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2002-2003
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
SOCIAL SECURITY AMENDMENT (FURTHER SIMPLIFICATION) BILL 2003
(Circulated by authority of the Minister for Family and
Community Services,
Senator the Hon Kay Patterson)
SOCIAL
SECURITY AMENDMENT (FURTHER SIMPLIFICATION) BILL 2003
OUTLINE AND FINANCIAL IMPACT STATEMENT
The Social Security Amendment (Further Simplification) Bill
2003 forms a part of the measures being undertaken to give effect to the
Government’s commitment to implement a simpler and more coherent social
security system that more effectively meets its objectives of adequacy, equity,
incentives for self provision, customer service and administrative and financial
sustainability.
The Bill repeals the existing provisions in Chapter 3 of the Social Security Act 1991 that deal with rent assistance and substitutes a new Part 3.7 that consolidates and simplifies the provisions that relate to rent assistance as one of the 2003-2004 Budget measures.
The Bill also gives effect to a number of minor simplification measures that were outlined in the 2003-2004 Budget including:
• Clarifying the payments recoverable when customers receive economic loss compensation payments; and
• Applying the definition of independence to disability support pension
youth customers to be consistent with that applied to youth allowance
customers.
Date of effect:
Schedule 1—1 July
2004.
Items 1-17, 35 and 36 of Schedule 2—1 July 2004.
Items
18-34 and 37 of Schedule 2—Royal Assent.
Financial
Impact:
The Bill is expected to result in savings of $2.2 million
over four years as follows:
|
|
|
2003-04
|
2004-05
|
2005-06
|
2006-07
|
|
Measure
|
Administered
Departmental Total |
0.000
0.000 0.000 |
-0.821
0.000 -0.821 |
-0.701
0.000 -0.701 |
-0.688
0.000 -0.688 |
NOTES ON CLAUSES
This clause specifies that the short title of the Bill, when enacted,
will be the Social Security Amendment (Further Simplification) Act
2003.
This clause specifies that:
• clauses 1 to 3 of the Bill
commence on Royal Assent;
• Schedule 1 commences on 1 July
2004;
• Items 1 to 17, 35 and 36 of Schedule 2 commence on 1 July
2004; and
• Items 18 to 34 and 37 of Schedule 2 commence on Royal
Assent.
Clause 3—Schedules
This clause
gives effect to the Schedules to the Bill.
Amendments of the Social Security Act 1991
Item 22 inserts a new Part 3.7 after Part 3.6A.
Part 3.7—Rent Assistance
Proposed Division 1—Operation of this Part
Proposed section 1070—When this Part
applies
This proposed section provides that the Part applies if the
rate of a person’s social security payment is calculated in accordance
with:
(a) Pension Rate Calculator A that relates to age pension, disability
support and wife pension (people who are not permanently blind), disability wage
supplement (people who are not permanently blind) and carer
payment;
(b) Pension Rate Calculator C that relates to bereavement allowance
and widow B pension;
(c) Pension Rate Calculator D that relates to certain
disability support pensions;
(d) Youth Allowance Rate
Calculator;
(e) Benefit Rate Calculator B that relates to mature age
allowance under Part 2.12 B and newstart, partner, sickness and widow
allowance;
(f) Pension PP (Single) Rate Calculator
or Benefit PP (Partnered) Rate Calculator that relate to parenting
payments.
Proposed section 1070A—Effect of this
Part
Essentially, if a person qualifies for rent assistance in
accordance with new Division 2 then the amount worked out in accordance with
Division 3 is added to the person’s maximum basic rate for the
person’s social security payment. All amounts of rent assistance are
calculated on a fortnightly basis, but if the maximum basic rate of a
person’s payment is calculated on an annual basis, this fortnightly amount
needs to be multiplied by 26.
Proposed Division 2—Qualification for rent assistance
Proposed section 1070B—Qualification—general
rule
A person qualifies for rent assistance if the person satisfies
the common requirements set out in section 1070C and any specific requirement
set out in the Division that applies in relation to the particular social
security payment that the person receives.
Proposed section
1070C—Common requirements (about aged care residence, homeownership and
rent)
This section lists four common requirements.
The first
is that the person is not an aged care resident, or is not taken to be an aged
care resident, for the purposes of the relevant Rate Calculator.
The
second is that person is not an ineligible homeowner.
The third is that
the person is pays, or is liable to pay, rent in respect of a period for the
person’s premises. The premises must be in Australia. In addition, the
rent cannot be Government rent.
The fourth is that the person’s
threshold fortnightly rent is more than the rent threshold amount. The rent
threshold amount is set out in section 1070T.
Proposed section
1070D—Specific requirement (carer payments and certain age,
disability support and wife pensions)
This section sets out the
specific requirement that applies if the rate of the person’s social
security payment is to be calculated in accordance with Pension Rate
Calculator A. The specific requirement only applies in the event that the
person, or their partner, is entitled to be paid family tax benefit.
Proposed section 1070E—Specific requirement (bereavement
allowance, widow B pension and certain parenting payments)
This
section sets out the specific requirement that applies for bereavement
allowance, widow B pension and certain parenting payments. The specific
requirement only applies in the event that the person is entitled to be paid
family tax benefit.
Proposed section 1070F—Specific requirement (certain disability
support pensions)
This section sets out the specific requirement that applies for disability support pension.
Proposed section 1070G—Specific requirement (youth
allowance)
This section sets out the specific requirement that
applies for youth allowance.
Proposed section 1070H—Specific
requirement (mature age allowance under Part 2.12B, newstart allowance, partner
allowance, sickness allowance or widow allowance)
This section sets out the specific requirement that applies for mature age
allowance under Part 2.12B, newstart allowance, partner allowance, sickness
allowance or widow allowance.
Proposed section 1070J—Specific
requirement (certain parenting payments)
This section sets out the specific requirement that applies for certain
parenting payments.
Proposed Division 3—Rate of rent assistance
Proposed section 1070K—Rate depends on social security
payment and family situation
This section provides that a
person’s rate of rent assistance depends on the person’s social
security payment and the person’s family situation.
Proposed
section 1070L—Rate for carer payments, and certain age, disability
support and wife pensions
This section sets out the rate of rent
assistance for a person if the person’s social security payment is worked
out using Pension Rate Calculator A.
Proposed section
1070M—Rate for bereavement allowance, widow B pension and certain
parenting payments
This section sets out the rate of rent assistance
for a person if the person’s social security payment is worked out using
Pension Rate Calculator C or the Pension PP (Single) Rate Calculator.
Proposed section 1070N—Rate for disability support
pension (person aged under 18)
This section sets out the rate of rent
assistance for a person if the person’s social security payment is worked
out using Pension Rate Calculator D and the person is under 18 years of age.
Proposed section 1070P—Rate for disability support
pension (person aged between 18 and 21)
This section sets out the
rate of rent assistance for a person if the person’s social security
payment is worked out using Pension Rate Calculator D and the person has turned
18 but is under 21 years of age.
Proposed section
1070Q—Rate for youth allowance, mature age allowance under Part
2.12B, newstart allowance, partner allowance, sickness allowance and widow
allowance
This section sets out the rate of rent assistance for a
person if the person’s social security payment is worked out using the
Youth Allowance Rate Calculator or Benefit Rate Calculator B.
Proposed section 1070R—Rate for certain parenting
payments
This section sets out the rate of rent assistance for a
person if the person’s social security payment is worked out using the
Benefit PP (Partnered) Rate Calculator.
Proposed Division 4—Certain concepts used in this Part
Proposed section 1070S—Division has effect for purposes of
Part
This section provides that the Division has effect for the
purposes of Part 3.7 that deals with rent assistance.
Proposed section
1070T—Rent threshold amount
Subsection (1) sets out that a
person’s rent threshold amount is $82.80 if that person’s social
security payment is to be worked out using Pension Rate Calculator C or the
Pension PP (Single) Rate Calculator. This rent threshold amount is indexed under
Part 3.16 of the Social Security Act 1991.
Subsection (2) provides
that if a person’s social security payment is worked out using rate
calculators other than those mentioned in subsection (1) then the person’s
rent threshold amount should be worked out using subsection
(3).
Subsection (3) provides that to work out a person’s rent
threshold amount, you need to first to work out which of sections 1070L, 1070N,
1070P, 1070Q and 1070R applies to the person. Then work out which family
situation the person falls into, as set out in Column 2 of the table in the
appropriate section. Then look in column 3 of the table at the item
corresponding to the person’s family situation; the amount which, as a
part of the formula, is deducted from the person’s fortnightly rent is the
person’s rent threshold amount.
Proposed section
1070U—Fortnightly rent
This section defines the meaning of
fortnightly rent for the purposes of this Part.
Proposed section
1070V—Rent paid by a member of certain couples
Subsection (1)
provides that where a person is a member of a couple, living with his or her
partner in their home, then for the purposes of working out the person’s
rent assistance entitlement, any rent paid, or liable to be paid, by the
person’s partner, in relation to the house the couple is living in, is to
be treated as paid or payable by the person.
Subsection (2) provides
that if a person is a member of an illness separated couple, respite care couple
or temporarily separated couple then, for the purposes of working out the
person’s rent assistance entitlement, any rent paid, or liable to be paid,
by the person’s partner, in relation to the residence of the person, is to
be treated as paid or payable by the person.
Proposed section
1070W—Partner with a rent increased pension
This section sets
out when a person has a partner with a rent increased
pension.
Proposed section 1070X—Partner with a rent increased
benefit
This section sets out when a person has a partner with a rent
increased benefit.
Proposed Division 5—Transitional indexation of rent assistance and rent threshold amounts
Proposed section 1070Y—Indexation of certain amounts for CPI
increases before commencement
This section provides for the
indexation of certain amounts included in this Part between the time of the
drafting of the legislation and its commencement. As explained in the note to
new subsection 1070Y(1), those indexed amounts will then be used as the basis
for further indexation under Division 2 of Part 3.16.
Items 1 to 5 of Schedule 1 are technical amendments that are
consequential on the changes made in the new Part 3.7.
Item 6 repeals
Module D of Pension of Pension Rate Calculator A in section 1064 as a
consequence of the insertion of new Part 3.7.
Items 7 and 8 are technical
amendments that are consequential on the changes made in the new Part
3.7.
Item 9 repeals Module D of Pension of Pension Rate Calculator C in
section 1066 as a consequence of the insertion of new Part 3.7.
Item 10
is a technical amendment that is consequential on the changes made in the new
Part 3.7.
Item 11 repeals modules EA and EB of Pension Rate Calculator D
in section 1066A as a consequence of the insertion of new Part 3.7.
Item
12 is a technical amendment that is consequential on the changes made in the new
Part 3.7.
Item 13 repeals Module D of the Youth Allowance Rate Calculator
in section 1067G as a consequence of the insertion of new Part 3.7.
Item
14 is a technical amendment that is consequential on the changes made in the new
Part 3.7.
Item 15 repeals Module D of the Benefit Rate Calculator B in
section 1068 as a consequence of the insertion of new Part 3.7.
Items 16
and 17 are technical amendments that are consequential on the changes made in
the new Part 3.7.
Item 18 repeals Module D of the Pension PP (Single)
Rate Calculator in section 1068A as a consequence of the insertion of new Part
3.7.
Items 19 and 20 are technical amendments that are consequential on
the changes made in the new Part 3.7.
Item 21 repeals Module D of the
Benefit PP (Partnered) Rate Calculator in section 1068B as a consequence of the
insertion of new Part 3.7.
Items 23 to 31 are technical amendments that
are consequential on the changes made in the new Part 3.7.
Item 32
specifies that changes made by provisions of this Schedule only apply in respect
of instalment periods which begin on or after 1 July 2004.
Amendments to the Social Security Act 1991
Item 1 repeals the definition of “homeless person” in
subsection 5(1) as a consequence of the amendment of the definition of
“independent” in item 2.
Item 2 amends the definition of
“independent” in subsection 5(1) so it also includes references to
Parts 3.4A, 3.4B and 3.7 of the Social Security Act 1991. This brings the
definition of “independent” for disability support pension for a
person who is aged 16 and over and less than 20 into line with the definition of
“independent” applicable to youth allowance.
Item 3 repeals
the definition of “independent young person” in subsection 5(1) as a
consequence of the amendment of the definition of “independent” in
item 2.
Items 4, 35 and 36 make amendments to the compensation recovery
regime. Broadly, the changes expand the existing list of recoverable payments
by including certain supplementary or ‘add-on’ payments that, while
not making up part of the rate of income support payment payable to a person,
might still be payable along with the person’s income support payment.
The relevant payments are:
• advance pharmaceutical
allowance;
• telephone allowance (other than a telephone allowance
payable to the holder of a seniors health card);
• employment entry
payment;
• education entry payment;
• pensioner education
supplement;
• fares allowance;
• CDEP Scheme Participant
Supplement.
The combined basic effect of the changes can be described as
follows:
1. If a person’s entitlement to one or more of the
existing compensation affected payments is impacted on due to a compensation
payment or payments; and
2. the result is that, for a period, the
compensation affected payment was/is not payable or was/is (or should have been)
reduced to nil;
3. then any amount of the supplementary or
‘add-on’ payments identified in these changes that have been, or
that otherwise would have been, paid in that same period are not payable (and
are recoverable if already paid).
The changes are also relevant in the
context of partners.
For ease of reference, a compensation affected
payment referred to in No.1 above is described as an ‘underlying
compensation affected payment’ while a payment referred to in No.3 is
described as a ‘supplementary compensation affected payment’.
Item 4 lists the payments which are affected by the amendments (ie the
supplementary compensation affected payments).
Item 35 specifies certain
‘time’ requirements that must be met before Part 3.14 can apply to
the payments listed in item 4. The first requirement is that a relevant
compensation payment (or payments) is received on or after
1 July 2004. The other requirement is met if one of the following two
scenarios applies. If the supplementary compensation affected payment is one
which requires a claim in order for the person to be qualified for the payment
(eg employment entry payment – see section 665 of the Social Security
Act 1991), that claim is made on or after 1 July 2004.
Alternatively, if no claim is required, the supplementary compensation affected
payment must have been received on or after 1 July 2004.
Item
36 inserts new section 1161A which ensures that supplementary compensation
affected payments can be included in the calculation of what amounts are
recoverable when a compensation payment (or payments) is made or received. It
also provides for the inclusion of those amounts in relevant notices.
Subsection 1161A(1) provides that the term ‘supplementary compensation
affected payment’ refers to a compensation affected payment mentioned in
paragraphs 17(1)(l), (m) or (n). It also highlights for the reader the concept
of an ‘underlying compensation affected payment’ to which a
supplementary compensation affected payment relates. In effect, the
reader’s attention is drawn back to the changes made by item 4 where the
concept of an ‘underlying compensation affected payment’ is first
raised.
Significantly, subsection 1161A(2) provides that
Part 3.14 does not apply to any of the payments listed in item 4 except as
set out in new section 1161A.
The broad combined effect of new paragraphs
1161A(3)(a) and (e) is that where an underlying compensation affected payment is
not payable due to the receipt of a lump sum compensation payment, any
associated supplementary compensation affected payment is also not
payable.
Paragraph 1161A(3)(b) deals with the situation where, due to
periodic compensation payments, an underlying compensation affected payment is
reduced to nil. Again, the effect of paragraph (e) in those circumstances is
that any associated supplementary compensation affected payment is not
payable.
Currently, the Secretary has the power to give a written notice
to a person or body under which the person or body is liable to pay an amount
(referred to as the recoverable amount) to the Commonwealth in connection with a
compensation payment. There are express provisions already in the social
security law which set out how the recoverable amount is to be calculated. For
example, the basic combined effect of sections 1180 and 1181 is that, where a
compensation affected payment has not been reduced to nil due to the operation
of section 1173 but it should/would have been, the Secretary can give the person
a written notice requiring the person to repay the amount that should/would not
have been paid (assuming that amount is the smaller of the amounts mentioned in
section 1181). The broad effect of paragraphs 1161A(3)(c) and (e) is that,
where any instalment of an underlying compensation affected payment would/should
have been reduced to nil but this did not occur, any supplementary compensation
affected payment which related to that payment is not payable.
Paragraph
1161A(3)(d) is concerned with certain situations where an amount of arrears of
periodic compensation payments is paid. If the effect of the arrears payment is
that an underlying compensation affected payment is cancelled or reduced to nil,
any associated supplementary compensation affected payment is not payable (and
is a debt due to the Commonwealth). Consistent with the approach currently
adopted in section 1184I, where paragraph 1161A(3)(d) applies in relation to a
supplementary compensation affected payment, paragraph 1161A(3)(f) provides that
the amount is a debt due to the Commonwealth.
As indicated above, the
Secretary has the power to give a written notice to a person or body under which
the person or body is liable to pay an amount (referred to as the recoverable
amount) to the Commonwealth in connection with a compensation payment. There
are also express provisions which determine how the recoverable amount is to be
worked out. The broad effect of subsections 1161A(4) to (6) is that the
recoverable amount that can be specified in the relevant notices will now be
able to include amounts of supplementary compensation affected payments in the
circumstances specified. The safeguard that the recoverable amount cannot
exceed the sum of the amounts of compensation payment is retained.
Items
5 to 17 are consequential changes to the amendments to the definition of
“independent” in item 2.
Items 18 and 19 are technical
amendments to bring subsections 1083(1) and 1083(2) into line with the
definition of ordinary income in section 8.
Item 20 inserts a new
subsection 1106(3) that provides that paragraph 1106(1)(a) does not apply if the
source of the income is a deprived asset or the income is earned, derived or
received from a transaction involving a deprived asset. This will clarify the
application 1106(a) in relation to deprived assets to avoid any possibility of
double counting.
Items 21 to 23 are technical amendments.
Item 24
repeals section 1110 which is redundant.
Items 25 to 28 clarify that the
scope of operation of subsections 1118(1), 1118(2), 1118B(1) and 1121(1) does
not extend to the deemed income provisions of Division 1B of Part
3.10.
Items 29 to 34 are technical amendments.
Item 37 provides
for the application of the amendments made by items 1 to 17 in Schedule 2.