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2010-2011
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
SOCIAL SECURITY AND OTHER
LEGISLATION AMENDMENT BILL 2011
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Minister for Families, Housing, Community Services and
Indigenous Affairs, the Hon Jenny Macklin MP)
SOCIAL SECURITY AND OTHER LEGISLATION
AMENDMENT BILL 2011
OUTLINE
This Bill will introduce several measures affecting, primarily, the Families,
Housing, Community Services and Indigenous Affairs portfolio, including two
Budget 2011-12 measures and a Budget 2009-10 measure.
Bereavement allowance
The Bill gives parenting payment recipients access to bereavement allowance
on the death of a partner.
Special benefit
The Bill aligns access to special benefit for certain visa holders with other
migrants, by removing the family member exemption from the two year newly
arrived resident's waiting period before special benefit is payable. The
amendments support the Budget 2011-12 measure Provisional Partner Visa
Holders - Entitlement to Special Benefit.
Impairment Tables for disability support pension
As part of the Disability Support Pension - Better and Fairer Assessments
2009-10 Budget measure, the Government undertook to update the Tables for
the Assessment of Work-related Impairment for Disability Support Pension
(the Impairment Tables) to ensure that they are consistent with contemporary
medical and rehabilitation practice. The Bill removes the current outdated
Impairment Tables from 1 January 2012, and enables the Minister to
introduce new Impairment Tables through a legislative instrument.
Disability advocacy services
The Bill provides for the introduction of a third party certification quality
assurance system for disability advocacy services. The new quality
assurance system will provider greater assurances about the quality of
disability advocacy support, by introducing mechanisms independent from
government to assess the compliance of disability advocacy services against
a tailored set of new Disability Advocacy Standards.
Asset-test exempt income streams
The Bill makes a number of amendments aimed at enhancing and improving
the integrity of treatment of certain asset-test exempt income streams.
Termination payments
The Bill clarifies that payments made by an employer to an employee in lieu of
notice of termination are regarded as redundancy payments for the purposes
of the social security law.
Financial impact statement
Bereavement allowance
Total resourcing
2011-12 2012-13 2013-14 2014-15
$0.2 m $0.2 m $0.2 m $0.2 m
Special benefit
Total resourcing
2011-12 2012-13 2013-14 2014-15
0.2 m -11.3 m -13.4 m -13.6 m
Impairment Tables for disability support pension
This Bill gives effect to the final component of the 2009-10 Budget measure
Disability Support Pension - better and fairer assessments, which also
included: fast tracking for claimants who are clearly or manifestly eligible for
disability support pension; the introduction of assessments for disability
support pension being undertaken by Senior Job Capacity Assessors; the
establishment of the Health Professional Advice Unit within Centrelink; and
new payments for claimants' treating doctors when they provide additional
diagnostic or further information at the request of the Health Professional
Advice Unit. These measures form an integrated package and the costs of
each component cannot be disaggregated. The financial impacts provided
are the impacts of this integrated package.
Total resourcing
2009-10 2010-11 2011-12 2012-13
$13.9 m $19.1 m - $4.8 m - $35.4 m
Disability advocacy services
Funding for this measure was introduced in the 2007-2008 financial year and
is linked to the costs incurred in the three-year certification cycle under this
measure. Costs are higher in the 2011-2012 financial year due to one-off
costs associated with practical supports to assist disability advocacy services
achieve certification.
Total resourcing
2011-12 2012-13 2013-14 2014-15
$1.02 m $0.74 m $0.69 m $0.61 m
Asset-test exempt income streams
Nil impact.
Termination payments
Nil impact.
SOCIAL SECURITY AND OTHER LEGISLATION
AMENDMENT BILL 2011
NOTES ON CLAUSES
Clause 1 sets out how the Act is to be cited, that is, as the Social Security
and Other Legislation Amendment Act 2011.
Clause 2 provides a table that sets out the commencement dates of the
various sections in, and Schedules to, the Act.
Clause 3 provides that each Act that is specified in a Schedule is amended or
repealed as set out in that Schedule.
This explanatory memorandum uses the following abbreviation:
· `Social Security Act' means the Social Security Act 1991.
1
Schedule 1 - Bereavement allowance
Summary
This Schedule gives parenting payment recipients access to bereavement
allowance on the death of a partner.
Background
Paragraph 315(1)(c) of the Social Security Act precludes a parenting payment
recipient from qualifying for bereavement allowance on the death of his or her
partner. The original intent of the legislation was that the surviving member of
a couple who had dependent children would continue to receive parenting
payment (single), rather than transferring temporarily to the equivalent of
bereavement allowance and then back to parenting payment (single).
Historically, there was no financial advantage in transferring between these
payment types.
The introduction of the Secure and Sustainable Pension Reform package in
September 2009 saw a substantial increase to the single rate of certain
pension types, including bereavement allowance. Allowing parenting
payment recipients to transfer temporarily to bereavement allowance will
provide additional assistance during a difficult time.
The amendments made by this Schedule commence on 1 January 2012.
Explanation of the changes
Item 1 repeals paragraph 315(1)(c) of the Social Security Act. In doing so, it
allows persons qualified for a parenting payment to transfer to bereavement
allowance during the 14 week bereavement period under the Act. This
removes the current financial disadvantage that affects parenting payment
recipients, compared to other income support recipients who are in the same
circumstances.
Item 2 provides that the amendments made by this Schedule apply in relation
to deaths occurring on or after the commencement of this Schedule.
2
Schedule 2 - Special benefit
Summary
The Schedule aligns access to special benefit for certain visa holders with
other migrants, by removing the family member exemption from the two year
newly arrived resident's waiting period before special benefit is payable. The
amendments support the Budget 2011-12 measure Provisional Partner Visa
Holders - Entitlement to Special Benefit.
Background
Temporary visa holders may qualify for special benefit if the visa is included in
a class of visas set out in a determination made by the Minister under
subparagraph 729(2)(f)(v) of the Social Security Act.
Currently, special benefit is payable to these temporary visa holders on arrival
in Australia if suffering hardship, whereas other migrants would be subject to
the newly arrived resident's waiting period and must wait two years before
special benefit is payable, unless they can demonstrate both financial
hardship and a substantial change in circumstances beyond their control after
arrival in Australia.
An exemption from the newly arrived resident's waiting period is provided to a
`family member' under paragraph 3(1)(e) or (g) of the Social Security
Legislation Amendment (Newly Arrived Resident's Waiting Periods and Other
Measures) Act 1997. Paragraph 7(6D) of the Social Security Act defines a
`family member' as a `partner' or a `dependent child' in relation to
paragraphs 3(1)(e) or (g).
As a result, unlike other newly arrived migrants, these temporary visa holders
can receive special benefit much earlier than migrants entering with
permanent visas.
As a result of the changes made by this Schedule, in respect of claims for
special benefit lodged on or after 1 January 2012, the exemption from the
newly arrived resident's waiting period will no longer apply to a holder of a
visa that is in a class of visas determined under both
subparagraph 729(2)(f)(v) and subsection 739A(8)(c) of the Social Security
Act, unless another exception applies (such as demonstrating a substantial
change of circumstances after their arrival in Australia).
This change means that Provisional Partner Visa Holders will need to
demonstrate that they have experienced a `substantial changes of
circumstances beyond their control' after arrival in Australia, in addition to
financial hardship, in order to access special benefit.
3
Explanation of the changes
Item 1 inserts new subsection 739A(8) into the Social Security Act.
This subsection provides that paragraphs 3(1)(e) and (g) of the Social
Security Legislation Amendment (Newly Arrived Resident's Waiting Periods
and Other Measures) Act 1997 do not apply to a person if the person makes a
claim for special benefit on or after 1 January 2012 and the person holds a
visa that is in a class of visas determined by the Minister under
subparagraph 729(2)(f)(v) of the Social Security Act and is in a class of visas
determined by the Minister for the purposes of new paragraph 739A(8)(c) of
the Social Security Act.
As a result, a person who holds such a visa will be subject to the newly
arrived resident's waiting period under section 739A of the Social Security
Act, unless the Secretary is of the opinion that the person has suffered a
substantial change in circumstances beyond the person's control under
subsection 739A(7) of the Social Security Act or another exception applies.
Irrespective of when a person applies for their visa or when their visa is
granted by the Department of Immigration and Citizenship, the new measure
applies to a person who is in Australia holding a visa in a class of visas for the
purpose of paragraph 739A(8)(c), and who applies for special benefit on or
after 1 January 2012.
Examples of the operation of new subsection 739A(8) of the Social Security
Act follow. These examples refer to a visa subclass called `visa subclass
XYZ'. This subclass of visas has been named, and is referred to, for
illustrative purposes only and does not represent any particular extant
subclass of visas.
Example 1
For the purposes of this example:
- visa subclass XYZ is a visa in a class of visas determined by the
Minister for the purposes of paragraph 739A(8)(c) of the Social
Security Act; and
- subparagraph 729(2)(f)(v) of the Social Security Act applies to
Jennifer; and
- Jennifer is a `family member' of a person who has lawfully been
a permanent resident of Australia for a continuous period of not
less than two years, for paragraph 3(1)(g) of the Social Security
Legislation Amendment (Newly Arrived Resident's Waiting
Periods and Other Measures) Act 1997 (the 1997 Act).
Jennifer applies for a visa subclass XYZ on 1 May 2011, is granted the
visa on 1 October 2011 and enters Australia on 1 November 2011.
Jennifer applies for special benefit on 1 December 2011.
4
As her claim for special benefit is lodged prior to 1 January 2012, new
subsection 739A(8) of the Social Security Act does not apply to Jennifer
(paragraph 739A(8)(a)).
Therefore, paragraph 3(1)(g) of the 1997 Act applies to Jennifer and, if
she is qualified for special benefit under section 729 of the Social
Security Act, she will not be subject to the newly arrived resident's
waiting period under section 739A (because of the operation of
paragraph 3(1)(g) of the 1997 Act).
Example 2
For the purposes of this example:
- visa subclass XYZ is a visa in a class of visas determined by the
Minister for the purposes of paragraph 739A(8)(c) of the Social
Security Act; and
- subparagraph 729(2)(f)(v) of the Social Security Act applies to
Raymond; and
- Raymond is a `family member' of a person who is an Australian
citizen, for paragraph 3(1)(e) of the Social Security Legislation
Amendment (Newly Arrived Resident's Waiting Periods and
Other Measures) Act 1997 (the 1997 Act).
Raymond applies for a visa subclass XYZ on 1 May 2011, is granted the
visa on 1 October 2011 and enters Australia on 1 November 2011.
Raymond applies for special benefit on 1 November 2012.
As his claim for special benefit is lodged after 1 January 2012, new
subsection 739A(8) of the Social Security Act applies to Raymond
(paragraph 739A(8)(a)).
Subsection 739A(8) has the effect that paragraph 3(1)(e) of the 1997 Act
does not apply to Raymond. Therefore, if Raymond is qualified for
special benefit under section 729 of the Social Security Act, he will be
subject to the newly arrived resident's waiting period under section 739A
and special benefit will not be payable to Raymond until the end of that
period (unless an exception, other than paragraph 3(1)(e) or (g) of the
1997 Act, applies to his situation).
5
Example 3
For the purposes of this example:
- visa subclass XYZ is a visa in a class of visas determined by the
Minister for the purposes of paragraph 739A(8)(c) of the Social
Security Act; and
- subparagraph 729(2)(f)(v) of the Social Security Act applies to
Benjamin; and
- Benjamin is a `family member' of a person who is an Australian
citizen, for paragraph 3(1)(e) of the Social Security Legislation
Amendment (Newly Arrived Resident's Waiting Periods and
Other Measures) Act 1997 (the 1997 Act).
Benjamin applies for a visa subclass XYZ on 1 May 2011, is granted the
visa on 1 October 2011 and enters Australia on 1 November 2011.
Benjamin applies for special benefit on 1 December 2011.
As his claim for special benefit is lodged prior to 1 January 2012, new
subsection 739A(8) of the Social Security Act does not apply to
Benjamin (paragraph 739A(8)(a)).
Therefore, paragraph 3(1)(e) of the 1997 Act applies to Benjamin and, if
he is qualified for special benefit under section 729 of the Social Security
Act, he will not be subject to the newly arrived resident's waiting period
under section 739A (because of the operation of paragraph 3(1)(e) of the
1997 Act).
Benjamin remains on special benefit for three weeks. He finds casual
employment on 20 December 2011 and, as a result, his special benefit is
cancelled.
After three months, Benjamin's employment ends, and he claims special
benefit again on 1 March 2012.
As his new claim for special benefit is lodged after 1 January 2012, new
subsection 739A(8) of the Social Security Act applies to Benjamin in
relation to that new claim (paragraph 739A(8)(a)).
Subsection 739A(8) has the effect that paragraph 3(1)(e) of the 1997 Act
does not apply to Benjamin in relation to his new claim for special
benefit. Therefore, if Benjamin is qualified for special benefit under
section 729 of the Social Security Act, he will be subject to the newly
arrived resident's waiting period under section 739A and special benefit
will not be payable to Benjamin until the end of that period (unless an
exception, other than paragraph 3(1)(e) or (g) of the 1997 Act, applies to
his situation).
6
Schedule 3 - Impairment Tables for disability support pension
Summary
As part of the Disability Support Pension - Better and Fairer Assessments
2009-10 Budget measure, the Government undertook to update the Tables for
the Assessment of Work-related Impairment for Disability Support Pension
(the Impairment Tables) to ensure that they are consistent with contemporary
medical and rehabilitation practice. This Schedule removes the current
outdated Impairment Tables from 1 January 2012, and enables the Minister to
introduce new Impairment Tables through a legislative instrument.
Background
This measure was announced in the 2009-10 Budget. It is an important
element of the Government's reforms to disability support pension to make it
simpler, fairer and sustainable for those who need it.
Disability support pension provides income support to people who, because of
an ongoing physical, intellectual or psychiatric impairment are prevented from
working or from being re-trained for work. This qualification for disability
support pension requires, amongst other things, that a person's impairment is
of 20 points or more under the Impairment Tables.
The Impairment Tables are currently in Schedule 1B to the Social Security
Act, and are used in the assessment of a person's work-related impairments.
This assessment is used in determining a person's qualification for disability
support pension.
An important element of the Government's reform of the disability support
pension has been a comprehensive review, by medical and allied health
experts and disability advocates, of the current Impairment Tables.
Announced in the 2009-10 Budget, this will ensure the Impairment Tables are
in line with contemporary medical and rehabilitation practices and modern
expectations about functional ability. The Impairment Tables were last
reviewed in 1993.
An Advisory Committee was established to oversee the review of the current
Impairment Tables and provide advice on updating the Impairment Tables,
drawing on consultations with the medical, allied health and rehabilitation
sector, disability peak bodies, mental health advocates and relevant
Government agencies.
This Schedule provides that the Minister may make a legislative instrument
setting out the new Impairment Tables and guidelines containing the rules
relating to the new Impairment Tables. The Minister has committed to consult
widely on the introduction of the new Impairment Tables.
7
The placement of the Impairment Tables in a legislative instrument will enable
the Impairment Tables to be updated regularly in response to developments in
medical or rehabilitation practice.
The amendments made by this Schedule commence on 1 January 2012.
Explanation of the changes
Item 1 is consequential to the repeal of Schedule 1B to the Social Security
Act by item 4. Item 1 repeals the definition of `Impairment Tables' in
subsection 23(1) of the Social Security Act and substitutes a new definition of
`Impairment Tables' in subsection 23(1). The new definition of `Impairment
Tables' reflects the movement of the Impairment Tables from Schedule 1B to
the Social Security Act to a legislative instrument made by the Minister under
new subsection 26(1) as introduced by item 2.
Item 2 inserts new sections 26 and 27. These new sections establish the
framework for the new Impairment Tables.
New subsection 26(1) inserts a power for the Minister to make a legislative
instrument containing tables relating to the assessment of work-related
impairment for disability support pension and the rules for applying the tables.
These will also be referred to as the `Impairment Tables'.
New subsection 26(2) provides that an instrument made under
subsection 26(1) may contain such ancillary or incidental provisions relating to
the Impairment Tables as the Minister considers appropriate. `Ancillary or
incidental provisions' include rules that are applicable to a particular table in
the Impairment Tables.
New subsection 26(3) provides that the Minister may, in a legislative
instrument made under subsection 26(1), set out rules that must be complied
with in applying the Impairment Tables and the ancillary or incidental
provisions made under new subsections 26(1) and (2). Concepts
fundamental to the determination of impairment ratings will be contained in
the rules made under this new subsection.
New subsection 26(4) provides that an instrument made under
subsection 26(1) may contain such ancillary or incidental provisions relating to
the rules for applying the Impairment Tables as the Minister considers
appropriate. `Ancillary or incidental provisions' include rules that are relevant
to the application of all of the Impairment Tables.
New section 27 sets out the regime for the application of the Impairment
Tables and rules for applying the Impairment Tables.
8
New subsection 27(1) provides that if a person makes a new claim, or is taken
to have made a new claim for disability support pension, the Impairment
Tables to apply in determining whether the person is qualified for disability
support pension are the Impairment Tables in effect at the date the person
makes the claim, or is taken to have made the claim. This is so even if the
Impairment Tables were amended within the 13 weeks of the date of claim.
The note to new subsection 27(1) refers the reader to sections 12, 13 and 15
of the Social Security (Administration) Act 1999 (the Administration Act) and
clause 4 of Schedule 2 to that Act. These provisions address when claims for
disability support pension are taken to have been made.
New subsection 27(2) provides that if the Secretary makes a decision in
relation to a claim referred to in subsection 27(1) (the original decision) and
the Secretary, the Social Security Appeals Tribunal (the SSAT) or the
Administrative Appeals Tribunal (the AAT) is reviewing the original decision or
a later decision arising out of the original decision, the Secretary, the SSAT or
the AAT must apply the Impairment Tables in effect at the date the person
made the claim, or was taken to have made the claim.
The note to new subsection 27(2) informs the reader and clarifies that the
effect of subsection 27(2) is that any change to the Impairment Tables
between the date of making of a claim to the making of a decision on the
review must be disregarded.
New subsection 27(3) provides that if a person is receiving disability support
pension and the Secretary gives the person an assessment notice under
subsection 63(2) (`Requirement to attend Department etc.), or
subsection 63(4) (`Requirement to undergo medical examination etc.'), of the
Administration Act, in assessing the person's qualification for disability support
pension, the Secretary must apply the Impairment Tables in force on the day
that the assessment notice was given.
New subsection 27(4) provides that if, after assessing the person's
qualification, the Secretary makes a determination under section 80 of the
Administration Act to either cancel or suspend the person's payment of
disability support pension, and the Secretary, the SSAT or the AAT reviews
that determination or a later decision arising out of that determination, then
the Secretary, the SSAT or the AAT must apply the Impairment Tables in
effect at the date that the assessment notice was given.
The note to new subsection 27(4) informs the reader and clarifies that the
effect of subsection 27(4) is that any change to the Impairment Tables
between the giving of the assessment notice to the making of a decision on
the review must be disregarded.
9
The effect of section 27 is to apply the Impairment Tables in force and fix the
Impairment Tables in time for the consideration of a new claim or, where a
person is already receiving disability support pension, a review of
qualification, from the date of claim or review throughout any subsequent
appeal process (if any) until the final determination of the claim or review.
Item 3 repeals note 2 after subsection 94(1) and substitutes new note 2. The
new note reflects the amendments to the Social Security Act which insert new
section 26 and 27 and refers the reader to the new sections when considering
Impairment Tables.
Item 4 repeals the current Impairment Tables.
Item 5 sets out the application provision which sets out the persons to whom
the amendments made by this Schedule will apply.
Subitem 5(1) provides that, for the purposes of working out a person's
qualification for disability support pension in respect of days on or after
1 January 2012, the changes made by items 1, 2 (to the extent that it inserts
section 26 of the Social Security Act), 3, 4 and 5 apply. Therefore, the new
Impairment Tables must be used after 1 January 2012 to work out
qualification for disability support pension. The phrase `working out a
person's qualification' is sufficiently broad to include new claims, review of a
person's qualification and reconsideration of a decision to suspend after
1 January 2012.
Subitem 5(2) provides that, if a claim for disability support pension is made,
or is taken to have been made, before 1 January 2012 and the Secretary had
not determined the claim before 1 January 2012, the changes made by
items 1, 2 (to the extent that it inserts section 26 of the Social Security Act), 3,
4 and 5 do not apply in relation to working out a person's qualification for
disability support pension in respect of days occurring on or before the day on
which the Secretary determines the claim.
Therefore the new Impairment Tables cannot be used in respect of any claims
made, or taken to have been made, before 1 January 2012 to work out
qualification for disability support pension. The current Impairment Tables will
apply to these claims.
Subitem 5(3) provides that the rules set out in subsections 27(1) and (2)
apply to claims for disability support pension made, or taken to have been
made, on or after 1 January 2012.
Subitem 5(4) provides that the rules set out in subsections 27(3) and (4)
apply to a person receiving disability support pension on or after
1 January 2012 regardless of whether the person started to receive disability
support pension, before, on or after 1 January 2012.
10
The note to item 5 refers the reader to sections 12, 13 and 15 of the
Administration Act and clause 4 of Schedule 2 to that Act. These provisions
address when claims for disability support pension are taken to have been
made.
The effect of the operation of clause 4 of Schedule 2 to the Administration Act
in the following situation should be noted: if a person makes a claim on a date
before 1 January 2012, is not qualified on the date of claim but becomes
qualified within 13 weeks of the date of claim on a date after 1 January 2012,
the effect of the operation of clause 4 of Schedule 2 to the Administration Act
is that the claim is taken to have been made on the first day on which the
person is qualified (that is, on a date after 1 January 2012). In these
circumstances, the Impairment Tables to be applied to determine the person's
qualification will be the Impairment Tables in force after 1 January 2012.
11
Schedule 4 - Disability advocacy services
Summary
This Schedule provides for the introduction of a third party certification quality
assurance system for disability advocacy services. The new quality
assurance system will provider greater assurances about the quality of
disability advocacy support, by introducing mechanisms independent from
government to assess the compliance of disability advocacy services against
a tailored set of new Disability Advocacy Standards.
Background
The need for improvement in the quality assurance system for disability
advocacy agencies has been highlighted in a number of reviews. Most
recently the 2005 Social Options review of the National Disability Advocacy
Program noted that tailored Standards should be developed for advocacy
agencies, and an independent system of auditing be introduced similar to that
in place for employment services. Development of a robust, quality assured
disability advocacy sector will help meet the objectives of the National
Disability Strategy, and will also help meet Australia's obligations under the
United Nations Convention on the Rights of Persons with Disabilities.
The current quality assurance system has not changed since 1997 and does
not provide assurances about the quality of disability advocacy support being
provided. Under the new quality assurance system, the compliance of
disability advocacy services with the new Disability Advocacy Standards
(which will be set out in a legislative instrument) is assessed by an
independent certification body over a three year cycle. The quality assurance
system is based on the Joint Accreditation System of Australian and New
Zealand (JAS-ANZ), under which JAS-ANZ is the accreditation body that
accredits certification bodies to undertake certification assessments of
disability advocacy services. This third-party certification system has been
successfully in place for disability employment services since 2002.
The new quality assurance system has been successfully trialled and
independently evaluated in consultation with the disability advocacy services
sector. The evaluation recommended formal implementation.
The amendments made by this Schedule commence the day after
Royal Assent.
12
Explanation of the changes
Accreditation and certification
Items 3, 4, 5 and 6 of this Schedule make amendments to the Disability
Services Act 1986 (the Disability Services Act) that are relevant to
accreditation and certification.
New section 6DA - Accredited certification body may give certificates of
compliance to providers of advocacy services
Item 6 inserts new section 6DA into the Disability Services Act. New
section 6DA deals with certification of advocacy services. This provision is
expressed in similar terms to existing sections 6D (employment services) and
6E (rehabilitation services) of the Disability Services Act.
New subsection 6DA(1) provides that, if an accredited certification body is
requested by a State, or by an eligible organisation, to give the State, or
eligible organisation, a certificate under this section in respect of a disability
advocacy service being so provided by either the State or the eligible
organisation, and if the accredited certification body is satisfied that the State
or eligible organisation's disability advocacy service meets the advocacy
standards, then the accredited certification body must issue a certificate of
compliance to the State or eligible organisation stating that the advocacy
standards have been met. This certificate is called a certificate of
compliance.
New subsection 6DA(2) provides that, in the circumstances where a State or
eligible organisation holds a certificate of compliance but then ceases to meet
the advocacy standards, the accredited certification body must, by written
notice given to the State or eligible organisation, revoke the certificate.
New subsection 6DA(3) provides that, where an accredited certification body
either gives, or revokes, a certificate of compliance for a State or eligible
organisation, the accredited certification body must, as soon as practicable,
notify the Secretary in writing of the reasons for either the giving of, or the
revoking of, the certificate.
New subsection 6DA(4) provides that a certificate of compliance continues to
be in force until it is revoked under new subsection 6DA(2) or, in a case where
the accredited certification body that issued the certificate of compliance itself
ceases to be accredited, until the end of the period of 3 months from the time
that the certification body ceases to be accredited.
New subsection 6DA(5) makes it clear that a certificate made under
subsection 6DA(1) is not a legislative instrument for the purposes of section 5
of the Legislative Instruments Act 2003. This provision is included to assist
readers, as the instrument is not a legislative instrument within the meaning of
section 5 of the Legislative Instruments Act. In other words, this provision is
merely declaratory of the law.
13
Items 3, 4 and 5 are consequential to item 6 and amend definitions in
section 6A of the Disability Services Act.
Item 3 inserts a reference to new section 6A in the definition of `certificate of
compliance'. The definition of `certificate of compliance' will apply to an
accredited certification body that may give certificates of compliance in
relation to advocacy services.
Item 4 inserts a new subparagraph (ia) in the definition of `certifying
functions'. Advocacy services must also comply with relevant key
performance indicators set out in the disability advocacy standards.
Item 5 amends paragraph (b) of the definition of certifying functions' by
including advocacy services.
The accompanying note explains to the reader that there is a minor
amendment to the heading of section 6D which inserts the words `providers of
employment services' in place of `States or eligible organisation'.
Convention
Item 9 inserts into section 7 of the Disability Services Act a new defined term,
`Disabilities Convention'. `Disabilities Convention' is defined as the
Convention on the Rights of Persons with Disabilities done at New York on
13 December 2006 that was ratified by the Australian Government in 2008.
This definition has been inserted into the Act to reflect that Australia is a party
to the Convention.
The accompanying note informs the reader of where to find the text of the
Convention.
Advocacy services
Items 7, 8, 11, 12 and 23 make amendments relevant to the definition of and
approval of additional advocacy services.
Item 7 inserts a new definition of `advocacy service' into section 7 of
the Disability Services Act. This definition reflects the findings of the National
Disability Advocacy Framework developed under the National Disability
Agreement as enabling people with disability to participate in the
decision-making processes that safeguard and advance their human rights as
provided by the Disabilities Convention. There are three broad types of
`advocacy service', comprising two current types and a third type which could
be approved by the Minister in the future.
14
The first type of advocacy service is a service that seeks to support persons
with disabilities to exercise their rights and freedoms, being rights and
freedoms recognised or declared by the Disabilities Convention through either
one-to-one support between the service and the person with disability or
through the service supporting the person with disability to advocate for
themselves, whether individually, through a third party (for example, their
guardian) or on a group basis (subsection 7(a) refers). This type of advocacy
service is known as individual advocacy.
The second type of advocacy service is a service that seeks to introduce and
influence long-term changes to ensure that the rights and freedoms of
persons with disabilities (being rights and freedoms recognised or declared by
the Disabilities Convention) are attained and upheld so as to positively affect
the quality of the lives of persons with disabilities (subsection 7(b) refers).
This type of advocacy service is known as systemic advocacy.
The third type of an advocacy service, and one that involves the Minister
approving a new class of services, can be found in new subsection 7(c),
which states that an advocacy service is a service that is included in a class of
services that has been approved by the Minister under new section 9B of
the Disability Services Act.
Item 12 inserts new section 9B at the end of Division 1 of Part II of
the Disability Services Act. New section 9B gives the Minister the power to
approve a class of services for the purposes of paragraph (c) of the definition
of `advocacy service' (see item 7). The Minister may, by legislative
instrument, approve a class of service if the Minister is satisfied that the
provision of a service in that class of service would do two things: further the
objects of the Act as set out in section 3 and the principles and objectives
formulated under section 5, and further the implementation of the Disabilities
Convention.
Item 23 is consequential to item 12. Item 23 amends paragraph 33(1)(ca) of
the Disability Services Act. This provision inserts new paragraph 33(1)(caa)
so that the Minister may delegate her or his power to approve additional
advocacy services under new section 9B.
Items 8 and 11 are consequential to item 7. Item 8 repeals the current
definition of the term `advocacy services'. Item 11 repeals paragraph (b) of
the definition of `eligible service' in section 7 of the Disability Services Act.
Disability advocacy standards - introduction of the standards, failure to
meet the applicable standards or hold a certificate of compliance
Presently the Act provides for three sets of standards to be observed:
eligibility standards to be observed by providers of eligible services; disability
employment standards to be observed by providers of disability employment;
and rehabilitation program standards to be observed by providers of
rehabilitation programs.
15
Items 1, 2 and 10 introduce standards applicable to providers of disability
advocacy services. Items 15, 16, 17 and 18 address the consequences for a
provider if they fail to meet the standards or hold a certificate of compliance
against the standards.
Introduction of the standards
Item 10 inserts, into section 7 of the Disability Services Act , a definition of
`disability advocacy standards'. `Disability advocacy standards' means the
standards determined by the Minister under paragraph 5A(1)(ba) in relation to
the provision of an advocacy service.
Items 1 and 2 amend paragraph 5A(1)(b) and subsection 5A(2) of
the Disability Services Act respectively.
Item 1 inserts new paragraph 5A(1)(ba) in subsection 5A(1), and provides
that the Minister may, by legislative instrument, determine that disability
advocacy standards are to be observed when a provider or a service provides
an `advocacy service'.
Item 2 inserts a reference to advocacy standards in subsection 5A(2) and
provides that, once the Minister has determined standards in relation to
advocacy standards (see item 1), the Minister must then, by legislative
instrument, approve key performance indicators to be applied in assessing
whether the standards have been observed.
Failure by the providers to meet the applicable standards or to hold a
certificate of compliance
Item 15 repeals subsections 14GA(1) and (2) of the Disability Services Act,
and substitutes new subsections 14GA(1) and (2). The new subsections
remove references to section 12AB (because this section is now spent) but
refer to the new disability advocacy services.
New paragraph 14GA(1)(a) provides that new section 14GA (consequences
of the failure to hold certificate of compliance) applies where an eligible
organisation is receiving a grant of financial assistance in respect of the
provisions of an employment service or a disability advocacy service and the
organisation is in breach of the condition of grant as prescribed by
subsection 12AD(5) (in respect of an employment service) or subsection 13(6)
(in respect of an advocacy service).
New subsection 14GA(2) states that, where an organisation fails to hold a
certificate of compliance, the Minister may make a declaration stating that the
organisation is in breach of that condition of the grant of financial assistance
(paragraph 14GA(2)(a) refers). New paragraph 14GA(2)(b) provides that the
Minister's declaration will specify what actions will be taken as a result of the
organisation's breach of that condition.
16
Item 16 amends paragraph 14GA(3)(a) of the Disability Services Act. The
amendment omits the words "specified under paragraph (2)(a)" and
substitutes the phrase "referred to in subsection 12AD(5) or 13(5), as the case
requires". This amendment incorporates the introduction of advocacy
services whilst maintaining the reference to employment services.
Items 17, inserts a provision that a declaration made under
new subsection 14GA(2) is not a legislative instrument for the purposes of
section 5 the Legislative Instruments Act 2003 as it is not legislative in nature.
This provision is included to assist readers, as the instrument is not a
legislative instrument within the meaning of section 5 of the Legislative
Instruments Act. In other words, this provision is merely declaratory of the
law.
Item 18 amends paragraph 14J(1)(a) by omitting the phrase "or an
employment service" and substitutes the words "an employment service or an
advocacy service" to incorporate the introduction of an advocacy service.
Amendment to Division 2 of Part II of the Disability Services Act -
Grants for eligible services and research and development activities
Item 13 amends subsection 12AE(4) of the Disability Services Act: the word
"Part" is to be substituted by the word "Division".
New Division 3 of Part II of the Disability Services Act - Grants of
financial assistance for disability advocacy services
Item 14 inserts new Division 3 after Division 2A of Part II of the Disability
Services Act.
Part II of the Disability Services Act contains provisions relating to approval of
grants of financial assistance for the provision of services.
New Division 3, which is inserted by item 14, deals with grants for advocacy
services.
New section 13 sets out the conditions for approval of a grant of financial
assistance for advocacy services.
New subsection 13(1) provides that the Minister may approve the making of a
grant of financial assistance to a State, or to an eligible organisation, where
the State or eligible organisation is providing disability advocacy services for
persons included in the target group.
New subsection 13(2) sets out the criteria the Minister must take into account
when approving a grant of financial assistance under new subsection 13(1).
17
First, the Minister must be satisfied that the making of the grant would further
the objects of the Disability Services Act as set out in section 3 and the
principles and objectives formulated under section 5 (new
subparagraph 13(2)(a)(i) refers) and that the making of the grant would
comply with the guidelines formulated under section 5 that are applicable to
the making of grants under subsection 13(1) (new subparagraph 13(2)(a)(ii)
refers).
In addition to both these criteria being fulfilled, the State or eligible
organisation (as applicable) must already hold a current certificate of
compliance in respect of a disability advocacy service, or the Minister must
have determined a day (under new section 13) by which the State or eligible
organisation must obtain a certificate of compliance, and the State or eligible
organisation must have given a written undertaking to obtain its certificate by
that date.
New subsections 13(3) and 13(4) relate to Ministerial determinations.
New subsection 13(3) provides that the Minister may make a determination
specifying a day for the purposes of subparagraph 13(2)(b)(ii). That is, the
Minister may make a determination specifying a day by which the State or
organisation must obtain their certificate of compliance.
New subsection 13(4) applies where subparagraph 13(2)(b)(ii) applies. This
new subsection provides that the Minister may vary a determination under
subsection 13(3) to specify a later day in which a State or eligible organisation
may obtain its certificate of compliance in respect of the advocacy service it
provides. The Minister cannot specify a date later than 18 months after the
day on which the grant of financial assistance is approved.
The date of grant of financial assistance may be made on a different day to
the determination under subparagraph 13(2)(b)(ii). Subsection 13(4) ensures
that the State or eligible organisation has 18 months in which to obtain its
certificate of compliance from the date of grant. This provision takes into
account that a service may need that timeframe to meet the new Standards in
order to obtain its certificate of compliance.
New subsection 13(5) sets out statutory conditions which attach to a grant of
financial assistance in relation to the period of time a State or eligible
organisation must hold a certificate of compliance. Subject to
new paragraphs 13(5)(a) and 13(5)(b), a grant of financial assistance can only
be made to a State or eligible organisation which is providing an advocacy
service where the State or eligible organisation holds a current certificate of
compliance in respect of that advocacy service.
If a State or eligible organisation holds a current certificate of compliance in
respect of an advocacy service at the time the grant of financial assistance is
approved, new paragraph 13(5)(a) provides that the State or eligible
organisation must continue to hold a certificate of compliance for the entire
period to which the grant of financial assistance relates.
18
If a grant of financial assistance to a State or eligible organisation for an
advocacy service is approved, and the State or eligible organisation does not
hold a certificate of compliance at the time the grant of financial assistance is
approved, the State or eligible organisation must obtain a certificate of
compliance by, or before, the day determined by the Minister and continue to
hold the certificate of compliance for so much of remaining period to which the
grant relates (new subparagraphs 13(5)(b)(i) and (ii)).
New subsection 13(6) makes it clear that approvals and determinations made
under new subsection 13(1) and new subsection 13(3) are not legislative
instruments for the purposes of section 5 of the Legislative Instruments
Act 2003 as they are not legislative in nature. This provision is included to
assist readers, as the instrument is not a legislative instrument within the
meaning of section 5 of the Legislative Instruments Act. In other words, this
provision is merely declaratory of the law.
New section 14 provides for ancillary provisions relating to grants of financial
assistance in respect of disability advocacy services.
New subsection 14(1) provides that without limiting the power the Minister has
to approve a grant of financial assistance in relation to the provision of a
disability advocacy service under new subsection 13(1). The Minister may
also approve a grant of financial assistance in relation to any of the following
matters:
· recurrent expenditure incurred or to be incurred by (new
paragraph 14(1)(a));
· the cost of acquiring land (with or without buildings) (new
paragraph 14(1)(b));
· the cost of acquiring, erecting, alerting or extending buildings - new
paragraph 14(1)(c));
· the costs of acquiring, altering or installing equipment - new
paragraph 14(1)(d)).
New subsection 14(2) provides that, wherever the Minister approves the
making of a grant of financial assistance under new subsection 13(1), subject
to new subsection 14(4) and the regulations, the Minister must also
determine:
· the amount of financial assistance or the manner in which the
amount of the financial assistance is to be calculated
(new paragraph 14(2)(a));
· the time, or times, at which the instalments (if any) in which the
financial assistance is to be paid (new paragraph 14(2)(b)); and
· any other terms and conditions on which the financial assistance is
granted (new paragraph 14(2)(c)).
19
New subsection 14(3) provides examples of the types of terms and conditions
the Minister may wish to incorporate into a grant of financial assistance.
The list provided is not exhaustive and does not limit the operation of new
paragraph 14(2)(c).
New subsection 14(4) provides that, in the event that a grant of financial
assistance is paid under Division 3 of Part II by instalments, all monies to be
paid by instalments must be paid to the disability advocacy service within
5 years after the approval of the making of the grant of financial assistance.
New subsection 14(5) makes it clear that a determination made by the
Minister under new subsection 14(2) is not a legislative instrument for the
purposes of section 5 the Legislative Instruments Act 2003 as it is not
legislative in nature. This provision is included to assist readers, as the
instrument is not a legislative instrument within the meaning of section 5 of the
Legislative Instruments Act. In other words, this provision is merely
declaratory of the law.
Amendments to Division 4 of Part II of the Disability Services Act --
miscellaneous
Items 19, 20, 21 and 22 make consequential amendments to various sections
in Division 4 of Part II of the Disability Services Act (which contains
miscellaneous provisions).
Item 21 repeals subsection 14K(2) of the Disability Services Act.
Subsection 14K(2) has been repealed because there are no longer any
transitional employment services. Item 19 is consequential upon item 21 and
omits the reference to subsection (1) from section 14K.
The accompanying note informs the reader that the heading to section 14K
will be amended by omitting the phrase "Division 2, or Subdivision A of
Division 2A, of" to reflect that section 14K will be retitled "Review of services
funded under Part II".
Item 20 omits the words "or an employment service" from subsection 14K(1)
and substitutes the words "an employment service or an advocacy service".
Item 22 omits the words "or an employment service" from paragraph 15(4)(a)
and substitutes the words "an employment service or an advocacy service".
20
Saving provisions
Item 24 is a saving provision in relation to accrediting authorities. A current
accrediting authority will remain accredited under section 6B of the Disability
Services Act despite the amendments made by this Schedule. Further, any
accreditations made under section 6C by the authority will continue to be in
force. Therefore the amendments made by items 4 and 5 have no effect on
the validity of any approval or accreditation in force immediately before the
commencement of items 4 and 5.
Item 25 is a saving provision in relation to existing grants in respect of
advocacy services. The Disability Services Act, as in force immediately
before the commencement of this Schedule, continues to apply on and after
the commencement in relation to grants of financial assistance approved
before that commencement in respect of advocacy services.
Item 26 is a saving provision in relation to existing declarations of failure to
hold a certificate of compliance. Any declarations made under
subsection 14GA(2) of the Act in effect at the time the amendments made by
this Schedule come into effect, continue to have effect on and after the
commencement of new subsection 14GA(2).
21
Schedule 5 - Asset-test exempt income streams
Summary
This Schedule makes a number of amendments aimed at enhancing and
improving the integrity of treatment of certain asset-test exempt income
streams.
Background
Under the social security law, lifetime and life expectancy income streams
receive concessional treatment for the assets test provided they meet the
requirements under sections 9A and 9B of the Social Security Act.
This means that the asset value of the income stream is not taken into
account when determining whether a social security payment is payable to a
person.
Similarly, the Veterans' Entitlements Act 1986 (the Veterans' Entitlements
Act), in sections 5JA and 5JB, also extends a concessional treatment under
its assets test when the equivalent requirements are met.
Over time, the effectiveness of the policy measures designed to ensure that
the requirements of sections 9A and 9B under the social security law (and
sections 5JA and 5JB of the Veterans' Entitlements Act) are being met has
been reduced in relation to the operation of self managed superannuation
funds (SMSFs) and small APRA funds (SAFs). This has resulted in inequity
between social security recipients and veterans' affairs pensioners, as
inconsistencies in the treatment of these products has led to some social
security recipients and veterans' affairs pensioners receiving concessions and
a higher rate of social security or veterans' entitlements payment without
meeting their reciprocal responsibilities.
The amendments in this Schedule are intended to strengthen the existing
income stream rules and clarify existing policy in relation to these products.
Social security recipients and veterans' affairs pensioners who have lifetime
or life expectancy income streams are required to provide the Secretary with
an actuarial certificate stating that there is a high probability that the provider
of the income stream will be able to pay the income stream as required under
the contract or governing rules for the term of the income stream. The Social
Security (Actuarial Certificate - Life Expectancy Income Stream Guidelines)
Determination 2003 and the Social Security (Actuarial Certificate - Lifetime
Income Stream Guidelines) Determination 2003 provide guidelines on what
constitutes a high probability or positive opinion that the provider of the
income stream will be able to pay the income stream as required under the
contract or governing rules, in order for that income stream to be an asset-test
exempt income stream.
22
The equivalent instruments under the Veterans' Entitlements Act are the
Veterans' Entitlements (Actuarial Certificate - Life Expectancy Income Stream
Guidelines) Determination 2009 and the Veterans' Entitlements (Actuarial
Certificate - Lifetime Income Stream Guidelines) Determination 2009.
As a general rule, the period in which these certificates are in force, for social
security and veterans' entitlements purposes, is 12 months. Customers have
a 26 week period from the date their current actuarial certificate ceases to be
in force in which to provide a new certificate.
Due to changes in economic and market conditions, the probability that a
provider of an income stream will be able to pay the income stream as
required under the contract or governing rules could fluctuate quite markedly,
even over a short period of time. As a result, some social security customers
provide the Secretary (and, in similar circumstances, veterans' affairs
pensioners to provide the Repatriation Commission) with actuarial certificates
that fail to meet the high probability test (which results in their income stream
becoming subject to the assets test) within the 26 week grace period, until
they obtain a favourable certificate that meets the high probability test.
This Schedule clarifies that SMSFs and SAFs can only give the Secretary (or
the Repatriation Commission) one actuarial certificate for each financial year
to show that the fund has sufficient resources to pay an income stream for its
term. In the event that a person gives the Secretary (or the Repatriation
Commission) more than one certificate for a particular financial year, only the
first certificate given will have effect, not any of the subsequent certificates. If
the first actuarial certificate does not meet the high probability test, the income
stream will lose its asset-test exemption.
This Schedule also clarifies that the grace period in which a person must
provide a new actuarial certificate for an income stream applies from the
beginning of the particular financial year (that is, from 1 July) and ends either
when a new actuarial certificate is given to the Secretary (or the Repatriation
Commission) in relation to that income stream for that financial year, or at the
end of the period of 26 weeks beginning on 1 July of that financial year. If a
person does not give the Secretary (or the Repatriation Commission) a new
actuarial certificate in relation to the income stream by the end of the 26 week
period, the income stream will lose its asset-test exemption.
The amendments made by this Schedule commence the day after
Royal Assent.
23
Explanation of the changes
Part 1 - Amendments
Amendments to the Social Security Act
Item 1 makes a minor technical amendment to paragraph 9A(1)(b) as a result
of the amendment made by item 5.
Items 2 and 7 remove the words `in the actuary's opinion' from
paragraphs 9A(1)(b) and 9B(1A)(b) respectively, and replace them with `the
actuary is of the opinion that, for the financial year in which the certificate is
given'. These amendments clarify that the actuarial certificate must state that
in the actuary's opinion, for the financial year in which the certificate is given,
there is a high probability that the provider of the income stream will be able to
pay the income stream as required under the contract or governing rules.
The reason for basing the actuarial certificate on the financial position of the
fund as at 30 June of the previous financial year is to align this requirement
under the social security law with Part 4 of the Superannuation Industry
(Supervision) Act 1993 (the SIS Act). Under the SIS Act, trustees of
superannuation funds (which includes SMSFs and SAFs) are required to
prepare an annual operating statement and an annual statement of the
financial position of the fund for the previous financial year. By linking the
actuarial certificate to the financial year, the requirement for an actuarial
certificate under the Social Security Act will not create an additional regulatory
burden, as trustees are already required to prepare an operating statement for
the financial year from which the actuarial assessment can subsequently be
prepared.
Items 3 and 8 add a note at the end of subsections 9A(1) and 9B(1A)
respectively to alert readers that, for paragraphs 9A(1)(b) and 9A(1A)(b), the
term `financial year' means a period of 12 months commencing on 1 July.
Items 4 repeals subsections 9A(1C) and replaces it with a new
subsection 9A(1C). New subsection 9A(1C) provides an exception for lifetime
income streams, in certain circumstances, if no actuarial certificate is in force.
New subsection 9A(1C) provides that if, on 30 June in a financial year, there
is in force an actuarial certificate that is referred to in paragraph 9A(1)(b), then
paragraph 9A(1)(b) does not apply in relation to the next financial year (the
later year) for a specific period of time. That is, the requirement that the
Secretary is satisfied that there is in force a current actuarial certificate (which
states that, in the actuary's opinion, there is a high probability that the provider
of the income stream will be able to pay the income stream as required under
the contract or governing rules) will not apply for a defined period of time.
This period begins on 1 July of the later year and ends either at the start of
the first day that any actuarial certificate is given to the Secretary for that
income stream in that later year or at the end of a period of 26 weeks
beginning on 1 July of the later year, whichever is earlier.
24
Accordingly, if on 30 June in a financial year an actuarial certificate is in force
for an income stream that is asset-test exempt, the income stream will
continue to be asset-test exempt for the next financial year (the later year)
until the earlier of the start of the first day the Secretary is given a new
actuarial certificate that relates to the later year, or the end of the 26 week
period which commenced on 1 July of the later year.
Item 5 inserts new subsection 9A(1D) which makes it clear that, for the
purposes of paragraph 9A(1)(b), the Secretary will only accept one actuarial
certificate for each financial year in relation to a lifetime income stream. In the
event that a social security recipient provides further new actuarial certificates
for the same financial year for that income stream, these certificates will have
no effect on whether the income stream meets the high probability test or not.
If the first actuarial certificate given to the Secretary fails to meet the high
probability test the income stream will lose its asset-test exemption and
become subject to the assets test. Once the income stream loses its
asset-test exemption it will not be able to regain the exemption at a later date.
For example, a customer provides the Secretary with an actuarial certificate
dated 21 October 2012 which states that in the actuary's opinion there is only
a 49 percent probability that the provider of the income stream will be able to
pay the income stream as required under the contract or governing rules.
(Guidelines for what constitutes a high probability that the provider of the
income stream will be able to pay the income stream as required under the
contract or governing rules in order for that income stream to be an asset-test
exempt income are provided by the Social Security (Actuarial Certificate--Life
Expectancy Income Stream Guidelines) Determination 2003 and the Social
Security (Actuarial Certificate--Lifetime Income Stream Guidelines)
Determination 2003). As a result of the income stream failing to meet the high
probability test, the income stream loses its asset-test exempt status.
However, on 15 December 2012 the customer provides the Secretary with a
further actuarial certificate which states that, in the actuary's opinion, there is
a 75 percent probability that the provider of the income stream will be able to
pay the income stream as required under the contract or governing rules.
Although the second actuarial certificate meets the high probability test, the
Secretary cannot accept this certificate as the Secretary has already received
an actuarial certificate for the 2012-13 financial year. As a result, the income
stream will be asset tested for the purposes of the assets test under the social
security law and cannot regain its asset-test exemption.
Item 6 makes a minor technical amendment to paragraph 9B(1A)(b) due to
the amendment made by item 10.
The amendments made by items 9 and 10 have the same effect on life
expectancy income streams under section 9B as items 4 and 5 have on
lifetime income streams under section 9A of the Social Security Act.
The note at the end of item 9 signposts the insertion of a heading to
subsection 9B(1D).
25
Amendments to the Veterans' Entitlements Act
Item 11 makes a minor technical amendment to paragraph 5JA(1)(b) to insert
a reference to new subsection 5JA(1D) due to the amendment made by
item 15.
Items 12 and 17 remove the words `in the actuary's opinion' from
paragraphs 5JA(1)(b) and 5JB(1A)(b) respectively and replaces them with `the
actuary is of the opinion that, for the financial year in which the certificate is
given'. These amendments clarify that the actuarial certificate must state that
in the actuary's opinion, for the financial year in which the certificate is given,
there is a high probability that the provider of the income stream will be able to
pay the income stream as required under the contract or governing rules.
The reason for basing the actuarial certificate on the financial position of the
fund as at 30 June of the previous financial year is to align this requirement
under the Veterans' Entitlements Act with Part 4 of the Superannuation
Industry (Supervision) Act 1993 (the SIS Act). Under the SIS Act, trustees of
superannuation funds (which includes SMSFs and SAFs) are required to
prepare an annual operating statement and an annual statement of the
financial position of the fund for the previous financial year.
By linking the actuarial certificate to the financial year, the requirement for an
actuarial certificate under the Veterans' Entitlements Act will not create an
additional regulatory burden, as trustees are already required to prepare an
operating statement for the financial year from which the actuarial assessment
can subsequently be prepared.
Items 13 and 18 add a note at the end of subsections 5JA(1) and 5JB(1A)
respectively to alert readers that, for paragraphs 5JA(1)(b) and 5JB(1A)(b),
the term `financial year' means a period of 12 months commencing on 1 July.
Items 14 repeals subsections 5JA(1C) and replaces it with a new
subsection 5JA(1C). New subsection 5JA(1C) provides an exception for
lifetime income streams, in certain circumstances, if no actuarial certificate is
in force.
New subsection 5JA(1C) provides that if, on 30 June in a financial year, there
is in force an actuarial certificate that is referred to in paragraph 5JA(1)(b),
then paragraph 5JA(1)(b) does not apply in relation to the next financial year
(the later year) for a specific period of time.
That is, the requirement that the Repatriation Commission is satisfied that
there is in force a current actuarial certificate that states in the actuary's
opinion there is a high probability that the provider of the income stream will
be able to pay the income stream as required under the contract or governing
rules will not apply for a defined period of time.
26
This period begins on 1 July of the later year and ends either at the start of
the first day that any actuarial certificate is given to the Repatriation
Commission for that income stream in that later year or at the end of a period
of 26 weeks beginning on 1 July of the later year, whichever is earlier.
Accordingly, if on 30 June in a financial year an actuarial certificate is in force
for an income stream that is asset-test exempt, the income stream will
continue to be asset-test exempt for the next financial year (the later year)
until the earlier of the start of the first day the Repatriation Commission is
given a new actuarial certificate that relates to the later year, or the end of the
26 week period which commenced on 1 July of the later year.
Item 15 inserts new subsection 5JA(1D) which makes it clear that, for the
purposes of paragraph 5JA(1)(b), the Repatriation Commission will only
accept one actuarial certificate for each financial year in relation to a lifetime
income stream.
In the event that a veterans' affairs pensioner provides further new actuarial
certificates for the same financial year for that income stream, these
certificates will have no effect on whether the income stream meets the high
probability test or not. If the first actuarial certificate given to the Repatriation
Commission fails to meet the high probability test, the income stream will lose
its asset-test exemption and become subject to the assets test. Once the
income stream loses its asset-test exemption it will not be able to regain the
exemption at a later date.
For example, a customer provides the Repatriation Commission with an
actuarial certificate dated 21 October 2012 which states that in the actuary's
opinion there is only a 49 percent probability that the provider of the income
stream will be able to pay the income stream as required under the contract or
governing rules. (Guidelines for what constitutes a high probability that the
provider of the income stream will be able to pay the income stream as
required under the contract or governing rules in order for that income stream
to be an asset-test exempt income are provided by the Veterans' Entitlements
(Actuarial Certificate--Life Expectancy Income Stream Guidelines)
Determination 2009 and the Veterans' Entitlements (Actuarial Certificate--
Lifetime Income Stream Guidelines) Determination 2009). As a result of the
income stream failing to meet the high probability test, the income stream
loses its asset-test exempt status. However, on 15 December 2012 the
customer provides the Repatriation Commission with a further actuarial
certificate that states in the actuary's opinion there is a 75 percent probability
that the provider of the income stream will be able to pay the income stream
as required under the contract or governing rules. Although the second
actuarial certificate meets the high probability test, the Repatriation
Commission cannot accept this certificate as the Repatriation Commission
has already received an actuarial certificate for the 2012-13 financial year.
As a result, the income stream will be asset tested for the purposes of the
assets test under the Veterans' Entitlements Act and cannot regain its
asset-test exemption.
27
Item 16 makes a minor technical amendment to paragraph 5JB(1A)(b) to
insert a reference to new subsection 5JB(1E) due to the amendment made by
item 20.
The amendments made by items 19 and 20 have the same effect on life
expectancy income streams under section 5JB as items 14 and 15 have on
lifetime income streams under section 5JA of the Veterans' Entitlements Act.
Part 2 - Application and transitional provisions
Item 21 is an application and transitional provision for the amendments made
under Part 1 of this Schedule.
Subitem 21(1) provides that the amendments made by items 2, 5, 7, 10, 12,
15, 17 and 20 apply in relation to the financial year beginning on 1 July 2012
and all later financial years.
Subitem 21(2) provides that the amendments made by items 4, 9, 14 and 19
apply in relation to the financial year ending on 30 June 2012 and all later
financial years.
Subitem 21(3) provides a transitional rule for income streams that have an
actuarial certificate that is in force in relation to the financial year ending on
30 June 2012. The effect of this provision is that an actuarial certificate that is
currently in force for an income stream (immediately before the
commencement of this item) will continue to be in force until 30 June 2012, at
which time a person will need to obtain a new actuarial certificate for the next
financial year commencing 1 July 2012. The period in which a person must
provide the new actuarial certificate is provided by the amendments made by
items 4, 9, 14 and 19
For example, John obtained and gave the Secretary an actuarial certificate
which stated that, in the actuary's opinion, there was a high probability that
the provider of the income stream would be able to pay the income stream as
required under the governing rules for the next 12 months (in this instance, for
the period 17 August 2011 to 16 August 2012). John's income stream has
been assessed as being asset-test exempt. However, due to the
amendments being made by this Schedule, John must now obtain a new
actuarial certificate which states, in the actuary's opinion, what the probability
of the income stream provider being able to pay the income stream is, for the
financial year 1 July 2012 to 30 June 2013. Although John has 26 weeks in
which to provide the certificate, the period it relates to must be for the
2012-2013 financial year (that is, 1 July 2012 to 30 June 2013, not
17 August 2012 to 16 August 2013).
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Schedule 6 - Termination payments
Summary
This Schedule clarifies that payments made by an employer to an employee
in lieu of notice of termination are regarded as redundancy payments for the
purposes of the social security law.
Background
The Social Security Act provides for an income maintenance period to be
applied to people who have claimed, or are in receipt of, certain social
security payments and who have received a redundancy or leave payment.
The income maintenance period is the period in which redundancy payments,
or leave payments, are treated as income under the Act. Income
maintenance periods are applied because people who receive leave or
redundancy payments from their employer are expected to use these
payments to support themselves for a period before turning to the social
security system for assistance.
The amendments made by this Schedule clarify that a payment made to a
person in lieu of notice of the termination of their employment is a
`redundancy payment' for the purposes of the Social Security Act. The effect
of this is that a payment in lieu of notice will be included when calculating
whether the person has to serve an income maintenance period, and the
length of that period.
The changes made by this Schedule ensure that people who receive
payments in lieu of notice are treated in the same way as people who receive
other types of redundancy or termination payments.
The amendments made by this Schedule apply to payments in lieu of notice
made on or after the commencement of this Schedule. The Schedule
commences on the day after Royal Assent.
Explanation of the changes
Item 1 amends the definition of `redundancy payment' contained in
point 1064-F14 of Pension Rate Calculator A in the Social Security Act to
refer specifically to a payment in lieu of notice, with the effect that a payment
in lieu of notice is a redundancy payment for the purposes of working out the
rate of disability support pension for a person who has turned 21 or who has
not turned 21 but has one or more dependent children.
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Item 2 amends the definition of `redundancy payment' contained in
point 1066A-G14 of Pension Rate Calculator D in the Social Security Act to
refer specifically to a payment in lieu of notice, with the effect that a payment
in lieu of notice is a redundancy payment for the purposes of working out the
rate of disability support pension for a person who has not turned 21 and has
no dependent children.
Item 3 amends the definition of `redundancy payment' contained in
point 1067G-H19 of the Youth Allowance Rate Calculator in the Social
Security Act to refer specifically to a payment in lieu of notice, with the effect
that a payment in lieu of notice is a redundancy payment for the purposes of
working out the rate of youth allowance for a person.
Item 4 amends the definition of `redundancy payment' contained in
point 1067L-D15 of the Austudy Payment Rate Calculator in the Social
Security Act to refer specifically to a payment in lieu of notice, with the effect
that a payment in lieu of notice is a redundancy payment for the purposes of
working out the rate of austudy payment for a person.
Item 5 amends the definition of `redundancy payment' contained in
point 1068-G7AQ of Benefit Rate Calculator B in the Social Security Act to
refer specifically to a payment in lieu of notice, with the effect that a payment
in lieu of notice is a redundancy payment for the purposes of working out the
rate of newstart allowance, sickness allowance, partner allowance, mature
age allowance (under Part 2.12B of the Act) or widow allowance for a person.
Item 6 amends the definition of `redundancy payment' contained in
point 1068A-E12 of the Pension PP (Single) Rate Calculator in the Social
Security Act to refer specifically to a payment in lieu of notice, with the effect
that a payment in lieu of notice is a redundancy payment for the purposes of
working out the rate of parenting payment (single) for a person.
Item 7 amends the definition of `redundancy payment' contained in
point 1068B-D18 of the Benefit PP (Partnered) Rate Calculator in the Social
Security Act to refer specifically to a payment in lieu of notice, with the effect
that a payment in lieu of notice is a redundancy payment for the purposes of
working out the rate of parenting payment (partnered) for a person.
Item 8 is an application provision, and provides that the amendments made
by this Schedule apply in relation to payments in lieu of notice made on or
after the commencement of the Schedule. The Schedule will commence on
the day after Royal Assent.
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