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Social Security Legislation Amendment Bill 1991

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House: House of Representatives

Portfolio: Social Security


This is an omnibus Bill that makes a number of minor amendments to the Social Security Act 1947 (the Principal Act). There are no policy initiatives. The amendments relate to matters such as the treatment of funeral bonds and the recovery of funds from compensation payments and money owing to people.


As there is no central theme to the Bill, each matter will be dealt with below.

Main Provisions

Funeral schemes

The social security assets test applies to a large range of payments and provides for the benefit

payable to a person to be reduced or eliminated if the value of a persons property exceeds a certain amount. Section 4 of the Principal Act lists a number of matters that are to be excluded from the calculation of the value of a persons property. Paragraph 4(1)(ix) provides that the value of any cemetery plot acquired, or funeral expenses paid, in respect of the person receiving a benefit or their spouse, will not be included in the calculation of the value of the person's property. While the traditional form of such schemes has been for the purchaser to acquire a right to a specific service at a discounted forward price, new schemes have been introduced which, while guaranteeing funeral benefits, are also investment vehicles. Income accrues on the bonds and this can be passed on to the bond holder. Effectively, this allows a large asset to be tied up in a scheme that gives funeral benefits, as defined in the Principal Act, and so excludes the asset from the operation of the assets test.

The amendments contained in clauses 4 and 6 will provide that investments in such bonds will be exempt so long as they are for not more than $5 000 ($10 000 for a person and their spouse) and satisfy a number of conditions, including that they do not mature before death and cannot be realised before then. Any income earned on such bonds will also be exempted from the calculation of the value of a person's property.

Recovery from compensation payments

Sections 154 and 155 of the Principal Act provide for the recovery of payments from compensation payments. Basically, the provisions cover the situation where a person is paid a benefit, such as sickness benefits, and subsequently receives a compensation payment for the period covered by the payments, such as damages for loss of wages. The provisions attempt to ensure that a person does not receive double benefits. A recent decision of the Victorian Supreme Court, Commonwealth of Australia v. Accident Compensation Commission, called into doubt the Commonwealth's ability to recover such amounts. Section 109 of the Constitution provides that where Commonwealth and State laws are inconsistent, the Commonwealth law will prevail. Paragraphs 51(xxiii) and 51(xxiiia) provide the Commonwealth with power to provide social security benefits and section 109 will allow State laws on these matters to be overruled. Clauses 14 and 15 will make it clear that the recovery provisions of the Principal Act will overrule a State or Territory law that seeks to make compensation payments inalienable. Laws with respect to Territories are made under section 122 of the Constitution. Section 162 of the Principal Act provides that where a person owes money to the Commonwealth under the Principal Act and that person is owed money by another, the Secretary may require the latter person to pay the money to the Commonwealth to satisfy the debt. Clause 16 will amend this section to provide that this will apply even if a State or Territory law is to the contrary.

Bills Digest Service 20 March 1991

Parliamentary Research Service

For further information, if required, contact the Education and Welfare Group on 06 2772410.

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Commonwealth of Australia 1991

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Published by the Department of the Parliamentary Library, 1991.