couple rate of maximum basic pension is then compared to 41.76 per cent of MTAWE and increased if the MTAWE benchmark would give a higher rate.  The maximum single basic pension is set at 66.33 per cent of the combined couple rate (around 27.7 per cent of MTAWE).  Alternative indexation by PBLCI and then benchmarking against MTAWE are to cease from 1 July 2017, such that future indexation of pensions other than pension PP (single) will only be by reference to the CPI as the result of Part 3 of this Schedule.

Comparable changes will be made to payments made under the Veterans Entitlements’ Act.

Resetting deeming thresholds

Part 3 contains provisions amending the Social Security Act and the Veterans’ Entitlements Act that will have the effect of resetting (reducing) from 20 September 2017 the amounts of the thresholds for the deeming of income from financial assets used to determine the rate of payment for social security and veterans’ affairs payments.

The deeming rules in the Social Security Act and Veterans’ Entitlements Act assume financial assets are earning a certain amount of income, regardless of the income they actually earn.  Deeming is used to calculate income for pension, benefit and allowance payments.  The deeming thresholds are the amounts at which the lower deeming rate ceases to apply and is replaced by the higher rate.  Currently, the lower rate is 2 per cent and the higher rate is 3.5 per cent.  Deemed income is calculated by multiplying the total value of a customer’s financial assets by the deeming rates.  Deeming rates were last changed on 4 November 2013.

In 1996, when extended deeming introduced the deeming thresholds, they were initially set at $30,000 for a person who is not a member of a couple and $50,000 for a pensioner couple.  Since then, the thresholds have been indexed to the CPI on 1 July each year.  From 4 November 2013:

·          if a person is single and getting either a pension or allowance, the first $46,600 of the person’s financial assets is deemed to earn income at 2 per cent per annum and any amount over that is deemed to earn income at 3.5 per cent per annum;

  • if a person is a member of a couple:
    • if at least one of the couple is getting a pension - the first $77,400 of the person’s and his or her partner's financial assets is deemed to earn income at 2 per cent per annum and any amount over that is deemed to earn income at 3.5 per cent per annum; or

o    if neither of the couple is getting a pension - the first $38,700 for each of their share of jointly owned financial assets is deemed to earn income at 2 per cent per annum and any amount over that is deemed to earn income at 3.5 per cent per annum.

The deeming threshold amounts (currently $46,600 and $77,400) will be reset (reduced) to $30,000 and $50,000 respectively from 20 September 2017.

The deeming threshold for a member of a couple, other than a pensioner couple, is set at an amount equal to one-half of the amount of the deeming threshold for a pensioner couple.  The deeming threshold amount for a member of a couple other than a pensioner couple (currently $38,700) will be $25,000 from 20 September 2017.

Under the amendments made by item 1 of Part 1 of this Schedule, indexation of the deeming thresholds will be paused for three years from 1 July 2017.  When indexation of pension income and asset test free areas and deeming threshold amounts recommences on 1 July 2020, it will apply to the reset deeming threshold amounts, and there will be no ‘catch up’ in respect of indexation that would have otherwise occurred during the three-year pause.

The amendments made by this Part commence on 20 September 2017.

Explanation of the changes

Part 1 - Amendments commencing on 1 January 2015

Pausing indexation

Amendments to the Social Security Act

Item 1 adds further subsections to section 1192.  New subsection (5AC) affects indexation provided for by item 14 in the CPI Indexation Table in subsection 1191(1).  Item 14 deals with the pension free area (which is an abbreviation for the ordinary income free area for social security pension (see item 20 of the table in subsection 1190(1)).  For pensions other than Pension PP (Single), the pension free area is not to be indexed on 1 July 2017, 1 July 2018 and 1 July 2019.

New subsection (5AD) affects indexation provided for by items 14AA (the youth allowance and austudy ordinary income free area), 14AB (the youth allowance and austudy range reduction boundary), 15 (the student income bank balance limit) and 24 (the youth allowance (non-independent) assets value limit) of the CPI Indexation Table in subsection 1191(1).  The amounts under these items are not to be indexed on 1 January 2015, 1 January 2016 and 1 January 2017.

New subsection (5AE) affects indexation provided for by items 18 (pension ‘single’ homeowner asset value limit), 19 (pension ‘partnered’ homeowner asset value limit), 20 (pension ‘partnered’ non-homeowner asset value limit), 35 (deeming threshold - individual) and 36 (deeming threshold pensioner couple) of the CPI Indexation Table in subsection 1191(1).  The amounts under these items are not to be indexed on 1 July 2017, 1 July 2018 and 1 July 2019.

Amendments to the Veterans’ Entitlements Act

Item 2 repeals subsections 59C(2A) and (3) and substitutes a new subsection 59C(3), which affects indexation provided under items listed in the CPI Indexation Table in subsection 59B(1):  item 4, which deals with the pension free area (an abbreviation for the ordinary/ adjusted income free area for service pension and income support supplement (see item 7 of the table in subsection 59A(1)); item 6, which deals with the pension ‘single’ homeowner asset value limit; item 7, which deals with the pension ‘partnered’ homeowner asset value limit; item 8, which deals with the pension ‘partnered’ non-homeowner asset value limit; item 11, which deals with the deeming threshold - individual; and item 12, which deals with the deeming threshold - pensioner couple.  The amounts under these items are not to be indexed on 1 July 2017, 1 July 2018 and 1 July 2019.

Index social security pensions by the CPI

Part 2 - Amendments commencing on 1 July 2017

Amendments to the Social Security Act7

Items 7 and 8 repeal section 1195, which currently benchmarks indexed rates against MTAWE, and Division 3 of Part 3.16, which alternatively indexes against PBLCI. 

Items 4, 5, and 6 are consequential to the repeal of section 1195 and Division 3 of Part 3.16, and remove references to indexation by PBLCI and benchmarking against MTAWE, and to Division 3 of Part 3.16.

Amendments to the Veterans’ Entitlements Act

Item 12 repeals sections 59EAA to 59EA which currently benchmarks indexed rates against MTAWE or PBLCI. 

Items 9, 10 and 11 are consequential to the repeal of sections 59EAA to 59EA and remove references to indexation by PBLCI and benchmarking against MTAWE by repealing paragraph 59(aa) and amending subsection 59C(2).

Item 13 repeals the redundant definition of ‘fortnightly MTAWE figure’ in subsection 198(1).

Amendments to the Income Tax Assessment Act 1997

Item 3 makes a consequential amendment to the note to subsection 54-40(2).  This is to correct references to the Social Security Act provisions, reflecting the repeal of section 1195.

Resetting deeming thresholds

Part 3 - Amendments commencing on 20 September 2017

Item 14 repeals subsections 1081(1) and (2), and substitutes new provisions indicating that the deeming threshold for a person who is not a member of a couple is $30,000 and that the deeming threshold for a pensioner couple is $50,000.  While these are the same amounts currently specified in subsections 1081(1) and (2), item 17 is an application provision making it clear that the stated amounts are to be used when working out the rate of social security payments on or after 20 September 2017, rather than any higher amounts that have resulted from prior indexation.

Item 15 repeals and substitutes the note to subsection 1081(3), which currently indicates that the amounts fixed by subsections 1081(1) and (2) are indexed every 1 July and makes reference to indexation provisions of sections 1190 to 1192.  The new note removes reference to the amounts being indexed every 1 July, and instead refers only to sections 1190 to 1192 for indexation of the deeming thresholds in subsections 1081(1) and (2).  This takes account of the fact that, under item 1 of Part 1 of this Schedule, amendments are being made under new subsection 1192(5AE) that will have the effect that indexation of the deeming thresholds will not occur on 1 July 2017, 1 July 2018 and 1 July 2019.

Item 16 inserts new subsections 1192(7A) and (7B), which relate to the calculation of deeming thresholds on 1 July 2020, the first indexation date after the non-occurrences of indexation of deeming thresholds referred to in new subsection 1192(5AE) under item 1 in Part 1 of this Schedule.  Under new subsection 1192(7A), the current figure for the deeming threshold for an individual immediately before 1 July 2020 is taken to be $30,000 and, under new subsection 1192(7B), the current figure for the deeming threshold for a pensioner couple immediately before 1 July 2020 is taken to be $50,000.

Amendments to the Veterans’ Entitlements Act

Item 18 repeals section 46H, and substitutes a new section indicating at subsection (1) that the deeming threshold for a person who is not a member of a couple is $30,000 and, at subsection (2), that the deeming threshold for a couple is $50,000.  While these are the same amounts currently specified in subsections 46H(1) and (2), item 20 is an application provision making it clear that the stated amounts are to be used when working out the rate of service pension or income support supplement on or after 20 September 2017, rather than any higher amounts that have resulted from prior indexation.

Item 19 inserts new subsections 59C(4) and (5), which relate to the calculation of deeming thresholds on 1 July 2020, the first indexation date after the non-occurrences of indexation referred to in Part 1 of this Schedule.  Under new subsection 59C(4), the current figure for the deeming threshold for an individual immediately before 1 July 2020 is taken to be $30,000 and, under new subsection 59C(5), the current figure for the deeming threshold for a couple immediately before 1 July 2020 is taken to be $50,000.



Schedule 2 - Disability support pension

 

 

Summary

This Schedule introduces a change in relation to disability support pension generally to limit the overseas portability period for disability support pension to 28 days in a 12-month period from 1 January 2015.

Background

Division 2 of Part 4.2 of the Social Security Act provides for the portability of social security payments.  The portability period refers to the length of time that social security payments can be paid to a person while that person is outside Australia.  A person’s payment is not payable for any period of absence that occurs after the end of the person’s portability period for a payment (section 1215).

Current portability rules for disability support pension state that, in the general case, a person in receipt of the disability support pension can continued to be paid during any temporary absences, provided each period of absence is no longer than six weeks in length.

In addition, certain exceptions to the general rule apply, which allow for absences of longer than six weeks.  For example, unlimited portability period applies for severely impaired disability support pensioners (section 1218AAA).  A person’s portability period may also be extended (under section 1218C) if the person is unable to return to Australia for specified reasons beyond their control and which occurred while the person was absent from Australia and before the end of their general portability period.

If a disability support pensioner’s absence from Australia exceeds their portability period, their pension is not payable and will be cancelled after the end of their portability period.

The amendments made by this Schedule will commence on 1 January 2015.

Explanation of the changes

The amendments in this Schedule are intended to limit the portability period for Australian resident disability support pensioners.  Generally, the maximum portability period is a total of 28 days (whether consecutive or not) in the last 12 months.  There is no limit to the number of times a person may be absent from Australia, so long as the number of days in each period of absence over the past 12 months, when added together, do not exceed 28 days.

Where an absence is for the purposes of seeking medical treatment, to attend to an acute family crisis or for a humanitarian purpose, the maximum portability period is four weeks.  It is intended that, if a person has already been absent for a period for the purposes of seeking medical treatment, to attend to an acute family crisis or for a humanitarian purpose, these days of absence are to count towards the 28 days of absence that is allowed for any purpose.



These portability rules are subject to the existing exceptions under sections 1218AAA, 1218AA, 1218AB, 1218, 1218C or 1218D.  That is, the current rules allowing unlimited portability in exceptional circumstances, or an extension to the portability period under certain circumstances, will continue to apply.

Amendments to the Social Security Act

Items 1 and 2 insert a new note at the end of subsection 1215(1).  The new note explains that, if a disability support pensioner’s period of absence extends beyond the person’s portability period, the Secretary must cancel the payment with effect immediately after the end of the portability period, because of subsections 80(1), 80(3AA) and 118(11B) of the Social Security Administration Act.

Item 3 repeals existing paragraph 1217(2)(b), and substitutes new paragraph 1217(2)(b).  Existing paragraph 1217(2)(b) provides that a person’s absence is an allowable absence if the absence does not exceed the period specified in column 5 of the table.  The new paragraph 1217(2)(b) provides that, in the case of item 2, an absence is an allowable absence if the absence does not cause the total number of days (whether consecutive or not) of the person’s temporary absence from Australia in the last 12 months to exceed 28 days.  The counting of the 28 days would include any days of absence for purposes of seeking eligible medical treatment; to attend to an acute family crisis or for a humanitarian purpose.

The rule in new paragraph 1217(2)(b) (that an absence is only an allowable absence if it does not exceed 28 days in the last 12 months) does not apply if an exception rule in Subdivision B of Division 2 of Part 4.2 applies.  That is, an absence is an allowable absence even if it exceeds 28 days in the last 12 months if any one of the following provisions applies:

·          section 1218AAA - unlimited portability for severely impaired disability support pensioners;

·          section 1218AA - unlimited portability for terminally ill overseas disability support pensioner;

·          section 1218AB - extended portability period for  disability support pension;

·          section 1218 - full time students outside Australia for purposes of Australian course;

·          section 1218C - extension of person’s portability period - general; or

  • section 1218D - life saving medical treatment overseas.

Item 4 makes a technical amendment to subsection 1217(4) by omitting the words ‘a period of weeks’, and substituting ‘not an unlimited period’.   Item 5 also makes a technical amendment to subparagraph 1217(4)(b)(ii) by deleted the words ‘of weeks’.  These amendments are required because the portability period for disability support pension (general) is now calculated in days rather than in weeks.

Item 6 provides for the amendment of the table at the end of section 1217, by the repeal of existing item 2 of the table and the substitution of new items 2 and 2AA.

New item 2 provides that, for disability support pensioners generally, their maximum portability period is the period that is a total of 28 days (whether consecutive or not) of temporary absence from Australia for any purpose in the last 12 months.  The 28 days is not to include days on which the person was not receiving disability support pension.  It is intended that these 28 days would include any days of absence, including if they are for the purpose of seeking medical treatment, to attend to an acute family crisis or for a humanitarian purpose.

New item 2AA provides that, for disability support pensioners who are absent for one of the purposes in column 4 of item 2AA (that is, to seek eligible medical treatment, to attend to an acute family crisis, or for a humanitarian purpose), their maximum portability period is a continuous period of four weeks of absence from Australia.  It is intended that any previous days of absence, regardless of the purpose of the previous absence/s, would not affect the right to continue to be paid during future periods of absence, provided the future absence is for any of the purposes listed in column 4 of item 2AA, and each future period of absence is no longer than four weeks.

Item 7 repeals existing subsection 1218AA(3), and substitutes new subsection 1218AA(3).  Existing subsection 1218AA(1) provides that the Secretary may determine that a person has an unlimited portability period if all of the qualifying circumstances exist.  Existing subsection 1218AA(2) provides that the Secretary may revoke the determination if any of the qualifying circumstances ceases to exist.

New subsection 1218AA(3) provides that, if the Secretary revokes the determination, the person’s maximum portability period would be worked out under whichever one of items 2, 2AA and 2A of the table in section 1217 applies.  If the person was absent from Australia at the time of the revocation, the person’s absence is taken to have started on the date of effect of the revocation.  If item 2 of the table in section 1217 applies, the person is taken not to have been absent from Australia at any time in the 12 months before the revocation.

Amendments to the Social Security Administration Act

Item 8 inserts new subsection 80(3AA) after subsection 80(3).  The effect of new subsection 80(3AA) is that the Secretary would be required to make a determination to cancel a person’s disability support pension if he or she is qualified for the pension but the pension is not payable because the person remained absent from Australia after the end of their portability period.

Item 9 provides for a new date of effect rule by the insertion of new subsection 118(11B).  New subsection 118(11B) provides that a determination under section 80 to cancel a person’s disability support pension because the pension is not payable after the end of the person’s portability period takes effect immediately after the end of the portability period.

Item 10 provides for the application and transitional provisions.  The amendments are to apply in relation to temporary absences that start on or after 1 January 2015.  In applying the amendments in relation to temporary absences that start on, or in the first 12 months after, the commencement of this Schedule, days of temporary absence that occurred before that commencement are to be ignored.

The effect of subitem 10(3) is that, where a person has, on or before the day this measure was announced, booked travel outside Australia, which involves transport of the person back to Australia before 1 January 2016, the amendments made by this Schedule would not apply.  That is, the existing six-week portability rule would continue to apply to any such person.

 



Schedule 3 - Young Carer Bursary Programme

 

 

Summary

This Schedule amends the Social Security Act and the Veterans’ Entitlements Act to ensure that a payment of a bursary under the programme established by the Commonwealth and known as the Young Carer Bursary Programme is not counted as income.

Background

The Young Carer Bursary Programme is a 2014 Budget measure which will provide bursary payments to young carers aged 25 years and under to relieve the financial pressure on them to undertake part-time work in addition to their educational and caring responsibilities.  The funding will provide 150 bursary payments of up to $10,000 a year from January 2015, and will target young carers in greatest financial need.

The Young Carer Bursary Programme will have positive long-term financial impacts through the expected contribution to educational retention among young carers, and will assist an estimated 450 young carers over three years.

The amendments made by this Schedule will ensure that a payment of a bursary under the Young Carer Bursary Programme is not to be treated as income for the purposes of the social security law and the Veterans’ Entitlements Act.

The amendments made by this Schedule commence on 1 January 2015.

Explanation of the changes

Amendments to the Social Security Act

Subsection 8(8) of the Social Security Act lists amounts that are not income for social security purposes.   Item 1 inserts a new paragraph (jai) into subsection 8(8) to ensure that a payment of a bursary under the programme established by the Commonwealth and known as the Young Carer Bursary Programme does not count as income for the purposes of the social security law.

Amendments to the Veterans’ Entitlements Act

Item 2 inserts a new paragraph (pabc) into subsection 5H(8) of the Veterans’ Entitlements Act to ensure that a payment of a bursary under the programme established by the Commonwealth and known as the Young Carer Bursary Programme does not count as income for the purposes of the Veterans’ Entitlements Act.

 



Schedule 4 - Seniors health card

 

 

Summary

This Schedule will include untaxed superannuation income in the assessment for the Commonwealth Seniors Health Card (with products purchased before 1 January 2015 by existing cardholders exempt from the new arrangements), and extend from six to 19 weeks the portability period for cardholders.

Background

This Schedule will include tax-free superannuation income in the assessment of income for qualification for the seniors health card, ensuring people on similar incomes will be treated the same for concession card purposes.  The income will be calculated using the same method as for income support payments from 1 January 2015, using income deemed to be generated by various account-based superannuation income streams, regarding them as financial investments.

From 1 January 2015, various long-term financial assets which produce an income stream will be counted as financial investments, and subject to the deemed income rules.  The products to be treated in this way are an asset-tested income stream (long term) that is an account-based pension within the meaning of the Superannuation Industry (Supervision) Regulations 1994 , and an asset-tested income stream (long term) that is an annuity (within the meaning of the Superannuation Industry (Supervision) Act 1993 ) provided under a contract that meets the standards, if any, determined under subsection 9(1EA). 

Holders of a seniors health card immediately before commencement of this measure will not have the deemed rate of their tax-free superannuation income for products held prior to commencement counted in the income test from commencement, unless they cease to be the holder of a card after this time.  However, if they have a partner who does not hold a seniors health card, then their partner’s income from a superannuation product will be counted from commencement.  Income from superannuation products cardholders purchase following commencement will be included in the test.

A related measure will extend the period for which seniors health card holders may travel temporarily overseas without losing qualification for the card from six weeks to up to 19 weeks.  This will ease the regulatory burden for cardholders whose qualification for the card has remained unchanged, apart from the fact they have temporarily travelled overseas for more than six weeks.  Currently, the supplement paid to holders of the card stops accruing after six weeks, and this will remain the case with this change.

The amendments made by this Schedule commence on 1 January 2015.



Explanation of the changes

Part 1 - Seniors health card income test

Division 1 - Main amendments

Amendments to the Social Security Act

Items 1 to 4 amend section 1071, which provides the seniors health card income test.  Item 1 inserts two new steps into the method statement at point 1071-1.  New step 1A identifies whether the person or their partner at the test time has at least one long-term financial asset .  This term is defined at new point 1071-13, inserted by item 4 , to mean a financial investment within the meaning of paragraph (i) or (j) of the definition of financial investment in subsection 9(1).  These paragraphs will be inserted into the Act at 1 January 2015 by the Social Services and Other Legislation Amendment Act 2014 (see item 4 of Schedule 11), to mean:

(i)    an asset - tested income stream (long term) that is an account - based pension within the meaning of the Superannuation Industry (Supervision) Regulations 1994 ; or

(j)    an asset - tested income stream (long term) that is an annuity (within the meaning of the Superannuation Industry (Supervision) Act 1993 ) provided under a contract that meets the requirements determined in an instrument under subsection (1EA).

The new definition in paragraph (i) of the definition of financial investment in subsection 9(1) is modified by requiring that the asset-tested income stream (long term) arises under a complying superannuation plan (within the meaning of the Income Tax Assessment Act 1997 ) that is not a constitutionally protected fund (within the meaning of that Act).  These terms limit the type of fund which will come within the definition to avoid the possibility that assessable income may also be produced by the income stream.

A note to this provision alerts the reader that this Schedule contains provisions preserving the rules in the Calculator for a certain kind of long-term financial asset that was being provided to a person immediately before 1 January 2015 where the person held a seniors health card immediately before that day, provided that, since that day, the person has held a seniors health card.

New step 1B adds the person’s deemed income amount under point 1071-11A or 1071-11B to the person’s adjusted taxable income amount generated at step 1 of the existing method statement.

If the person is not a member of a couple, and has such an asset, their deemed income from the asset is worked out under new point 1071-11A, inserted by item 3 .  If the person is a member of a couple, and either they or their partner has such an asset, their deemed income amount is worked out under new point 1071-11B, also inserted by item 3. 

New point 1071-11A works out an unpartnered person’s deemed income amount using a method statement.  The method involves working out the total value of all the person’s long-term financial assets at the test time, and then applying existing section 1076 to generate an amount of ordinary income the person would be taken to receive per year on the assumption that the only financial assets of the person were their long-term financial assets.  This amount of ordinary income is then the person’s deemed income amount for the purposes of the seniors health card income test.

New point 1071-11B works out a partnered person’s deemed income amount, also using a method statement.  The method involves working out the value of all of the person’s long-term financial assets and the value of the person’s partner’s long-term financial assets, if the partner has reached the minimum age mentioned in section 301-10 of the Income Tax Assessment Act 1997 .  Currently, section 301-10 specifies age 60, so that, if a person aged 60 or over receives a superannuation benefit, the benefit is not assessable income.  This ensures that only tax-free income of a cardholder’s partner is included in the seniors health card income test as a deemed income amount in addition to taxable income already captured by the test.  No age need be specified for the cardholder because, to be qualified for a seniors health card, a person must have reached pension age, which is a minimum of 60 years.

The method then applies existing section 1077 to generate an amount of ordinary income for the couple, on the assumption that the only financial assets of the couple were their long-term financial assets.  The total ordinary income deemed for the couple is then divided by two to give the person’s deemed income amount for the purposes of the seniors health card test.  This matches the approach taken in existing point 1071-11 where, if a person is a member of a couple, the couple’s adjusted taxable incomes are added and then divided by two to work out the amount of the person’s adjusted taxable income for the reference tax year.

Item 2 amends steps 3, 4 and 5 of the method statement, such that the method statement compares the sum of the person’s adjusted taxable income and their deemed income from long-term financial assets against the person’s seniors health card taxable income limit generated at step 2.

Item 5 provides for the application of these amendments.  The amendments are prospective only, applying to working out whether a person is qualified for a seniors health card on a day on or after 1 January 2015.  However, some exceptions to this will apply.  If a person held a seniors health card immediately before 1 January 2015, and a relevant long-term financial asset was being provided to the person immediately before 1 January 2015, then that asset is not to be included in the seniors health card income test, if it would otherwise be caught by the test.  This only applies while the person continuously holds a seniors health card.  If the person ceases to hold a seniors health card under the Social Security Act, then the amendments would apply to the income test for any card they later hold.

Amendments to the Veterans’ Entitlements Act

Items 6 to 9 amend section 118ZZA, which provides the seniors health card income test.  Item 6 inserts two new steps into the method statement at point 118ZZA-1.  New step 1A identifies whether the person or their partner at the test time has at least one long-term financial asset .  This term is defined at new point 118ZZA-12, inserted by item 9 , to mean a financial investment within the meaning of paragraph (i) or (j) of the definition of financial investment in subsection 5J(1).  These paragraphs will be inserted into the Veterans’ Entitlements Act at 1 January 2015 by the Social Services and Other Legislation Amendment Act 2014 (see item 35 of Schedule 11), to mean:

(i)    an asset-tested income stream (long term) that is an account-based pension within the meaning of the Superannuation Industry (Supervision) Regulations 1994; or

(j)    an asset-tested income stream (long term) that is an annuity (within the meaning of the Superannuation Industry (Supervision) Act 1993) provided under a contract that meets the requirements determined in an instrument under subsection (1G).

The new definition in paragraph (i) of the definition of financial investment in subsection 5J(1) is modified by requiring that the asset-tested income stream (long term) arises under a complying superannuation plan (within the meaning of the Income Tax Assessment Act 1997 ) that is not a constitutionally protected fund (within the meaning of that Act).  These terms limit the type of fund which will come within the definition in order to avoid the possibility that assessable income may also be produced by the income stream.

A note to this provision alerts the reader that this Schedule contains provisions preserving the rules in the Calculator for a certain kind of long-term financial asset that was being provided to a person immediately before 1 January 2015 where the person held a seniors health card immediately before that day, provided that, since that day, the person has held a seniors health card.

New step 1B adds the person’s deemed income amount under point 118ZZA-10A or 118ZZA-10B to the person’s adjusted taxable income amount generated at step 1 of the existing method statement.

If the person is not a member of a couple, and has such an asset, their deemed income from the asset is worked out under new point 118ZZA-10A, inserted by item 8 .  If the person is a member of a couple, and either they or their partner has such an asset, their deemed income amount is worked out under new point 118ZZA-10B, also inserted by item 8.

New point 118ZZA-10A works out an unpartnered person’s deemed income amount using a method statement.  The method involves working out the total value of all the person’s long-term financial assets at the test time, and then applying existing section 46D to generate an amount of ordinary income the person would be taken to receive per year on the assumption that the only financial assets of the person were their long-term financial assets.  This amount of ordinary income is then the person’s deemed income amount for the purposes of the seniors health card test.

New point 118ZZA-10B works out a partnered person’s deemed income amount, also using a method statement.  The method involves working out the value of all of the person’s long-term financial assets and the value of the person’s partner’s long-term financial assets, if the partner has reached the minimum age mentioned in section 301-10 of the Income Tax Assessment Act 1997.

Currently, section 301-10 specifies age 60 so that, if a person aged 60 years or over receives a superannuation benefit, the benefit is not assessable income.  This ensures that only tax-free income of a cardholder’s partner is included in the seniors health card income test as a deemed income amount in addition to taxable income already captured by the test.  No age need be specified for the cardholder because, to be qualified for a seniors health card, a person must have reached pension age, which is a minimum of 60 years.

The method then applies existing section 46E to generate an amount of ordinary income for the couple, on the assumption that the only financial assets of the couple were their long-term financial assets.  The total ordinary income deemed for the couple is then divided by two to give the person’s deemed income amount for the purposes of the seniors health card test.  This matches the approach taken in existing point 118ZZA-10 where, if a person is a member of a couple, the couple’s adjusted taxable incomes are added and then divided by two to work out the amount of the person’s adjusted taxable income for the reference tax year.

Item 7 amends steps 3, 4 and 5 of the point 118ZZA-1 method statement, such that the method statement compares the sum of the person’s adjusted taxable income and their deemed income from long-term financial assets against the person’s seniors health card taxable income limit generated at step 2. 

Item 10 provides for the application of these amendments.  The amendments are prospective only, applying to working out whether a person is qualified for a seniors health card on a day on or after 1 January 2015.  However, some exceptions to this will apply.  If a person held a seniors health card immediately before 1 January 2015, and a relevant long-term financial asset was being provided to the person immediately before 1 January 2015, then that asset is not to be included in the seniors health card income test.  This only applies while the person continuously holds a seniors health card.  If the person ceases to hold a seniors health card under the Veterans’ Entitlements Act, then the amendments would apply to the income test for any card they later hold.

Division 2 - Technical amendments

This Division makes amendments to rename the income test for the seniors health card the ‘seniors health card income test’, omitting the word ‘taxable’, to reflect the fact the test will now include tax-free elements.

Items 11 to 28 make technical amendments to the Social Security Act to substitute ‘seniors health card income test’ and ‘seniors health card income limit’ for the existing labels which include the word ‘taxable’.

Item 29 makes a technical amendment to the table in point 118ZZA-11 of Veterans’ Entitlements Act to reference correctly the ‘seniors health card income limit table’.

Part 2 - Portability

Non-cancellation of concession cards for temporary overseas absences is provided for by Division 4 of Part 2A.1 of the Social Security Act.  Section 1061ZUB sets a maximum non-cancellation period of up to six weeks beginning on the day the person leaves Australia.  The person ceases to be qualified for the card after the end of the period of six weeks beginning on the day the person leaves Australia (see subsection 1061ZUB(2)).

Item 30 makes a consequential amendment, narrowing the application of subsection 1061ZUB(2) to concession cards other than a seniors health card.

Item 31 inserts new subsection 1061ZUB(2A), providing that person is not qualified for a seniors health card for any period of absence after the end of the period of 19 weeks beginning on the day the person leaves Australia.

Item 32 substitutes two subparagraphs for former paragraph 1061ZUB(3)(b), to provide for a maximum non-cancellation period of six weeks for concession cards other than a seniors health card, and 19 weeks for a seniors health card.

Item 33 provides that the amendments made by items 30, 31 and 32 apply to periods of absence from Australia beginning on or after the commencement of those items.  The amendments also apply to periods of absence from Australia beginning before the commencement of those items, where the person is continuously absent from Australia during the period beginning on the day the person leaves Australia and ending immediately before 1 January 2015, and the length of that absence if less than 19 weeks. 

In other words, if a person leaves Australia in September 2014, and returns on 31 December 2014, their card will have been cancelled, and they will have to reapply for a card.  They would need to be re-granted a card on 31 December 2014 if they are to retain the benefit of the provisions preserving the previous application of the income test for continuing cardholders.  However, if the person leaves Australia in late 2014, and returns in January 2015, having been continuously absent in the intervening period, the new provisions may apply, provided the person was absent for fewer than 19 weeks in total.  In these cases, where the person’s card had been cancelled in 2014 because they had been absent for more than six weeks, and they return in 2015, having been continuously absent for less than 19 weeks, the Secretary may retrospectively reinstate their card.

 



Schedule 5 - Relocation scholarships

 

 

Summary

This Schedule will restrict qualification for the relocation scholarship payment to students relocating to or from regional or remote areas from 1 January 2015.  Students relocating from major cities will only remain qualified for a relocation scholarship payment if they relocate to a regional or remote area.

Background

This measure will continue to recognise the reduced level of course and institution choice in regional and remote areas and the higher proportion of regional or remote students who need to relocate to study, compared to students from major cities.

Students from major cities are more likely than students from regional or remote areas to have a suitable education institution near to their parental home.

The relocation scholarship payment is currently paid at a rate of $4,145 in the first year the student is required to live away from home and $1,036 each year thereafter for students relocating from major cities (2014 rates).  Recognising that they may have higher costs, students relocating from regional or remote areas are paid at a higher rate of $2,073 in the second and third year they are required to live away from home to study.

Qualification for the relocation scholarship payment is restricted to recipients of youth allowance (or ABSTUDY recipients under equivalent provisions in the ABSTUDY policy manual) undertaking higher education or higher education preparatory courses.

The amendments made by this Schedule commence on 1 January 2015.

Explanation of the changes

Item 1 amends section 592K of the Social Security Act to add further circumstances in which a person is not qualified for a relocation scholarship payment despite being otherwise qualified under section 592J.

The first circumstance, as dealt with by new subsection 592K(6), covers people who are not independent (as defined in section 1067A) but who are ‘required to live away from home’ at the time their qualification is to be determined.  Such people are not qualified for a relocation scholarship payment where, on the day the person started to undertake the course that would have otherwise qualified them for payment under paragraph 592J(d), each of the person’s parents lived in a major city location (as defined by new subsection 592K(9)), and the person’s place of study (as decided in accordance with principles made under new subsection 592K(8)) is also in a major city location.  This rule is intended to ensure that, for persons who are not independent but are required to live away from home, they are not paid a relocation scholarship payment when they have relocated from a major city (where their parents live) to the same or another major city.



The second circumstance, as dealt with by new subsection 592K(7), covers people who are independent, but only as a result of one of a certain range of subsections in section 1067A of the Social Security Act:  subsection (3), (5), (6), (7), (8), (9) or (11)).  Such people are not qualified for a relocation scholarship payment if, six months before starting to undertake the course that would have otherwise qualified them for payment under paragraph 592J(d), the person’s usual place of residence was in a major city location and, at the qualification time, the person’s place of study is also in a major city location.  This rule is intended to ensure that people, who are independent under the provisions referred to in new paragraph 592K(7)(a) are not paid a relocation scholarship payment where they have remained in a major city location, or relocated between major city locations, to study.

New subsection 592K(8) will provide power to the Secretary to make a legislative instrument outlining principles that must be complied with by decision-makers when deciding a person’s place of study at a particular time.  These principles will be able to address a range of study scenarios, including when a person is studying through attending classes, conducting research or fieldwork, or is studying online.  A legislative instrument will enable the rule-maker to adapt the principles flexibly to various study scenarios as they arise.

New subsection 592K(9) defines the term major city location as used in new subsections 592K(6) and (7).  The term will mean a location categorised as one of the ‘Major Cities of Australia’ under the ‘Remoteness Structure’ referred to in subsection 1067A(10F) of the Social Security Act.   Under subsection 1067A(10F), the default Remoteness Structure is as described in the Australian Bureau of Statistics publication, Statistical Geography Volume 1 Australian Standard Geographical Classification (ASGC) July 2006 , or other Australian Bureau of Statistics document that may be declared under subsection 1067A(10G) as a replacement document (for example, if new data becomes available from a more recent census). 

As at the date of introduction of the Bill, there is some useful information on the Australian Bureau of Statistics website about the ‘Remoteness Structure’ here:

http://www.abs.gov.au/websitedbs/D3310114.nsf/home/remoteness+structure ,

and on the Doctor Connect website here:

http://www.doctorconnect.gov.au/internet/otd/Publishing.nsf/Content/locator .

Item 2 is an application provision to clarify that the amendment made by the Schedule applies from commencement of the Schedule onwards in relation to qualification for a relocation scholarship payment following that date (irrespective of whether qualification is, following commencement, being determined for a person who has received qualification payments prior to commencement).

 



Schedule 6 - Pensioner education supplement

 

 

Summary

This Schedule ceases pensioner education supplement from 1 January 2015.

Background

In broad terms, the pensioner education supplement assists students with the ongoing costs of full-time or part-time study.  This Schedule repeals provisions that provide for pensioner education supplement, and makes related consequential changes.

The Government remains committed to providing incentives for income support recipients to improve their employment prospects through study or training.  More appropriate channels of Government-funded study and training assistance for income support recipients are available through employment service providers and the FEE HELP and VET FEE HELP tuition loan programmes.

Explanation of the changes

Part 1 - Main amendments

Amendments to the Social Security Act

Part 2.24A of the Social Security Act provides for the payment of pensioner education supplement.   Item 17 repeals Part 2.24A.

Consequential amendments are made as follows.

Item 1 omits ‘a pensioner education supplement,’ from subsection 7(6).

Item 2 repeals subparagraph (l)(v) of the definition of compensation affected payment in subsection 17(1).

Item 3 omits ‘ or supplement, ’ from paragraph (l) of the definition of compensation affected payment in subsection 17(1).

Item 4 repeals and substitutes paragraph (m) of the definition of compensation affected payment in subsection 17(1) to reflect the repeal of subparagraph 1061ZAAA(1)(b)(iv) by item 19.

Item 5 repeals the note at the end of the definition of approved course of education or study in subsection 19AB(2).

Item 6 repeals and substitutes the definition of independent in subsection 23(1).

Item 7 repeals paragraph (cb) of the definition of newly arrived resident’s waiting period in subsection 23(1).



Item 8 omits ‘ , a double orphan pension or a pensioner education supplement’, and substitutes ‘or a double orphan pension’ in paragraph (a) of the definition of payday in subsection 23(1).

Item 9 omits the word ‘, supplement’ from paragraph (a) of the definition of payday in subsection 23(1).

Item 10 repeals paragraph 23(4AA)(c).

Item 11 omits ‘paragraph 1061PB(1)(b)’, and substitutes ‘subsection 541B(5)’, in paragraphs 23(10F)(c) and (d).

Item 12 repeals section 119.

Item 13 repeals subsection 503AA(1).

Item 14 omits ‘(2)’ from subsection 503AA(2).  This is consequential to item 13.

Item 15 omits ‘, 569A(b) or 1061PB(1)(b)’, and substitutes ‘or 569A(b)’ in subparagraph 569H(7)(g)(iii).

Item 16 repeals subsection 1049(1).

Item 18 adds ‘and’ to the end of subparagraph 1061ZAAA(1)(b)(iii).  This is consequential to item 19.

Item 19 repeals subparagraph 1061ZAAA(1)(b)(iv).

Item 20 omits ‘ , a mobility allowance or a pensioner education supplement’, and substitutes ‘or a mobility allowance’, in section 1158.

Amendments to the Social Security Administration Act

Item 21 omits ‘allowance; or’, and substitutes ‘allowance.’, in paragraph (i) of the definition of supplementary payment in subsection 15(5).  This is consequential to item 22.

Item 22 repeals paragraph (j) of the definition of supplementary payment in subsection 15(5).

Item 23 repeals subsection 50(3).

Item 24 repeals paragraph 52(1)(h).

Item 25 omits ‘, austudy payment or pensioner education supplement’, and substitutes ‘or austudy payment’, wherever occurring in paragraphs 55(4A)(a) and (b).

Items 26 and 27 repeal paragraphs (i) and (o) of the definition of category I welfare payment and paragraphs (d) and (i) of the definition of category Q welfare payment respectively in section 123TC.

Item 28 repeals paragraph (i) of the definition of social security periodic payment in subclause 1(1) of Schedule 1.

Item 29 repeals clauses 30 to 32 of Schedule 2.

Part 2 - Other amendments

Consequential amendments are also made to the following Acts.

Amendments to the Family Assistance Act

Item 30 omits the reference to paragraph 17(1)(c) in subparagraph 14(1A)(b)(i).  This is consequential to item 31.

Item 31 repeals paragraph 17(1)(c).

Amendment to the Farm Household Support Act

Item 32 repeals paragraph 94(i). 

Amendments to the Income Tax Assessment Act 1997

Item 33 repeals item 22A.1 in the table contained in section 52-10.

Item 34 repeals item 22A in the table contained in section 52-40.

Part 3 - Application and saving provisions

Subitem 35(1) provides that, despite the amendments to the definition of compensation affected payment in subsection 17(1) of the Social Security Act made by Part 1 of this Schedule, Parts 3.6A and 3.14 of the Social Security Act continue to apply as if those amendments had not been made.

Subitem 35(2) provides that, despite the amendments made by items 12, 13, 14 and 16 of this Schedule, sections 119, 503AA and 1049 of the Social Security Act, as in force immediately before the commencement of this item, will continue to apply on and after the commencement of the items in relation to working out whether an approved program of work supplement or language, literacy and numeracy supplement are payable in respect of a fortnight beginning before that commencement.

Subitem 35(3) provides that, despite the amendment made by item 17 of this Schedule, Part 2.24A of the Social Security Act, as in force immediately before the commencement of this item, will continue to apply on and after the commencement in relation to days occurring before the commencement.

Subitem 35(4) provides that, despite the amendments made by items 18 and 19 of this Schedule, paragraph 1061ZAAA(1)(b) of the Social Security Act, as in force immediately before the commencement of this item, continues to apply on and after that commencement in relation to a relevant period that began before that commencement.

Subitem 35( 5 ) provides that, despite the amendment made by item 20 of this Schedule, section 1158 of the Social Security Act, as in force immediately before the commencement of this item, continues to apply on and after that commencement in relation to days occurring before that commencement.

Subitem 35(6) provides that, despite the amendments made by items 23 and 25 of this Schedule, subsections 50(3) and 55(4A) of the Social Security Administration Act, as in force immediately before the commencement of this item, continue to apply on and after that commencement in relation to the payment of fares allowance on or after that commencement, to the extent that payment of fares allowance is being made because of the receipt of pensioner education supplement.

Subitem 35(7) provides that, despite the amendment made by item 24 of this Schedule, paragraph 52(1)(h) of the Social Security Administration Act, as in force immediately before the commencement of this item, continues to apply on and after that commencement in relation to the payment of pensioner education supplement on or after that commencement.

Subitem 35(8) provides that, despite the amendments made by items 26 and 27 of this Schedule to paragraphs (i) and (o) of the definition of category I welfare payment and paragraphs (d) and (i) of the definition of category Q welfare payment in the Social Security Administration Act, Part 3B of that Act continues to apply as if those amendments had not been made.

Subitem 35(9) provides that, despite the amendments made by items 30 and 31 of this Schedule, subparagraph 14(1A)(b)(i) and paragraph 17(1)(c) of the Family Assistance Act, as in force immediately before the commencement of this item, continue to apply on and after that commencement in relation to working out whether an individual satisfies the work/training/study test or has recognised study commitments before, on or after that commencement.

Subitem 35(10) provides that, despite the amendment made by item 33 of this Schedule, item 22A.1 of the table in section 52-10 of the Income Tax Assessment Act 1997 , as in force immediately before the commencement of this item, continues to apply on and after that commencement in relation to a payment of pensioner education supplement before, on or after that commencement.

 

 



Schedule 7 - Education entry payment

 

 

Summary

This Schedule c eases the education entry payment from 1 January 2015.

Background

In broad terms, the education entry payment assists with education expenses, and is paid once a year to eligible recipients.  This Schedule repeals provisions that provide for education entry payment, and makes related consequential changes.

The Government remains committed to providing incentives for income support recipients to improve their employment prospects through study or training.  More appropriate channels of Government-funded study and training assistance for income support recipients are available through employment service providers and the FEE HELP and VET FEE HELP tuition loan programs.

Explanation of the changes

Part 1 - Main amendments

Amendments to the Social Security Act

Part 2.13A of the Social Security Act provides for the payment of education entry payment.  Item 3 repeals Part 2.13A.

Consequential amendments are made as set down below.

Item 1 repeals subparagraph (l)(iv) of the definition of compensation affected payment in subsection 17(1).

Item 2 omits ‘allowance, payment’, and substitutes ‘allowance,’ in paragraph (l) of the definition of compensation affected payment in subsection 17(1).

Item 4 repeals table item 7 in subsection 1222(2).

Item 5 omits ‘or an education entry payment supplement’ in paragraph 1223ABAAB(1)(a).

Item 6 omits ‘benefit; and’, and substitutes ‘benefit.’ in paragraph 1223ABAAB(2)(e).  This is consequential to item 7.

Item 7 repeals paragraph 1223ABAAB(2)(h).

Item 8 repeals section 1224B.

Amendments to the Social Security Administration Act

The following paragraphs refer to the education entry payment.  Amendments are made to remove these references.



Item 9 repeals paragraph (c) of the definition of supplementary payment in subsection 15(5).

Item 10 repeals paragraph (d) of the definition of lump sum benefit in subsection 47(1).

Item 11 repeals paragraph (c) of the definition of household stimulus payment in section 123TC.

Amendment to the Veterans’ Entitlement Act

Part VIIAA of the Veterans’ Entitlement Act provides for the payment of education entry payment.  Item 19 repeals Part VIIAA.

 

Consequential amendments are made as follows:

Item 12 omits the words ‘age; or’ and substitutes ‘age.’ in paragraph (c) of the definition of compensation affected pension in subsection 5NB(1).

 

Item 13 repeals paragraph (f) of the definition of compensation affected pension in subsection 5NB(1).

 

Item 14 omits the words ‘pensions, supplements and payments’, and substitutes ‘pensions and supplements’ in subsection 59M(1).

 

Item 15 omits the word ‘supplement;’ and substitutes ‘supplement.’ in paragraph 59M(1)(f).  This is consequential to Item 16.

 

Item 16 repeals paragraph 59M(1)(i).

 

Item 17 omits the words ‘pensions, supplements, allowances and payments’, and substitutes ‘pensions and supplements’ in note 2 to subsection 59M(1).

 

Item 18 omits the words ‘supplement or payment’ and substitutes ‘or supplement’ in subsections 59M(2), (3) and (4).

 

Part 2 - Other amendments

Consequential amendments are made as follows to various Acts, as set out below.

Amendment to the Farm Household Support Act

Item 20 repeals paragraph 94(e).

Amendments to the Income Tax Assessment Act 1936

Item 21 omits ‘or education entry payment’ in subparagraph 160AAAA(2)(c)(i).

Item 22 omits ‘or education entry payment’ in subparagraph 160AAAB(2)(c)(i).

Amendments to the Income Tax Assessment Act 1997

Item 23 omits the entry ‘education entry payment supplement under the Social Security Act 1991’ in the table item headed ‘social security or like payments’ in section 11-15.

Item 24 omits ‘purposes;’, and substitutes ‘purposes.’ in paragraph 51-35(e).  This is consequential to item 18.

Item 25 repeals paragraph 51-35(f).

Item 26 repeals and substitutes section 51-40.

Item 27 repeals paragraph 52-10(1)(za).

Item 28 repeals subsection 52-10(1J).

Item 29 repeals section 55-10.

Amendment to the Taxation Administration Act 1953

Item 30 omits ‘, 55-5 or 55-10’, and substitutes ‘or 55-5’ in paragraph 12-110(1)(c) of Schedule 1.

Part 3 - Application and saving provisions

Subitem 31(1) provides that, despite amendments to the definition of compensation affected payment in subsection 17(1) of the Social Security Act made by Part 1 of this Schedule, Parts 3.6A and 3.14 of the Act continue to apply as if the amendments had not been made. 

Subitem 31(2) provides that, despite the amendment made by item 3 of this Schedule, Part 2.13A the Social Security Act, as in force immediately before the commencement of this item, continues to apply on and after that commencement in relation to the 2014 calendar year and earlier calendar years.

Subitem 31(3) provides that, despite amendments made by items 5 to 8 of this Schedule, sections 1223ABAAB and 1224B of the Social Security Act, as in force immediately before the commencement of this item, continue to apply on and after that commencement in relation to payments of education entry payment supplement or education entry payment made before, on or after that commencement.

Subitem 31(4) provides that despite the amendments of the definition of compensation affected pension in subsection 5NB(1) of the Veterans’ Entitlements Actmade by Part 1, Part IIIC of the Veterans’ Entitlements Act continues to apply as if those amendments had not been made.

 

Subitem 31(5) provides that despite the amendment made by item 19, Part VIIAA of the Veterans’ Entitlements Act 1986, as in force immediately before the commencement of this item, continues to apply on and after that commencement in relation to the calendar year 2014 and earlier calendar years.

 

Subitem 31(6) provides that, despite the amendments made by items 14 and 15 of this Schedule, paragraphs 160AAAA(2)(c)(i) and 160AAAB(2)(c)(i) of the Income Tax Assessment Act 1936 , as in force immediately before the commencement of this item, continue to apply on and after that commencement in relation to payments of education entry payment made before, on or after that commencement.

Subitem 31(7) provides that, despite the amendments made by items 18, 19 and 22 of this Schedule, paragraph 51-35(f) and sections 51-40 and 55-10 of the Income Tax Assessment Act 1997 , as in force immediately before the commencement of this item, continue to apply on and after that commencement in relation to payments of education entry payment made before, on or after that commencement.

Subitem 31(8) provides that, despite the amendment made by item 21 of this Schedule, subsection 52-10(1J) of the Income Tax Assessment Act 1997 , as in force immediately before the commencement of this item, continue to apply on and after that commencement in relation to payments of education entry payment supplement made before that commencement.

 



Schedule 8 - Age requirements for various Commonwealth payments

 

 

Summary

From 1 January 2015, this Schedule provides that young unemployed people aged 22 to 24 would no longer be eligible for newstart allowance or sickness allowance until they turn 25 years of age and would, instead, be able to claim and qualify for youth allowance.  To enable this, youth allowance for all types of persons who can satisfy the activity test, will be available to persons who have not yet reached 25.  Youth disability supplement will also be available to all youth allowance recipients who have not yet reached 25.  The amendments include safeguards to ensure that existing newstart allowance recipients who are 22, 23 or 24 leading up to commencement (or persons undergoing certain waiting periods or suspension periods) can remain in receipt of newstart allowance.  Similar savings rules are provided for sickness allowance.

This Schedule also makes consequential amendments to the Farm Household Support Act to align rates at which farm household allowance is paid to farmers and their partners, with newstart allowance and youth allowance rates.

Background

The key aim of this measure is to incentivise young unemployed people to obtain the relevant education and training to increase employability.  Changes to labour markets presage the need for a highly educated and skilled workforce and this measure is designed to encourage young people to adequately skill themselves and move off unemployment benefits.  The proposal is driven by the current high youth unemployment rate of approximately 12 per cent, which is significantly higher than the comparable national average of 5.4 per cent.

 

Presently, unemployed youth aged 22 to 24 are able to qualify for newstart allowance or sickness allowance rather than youth allowance.  Persons in this age bracket may perceive an advantage by remaining in receipt of newstart allowance and a disincentive to pursue full-time study or employment, given the higher rate of newstart allowance and sickness allowance as compared to youth allowance.  This measure removes this disincentive by placing all under 25 year olds on the same payment levels whether unemployed or studying full-time.  The broad financial incentives provided for further education in lieu of working, applying to those on youth allowance (student) payments are not diminished, since youth allowance (student) attracts more generous income testing compared to youth allowance (other).  In addition, a facility is provided to youth allowance (student) recipients to accumulate a student income bank of $10,000 without affecting payments.

 

While youth allowance is paid at lower rates to newstart allowance, the payment has a larger income free area compared to newstart allowance, providing greater flexibility to earn while on payment.

 



Explanation of the changes

Amendments to the Social Security Act

Item 1 replaces the reference to age 22 in paragraphs 19C(8)(b) and (c) of the Social Security Act with a reference to age 25.  This amendment is consequential on the age adjustments proposed to be made by the Bill to youth allowance and newstart qualification rules.  Section 19C deals with definitions for a number of terms related to when a person is in severe financial hardship .  The concept of severe financial hardship is relevant to a number of provisions in the Social Security Act, including those dealing with advance payments, ordinary waiting periods, special employment advances, certain rules dealing with seasonal workers and others.  The specific amendments to paragraphs 19C(8)(b) and (c) will ensure that the reference to ‘maximum payment rate’ in subsections 19C(2) and (3) will mean that the age thresholds relevant to determining a person’s maximum payment rate will be interpreted in line with the new qualification age thresholds for youth allowance and newstart allowance as proposed by this Schedule to the Bill.

Item 2 is the key amendment that will lift the qualification age for youth allowance, allowing persons who have not yet reached 25 to qualify.  Under section 543 of the Social Security Act, a person is of youth allowance age if the person has attained the ‘minimum age for youth allowance’ and has not yet attained the ‘maximum age for youth allowance’ as set out under section 543B.  Prior to these amendments, the maximum age for youth allowance under section 543B was set at different ages (either 22 or 25) for persons not undertaking full-time study, persons undertaking full-time study and persons who are ‘new apprentices’.  This amendment proposes to set the maximum age of youth allowance at 25 for all persons previously dealt with by subsection 543B(1).  Note that subsection 543B(2) will still provide that persons in receipt of youth allowance at the time they turn 25 to remain below the maximum age for youth allowance if they continue full-time study or remain as a new apprentice after they turn 25.  The amendments made by this item will operate subject to the application rules set out in item 13.

Items 3 and 4 propose to make changes to the basic qualification rules for newstart allowance, amending references to age 22 to age 25.  These amendments will ensure that a person is only qualified for youth allowance during a period where they have reached the age of 25.  These amendments will operate subject to the application rules set out in item 14.

Item 5 proposes to amend the age at which a person can qualify for sickness allowance, by changing the reference to 22 years to 25 years in paragraph 666(1)(e) of the Social Security Act.  This will mean that, from commencement, a person will no longer be able to qualify for sickness allowance if they have not yet turned 25 years old.  This amendment will operate subject to the application rules set out in item 15.

Item 6 proposes to amend the age at which a person is able to have an amount by way of youth disability supplement to be added to their rate of youth allowance under the youth allowance rate calculator.  Prior to these amendments, a person can only receive an amount by way of youth disability supplement if they have not turned 22.  These amendments will allow a person to receive youth disability supplement up to the age of 25 to align with the adjustment to the maximum age for youth allowance made by item 2.

Items 7 8 9 and 10 propose to make changes to the rules around how to determine the ‘partner income free area for a person’ for the purposes of the youth allowance, austudy payment, benefit rate calculator B (including for newstart allowance) and parenting payment (partnered) rate calculators.  Prior to these amendments, the partner income free area was determined by reference to the amount of income of a partner beyond which youth allowance or newstart allowance would not be payable to the partner if the partner were qualified for youth allowance or newstart allowance.  Whether the calculation is conducted by reference to youth allowance or newstart allowance depends on the age of the partner:  whether they have reached 22 years of age or not.  The amendments propose to change references to 22 to 25 for relevant ‘partner income free area’ provisions such that the ‘partner income free area for a person’ will be calculated by reference to the income test for youth allowance for partners who are not yet 25 and by reference to the income test for newstart allowance for partners who have already turned 25.

Item 11 is an amendment consequential upon the changes to youth disability supplement proposed by item 6.  Item 11 addresses the description of youth disability supplement in the indexation table at section 1190 of the Social Security Act to refer to youth disability supplement as payable to a recipient of youth allowance who is under 25 (rather than under 22).  This item in the indexation table operates to make clear which amount is subject to the indexation rules in Part 3.16 of the Social Security Act.

Item 12 is an application provision to clarify that the amendments made to the ‘severe financial hardship’ definitions in item 1 will apply for days on or after 1 January 2015.

Item 13 is an application provision that sets out how various amendments proposed by this Schedule will affect different persons. 

Subitem 13(1) sets out the default rule (‘default’ in the sense that it operates subject to subitems 13(2) and (3)) that the amendments made by item 2 to the ‘maximum age for youth allowance’ apply for the purposes of working out whether a person qualifies for youth allowance for days from 1 January 2015 and onwards.

Subitem 13(2) provides that, if a person was aged 22, 23 or 24 on the day before the amendments to adjust the ‘maximum age of youth allowance’ commence and is, at that time, receiving newstart allowance (or is undergoing a period of suspension), the amendment to the maximum age of youth allowance does not apply to the person until their newstart allowance is cancelled.  This provision will operate to ensure, along with subitem 14(2), that existing persons in receipt of newstart (or subject to a period of suspension) will remain in receipt of newstart in spite of the amendments proposed to the ages at which a person can qualify for youth allowance and newstart allowance as proposed by this Schedule to the Bill.

Subitem 13(3) is an application provision that will apply to a person where a claim for newstart allowance was granted before the commencement of item 2 in circumstances where the start day is worked out as being on a day after 1 January 2015.  If this provision applies to a person, the amendments made by item 2 (to adjust the ‘maximum age of youth allowance’) will not apply to that person until their newstart allowance is cancelled.

Subitem 13(4) is an application provision that deals with when the changes to youth disability supplement (as paid as an amount by way of youth allowance) proposed by item 6 will apply to a person.  The subitem states that the amendment made by item 6 will apply from 1 January 2015 onwards.

Item 14 deals with various circumstances around how the amendments made by items 3 and 4 (to raise the lower age qualification limits for newstart allowance) apply, depending upon a person’s particular case as follows.

Subitem 14(1) sets out the default rule (to operate subject to the more specific rules in the remainder of item 14) that the amendments made by items 3 and 4 apply for working out whether a person is qualified for newstart allowance from days extending from 1 January 2015 onwards.

Subitem 14(2) provides that if, immediately before the amendments made by this Schedule commence (that is, on 31 December 2015), the person was aged 22, 23 or 24 and was receiving newstart allowance (or subject to a period of suspension), the amendments made by items 3 and 4 (to raise the lower qualification age for newstart allowance from 22 to 25) do not affect the person from commencement on 1 January 2015 until their newstart is cancelled.  This provision will mean that existing recipients of newstart allowance, at the time this Schedule commences, will be able to remain in receipt of newstart allowance.

Subitem 14(3) operates to ensure that claims for newstart allowance made by persons aged 22, 23 or 24 that have been made but not determined by the Secretary at the time immediately before 1 January 2015 can still be granted on the basis that the lower age limit for qualification for newstart allowance is not affected by the amendments proposed by items 3 and 4.  This means that 22, 23 and 24 year old persons who have a claim pending (that is, made but not determined) on 1 January 2015 can still be granted newstart allowance on the basis of the claim as if the lower age limit for qualification remains 22, from 1 January 2015 until the person’s payment (if granted as a result of the claim) is cancelled.

Subitem 14(4) deals with the application of the amendments proposed by items 3 and 4 to persons aged 22, 23 or 24 who have claimed newstart allowance prior to the time this Schedule commences and who are undergoing a liquid assets test waiting period, in relation to that claim, on 1 January 2015.  For such persons, the amendments made by items 3 and 4 do not apply from 1 January 2015 in relation to their claim and subsequent qualification for and payment of newstart allowance as a result of that claim.  Once any payment as a result of that claim is cancelled, the person will no longer be subject to this application provision and will not be able to qualify for newstart allowance again until they turn 25.

Subitem 14(5) ensures that persons serving an income maintenance period on 1 January 2015 in relation to newstart allowance are not affected by the amendments proposed by items 3 and 4 from 1 January 2015 until their payment is cancelled.  This provision will operate as a beneficial rule for persons who are 22, 23 and 24 in these circumstances, as they will able to resume payment on newstart allowance following their income maintenance period, notwithstanding the proposal to raise the age of qualification for newstart allowance to 25.

Subitem 14(6) is an application provision that will apply to a person where a claim for newstart allowance was granted before the commencement of items 3 and 4 in circumstances where the start day is worked out as being on a day after 1 January 2015.  If this provision applies to a person, the amendments made by items 3 and 4 (to raise the lower age for qualification for newstart allowance) will not apply to that person until their newstart allowance is cancelled.  This will operate beneficially for such persons aged 22, 23 or 24 at the time of commencement, as persons of these ages will still be able to receive newstart allowance, notwithstanding the amendments to the qualification age for newstart allowance proposed by this Schedule.

Subitems 15(1) and (2) provide that item 5, which amends the lower qualification age for sickness allowance from 22 to 25, applies for working out a person’s qualification for sickness allowance from 1 January 2015 onwards, unless the person is 22, 23 or 24 on 1 January 2015 and is in receipt of sickness allowance or is undergoing a period of suspension in relation to their sickness allowance:  such persons can remain in receipt (or have their sickness allowance payment resumed after a period of suspension) following 1 January 2015 until their payment is cancelled.

Subitems 15(3) to 15(6) are modelled on the application provisions for newstart allowance at subitems 14(3) to 14(6), and operate as described in more detail above in relation to newstart allowance in circumstances where, for persons aged 22, 23 and 24:  a claim is made but not determined; the person is serving a liquid assets test waiting period; the person is serving an income maintenance period; or a claim is granted but the person’s start day post-dates 1 January 2015.

Item 16 provides that the amendments made by items, 7, 8, 9 and 10 (which make changes to the rules around how to determine the ‘partner income free area’ for a person) apply in relation to working out that rates of social security payments for a person for days following commencement on 1 January 2015 onwards.

Amendments to the Farm Household Support Act

Items 17, 18, 19 and 20 replace a number of references in the Farm Household Support Act to a person who has ‘turned 22’ to references to a person who has ‘turned 25’.  The changes are consequential upon the changes to the qualification ages for youth allowance and newstart allowance proposed by items 2, 3 and 4 of this Schedule to the Bill.  Prior to these amendments, farm household allowance was paid either at youth allowance rates or newstart allowance rates, depending upon whether a person had turned 22.  These amendments will ensure payment rates of farm household allowance remain aligned with payment rates of youth allowance and newstart allowance for persons of the same age.

Similarly, items 21, 22 and 23 replace a number of references in the Farm Household Support Act to a person who has ‘not turned 22’ to references to a person who has ‘not turned 25’.  These amendments will also ensure payment rates of farm household allowance remain aligned with payment rates of youth allowance and newstart allowance for persons of the same age.

Item 24 makes amendments to the table in section 93 of the Farm Household Support Act that deals with reading certain references in the Social Security Act for the purposes of the Farm Household Support Act.  The amendments to items 1 and 2 in the table will ensure that, from commencement, references to newstart allowance and youth allowance in the Social Security Act are to be read as including references to persons who have and have not turned 25 respectively (subject to the other rules in Division 2 of Part 5 of the Household Support Act).  The amendments to items 15 and 16 in the table will ensure that, from commencement, references to the newly arrived resident’s waiting period for newstart allowance and youth allowance are to be read as references to a newly arrived resident’s waiting period (within the meaning of the Farm Household Support Act) for persons who have and have not turned 25 respectively.

The amendments made by item 25 are various application rules which determine how certain persons are affected by the amendments made by items 19, 20 and 24 from commencement on 1 January 2015.

Subitem 25(1) sets out a default rule (that is, one that is subject to subitems 25(2) and (3)) for how various substantive provisions made by this Schedule apply (excluding amendments made to headings and the outline at section 7 of the Farm Household Support Act).   Subitem (1) states that amendments made by items 19, 20, 22 and 23, to change references to age 22 to age 25 throughout the Farm Household Support Act apply for working out the rate of a person’s farm household allowance from 1 January 2015 and days following.

Subitem 25(2) ensures that persons in receipt of farm household allowance on 1 January 2015 (or for whom payment is suspended) and who are aged 22, 23 or 24 are not affected by amendments to change references to age 22 to age 25 made by items 19 and 20.  This is a beneficial rule which will ensure that such persons will be able to be paid farm household allowance at the newstart allowance rate (under benefit rate calculator B of the Social Security Act) notwithstanding amendments made to Subdivision A of Division 8 of the Farm Household Support Act.  Note that equivalent amendments are not required in relation to the amendments made by items 22 and 23 as these items change references to persons who ‘have not turned 22’ to references to persons who ‘have not turned 25’, the rationale being that persons who have not turned 22 on commencement will also have not turned 25.  Persons will only remain able to benefit from this application provision until their payment is cancelled.

Subitem 25(3) is a similar rule that deals with persons who are aged 22, 23 or 24 on commencement whose claim has been granted prior to 1 January 2015 for a start date on or after 1 January 2015.  Such persons are also not affected by the amendments made by items 19 and 20 and can therefore receive farm household allowance at the newstart allowance rate (under benefit rate calculator B of the Social Security Act) notwithstanding amendments made to Subdivision A of Division 8 of the Farm Household Support Act.  Persons will only remain able to benefit from this application provision until their payment is cancelled.

Subitem 25(4) ensure that the amendments proposed for changing the reference from 22 to 25 in items 1 and 16 do not apply during the period that the application provisions described above (and particularly subitems 25(2) and (3)) do not apply.  Aligned in this way to the period for which the application provisions dealing with items 19 and 20 operate for a person, this subitem also ensures that persons aged 22, 23 and 24 on commencement who are in receipt of farm household allowance, subject to a period of suspension, or for whom a claim has been determined but whose start date follows 1 January 2015, can benefit from their payment being calculated at the at the newstart allowance rate (under benefit rate calculator B of the Social Security Act) until their farm household allowance is cancelled.

 



Schedule 9 - Exclusion periods

 

 

Summary

This Schedule makes amendments to require young people with full capacity to earn, learn, or Work for the Dole from 1 January 2015.

Background

This Schedule implements an income support measure that forms part of the broader reforms announced in the 2014-15 Budget.  This measure aims to encourage greater participation in work and other activities and make the welfare system fairer and more sustainable, to ensure a productive Australian workforce for the future.  The measure establishes firm expectations for young jobseekers.  It provides an incentive for affected persons to be self-sufficient, or to undertake further relevant education or training to increase employability before relying on the taxpayer for support. 

Subject to some exceptions, the amendments made by this Schedule will apply from 1 January 2015 to a person aged under 30 years who is a new claimant for, or transferring from another payment to, newstart allowance, youth allowance (other) and, in certain circumstances, special benefit.  Such a person will be subject to a 26-week waiting period before the social security benefit becomes payable.  This 26-week period may be reduced if a person has had past periods of gainful work. 

After an initial 26-week waiting period, jobseekers may become eligible to receive income support for 26 weeks, after which a person will be required to participate in 25 hours a week of Work for the Dole during this 26-week payment period.

After the 26-week payment period, a person may become subject to a 26-week non-payment period, unless an exemption applies.  During this period, a wage subsidy will be available for employers, as well as relocation assistance to encourage people to move to where jobs are available.

A person who is receiving, on 1 January 2015, a social security benefit to which these amendments apply will become subject to a 26-week non-payment period once they have completed a Work for the Dole programme after 1 July 2015, provided they are aged under 30 years and an exemption does not apply.  This cycle will continue, with income support generally payable for 26 weeks in every 52-week period, until a person finds a job, undertakes full-time study, or turns 30 years of age.

 



A person will be required to register as a jobseeker in order to commence the new waiting period.  They will then have to comply with their activity test and participation requirements while they are subject to the new waiting period and non-payment period.  These requirements are to look for work, attend appointments with employment services providers and accept any offers of suitable work.   Requirements will be monitored through Employment Pathway Plans and young jobseekers will be required to enter into and comply with the terms of an Employment Pathway Plan at all times during the new exclusion period.  Jobseekers who fail to comply with an Employment Pathway Plan may have an exclusion period extended or a penalty imposed. 

A person will not be subject to the new waiting period or the new non-payment period if they are subject to an exemption.  This Schedule sets out a number of exemptions for a person who does not have a full capacity to work and allows the Minister to specify further exemptions in a legislative instrument.  The Minister will also be able to specify temporary exemptions in a legislative instrument which exempt a person from a waiting period or a non-payment period for particular period of time.

The amendments made by this Schedule commence on 1 January 2015 with the exception of Part 2, which commences immediately after the remainder of Part 1 commences, unless the Social Security Legislation Amendment (Increased Employment Participation) Act 2014 does not receive the Royal Assent, in which case Part 2 would not commence at all.

Explanation of the changes

Part 1 - Main amendments

Amendments to the Social Security Act

Item 1 inserts a new Part 3.12B to provide for new exclusion periods.

Relevant social security benefits

New subsection 1157AA(1) provides that Part 3.12B applies to the following social security benefits:

(a)   youth allowance, if the person qualified for that payment is neither undertaking full-time study nor a new apprentice;

(b)   newstart allowance;

(c)   special benefit, if the person qualified for that benefit is an Australian resident or a person who is the holder of a visa in a class determined by the Minister by legislative instrument.

Subsection 1157AA(2) provides that the Minister may determine classes of visas for the purpose of paragraph (1)(c).

Subsections 1157AA(3) and (4) provide for special rules for Part 3.12B exclusion periods in relation to youth allowance.  These rules are necessary because a person may be qualified for youth allowance on two separate bases.  First, a person may be qualified on the basis that they are undertaking full-time study or are a new apprentice (hereafter referred to as youth allowance (student)).  Second, a person may be qualified for youth allowance other than on the basis that they are undertaking full-time study or are a new apprentice, usually where the person is a jobseeker (hereafter referred to as youth allowance (other)).  Part 3.12B exclusion periods will apply only to youth allowance (other) and not youth allowance (student).

Subsection 1157AA(3) modifies rules in new Part 3.12B where a person becomes qualified for youth allowance (other) immediately after they were receiving youth allowance (student).  In particular, one of the effects of subsection 1157AA(3) is that a person may be required to serve a Part 3.12B waiting period, under sections 1157AB and 1157AC, if the person became qualified for youth allowance (other) after receiving youth allowance (student). 

Subsection 1157AA(4) provides for the end of a Part 3.12B exclusion period where a person was previously subject to that exclusion period because they were qualified for youth allowance (other) and they then become qualified for youth allowance (student). In these circumstances, the exclusion period will end when the person becomes qualified for youth allowance (student).

Part 3.12B waiting period

Section 1157AB provides for when a person is subject to a Part 3.12B waiting period. 

Subsection 1157AB(1) provides that a person qualified for a social security benefit to which Part 3.12B applies will generally be subject to a Part 3.12B waiting period if, on the person’s start day for the social security benefit:

·          they are aged under 30 years; and

  • they are not covered by an exemption in new section 1157AF (inserted by this item).

Subsection 1157AB(2) provides for when a person will not be subject to a Part 3.12B waiting period despite the general rule in subsection (1). 

A person will not be subject to a Part 3.12B exclusion period if they are transferring from a social security pension or a social security benefit of a kind determined by the Minister in a legislative instrument to any of the payments to which new Part 3.12B applies where the conditions determined by the Minister in a legislative instrument are met. 

A person will not be subject to a Part 3.12B waiting period if they are transferring to newstart allowance from youth allowance, other than youth allowance paid to a person undertaking full-time study or as a new apprentice, provided the person was not subject to a Part 3.12B exclusion period at the time of their transfer to newstart allowance.  This is also the case for a person transferring from special benefit to youth allowance or newstart allowance.

Duration of the waiting period

Section 1157AC sets out the duration of a Part 3.12B waiting period.

Subsection 1157AC(1) provides for when a Part 3.12B waiting period commences.  A person’s social security payment becomes payable from a person’s start day.  The Social Security Administration Act provides for rules in relation to a person’s start day, with the general rule being that the start day is the day of a person’s claim for a social security payment, if the person is qualified for the payment on that day.

If a person’s start day falls within one or more of a period of non-payment because the person has moved to an area of lower employment prospects without sufficient reason, a seasonal work preclusion period, liquid assets test waiting period, newly arrived resident’s waiting period, a lump sum preclusion period or an income maintenance period, then the Part 3.12B waiting period commences when all of those waiting periods and preclusion periods have ended.  The effect of this is that a person cannot serve a Part 3.12B waiting period concurrently with the other specified waiting periods and preclusion periods.

Subsection 1157AC(2) provides for when the Part 3.12B waiting period ends.  The general rule in subparagraph (a)(i) is that a person’s Part 3.12B waiting period is 26 weeks. 

However, subparagraph (a)(ii) provides that the waiting period may be reduced if the person has participated in previous periods of gainful work.  Gainful work is defined to mean any work for financial gain or reward (see subsection (4)).  Under subsection (3), the Minister will be able to determine, in a legislative instrument, the method for working out the reduced period on the basis of previous periods of gainful work.  However, the minimum reduced period worked out under the determination must be at least four weeks.  This determination will also be able to provide that particular kinds of gainful work do not cause a reduced waiting period to apply.  As examples, the Minister could provide that particular kinds of gainful work do not cause a reduced waiting period if the work:

·          does not involve a substantial degree of consistent personal exertion;

·          consists of domestic or gardening tasks in relation to the place of residence of the person or a member of their family;

·          consists of the management of financial investments in which the person or a member of their family has an interest;

·          involves nudity or is in the sex industry;

·          contravenes Commonwealth, state or territory legislation; or

·          is for the purpose of achieving election of the person to public office.

The general rule that the Part 3.12B waiting period will be a period of 26 weeks will also not apply if the person makes a claim for the social security benefit while serving a Part 3.12B exclusion period for another benefit (subparagraph (2)(a)(iii)).  In these circumstances, the person will be required to serve only the balance of the Part 3.12B exclusion period that remained at the time of their transfer to the new payment.  For example, if a person made a claim for newstart allowance when they were subject to, and had served 13 weeks of, a Part 3.12B waiting period for youth allowance, then the person would have a Part 3.12B waiting period of 13 weeks for newstart allowance (assuming no other reductions applied).

The effect of paragraph 1157AC(2)(b) is that a Part 3.12B waiting period will end when a person becomes subject to an exemption under section 1157AF.  A Part 3.12B waiting period will also end when a person turns 30 years of age (paragraph 1157AC(2)(c)).

Part 3.12B non-payment period

Section 1157AD provides for when a person will be subject to a Part 3.12B non-payment period.

Subsection 1157AD(1) provides that a person will be subject to a Part 3.12B non-payment period if on the relevant day specified in subsection (2):

·          the person’s age is under 30 years;

·          the person would be receiving a social security benefit to which Part 3.12B applies, apart from the operation of section 1157AD; and

·          the person is not covered by an exemption under section 1157AF.

Subsection 1157AD(2) provides for when a person will become subject to a Part 3.12B non-payment period, if they are a person who is covered by subsection 1157AD(1).  A person will become subject to a Part 3.12B non-payment period if 26 weeks have elapsed since the person’s last Part 3.12B exclusion period, which may be either a Part 3.12B waiting period or another Part 3.12B non-payment period.  A person will also become subject to a Part 3.12B non-payment period immediately after an exemption to a Part 3.12B exclusion period ends (paragraph 1157AD(2)(c)). 

However, these rules for when a person becomes subject to a Part 3.12B non-payment period will not apply if:

·          the last Part 3.12B exclusion period that the person served was a waiting period and this waiting period was a reduced period on the basis of previous periods of gainful work (under subparagraph 1157AC(2)(a)(ii)).  In these circumstances the Part 3.12B non-payment period will apply after a period of time equivalent to the period by which the Part 3.12B waiting period was reduced, in addition to 26 weeks.  For example, if a person had previous periods of gainful work that resulted in an eight-week reduction of the Part 3.12B waiting period, then the relevant day on which the person would become subject to the Part 3.12B non-payment period would be 34 weeks after the Part 3.12B waiting period ended;

·          the 26-week period falls within a Part 3.12B penalty period.  In these circumstances, the Part 3.12B non-payment period will start after the Part 3.12B penalty period ends.  New subsection 1157AE(5) allows the Secretary to impose a Part 3.12B penalty period in certain circumstances.

Subsection 1157AD(3) provides for when a person will become subject to a Part 3.12B non-payment period when they are also subject to a non-payment period as a result of moving to an area of lower employment prospects without sufficient reason.  In these circumstances, the Part 3.12B non-payment period will start after the end of the non-payment period that applies as a result of the person moving to an area of lower employment prospects without sufficient reason.

Subsections 1157AD(4) and (5) provide for the duration of a Part 3.12B non-payment period.  Generally, the non-payment period is a period of 26 weeks that starts on the day worked out under subsection (2), unless the person turns 30 before the end of that period, or the person is exempt from the non-payment period by reason of section 1157AF.  Note 1 at the end of subsection 1157AD(5) alerts the reader to the fact that not all of the non-payment period may apply if the person becomes subject to a temporary exemption.  Note 2 refers to section 1157AE so that the reader is aware that a Part 3.12B non-payment period may be extended in certain circumstances.

Extending Part 3.12B exclusion periods

Section 1157AE sets out when the Secretary may extend a person’s Part 3.12B exclusion period.

Subsection 1157AE(1) provides that the Secretary may extend a person’s Part 3.12B exclusion period if, during that period, the person fails to enter into an employment pathway plan as required by the Secretary or fails to comply with a requirement in an employment pathway plan.

Subsection 1157AE(2) provides, however, that subsection 1157AE(1) does not apply if the person satisfies the Secretary that the failure was the result of exceptional circumstances beyond the person’s control.  If, however, the failure is one relating to attendance at an appointment (including an appointment relating to entering into an employment pathway plan) or attendance at an interview or activity then there is an additional requirement contained in paragraph1157AE(2)(b).  This provision provides that in such circumstances it is necessary for the person to also give the Secretary advance notice of the failure or satisfy the Secretary that exceptional circumstances beyond the person’s control prevented the person from giving such notice. 

Subsection 1157AE(3) states that an extension under subsection 1157AE(1) is for the period worked out under a determination made under subsection 1157AE(4).  Subsection 1157AE(4) provides that the Employment Minister may, by legislative instrument, determine extension periods that apply for failures to enter into employment pathway plans, including new plans, and failures to comply with particular requirement in such plans.  Such extensions must not exceed four weeks for each failure.  New subsection 1157AE(5) provides for the consequences of a person providing false or misleading information for the purpose of subsection 1157AC(3), which provides for a reduction of the Part 3.12B waiting period on the basis of previous periods of gainful work. 

Subsection 1157AE(5) provides that the Secretary may extend the person’s Part 3.12B waiting period if the false or misleading information is identified while the person is serving that period.  A Part 3.12B penalty period may be imposed if the false or misleading information is identified while the person is receiving a social security payment.

Subsection 1157AE(6) provides that the Minister may, by legislative instrument, determine a method for working out the number of weeks by which a person’s Part 3.12B waiting period may be extended and the number of weeks and commencement day of a Part 3.12B penalty period.  As an example, the Minister could determine that the extension of the Part 3.12B waiting period/ penalty period is the period of weeks equal to the period of time by which the Part 3.12B waiting period was reduced under subsection 1157AC(3).  The Minister could also determine an additional period by which the person should be sanctioned for providing false or misleading information. 

Exemptions from Part 3.12B exclusion periods

Section 1157AF provides that a person will be exempt from a Part 3.12B waiting period and non-payment period if the person:

·          is a principal carer of a child;

·          is a parent of an FTB child.  The effect of this is that a parent who has 35 per cent care of a child will be exempt from a Part 3.12B waiting period and non-payment period;

·          has a partial capacity to work. Section 16B of the Social Security Act provides that a person has a partial capacity to work if:

o    the person has a physical, intellectual or a psychiatric impairment; and

o    the Secretary is satisfied that the impairment prevents the person from doing  30 hours or more a week of work independently of a programme of support where no training activity is likely to enable the person from doing such work;

·          has a current Commonwealth registration number in relation to a part-time apprenticeship, traineeship or trainee apprenticeship.  Subsection 1157AE(3) provides that this exemption does not apply to a person whose registration number has been suspended;

·          requires employment services or disability employment services of a class determined by the Minister in a legislative instrument.  Paragraph 1157AF(2)(a) provides that the Minister may determine classes of employment services or disability employment services for this purpose;

·          is covered by an exemption determined by the Minister by legislative instrument.  Paragraph 1157AF(2)(b) provides that the Minister may determine exemptions for this purpose. 

Temporary exemptions from Part 3.12B exclusion periods

Subsection 1157AG(1) provides that a person is not, or ceases to be, subject to a Part 3.12B exclusion period while an exemption determined by the Minister in a legislative instrument applies to him or her. 

Paragraph 1157AG(2)(a) provides that the Minister may, by legislative instrument, determine  the circumstances in which a person is exempt from a kind of a Part 3.12B exclusion period.  It is intended that the Minister would determine in such an instrument circumstances that may hinder a person from effectively looking for work.  An example of a circumstance that the Minister could determine in a legislative instrument may be where a person has an injury that prevents the person from actively looking for work for a temporary period.

Paragraph 1157AG(2)(b) provides that the Minister may also determine in the same legislative instrument a method for working out the number of weeks and the commencement day for the exemption.  The period of time that a person would be exempt from a Part 3.12B exclusion period would depend on the nature of the particular circumstances. 

Generally, where a person is subject to a temporary exemption, this will not change when the Part 3.12B exclusion period ends.  For example, if, 15 weeks into a 26-week Part 3.12B exclusion period, a person becomes subject to a six-week exemption period, the person would then have five weeks of their exclusion period to serve when the exemption ends.  However, subsection 1157AG(3) provides that the Minister may determine, in a legislative instrument, that the exemption does extend the Part 3.12B exclusion period in some circumstances.

Treating a person as still receiving a benefit for certain purposes

Subsection 1157AH(1), together with subsection (3), provides that, for the purpose of provisions about health care cards, a person is taken to have been receiving, or to be receiving, a social security benefit during a Part 3.12B exclusion period.

There are provisions in the Social Security Act which provide for the automatic issue of a health care card.  The automatic issue of these cards turns on the person receiving a social security payment. 

Subsections 1157AH(1) and (3) ensure that a person can be automatically issued with a health care card during a Part 3.12B exclusion period, even though the person is not technically receiving a social security payment during this period. 

Subsection 1157AH(4) provides that a person is taken to be still receiving a social security benefit for the purpose of subsections 1157AA(3) and 1157AD(1) if the person would be receiving the benefit apart from the operation of a provision of, or a decision made under, the social security law.  Subsections 1157AA(3) and 1157AD(1) provide rules for when a person is taken to be receiving a social security benefit.  The purpose of subsection 1157AH(4) is to provide that the person will be taken to be receiving a social security benefit for the purpose of those rules if they would have been receiving such a benefit but they were subject to, for example, a waiting period, a preclusion period or a compliance penalty period.

Part 2 - Contingent amendments

Part 2 provides for contingent amendments in relation to the job commitment bonus.  If passed by the Parliament, the Social Security Legislation Amendment (Increased Employment Participation) Bill 2014 would insert into the social security law provisions for the job commitment bonus.  One of the qualification requirements for the job commitment bonus is that a person has received certain payments for a continuous period of at least 12 months. 

Item 2 is consequential to the amendments made by item 3.

Item 3 inserts a note at the end of subsection 861(1).

If the Social Security Legislation Amendment (Increased Employment Participation) Bill 2014 is passed by the Parliament, subsection 861(1) would provide for qualification for the first job commitment bonus.  The new note would refer the reader to the fact that a person may be taken to be receiving newstart allowance or youth allowance while the person is subject to a Part 3.12B exclusion period.

Item 4 amends new subsection 1157AH(3) to refer to provisions relating to the job commitment bonus.  The effect of this will be that a person will be taken to be receiving a social security payment during a Part 3.12B exclusion period for the purpose of provisions dealing with the job commitment bonus.  This means that the period of receiving a social security benefit for 12 months for the purpose of the qualification rule for the job commitment bonus will not be broken by a period serving a Part 3.12B exclusion period.

Part 3 - Other amendments

Amendments to the Farm Household Support Act

Item 5 inserts a new paragraph (ea) into section 94 of the Farm Household Support Act. 

Farm household allowance under the Farm Household Support Act is generally treated in the same way as newstart allowance and youth allowance.  This means that, where there is a reference to newstart allowance and youth allowance in the Social Security Act, it is as though there were also a reference to farm household allowance.  However, section 94 of the Farm Household Support Act specifies that a number of provisions in the Social Security Act do not apply for the purpose of the operation of the Farm Household Support Act. 

The effect of this item is that new Part 3.12B in the Social Security Act about Part 3.12B exclusion periods (inserted by this Schedule) will not apply for the purpose of the Farm Household Support Act.  This means that there will be no Part 3.12B exclusion periods for the purpose of farm household allowance.  The  Farm Household Support Act has its own participation regime, which sets out the activity requirements the farmer and/or their partner will need to undertake to receive the farm household allowance.

Amendments to the Social Security Act

Item 6 inserts a number of new definitions into subsection 23(1) that are relevant to the insertion of Part 3.12B of this Schedule. 

Part 3.12B exclusion period is defined to include a Part 3.12B waiting period, a Part 3.12B non-payment period and a Part 3.12B penalty period.  Employment Minister is defined because that term is used in new section 1157AE and it is not currently defined in the Social Security Act.  All of the other defined terms take their meaning from new provisions in Part 3.12B or existing definitions in the Social Security Administration Act.

Items 7 and 8 amend the definition of waiting period in subsection 23(1) to refer to the new Part 3.12B waiting period for newstart allowance and special benefit.

Item 9 amends subsection 549(2) to provide for the Part 3.12B waiting period.  Section 549 provides that youth allowance is not payable if a person is subject to certain waiting periods.

Items 10, 14 and 22 insert new subsections 553B(4A), 634(5) and 745N(6).

Sections 553B, 634 and 745N provide that a person may be subject to a non-payment period of 26 weeks for youth allowance, newstart allowance or special benefit if the person has reduced his or her employment prospects by moving to a new place of residence without sufficient reason.  The effect of these items is that, if the person is subject to a Part 3.12B exclusion period when the non-payment period under section 553B, 634 and 745N would have otherwise begun, then the non-payment period under section 553B, 634 and 745N begins on the day after the end of the Part 3.12B exclusion period. 

Items 11, 15 and 21 insert new provisions in parts of the Social Security Act that provide for the payability of newstart allowance, youth allowance and special benefit.  The new provisions make it clear that these payments are not payable while the person is subject to a Part 3.12B exclusion period, which is provided in a separate part of the Social Security Act.

Item 12 amends a note in subsection 593(1), which provides for qualification for newstart allowance, to alert the reader to the fact that a person’s newstart allowance may not be payable by reason of a Part 3.12B exclusion period, even if the person is qualified for the allowance.

Item 13 inserts a note after a provision providing for ordinary waiting periods for newstart allowance to make it clear that a person may also be subject to a Part 3.12B waiting period.

Item 16 is a technical amendment that is consequential to the amendments made by item 17.

Item 17 inserts a note after a provision that provides for qualification for special benefit to alert the reader to the fact that a person may also be subject to a Part 3.12B exclusion period.

Item 18 is a technical amendment that is consequential to the amendment made by item 19.

Items 19 and 20 insert new paragraphs into a special benefit qualification provision.

A person is generally qualified for special benefit only if other social security benefits or social security pensions are not payable to the person.  However, under current provisions, a person is not qualified for special benefit if newstart allowance or youth allowance is not payable to the person because of certain non-payment periods or preclusion periods.

The effect of items 19 and 20 is that a person will not be qualified for special benefit if newstart allowance or youth allowance is not payable to the person because of a Part 3.12B exclusion period.  It would undermine the integrity of Part 3.12B exclusion periods if a person was able to qualify for, and be paid, special benefit while they are subject to a Part 3.12B exclusion period for newstart allowance or youth allowance.

Item 23 inserts a note after subsection 1061ZK(5).

Section 1061ZK provides for qualification for health care cards.  The new note alerts the reader to section 1157AH, inserted by this Schedule, which provides for when a person is taken to have been receiving, or to be receiving, a social security benefit for the purpose of provisions that deal with health care cards.

Amendments to the Social Security Administration Act

Item 24 renames the existing note at the end of section 42D ‘Note 1’ to avoid confusion with the second note inserted under item 25.

Item 25 inserts a second note at the end of section 42D to make clear that the deduction under section 42D may not be made until payments resume at the end of the Part 3.12B exclusion period (which is usually 26 weeks).  This and item 27 make it clear that penalties that cannot be deducted before the jobseeker enters the exclusion period (for example, because they are not reported or determined in time) to be held on the person’s record and deducted when and if they return to payment.

Item 26 renames the existing note at the end of section 42L ‘Note 1’ to avoid confusion with the second note to section 42L inserted by item 27.

Item 27 inserts a second note at the end of section 42L to make clear that the deduction under section 42L may not be made until payments resume at the end of the Part 3.12B exclusion period (which is usually 26 weeks).

Part 4 - Application and transitional provisions

Item 28 provides that the amendments made by this Schedule apply to a person who makes a claim for a social security benefit on or after 1 January 2015.

Item 29 provides for how the amendments about Part 3.12B exclusion periods apply to certain persons. 

Generally, if a person’s circumstances are dealt with in subitem 29(1) , the person will become subject to a Part 3.12B waiting period set out in section 1157AD on the day worked out in subitem 29(2).

The effect of subitem 29(2) is that such a person may become subject to a Part 3.12B non-payment period pursuant to new section 1157AD following their completion of an approved program of work for income support payment after 1 July 2015.  The Employment Secretary has declared particular programs of work as approved programs of work for income support payment under section 28 of the Social Security Act.  Work for the Dole is an approved program of work for income support payment.  1 July 2015 is the date that the new employment service framework is expected to come into place.  It is anticipated that all jobseekers who are receiving income support payments will be moved into an approved program work for income support payment at some point after 1 July 2015.

The first circumstance in which subitem 29(2) applies, set out under paragraph 29(1)(a), is where the person is receiving a social security benefit on 1 January 2015.  While this paragraph is expressed to apply broadly to social security benefits, a person will only become subject to a Part 3.12B non-payment period under new section 1157AD if they are receiving a social security benefit to which Part 3.12B applies, as provided under new section 1157AA.

The second circumstance in which subitem 29(2) applies, set out under paragraph 29(1)(b), is where a person has made a claim for a social security benefit on 1 January 2015, but where that claim has not been determined on that date.  For example, a person may make a claim for a social security benefit on 30 December 2014 but that claim may not be determined until 3 January 2015.  Such a person would not be ‘receiving’ a social security benefit on 1 January 2015 and so paragraph 29(1)(a) would not apply.  Paragraph 29(1)(b) does not apply if the claim is later rejected.

The third circumstance in which subitem 29(2) applies, set out under paragraph 29(1)(c), is where the person has been granted a social security benefit and would be receiving that benefit apart from the operation of a decision under, or a provision of, the social security law.  This paragraph is intended to cover a person who is subject to a waiting period on 1 January 2015 and, as such, results in the person’s social security payment not being payable, which means they are not technically ‘receiving’ the social security benefit.  It also covers a person who has an income maintenance period which reduces the person’s payment rate to nil and a person whose social security benefit is suspended on 1 January 2015, other than in the circumstances set out in subitem (3).  

Subitem 29(3)  provides exceptions to the general transitional rules in subitem (2) where a person:

·          is serving a serious failure period or an unemployment non-payment period on 1 January 2015; and

  • would otherwise be receiving a social security benefit to which Part 3.12B applies. 

Such a person will become subject to a Part 3.12B non-payment period pursuant to new section 1157AD on 1 January 2015. 

A serious failure period may be imposed if a person is receiving a participation payment and has persistently failed to comply with his or her obligations in relation to that payment, or if the person refuses or fails to accept an offer of suitable employment.  A participation payment is not payable during an unemployment non-payment period if the Secretary has determined that a person is unemployed as a result of a voluntary act of the person, or as a result of the person’s misconduct as an employee. 

 

 

 



Schedule 10 - Family tax benefit

 

 

Summary

 

This Schedule implements the following family payment reforms from 1 July 2015:

 

·          limit  the family tax benefit Part A large family supplement to families with four or more children;

·          remove the per-child add-on that currently applies for each child after the first under the income test for the base rate of family tax benefit Part A;

·          revise family tax benefit end-of-year supplements to their original values, and cease indexation;

·          better target the family tax benefit Part B by reducing the primary earner income limit from $150,000 per annum to $100,000 per annum;

·          limit family tax benefit Part B to families with children under six years of age, with transitional arrangements applying to current recipients with children above the new age limit for two years; and

  • introduce a new allowance for single parents on the maximum rate of family tax benefit Part A for each child aged six to 12 years inclusive, and not receiving family tax benefit Part B.

 

Background

 

Limit large family supplement

 

The large family supplement is a component of family tax benefit Part A that is paid for the third and each subsequent FTB child in a family.  From 1 July 2015, the large family supplement will no longer be paid for the third child but families with four or more children would continue to receive the large family supplement.

 

Remove child add-on amount

 

Under the current income test, families are able to receive the base rate of family tax benefit Part A until their annual income reaches the higher income free area of $94,316, plus a child add-on amount of $3,796 for each FTB child after the first.  The per-child add-on will be removed from 1 July 2015.

 

Revise end-of-year supplements

 

From 1 July 2015, the end-of-year FTB Part A and FTB Part B supplements will be revised to their original values.  The FTB Part A supplement will be reduced from the current $726.35 per child per annum to $602.25 (the next whole multiple of $3.65 above $600).  The FTB Part B supplement will be reduced from the current $354.05 per family per annum to $302.95 (the next whole multiple of $3.65 above $300).  These amounts, as revised, will not be subject to indexation. 

 



Primary earner income limit for family tax benefit Part B

 

Family tax benefit Part B is currently limited to families where the higher earner in a couple, or a single parent, has an income of $150,000 per annum or less.  From 1 July 2015, this income limit will be reduced to $100,000. 

 

Limit family tax benefit Part B

 

Family tax benefit Part B is currently available to families who have a child aged under 16 or a full-time secondary student up to the end of the calendar year they turn 18.   From 1 July 2015, family tax benefit Part B will be limited to families with a youngest child aged under six years.  Transitional arrangements will apply, allowing families who were entitled to family tax benefit Part B for a youngest child aged six years or more on 30 June 2015 to remain eligible for family tax benefit Part B for up to two years, until 30 June 2017.

 

Single parent supplement

 

A new family tax benefit payment, called the single parent supplement, will be introduced from 1 July 2015 for single parents on the maximum rate of family tax benefit Part A whose youngest child is aged six to 12.  The single parent supplement aims to offset partially the loss of assistance experienced by certain single parent families, as a result of the reduction, to under age six, of the age limit for family tax benefit Part B from 1 July 2015, with transitional arrangements for two years.  Only FTB children aged six to 12 (inclusive) would attract the additional payment, and families, while covered by the family tax benefit Part B age limit transitional provision, would not be eligible for the payment. 

 

The annual amount of the payment is $751.90 (the next whole multiple of $3.65 above $750). 

 

Explanation of the changes

 

Amendments to the Family Assistance Act

 

Limit large family supplement

 

Clause 34 of Schedule 1 to the Family Assistance Act provides for eligibility for the large family supplement, and is triggered if an individual has three or more children.  Item 13 amends clause 34 to ensure that the provision only applies if an individual has four or more children. 

 

A consequential amendment is made by item 14 to the formula in clause 35 so that a large family supplement is only paid in respect of the individual’s fourth and subsequent FTB child/ren.  The reference in the formula to ‘2’ is changed to ‘3’.

 

Remove child add-on amount

 

Under the current income test, families are able to receive the base rate of family tax benefit Part A until their annual income reaches the higher income free area plus a child add-on amount for each FTB child after the first.  Clause 2 of Schedule 1 to the Family Assistance Act defines an individual’s higher income free area by reference to a ‘basic amount’ and an ‘additional amount’ for each FTB child after the first.  The relevant amounts are in the table at the end of that provision.

 

Items 5 and 6 amend clause 2 so that an individual’s higher income free area is the basic amount worked out under the table.  The additional amount is removed from the table in clause 2. 

 

The additional amount currently referred to in clause 2 of Schedule 1 is indexed in accordance with movement in the Consumer Price Index (CPI) each 1 July.  As this amount is being removed, consequential amendments are also made to relevant provisions in Schedule 4 to remove indexation arrangements for the amount.  The relevant amendments are made by items 17, 19 and 21

 

Revise family tax benefit end-of-year supplements

 

From 1 July 2015, the end-of-year FTB Part A and FTB Part B supplements are being revised to their original values and these amounts, as revised, will not be subject to indexation.

 

Clause 31A of Schedule 1 to the Family Assistance Act provides for the calculation of the FTB Part B supplement by reference to the FTB (B) gross supplement amount Item 11 repeals subclauses 31A(2) and (3), and substitutes a new subclause 31A(2), which resets the FTB (B) gross supplement amount to $302.95. 

 

Clause 38A of Schedule 1 provides for the calculation of the FTB Part A supplement by reference to the FTB gross supplement amount (a per-child amount).  Item 15 repeals subclauses 38A(3) and (4), and substitutes a new subclause 38A(3), which resets the FTB gross supplement amount to $602.25. 

 

The FTB gross supplement amount and the FTB (B) gross supplement amount are currently indexed in accordance with movements in the CPI on 1 July each year (although indexation of these amounts is currently paused until 30 June 2017 under clause 3(8) of Schedule 4).  The amendments made by items 17 and 19 ensure that these amounts are no longer subject to indexation. 

 

Primary earner income limit for family tax benefit Part B

 

Family tax benefit Part B is currently limited to families where the higher earner in a couple, or a single parent, has an income of $150,000 per annum or less.  The relevant rule is in clause 28B of Schedule 1 to the Family Assistance Act.  Item 8 amends subclause 28B(1) to change the income limit to $100,000, while item 7 makes a consequential amendment to the heading to clause 28B to reflect the new limit.  The $100,000 primary earner income limit for family tax benefit will then next be indexed on 1 July 2017.

 

Limit family tax benefit Part B

 

Family tax benefit Part B is currently payable to families who have a child aged under 16 or a full-time secondary student up to the end of the calendar year they turn 18.  The following amendments are made to limit family tax benefit Part B to families with a youngest child aged under six. 

 

Subclause 29(3) of Schedule 1 to the Family Assistance Act currently disregards an FTB child who has turned 16 from the calculation of an individual’s Part B rate unless the child is a senior secondary school child.  Item 9 reworks subclause 29(3) to ensure that an FTB child who has turned six is disregarded in applying Part 4 of Schedule 1 (Part B rate). 

 

Section 22B of the Family Assistance Act defines a senior secondary school child Item 1 makes a consequential amendment to subparagraph 22B(1)(a)(i) to remove a reference to subclause 29(3) from that provision. 

 

Clause 30 of Schedule 1 sets out the standard rates for family tax benefit Part B, depending on the individual’s family situation (that is, whether the individual’s youngest child is under 5 years of age or is 5 and over).  Item 10 amends the table in clause 30 so that the family situation described in item 2 is that the individual’s youngest child is 5 years of age.

 

Clause 31B of Schedule 1 currently provides a method for working out the amount of an individual’s clean energy supplement Part B, depending on the individual’s family situation (that is, whether the individual’s youngest child is under five years of age or is five and over).  The clean energy supplement Part B is being renamed the energy supplement Part B from 1 July 2014 by amendments in the Social Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014.  Item 12 then amends the table in clause 31B(1) so that the family situation described in item 2 is that the individual’s youngest child is five years of age.  

 

Transitional arrangements will also apply.  These are set out in the application and saving provisions, in subitems 23(2) to (4) .

 

Subitem 23(2) sets out the circumstances in which the amendments to limit family tax benefit Part B to families with children under six do not apply in working out the rate of family tax benefit for an individual for days on and after 1 July 2015.  An individual who is entitled to family tax benefit for 30 June 2015, including a Part B rate greater than nil for a youngest child who is aged six or more on that day, is not subject to the new Part B rules.  This individual is referred to as the saved individual .  The new Part B rules will also not apply to an individual who is the partner of the saved individual but only for as long as the new Part B rules do not apply to the saved individual.

 

Subitem 23(3) lists the circumstances in which subitem 23(2) ceases to apply to a saved individual (and their partner because of the connection in paragraph 23(2)(b)). 

 

Subitem 23(2) ceases to apply effectively from the earliest of the following:

 

·          1 July 2017;

·          the first day on which neither the saved individual nor their partner (if any) is entitled to family tax benefit;

·          the first day on which the Part B rate for the saved individual or their partner (if any) is nil;

·          the first day on which none of the saved individual’s FTB children on 30 June 2015 is an FTB child of the saved individual or their partner (if any);

  • the first day that the saved individual’s single parent supplement would be equal to or more than their Part B rate.

 

Some examples of how these saving provisions will work are set out below.

 

Example 1

On 30 June 2015, Mary is entitled to family tax benefit, including Part B, for one FTB child aged 10.  Mary is a saved individual under paragraph 23(2)(a).

On 1 August 2015, Mary gains the care of a younger child, aged three.  She now has two FTB children aged 10 and three.  Mary is entitled to family tax benefit, including Part B worked out by reference to her three-year old.  Mary continues to come within the transitional rule in subitem 23(2).

On 1 October 2015, Mary has one FTB child aged 10, having lost the care of the child aged three.  Mary continues to come within the transitional rule in subitem 23(2).

If, however, Mary lost the care of the child aged 10 on 1 October 2015 and has one FTB child aged three, then she would cease to come within the transitional rule in subitem 23(2) due to paragraph 23(3)(d), because she no longer has care of the child aged 10 who was her only FTB child on 30 June 2015.  However, Mary would continue to receive Part B for her child aged three until the child turns six.

 

Example 2

On 30 June 2015, Idris, a single parent, is entitled to family tax benefit, including Part B, for his two FTB children aged eight and 11.  Idris is a saved individual under paragraph 23(2)(a).

On 1 August 2015, Idris becomes partnered with Aretha, and they have care of his two children.  Idris’ Part B rate continues to be greater than nil.  Therefore, Idris continues to come within the transitional rule in subitem 23(2).  Also, Aretha becomes an individual who satisfies paragraph 23(2)(b), because she is the partner of a saved individual to whom the transitional rule in subitem 23(2) continues to apply.

On 1 October 2015, Idris and Aretha agree that Aretha will begin to receive family tax benefit for Idris’ two children.  There is no period when neither Idris nor Aretha is entitled to be paid family tax benefit, and no period when the Part B rate is nil.  Therefore, Aretha’s rate of family tax benefit is affected by the transitional rule in subitem 23(2), so she will receive Part B when she begins to receive family tax benefit.

 

Subitem 23(4) allows the Minister to prescribe, by legislative instrument, other scenarios where the amendments to limit family tax benefit Part B to families with children under six years of age do not apply.  This will allow the transitional rules to apply to the calculation of a lump sum payment of family tax benefit for a deceased child.

 

As transitional arrangements end from 1 July 2017, no families with a youngest child aged six or over will receive family tax benefit Part B from that time.

 

Single parent supplement

 

From 1 July 2015, a new payment, the single parent supplement will be introduced. 

 

The single parent supplement will be a new component of family tax benefit, a new amount that, together with family tax benefit Part A and family tax benefit Part B, will make up family tax benefit.  Item 4 amends subclause 1(1) of Schedule 1 to the Family Assistance Act to achieve this.

 

The single parent supplement will be provided for in new clauses 52 to 54 (a new Part 6) in Schedule 1 to the Family Assistance Act.  These provisions are inserted by item 16 .

 

New clause 52 sets out the circumstances in which an amount of single parent supplement is to be added in working out an individual’s annual rate of family tax benefit.  An amount of single parent supplement is added if:

 

·          the individual is not a member of a couple;

·          the individual’s youngest FTB child is six years of age and has not turned 13 years (that is, aged six to 12 inclusive);

·          the individual’s Part A rate worked out under Part 2 (that is, Method 1) of Schedule 1 but disregarding reductions (if any) under clause 5 of Schedule 1 and disregarding section 58A and subclause 38AA(3) of Schedule 1, is greater than nil;

·          the individual’s income excess for the purposes of Division 2C of Part 5 of Schedule 1 is nil; and

·          the individual’s maintenance income excess is nil under Subdivision A of Division 5 of Part 2 of Schedule 1.

 

The last three dot points require the individual to be eligible for the maximum rate of family tax benefit Part A. 

 

New clause 53 sets the annual amount of single parent supplement at $751.90 for each FTB child aged six to 12 (inclusive).  The amount is the next whole multiple of $3.65 above $750.

 

New clause 54 applies where an individual has a shared care percentage (is sharing the care of an FTB child).  In this situation, the individual’s amount of single parent supplement for the child is the shared care percentage of the full amount of the single parent supplement. 

 

The same absence from Australia rules that apply to family tax benefit Part B under sections 62, 63 and 63A of the Family Assistance Act will also apply to the new single parent supplement.  If the individual is an absent overseas recipient, the individual’s single parent supplement for each FTB child aged six to 12 would be nil.  If an FTB child aged six to 12 is an absent overseas FTB child, the child would be disregarded in working out the individual’s rate of single parent supplement.  The relevant amendments are made by items 2 and 3 .

 

Because the new single parent supplement partly offsets the loss of assistance due to the new age limit for family tax benefit Part B, an amount of single parent supplement will not be added if the transitional rules apply to the individual.  Otherwise, the amendments discussed above will apply in working out the rate of family tax benefit for days on or after 1 July 2015.  These rules are provided for in subitems 23(5) and (6) .  

 

Items 18, 20 and 22 provide for the indexation of the new single parent supplement.  As with other FTB child amounts, the single parent supplement will be indexed on 1 July in accordance with movement in the CPI.  The amount will first be indexed on 1 July 2016.  This is consistent with the indexation arrangements for the FTB child rates for family tax benefit Part A (methods 1 and 2), which will be paused on 1 July 2014 and 1 July 2015, and resume on 1 July 2016. 

 

Application and saving provisions

 

Item 23 provides some application and saving provisions that apply in relation to the amendments made by Part 2 of this Schedule. 

 

Subitem 23(1) covers the amendments that limit family tax benefit Part B to families with children under six years of age.  Subject to the transitional rules in subitems 23(2) to (4), these amendments apply in relation to working out the rate of family tax benefit for days on or after 1 July 2015. 

 

Subitems 23(2) to (4) are addressed above in the context of amendments that limit family tax benefit Part B to families with children under six years of age.

 

Subitems 23(5) and (6) are addressed above in the context of amendments that introduce the new single parent supplement.

 

Subitem 23(7) provides that the amendments made to specified provisions which affect the calculation of rate apply in relation to working out the rate of family tax benefit for days on or after 1 July 2015.



Schedule 11 - Pension age

 

 

Summary

This Schedule increases the age pension qualifying age, and the non-veteran pension age, for both men and women from 67 to 70 years by six months every two years, commencing on 1 July 2025.

Background

The Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Act 2009 increased the pension age from 65 to 67 years at a rate of six months every two years, commencing on 1 July 2017.  Under this enacted legislation, pension age will reach 67 by 2023.

This Schedule provides for a further increase in the pension age from 67 to 70 years by six months every two years, commencing on 1 July 2025.  This Schedule does not affect people born before 1 July 1958.

This Schedule amends the Social Security Act and the Veterans’ Entitlements Act.  Under the Veterans’ Entitlements Act, pension age for people other than veterans is the same as pension age under the Social Security Act.  Amendments to increase the non-veteran pension age for men and women from 67 to 70 years by six months every two years, starting on 1 July 2025, have also been included in this Schedule.

The amendments made by this Schedule commence on the day on which they receive Royal Assent.

Explanation of the changes

Amendments to the Social Security Act

Item 1 repeals table item 5 in subsection 23(5A), and substitutes new table items 5 to 11.  Subsection 23(5A) defines the pension age for men.  The amendments increase the pension age for men born on or after 1 July 1958.  This means that:

A man born during the period:

will turn age pension age at:

1 July 1958 to 31 December 1959

67 years and 6 months

1 January 1960 to 30 June 1961

68 years

1 July 1961 to 31 December 1962

68 years and 6 months

1 January 1963 to 30 June 1964

69 years

1 July 1964 to 31 December 1965

69 years and 6 months

On or after 1 January 1966

70 years

 



Item 2 repeals table item 5 in subsection 23(5D), and substitutes new table items 5 to 11.  Subsection 23(5D) defines the pension age for women.  The amendments increase the pension age for women born on or after 1 July 1958.  This means that:

A woman born during the period:

will turn age pension age at:

1 July 1958 to 31 December 1959

67 years and 6 months

1 January 1960 to 30 June 1961

68 years

1 July 1961 to 31 December 1962

68 years and 6 months

1 January 1963 to 30 June 1964

69 years

1 July 1964 to 31 December 1965

69 years and 6 months

On or after 1 January 1966

70 years

 

People born before 1 July 1958 are not affected.

The changes to the definition of pension age will flow through to a number of social security entitlements under the Social Security Act.  For example, paragraph 593(1)(g) of the Social Security Act provides that pension age is the upper age qualification limit for newstart allowance.  The upper age qualification limits for newstart allowance and sickness allowance will increase in line with the increase in pension age, as will the age qualification for the Commonwealth Seniors Health Card and the upper age limit for disability support pension.

Amendments to the Veterans’ Entitlements Act

Item 3 repeals table item 5 in subsection 5QB(2), and substitutes new table items 5 to 11.  Subsection 5QB(2) defines the (non-veteran) pension age for men.  The amendments increase the pension age for men born on or after 1 July 1958.  This means that:

A man born during the period:

will turn age pension age at:

1 July 1958 to 31 December 1959

67 years and 6 months

1 January 1960 to 30 June 1961

68 years

1 July 1961 to 31 December 1962

68 years and 6 months

1 January 1963 to 30 June 1964

69 years

1 July 1964 to 31 December 1965

69 years and 6 months

On or after 1 January 1966

70 years

 



Item 4 repeals table item 5 in subsection 5QB(5), and substitutes new table items 5 to 11.  Subsection 5QB(5) defines the (non-veteran) pension age for women.  The amendments increase the pension age for women born on or after 1 July 1958.  This means that:

A woman born during the period:

will turn pension age at:

1 July 1958 to 31 December 1959

67 years and 6 months

1 January 1960 to 30 June 1961

68 years

1 July 1961 to 31 December 1962

68 years and 6 months

1 January 1963 to 30 June 1964

69 years

1 July 1964 to 31 December 1965

69 years and 6 months

On or after 1 January 1966

70 years

 

People born before 1 July 1958 are not affected.

The changes to the definition of pension age will flow through to other entitlements under the Veterans’ Entitlements Act, such as the age qualification for the partner of a veteran for a Commonwealth Seniors Health Card.

 



Schedule 12 - Date of effect for veterans’ disability pension

 

 

Summary

From 1 January 2015, this Schedule removes the three months’ backdating of disability pension under the Veterans’ Entitlements Act.

Background

Disability pension is paid under Parts II and IV of the Veterans’ Entitlements Act to veterans and eligible members of the Forces, or of a Peacekeeping Force, for incapacity from war or defence-caused injuries or diseases.

Currently, under the Veterans’ Entitlements Act, disability pension may be granted from a date not earlier than three months before the date on which the claim for disability pension was received at the Department of Veterans’ Affairs (the Department).  In practice, disability pensions are automatically backdated three months from the date the claim is received at the Department. 

This measure will change the earliest date of effect for a grant of disability pension, from a date that is not earlier than three months before the date on which the claim for disability pension was received at the Department, to the date on which the claim for disability pension was received at the Department. 

The amendments align the date of effect for the grant of disability pension with other Veterans’ Affairs payments such as income support under the Veterans’ Entitlements Act and permanent impairment compensation under the Military Rehabilitation and Compensation Act. 

The measure will not change the effective date for treatment eligibility under subsections 85(1), (3) and (7) of the Veterans’ Entitlements Act.  Treatment eligibility for specific conditions will continue to be backdated three months from the date as from which disability pension is, or would have been granted.  Treatment eligibility for all conditions may continue to be backdated three months from the date as from which disability pension is payable. 

The existing earliest dates of effect for disability pension increase, war widow or widower and orphan pension remain unchanged.

These amendments commence on 1 January 2015.

Explanation of the changes

Amendments to the Veterans’ Entitlements Act

 

Item 1 repeals subsections 20(1) and (2), and substitutes new subsections 20(1) and (2). 

 



New paragraph 20(1)(a) provides that, where a claim for disability pension made in accordance with an approved claim form is granted, the earliest date that the Repatriation Commission may specify as a date from which the disability pension may be granted is a date that is not earlier than the date on which the claim for pension was received at the Department.  

 

New paragraph 20(1)(b) retains the existing date of effect for a claim for war widow or widower pension (other than a claim to which subsection 20(2A) applies) or orphan pension, made in accordance with an approved claim form, as a date not earlier than three months before the date on which the claim is received at the Department. 

 

Collectively, new paragraphs 20(2)(a),(b), (c) and (d) provide that:

 

·          where a person initially makes a claim for disability pension in writing, but not in accordance with an approved form; and

·          the person later makes a claim for the pension in accordance with an approved claim form within the required timeframe; and

  • the pension is granted;

 

the earliest date that the Repatriation Commission may specify as a date from which the pension may be granted is a date that is not earlier than the date on which the claim for pension was received at the Department. 

 

Collectively, new paragraphs 20(2)(a), (b), (c) and (e) retain the existing date of effect for a claim for war widow or widower pension (other than a claim to which subsection 20(2B) applies) or orphan pension that is initially made not in accordance with an approved claim form but is subsequently made in accordance with an approved claim form, as a date not earlier than three months before the date on which the claim is received at the Department. 

 

Item 2 repeals paragraph 85(1)(a) and (b), and substitutes new paragraphs 85(1)(a) and (b). 

 

In accordance with new subparagraph 85(1)(a)(i), the date from which treatment may be provided for an accepted condition for a veteran or member granted disability pension is the date that is three months before the date from which the pension is granted.  This amendment ensures that eligibility for treatment in these circumstances is not affected by the removal of the three-month backdating of disability pension, and treatment eligibility is maintained at three months before the date from which the disability pension is granted. 

 

In accordance with new subparagraph 85(1)(a)(ii), the date of effect for treatment eligibility for an accepted condition for a veteran or member granted an increased rate of disability pension is the date from which the pension increase is granted.  This amendment retains the effect of the existing provision. 

 

In accordance with new subparagraph 85(1)(b)(i), the date of effect for treatment eligibility for an accepted condition, for a veteran or member not granted disability pension because the extent of the incapacity does not justify the grant of a disability pension, is the date that is three months before the date as from which the disability pension would have been granted.  This amendment ensures that eligibility for treatment in these circumstances is not affected by the removal of the three month backdating of disability pension, and treatment eligibility is maintained at three months before the date a disability pension would have been granted.

 

In accordance with new subparagraph 85(1)(b)(ii), the date of effect for treatment eligibility for an accepted condition, for a veteran or member not granted an increased disability pension because the extent of the incapacity does not justify the increase of the rate a disability pension, is the date from which the pension increase would have been granted.  This amendment retains the effect of the existing provision. 

 

Item 3 repeals subsection 85(3), and substitutes a new subsection 85(3).  In accordance with new paragraph 85(3)(c), where a veteran or member is in receipt of a disability pension at the general or higher rate or in respect of an accepted condition of a kind described in column 1 of the table in subsection 27(1) of the Veterans’ Entitlements Act, the veteran or member is eligible to be provided with treatment for any condition from the date that is three months before the date from which the disability pension became payable.  This amendment ensures that eligibility for treatment in these circumstances is not affected by the removal of the three-month backdating of disability pension, and treatment eligibility is maintained at three months before the date a disability pension became payable. 

 

New paragraph 85(3)(d) provides that, where a veteran or member who is in receipt of an increased disability pension at the general or higher rate or in respect of an accepted condition of a kind described in column 1 of the table in subsection 27(1) of the Veterans’ Entitlements Act, the veteran or member is eligible to be provided with treatment for any condition as from the date as from which the increased disability pension became payable.  This amendment retains the effect of the existing provision.

 

Item 4 repeals paragraph 85(7)(a), and substitutes a new paragraph 85(7)(a).  New paragraph 85(7)(a) clarifies that subsection 85(7) applies to a grant of pension, or an increased pension, that is a rate not less than 50 per cent of the general rate. 

 

Item 5 repeals subsection 85(7)(c), and substitutes a new subsection 85(7)(c).

 

In accordance with new subparagraph 85(7)(c)(i), where a veteran or member is in receipt of a disability pension at a rate that is not less than 50 per cent of the general rate, the veteran or member is eligible to be provided with treatment for any condition from the later of:  the date that is three months before the date from which the disability pension became payable; or the date service pension became payable.  This amendment ensures that eligibility for treatment in these circumstances is not affected by the removal of the three-month backdating of disability pension, and treatment eligibility is maintained at the later of:  three months before the date from which disability pension became payable; or the date service pension became payable. 

 

New paragraph 85(7)(c)(ii) provides that, where a veteran or member who is in receipt of an increased disability pension at a rate that is not less than 50 per cent of the general rate, the veteran or member is eligible to be provided with treatment for any condition from the later of:  the date from which the increased disability pension became payable; or the date service pension became payable.  This amendment retains the effect of the existing provision in that treatment eligibility is maintained at the later of, the date as from which the increased disability pension became payable, or the date service pension became payable. 

 

Item 6 is an application provision.

 

In accordance with subitem 6(1) , subsection 20(1) of the Veterans’ Entitlements Act, as amended by this Schedule, is to apply to claims made on or after 1 January 2015.  This means that a claim, lodged in accordance with a form approved for the purpose by the Repatriation Commission on or before 31 December 2014, may take effect from a date not earlier than three months before the date on which the claim is received at the Department. 

 

In accordance with subitem 6(2) , paragraph 20(2)(a) of the Veterans’ Entitlements Act, as amended by this Schedule, is to apply to claims made in writing on or after 1 January 2015.  This means that claims initially made on or before 31 December 2014, not in accordance with a form approved for the purpose by the Repatriation Commission, but subsequently made in accordance with a form approved for the purpose, including where the subsequent claim is made, within the required timeframe, after 1 January 2015, may take effect from a date not earlier than three months before the date on which the initial claim referred to in paragraph 20(2)(a) is received at the Department. 

 

Subitem 6(3) provides that the amendment made by item 2 applies in relation to a determination referred to in subsection 85(1) of the Veterans’ Entitlements Act that is made on or after 1 January 2015 where the claim for the pension referred to in paragraph 85(1)(a) or (b) associated with the determination referred to in subsection 85(1) was made on or after 1 January 2015.

 

Subitem 6(4) provides that the amendments made by items 3, 4 and 5 apply in relation to a pension, or increased pension, that begins to be received on or after 1 January 2015, where the claim for the pension, or increased pension, is made on or after 1 January 2015. 

 



STATEMENTS 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

(2014 BUDGET MEASURES No. 2) BILL 2014

 

Schedule 1 - Indexation and deeming thresholds

 

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 have the effect of:

 

1.     Fixing the value of income and assets test free areas and thresholds for certain Australian Government payments for three years.

 

From 1 January 2015 this measure will fix for a period of three years:

 

·          income free areas and assets value limits for student payments, including the student income bank limit, the parental income free area and the family actual means free area.

 

From 1 July 2017 this measure will fix for a period of three years:

 

·          income test and assets test free areas for social security pension payments (other than parenting payment (single)) and equivalent Veterans' Affairs pension payments; and the deeming thresholds for all income support payments.

 

Indexation using the Consumer Price Index will resume after three years.

 

2.     Amending indexation provisions for recipients of pensions from 20 September 2017, with the effect that payments will be indexed to movements in the Consumer Price Index only.

 

3.     Resetting the deeming thresholds from 20 September 2017 for single pensioners and allowees to $30,000 and $50,000 combined for pensioner couples.  The deeming threshold for a member of a couple, other than a pensioner couple, is set at an amount equal to one-half of the amount of the deeming threshold for a pensioner couple and will be $25,000.

 

Human rights implications

The Schedule engages the following human right:



Right to social security

Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) recognises the right of everyone to social security.

The Schedule has no effect on the right to social security.

The changes to the value of income and assets test free areas and thresholds for certain Australian Government payments assist in targeting payments according to need.  Payments will not be reduced unless customers’ circumstances change, such as their income or assets increasing in value. 

 

The amendments to the indexation provisions for recipients of pensions ensures consistency of indexation arrangements across the social security system, by indexing all social security payments to movements in the Consumer Price Index.

Pension payments will continue to be indexed to movement in the Consumer Price Index twice a year, and their purchasing power will be maintained. 

 

The amendments resetting the deeming thresholds change the value of the thresholds used to assess income from financial investments held by payment recipients.  The upper deeming rate applies to the value of financial investments above the relevant threshold.

Most recipients hold levels of financial assets below the reset thresholds.  As deeming is a proxy for actual returns received, resetting the deeming thresholds ensures appropriate assessment when calculating rates of social security payment.

 

Conclusion

The amendments in the Schedule are compatible with human rights because they do not limit access to social security.

 



Schedule 2 - Disability support pension

 

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 introduces new rules that generally limit the period a person who is outside Australia can be paid disability support pension (DSP).  Under the new rules, most DSP recipients will be limited to a total of 28 days payment overseas every 52 weeks.  Unless certain other provisions apply, DSP recipients who are absent for more than 28 days will have their payment cancelled and will need to reapply when they return.

The change will not apply to DSP recipients assessed as having a severe and permanent disability and no future work capacity, or to those who are terminally ill and returning to their country of origin or to be with family.  The change includes safeguards consistent with similar provisions for other payments.  The change will also not affect severely disabled DSP recipients paid under Australia’s international social security agreements.  In limited circumstances currently specified in legislation, disability support pension recipients will be able to be paid for more than 28 days.

 

Human rights implications

This Schedule has considered the human rights implications particularly with reference to the right to social security contained within Articles 9 of the International Covenant on Economic, Social and Cultural Rights , the right to freedom of movement contained in Articles 12 and 13 of the International Covenant on Civil and Political Rights , and the rights of persons with disabilities contained in Article 18 of the Covenant on the Rights of Persons with Disabilities .  It is concluded that the Schedule does not place limitations on human rights.

 

Right to freedom of movement

The 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 .  Disability support pensioners will remain able to move freely, whether within Australia or overseas.  However, they will no longer receive DSP while overseas, if they are absent from Australia for more than 28 days in a 12 month period.

The policy objective of this measure is to strengthen the residence basis of Australia’s social security system by requiring most DSP recipients to be present in Australia for the great majority of the year and, where they have the capacity to do so, engage in activities that will assist them to participate socially and economically. 

 

The impact on a disability support pensioner’s freedom to leave Australia for more than 28 days in a 12-month period due to the loss of disability support pension is considered to be proportionate and reasonable.  This is because of the range of exceptions to the general 28 days portability rule.

Where a disability support pensioner is absent for the purposes of seeking eligible medical treatment, to attend to an acute family crisis or for a humanitarian purpose, there is no limit to the total number of days of absence from Australia, so long as each continuous period of absence is no longer than four weeks.  Severely impaired disability support pensioners and terminally ill disability support pensioners have an unlimited portability period.  Disability support pensioners who are undertaking full-time studies overseas can continue to receive the pension throughout the period of study.

 

Further, the Secretary may extend a disability support pensioner’s portability period, in the situation where the person is unable to return to Australia due to serious accident or illness of the person or a family member, the death of a family member of the person, the person is undertaking life-saving treatment, the person is involved in legal proceedings, or where there is a natural disaster, political or social unrest, industrial action or war in the country in which the person is located.

 

Rights of persons with disabilities

 

This measure also engages the right of persons with disabilities in relation to liberty of movement, contained in Article 18 of the Convention on the Rights of People with Disabilities .  Disability support pensioners will remain free to leave Australia.  Any impact on a disability support pensioner’s freedom to leave Australia due to the loss of disability support pension is reasonable and consistent with policy objectives as discussed above.

 

Right to social security

The measure engages the right to social security contained in Article 9 of the International Covenant on Economic, Social and Cultural Rights .

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 changes to the portability period for disability support pensioners do not affect their ability to access social security within Australia.  The measure ensures that social security is appropriately targeted, and only affects disability support pensioners who elect to travel overseas for more than 28 days in a 12-month period, and where the range of exceptions to the 28-day portability rule do not apply.

Conclusion

This Schedule is compatible with human rights because it advances the protection of human rights, it does not limit or preclude people from gaining or maintaining access to social security in Australia and any impact on freedom of movement is reasonable and consistent with the policy objectives.

 



Schedule 3 - Young Carer Bursary Programme

 

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 amends the Social Security Act 1991 and the Veterans’ Entitlements Act 1986 to ensure that a payment of a bursary under the programme established by the Commonwealth and known as the Young Carer Bursary Programme is not counted as income.

Human rights implications

Right to social security

The amendments made by this Schedule will engage Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR).

Article 9 of ICESCR recognises the right to social security for all persons.  The amendments to the Social Security Act and Veterans’ Entitlements Act engage with the right to social security under ICESCR.

The amendments to the Social Security Act make clear that a payment of a bursary under the Young Carer Bursary Programme is not income for the purposes of the Social Security Act.  This amendment promotes the right to social security in ensuring that the entitlement to a social security benefit is not affected by a payment of a bursary under the Young Carer Bursary Programme .

Similarly, the amendments to the Veterans’ Entitlements Act make clear that a payment of a bursary under the Young Carer Bursary Programme is not income for the purposes of the Veterans’ Entitlements Act.  This amendment promotes the right to social security in ensuring that the entitlement to a social security benefit is not affected by a payment of a bursary under the Programme.

Conclusion

This Schedule is compatible with human rights because it advances the right to social security for all persons.



Schedule 4 - Seniors health card

 

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 includes tax-free superannuation income in the assessment of income for qualification for the Commonwealth Seniors Health Card.  Income generated from various account-based superannuation income streams will be deemed, using the same method as for income support payments, from 1 January 2015.  Veterans who hold a Seniors Health Card will also be affected by this measure. 

People who are seniors health cardholders immediately before commencement of the measure will not have the deemed rate of their tax-free superannuation included in the income test, unless they cease to be the holder of a card after this time.  Income from superannuation products purchased following commencement of the Schedule will be included in the test. 

The Schedule will also extend the period for which seniors health cardholders may travel temporarily overseas without losing qualification for the card from six weeks to up to 19 weeks. 

Human rights implications

Right to social security

This Schedule ensures people on similar incomes will be treated the same for qualification for the seniors health card.

The Schedule engages Article 11 of the International Covenant on Economic, Social and Cultural Rights (ICESCR), which provides for the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.  Holders of a seniors health card are entitled to a range of concessions, including concessions on pharmaceutical and health services.

Conclusion

The Schedule is compatible with human rights because it maintains the right to health.  The Schedule is compatible with human rights.



Schedule 5 - Relocation scholarships

 

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 will restrict qualification for the relocation scholarship payment to students relocating to or from regional or remote areas from 1 January 2015.  Students relocating from major cities will only remain qualified for a relocation scholarship payment if they relocate to a regional or remote area.

The measure will continue to recognise the reduced level of course and institution choice in regional and remote areas and the higher proportion of regional or remote students who need to relocate to study, compared to students from major cities.

Students from major cities are more likely than students from regional or remote areas to have a suitable education institution near to their parental home.

The relocation scholarship payment is currently paid at a rate of $4,145 in the first year the student is required to live away from home and $1,036 each year thereafter for students relocating from major cities (2014 rates).  Recognising that they may have higher costs, students relocating from regional or remote areas are paid at a higher rate of $2,073 in the second and third year they are required to live away from home to study.

Qualification for the relocation scholarship payment is restricted to recipients of youth allowance (or ABSTUDY recipients under equivalent provisions in the ABSTUDY policy manual) undertaking higher education or higher education preparatory courses.

Human rights implications

Right to education

The Schedule engages the right to education in Article 13 of the International Covenant on Economic, Social and Cultural Rights (ICESCR).

Students who relocate within or between major cities will no longer be eligible for the relocation scholarship payment, which assists with the costs of relocating to study.

Although this measure will reduce the level of relocation assistance available to students who relocate within or between major cities, this measure remains compatible with the right to education because other assistance remains available for students who relocate away from home to study, including the higher ‘away from home’ rate of youth allowance, and rent assistance (depending on their rental situation). 

The measure will continue to recognise the reduced level of course and institution choice in regional and remote areas and the higher proportion of regional and remote students who need to relocate to study, compared to students from major cities.  As such, this measure focuses relocation assistance on students who need it most.  Any impact on students from major cities and their ability to access education will be limited and proportionate to the policy objectives.

Right to equality and non-discrimination

The measure engages the right to equality and non-discrimination under articles 2 and 26 of the International Covenant on Civil and Political Rights (ICCPR) .

While the measure makes a distinction in qualification for the relocation scholarship payment based on the location of students’ parental homes and whether they move to a major city or a regional or remote area to study, it will help to ensure the financial sustainability of student payments while further recognising the reduced level of course and institution choice in regional and remote areas and the higher proportion of regional and remote students who need to relocate to study, compared to students from major cities.  In focussing relocation assistance on those who need it most, the measure is compatible with the right to equality and non-discrimination.

Right to freedom of movement

To remove doubt, the measure does not engage the right to freedom of movement, which is contained in articles 12 and 13 of the ICCPR.  Students will remain able to move freely, whether to study or otherwise.  Students from major cities who relocate within or between major cities will remain eligible for other assistance to live away from home to study, including the higher ‘away from home’ rate of youth allowance, and rent assistance depending on their rental situation.

Right to adequate standard of living

The measure engages the right to an adequate standard of living, contained in article 11(1) of the ICESCR .

Students relocating within or between major cities will no longer be eligible for the relocation scholarship payment, currently paid at a rate of $4,145 in the first year the student is required to live away from home and $1,036 each year thereafter for students relocating from major cities (2014 rates).  This will reduce the total value of support available to these students to support their standard of living.  However, this reduction is reasonable and proportionate to the policy objective of prioritising funds to assist students relocating to or from regional or remote areas. 

Students affected by the measure will retain access to other assistance to assist them with the costs of an adequate standard of living while studying, such as youth allowance, ABSTUDY and rent assistance.

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.

The changes to the relocation scholarship payment will help to ensure that the social security system remains sustainable and that available funds will be targeted to those recipients with the greatest need.  Students who lose access to the relocation scholarship payment will retain access to youth allowance and ABSTUDY and a range of other income support.

Conclusion

These amendments are compatible with human rights.  To the extent that they may adversely impact on a person’s access to education, social security, an adequate standard of living or the right to equality and non-discrimination, the limitation is reasonable and proportionate to the policy objectives.

 



Schedule 6 - Pensioner education supplement

 

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

In broad terms, the pensioner education supplement (PES) assists students with the ongoing costs of full-time or part-time study.  This Schedule repeals provisions that provide for PES, and makes related consequential changes.

The Government remains committed to providing incentives for income support recipients to improve their employment prospects through study or training.  More appropriate channels of Government-funded study and training assistance for income support recipients are available through employment service providers and the FEE HELP and VET FEE HELP tuition loan programmes.

Human rights implications

The Schedule engages the following human rights:

Right to social security

Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) recognises the right of everyone to social security.

The amendments in this Schedule remove the PES.  PES is an additional fortnightly supplement of $62.40 for students who are undertaking at least 50 per cent of a full-time study load, or $31.20 for students with a study load below 50 per cent.

PES is available to certain recipients of social security payments and payments under the Veterans’ Entitlement Act 1986 who are undertaking qualifying study to assist with the ongoing costs associated with study.  Qualifying study includes secondary courses, tertiary courses, open learning, Certificate courses, Bachelor degrees, Advanced Certificate courses, Graduate Certificate courses, Graduate Diplomas and Degrees, Master qualifying courses or Approved Masters by coursework programs.

The removal of PES is compatible with the right to social security as it is not a social security payment to meet the regular cost of living but rather a supplement designed to assist with some of the costs associated with study, paid on top of a recipient’s social security payment.  An individual’s entitlement to other social security payments or benefits will be unaffected by the cessation of PES.

Right to education

Article 13 of the ICESCR recognises the right of everyone to education.

The removal of PES, to a small extent, impacts on an individual’s ability to participate in education, particularly if they have a low income.  However, its impact on individuals is minor ($31.20 or $62.40 per fortnight depending on study load), and it does not affect a person’s entitlement to other ongoing payments designed to support individuals to engage in education, such as austudy payment and youth allowance (student).

The Australian Government currently provides other programmes to assist tertiary students with the cost of their fees:

·          Students who are enrolling in a Commonwealth Supported Place for a university level qualification (that is, undergraduate level) can access a HECS-HELP loan to pay their student contribution amount.  Students accessing this loan are required to pay their debt through the tax system when they earn above the minimum threshold for compulsory repayment.

·          Eligible students who are enrolling in a higher-level vocational education and training (VET) qualification are able to access VET FEE-HELP, a loan scheme which assists eligible students, enrolled in diploma-level and above courses at an approved VET provider, to pay their tuition fees.

·          FEE-HELP is a loan scheme that assists eligible fee paying students in non-Commonwealth Support Places (for example, post-graduate level courses at university) pay all or part of their tuition fees.

  • Eligible students who access any of the above loans can borrow up to the FEE-HELP limit to pay their fees and do not have to repay the loan until their income meets the minimum repayment threshold.

The 2014-15 Budget is introducing additional measures to assist students with the costs of study.  Subject to the passage of legislation, the following measures will be introduced.

·          Equal access to loans for all Australian undergraduate students - the existing 25 per cent FEE-HELP loan fee and the 20 per cent VET FEE-HELP loan fee will be removed from 1 January 2016.

·          The FEE-HELP limit will be removed, and there will be no limit on the amount of FEE-HELP and VET FEE-HELP assistance that a student can access.  This change will apply for all students from 1 January 2016.

·          A new minimum repayment threshold for HELP will be introduced from the 2016-17 income year.  In that year, graduates will commence repaying their HELP debt once their income reaches an estimated $50,638.

  • Commonwealth Scholarship Scheme.  Higher education institutions will be required to commit $1 in every $5 of additional revenue to a new Commonwealth Scholarship scheme to provide tailored, individualised support to students, including needs-based scholarships to help meet costs of living, fee exemptions, tutorial support, and assistance at other critical points in their university career.  These Commonwealth scholarships are in addition to the existing student income support payments.  Commonwealth scholarships will be available from 1 January 2016.

In addition, if an individual is a jobseeker who is registered with a Job Services Australia provider, the provider can use the Employment Pathway Fund to help provide skills and qualifications for the jobseeker including:

 

·          employment-related training, and associated books and equipment;

·          literacy, language or numeracy assistance where places in other government funded programmes are unavailable; or

  • pre-vocational or preparatory support such as pre-apprenticeship training or pre-tertiary courses where it is not covered by other Government-funded programme.

Consequently, the removal of PES is reasonable in that access to other payments and support mechanisms to allow individuals to undertake study remains.

Conclusion

The Schedule is compatible with human rights because any impact on the right to education is balanced with other financial support for students.

 



Schedule 7 - Education entry payment

 

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

In broad terms, the education entry payment (EdEP) assists with education expenses, and is paid once a year to eligible recipients.  This Schedule repeals provisions that provide for EdEP, and makes related consequential changes.

The Government remains committed to providing incentives for income support recipients to improve their employment prospects through study or training.  More appropriate channels of Government-funded study and training assistance for income support recipients are available through employment service providers and the FEE HELP and VET FEE HELP tuition loan programs.

Human rights implications

The Bill engages the following human rights:

Right to social security

Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) recognises the right of everyone to social security.

The amendments in this Schedule remove the EdEP.  EdEP is an additional annual supplement of $208 paid to recipients of newstart allowance, partner allowance, widow allowance, widow B pension, wife pension, parenting payment (single and partnered), disability support pension, carer payment, special benefit partner service pension, invalidity service pension and income support supplement.  EdEP is specifically targeted to assist with the up-front costs of education and training for those who are enrolling or commencing in an approved course of study.

The removal of EdEP is compatible with the right to social security as it is not an ongoing social security payment to meet the regular cost of living but rather a supplement designed to assist individuals meet the up-front costs of education/training on an annual basis.  An individual’s entitlement to other social security or Veterans’ Affairs payments or benefits will be unaffected by the cessation of EdEP.

Right to education

Article 13 of the ICESCR recognises the right of everyone to education.

The removal of EdEP, to a small extent, impacts on an individual’s ability to participate in education, particularly if they have a low income.  However, its impact on individuals is minor ($208 per annum), and it does not affect a person’s entitlement to other ongoing payments designed to support individuals to engage in education, such as austudy payment and youth allowance (student).

The Australian Government currently provides other programmes to assist tertiary students with the cost of their fees:

·          Students who are enrolling in a Commonwealth Supported Place for a university level qualification (that is, undergraduate level) can access a HECS-HELP loan to pay their student contribution amount.  Students accessing this loan are required to pay their debt through the tax system when they earn above the minimum threshold for compulsory repayment.

·          Eligible students who are enrolling in a higher-level vocational education and training (VET) qualification are able to access VET FEE-HELP, a loan scheme which assists eligible students, enrolled in diploma-level and above courses at an approved VET provider, to pay their tuition fees.

·          FEE-HELP is a loan scheme that assists eligible fee paying students in non-Commonwealth Support Places (for example, post-graduate level courses at university) pay all or part of their tuition fees.

  • Eligible students who access any of the above loans can borrow up to the FEE-HELP limit to pay their fees and do not have to repay the loan until their income meets the minimum repayment threshold.

The 2014-15 Budget is introducing additional measures to assist students with the costs of study.  Subject to the passage of legislation, the following measures will be introduced:

·          Equal access to loans for all Australian undergraduate students - the existing 25 per cent FEE-HELP loan fee, and the 20 per cent VET FEE-HELP loan fee will be removed from 1 January 2016.

·          The FEE-HELP limit will be removed, and there will be no limit on the amount of FEE-HELP and VET FEE-HELP assistance that a student can access.  This change will apply for all students from 1 January 2016.

·          A new minimum repayment threshold for HELP will be introduced from the 2016-17 income year.  In that year, graduates will commence repaying their HELP debt once their income reaches an estimated $50,638.

·          Commonwealth Scholarship Scheme.  Higher education institutions will be required to commit $1 in every $5 of additional revenue to a new Commonwealth Scholarship scheme to provide tailored, individualised support to students, including needs-based scholarships to help meet costs of living, fee exemptions, tutorial support, and assistance at other critical points in their university career.  These Commonwealth scholarships are in addition to the existing student income support payments.  Commonwealth scholarships will be available from 1 January 2016.

In addition, if an individual is a jobseeker who is registered with a Job Services Australia provider, the provider can use the Employment Pathway Fund to help provide skills and qualifications for the jobseeker including:

·          employment related training, and associated books and equipment;

·          literacy, language or numeracy assistance where places in other government-funded programmes are unavailable; or

·          pre-vocational or preparatory support such as pre-apprenticeship training or pre-tertiary courses where it is not covered by other government-funded programme.

Consequently, the removal of EdEP is reasonable in that access to other payments and support mechanisms to allow individuals to undertake study remains.

Conclusion

The Schedule is compatible with human rights because any impact on the right to education is balanced with other financial support for students.

 



Schedule 8 - Age requirements for various Commonwealth payments

 

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 measure proposes that, from 1 January 2015, young unemployed people aged 22 to 24 would no longer be eligible for newstart allowance or sickness allowance until they turn 25 years of age and would, instead, be able to claim and qualify for youth allowance.  To enable this, youth allowance for all types of persons who can satisfy the activity test, will be available to persons who have not yet reached 25.  Youth disability supplement will also be available to all youth allowance recipients who have not yet reached 25.  The amendments include safeguards to ensure that existing newstart allowance recipients on commencement of the measure who are 22, 23 or 24 (or persons undergoing certain waiting periods or suspension periods) can remain in receipt of newstart allowance.  Similar savings rules are provided for sickness allowance.

The measure also proposes to make consequential amendments to the Farm Household Support Act to align rates at which farm household allowance is paid, to farmers and their partners, with newstart allowance and youth allowance rates.

Human rights implications

The measure engages the following human rights:

Right to social security

The measure engages article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR), which recognises the right of everyone to social security.

The proposed measure provides incentives to young unemployed Australians to acquire the required skills to obtain gainful employment.  Incentives are provided to persons aged 22, 23 or 24 who, as a result of this measure, will no longer be able to qualify for newstart allowance.  Youth allowance (other) has a larger income free threshold compared to newstart allowance, for those being paid for any work while studying or training.  The use of savings provisions for recipients already in receipt of newstart allowance or sickness allowance on 31 December 2014 (or others undergoing certain waiting periods or suspension periods), ensures 22, 23 and 24 year olds already qualified for newstart allowance and sickness allowance will not be affected by the amendments following commencement until their payment is cancelled.  The measure will also not modify the age at which a person is regarded as ‘independent’ (currently 22 years) for youth allowance.  This will mean that persons above that age will continue not be subject to parental means testing.

Right to education

This measure engages Article 13 of the ICESCR, which recognises the right of everyone to education.

The proposed measure enhances and incentivises the acquiring of education and skills for young people.  It is designed to activate young unemployed youth (age 22 to 24) who are currently not in education or working.  Enabling this cohort to qualify for youth allowance rather than newstart allowance provides an incentive to obtain the required training to place them in a position of improved employability.  Youth allowance has a higher income free threshold compared to newstart allowance enabling a greater scope to earn while learning or training.

Rights of persons with disabilities

This measure engages Article 28 of the Convention of the Rights of Persons with Disabilities , which recognises the right to an adequate standard of living and social protection for those with disability.  The proposal recognises the special requirements of income support recipients with disability by raising the age of qualification for the youth disability supplement (as paid as a component of youth allowance) to 24 years.

Conclusion

This measure is compatible with human rights because it generally advances human rights including the opportunity for education and gainful employment.  To the extent that it may have any adverse impact on human rights, that impact is reasonable and for legitimate reasons.

 

 



Schedule 9 - E xclusion periods

 

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 implements an income support measure that forms part of the broader reforms announced in the 2014-15 Budget.  This measure aims to encourage greater participation in work and other activities and make the system fairer and more sustainable, to ensure a productive Australian workforce for the future.  The measure establishes firm expectations for young jobseekers.  It provides an incentive for affected persons to be self-sufficient, or to undertake further relevant education or training to increase employability before relying on the taxpayer for support. 

Waiting periods

Subject to some exemptions, the amendments made by this Schedule will apply from 1 January 2015 to a person aged under 30 years and who is a new claimant for, or transferring from another payment to, newstart allowance, youth allowance (other) and, in certain circumstances, special benefit.  Such persons will be subject to a 26-week waiting period before the social security benefit becomes payable.  This 26-week period may be reduced if a person has had past periods of gainful work. 

After an initial 26-week waiting period, jobseekers may become able to receive income support for 26 weeks.  It is anticipated that a person will be required to participate in 25 hours per week of Work for the Dole during this 26-week payment period.

Non-payment period

After a 26-week payment period, a person may become subject to a further 26-week non-payment period, unless an exemption applies.  A wage subsidy will be made available to employers, as well as relocation assistance to encourage people to move to where jobs are available.

Recipients of social security benefits on 1 January 2015

A person who, on 1 January 2015, is receiving a social security benefit or is taken to be receiving a social security benefit in certain circumstance, may become subject to a 26-week non-payment period once they have completed a Work for the Dole programme after 1 July 2015, provided they are aged less than 30 years and an exemption does not apply.  This cycle will continue, with income support generally payable for 26 weeks in every 52-week period, until a person finds a job, undertakes full-time study, or turns 30 years of age.

Exemptions

A person will have an exemption from the new waiting period or the new non-payment period if the person:

·          is a principal carer of a child;

·          is a parent of an FTB child.  The effect of this is that a parent who has 35 per cent care of a child will be exempt from a Part 3.12B waiting period and non-payment period;

·          has a partial capacity to work;

·          has a current Commonwealth registration number in relation to a part-time apprenticeship, traineeship or trainee apprenticeship;

·          requires employment services or disability employment services of a class determined by the Minister in a legislative instrument;

·          is covered by an exemption determined by the Minister by legislative instrument.

The Minister will also be able to determine temporary exemptions in a legislative instrument which exempt a person from a waiting period or a non-payment period for particular period of time.

Activity test and participation requirements

A person will be required to comply with their activity test and participation requirements while they are subject to the new waiting period and non-payment period.  These requirements are to look for work, attend appointments with employment services providers and accept any offers of suitable work.   Requirements will be monitored through Employment Pathway Plans, and young jobseekers will be required to enter into and comply with the terms of an Employment Pathway Plan at all times during the new exclusion period.  Jobseekers who fail to comply with an Employment Pathway Plan may have an exclusion period extended or a penalty imposed. 

Human rights implications

Right to work, right to social security and the right to an adequate standard of living

Article 6 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) recognises the right to work.  This includes the right to the opportunity to gain a living by work which the person freely chooses or accepts, and is considered an inherent part of human dignity. [1]

 

Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) recognises the right of everyone to social security.  Article 11 of the ICESCR recognises the right of everyone to an adequate standard of living and to the continuous improvement of living conditions.

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.

This Schedule provides incentives for young unemployed Australians to either acquire employment or the required skills to obtain gainful employment.  As such, this Schedule encourages affected persons to enter the workforce rather than relying on the social security system.  The savings made by the measure will ensure that the broader social security system is focussed on those that need it most, helping to promote general welfare in a democratic society (consistent with Article 4 of the ICESCR).

Currently, claimants of social security payments may be subject to a range of waiting and exclusion periods which operate on the basis that claimants should draw on their own resources before drawing from taxpayer funded financial support.  This Schedule will impose an additional initial 26-week exclusion period to prevent young job ready people becoming fully reliant on income support and to encourage workforce participation.

If a young person enters a second or subsequent non-payment period, they will have access to wage subsidy support through employment service providers and additional assistance to relocate for employment.  This aspect of the measure recognises that the right to social security can be made available ‘in cash or in kind’, as acknowledged by the Committee on Economic, Social and Cultural Rights’, General Comment 19.

This Schedule will also implement a framework to ensure that vulnerable young people, including those with children or disability, will continue to have access to income support under the current arrangements and not be subject to this measure.  In alignment with the intent of the measure, those young people that have work experience may be able to reduce their initial 26-week waiting period to a minimum period of 4 weeks.

This Schedule therefore seeks to ensure that more jobseekers experience the benefits of employment - for example, greater social and economic inclusion.  The measure is also compatible with the protection of just and favourable conditions of employment, as work which provides terms and conditions less generous than the applicable statutory conditions is not taken to be suitable work for the purposes of social security law.

 

To the extent that this Schedule may limit the right to social security and the right to an adequate standard of living, the impact is reasonable and for legitimate reasons.

 

There is a need to provide greater encouragement to jobseekers to make a genuine effort to enter suitable employment, including if necessary by moving to a different area, rather than remaining on income support.  This will help to maintain the integrity of the social security system, and to ensure finite resources are equitably allocated to genuine jobseekers.

 

This Schedule, in focusing on young persons, acknowledges that young persons often have access to family support to enjoy an adequate standard of living.  In encouraging young persons to work, it also acknowledges that the best way for a person to enjoy an adequate standard of living is through entering the workforce. 

This Schedule contains exemptions to ensure that vulnerable persons can be exempted from the measure, including those who:  are the principal carer of a child or a parent of an FTB child; have only a partial capacity to work; are a part-time apprentice; or are another person whose circumstances are covered in a legislative instrument to allow flexibility in exempting certain vulnerable persons from the measure.  These exemptions ensure that vulnerable persons are still able to receive payments.

The Government intends to review the impact of the amendments made by this Schedule once sufficient data is available.

Right to education

Article 13 of the ICESCR recognises the right of everyone to education.

This Schedule enhances and provides incentives for young people to obtain an education and skills.  It is designed to motivate young unemployed youth who are currently not in education or working.  Subjecting a job ready young person to a waiting period unless they are studying provides a financial incentive to learn which will place such persons in a position of improved employability over their life course.

Rights of persons with disabilities

Article 28 of the Convention on the Rights of Persons with Disabilities deals with the adequate standard of living and social protection issues of those having a disability. The Schedule recognises the special requirements of income support recipients in such a situation and exempts people with an assessed partial capacity to work due to disability from the measure.

Conclusion

This Schedule is compatible with human rights.  To the extent that it limits rights, the limitation is reasonable, proportionate to the policy objective and for legitimate reasons.



Schedule 10 - Family tax benefit

 

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 amends the A New Tax System (Family Assistance) Act 1999 to implement a number of reforms to the family tax benefit.  These reforms will improve the sustainability of the family payments system over the long term, while continuing to provide assistance to families in need and encouraging increased workforce participation.

The amendments in Schedule 10 will enable the following family payment reforms from 1 July 2015:

 

  • limit the family tax benefit Part A large family supplement to families with four or more children;
  • remove the family tax benefit Part A per-child add-on to the higher income free area for each additional child after the first;
  • revise the family tax benefit end-of-year supplements to their original values and cease indexation;
  • improve targeting of family tax benefit Part B by reducing the primary earner income limit from $150,000 a year to $100,000 a year;
  • limit family tax benefit Part B to families with children under six years of age, with transitional arrangements applying to current recipients with children above the new age limit for two years; and
  • introduce a new allowance for single parents on the maximum rate of family tax benefit Part A for each child aged six to 12 years inclusive, and not receiving family tax benefit Part B.

Human rights implications

These amendments engage the human right discussed below.

Right to social security

Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) recognises the right of everyone to benefit from social security.

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.

To the extent that revising the family tax benefit end-of-year supplements to their original values limits the right to social security, this is reasonable and proportionate.  It does not reduce the fortnightly assistance that families receive throughout the year.  The family tax benefit end-of-year supplements were introduced to help minimise the impact of families being overpaid as a result of underestimating their incomes for an entitlement year.  The change still retains a substantial amount to assist families to cover end-of-year debt.

Other changes to family tax benefit Part A will have the effect of better targeting the payment.  The removal of the per-child add-on that currently applies under the family tax benefit Part A income test means that the higher income free area (currently $94,316) will remain, but without the add-on of $3,796 for a second or subsequent child.  To the extent that this limits the right to social security, this is reasonable and proportionate.

Limiting the family tax benefit Part A large family supplement better targets this supplement to families with four or more children.  To the extent that this limits the right to social security, this change is reasonable and proportionate.  Very large families will have extra support.

Reforms to family tax benefit Part B are intended to better target the payment to low and middle-income families, and to families with young children.  To the extent that reducing the primary earner income limit for family tax benefit Part B from $150,000 to $100,000 limits the right to social security, this is reasonable and proportionate, as it will not impact on families most in need.  Families with a primary earner earning income above the new limit rely less on family tax benefit Part B to meet everyday expenses.

Limiting the age of eligibility for family tax benefit Part B to families with a youngest child aged under six acknowledges that care requirements for children are higher when children are very young.  To the extent that this limits the right to social security, it is reasonable and proportionate.  This change encourages parents to participate in the workforce.  Families with a youngest child aged six and over will continue to be eligible for the payment for two years under grandfathering arrangements, giving them time to adjust to the change.

The introduction of a new allowance for single parents with a child aged six to 12 inclusive recognises that these families may have fewer resources to meet living costs and need to balance work with care responsibilities.  The single parent supplement is targeted specifically to low-income families, ensuring that children in these families will continue to benefit from additional financial support despite losing access to family tax benefit Part B.

These reforms 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 11 - Pension age

 

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 increases the age pension qualifying age, and the non-veteran pension age, for both men and women from 67 to 70 years by six months every two years, commencing on 1 July 2025.  The measure to increase pension age from 67 to 70 will not affect anyone born before 1 July 1958.

This change will apply to future claimants of the age pension.  In the period before qualifying for the age pension, a proportion of people affected will remain in work longer.  Those who cannot work will be able to claim an income support payment, such as newstart allowance or disability support pension, subject to their circumstances and eligibility.

The current pension qualifying age for both men and women is 65 years, rising to 67 years between 1 July 2017 and 1 July 2023. 

This Schedule also amends the Veterans’ Entitlements Act 1986 to increase the non-veteran pension age.  Under the Veterans’ Entitlements Act, pension age for people other than veterans is the same as pension age under the Social Security Act 1991 for the age pension

Human rights implications

This change is being introduced gradually over the next 21 years to allow people to plan for their retirement income arrangements.  The change is underpinned by increasing life expectancy in Australia.  A person aged 65 today, on average, could expect to live for around another 20 years.

The age pension qualifying age is not an official retirement age.  Many people already work beyond the qualifying age for the age pension .  There are both economic and social benefits to participating in the workforce.

People unable to support themselves fully financially are supported by Australia’s social security safety net, if they meet the relevant eligibility criteria. 

Conclusion

This Schedule changes the qualification arrangements for the age pension.  However, other social security income support payments will remain available for claimants in the affected age groups who cannot fully support themselves before qualifying for the age pension.  The Schedule is compatible with human rights because it does not limit or preclude people from gaining or maintaining access to social security. 

There are no human rights implications.



Schedule 12 - Date of effect for veterans’ disability pension

 

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 amends the Veterans’ Entitlements Act 1986 to change the earliest date of effect for a grant of disability pension to the date the claim is received at the Department of Veterans’ Affairs, instead of a date that is not earlier than three months before the date the claim is received at the Department of Veterans’ Affairs.

Human rights implications

Schedule 16 engages the right 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 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).

 

A backdated commencement for disability pension was originally introduced in 1943 under the Act preceding the Veterans’ Entitlements Act, to provide a safety net for Second World War veterans who were discharged before a claim for a disability pension was lodged.  The intention was to ensure that veterans could receive payment from the date of discharge where there had been a delay in lodging the claim.

 

The current backdating provisions relate only to claims under the Veterans’ Entitlements Act for injuries and illnesses related to defence service rendered prior to 30 June 2004.  Claims for permanent impairment compensation under the Military Rehabilitation and Compensation Act 2004 for defence service rendered on or after 1 July 2004 are paid from the date of claim or later.

 

The amendments will align the date of effect for the grant of disability pension with other Veterans’ Affairs portfolio programmes, such as income support under the Veterans’ Entitlement Act and permanent impairment under the Military Rehabilitation and Compensation Act.  The proposed amendments also restore equity between income support and disability pension compensation under the Veterans’ Entitlement Act .

 

Conclusion

 

The amendments made by this Schedule are compatible with human rights because:

 

·          to the extent that the changes reduce the period for which disability pension is payable, the reduction is reasonable, necessary and proportionate to achieving a legitimate aim; and

  • they do not limit or preclude eligible persons from gaining or maintaining access to disability pension compensation under the Veterans’ Entitlement Act .

 

 

 

Minister for Social Services, the Hon Kevin Andrews MP

 




[1] Committee on Economic, Social and Cultural Rights, General Comment 18, paragraphs 1 and 2.