Bills Digest no. 135 2009–10
Veterans' Entitlements Amendment
(Income Support Measures) Bill 2010
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage history
Purpose
Background
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Veterans' Entitlements Amendment
(Income Support Measures) Bill 2010
Date introduced: 10 March 2010
House: House of Representatives
Portfolio: Veterans' Affairs
Commencement: Sections 1 to 3, Items 1 to 28 and Items 34 and 35 on the
date of Royal Assent. Items 29 to 33 and Item 36 on the day after date of Royal
Assent.
Links: The links to the Bill, its Explanatory
Memorandum and second reading speech can be found on the Bills page, which is
at http://www.aph.gov.au/bills/. When Bills have been passed they can
be found at ComLaw, which is at http://www.comlaw.gov.au/.
The majority of provisions in the Bill
align the Veterans’ Entitlements Act 1986 (VEA) with like provisions in
the Social Security Act 1991 (SSA). The Bill also removes redundant
provisions.
The amendments in the Bill remove references to ‘benevolent
homes’ in the VEA. The term ‘benevolent homes’ used to refer to institutions
in which a person may be placed for a prolonged period. This could apply to an
adult in a place for the mentally ill or a young person or child in a place for
the care of the child. For a long time there was a disagreement between the
Federal Government and the States about the provision for such persons and the
payment of pensions or family assistance payments. Was it a matter for the
States or a matter for the Commonwealth? The Bill removes references to the
term ‘benevolent homes’, which was a term commonly used to describe a home (institution)
into which a person in State care was placed. The term is now redundant.
The Bill proposes to exempt as income under the income test
payments provided for expenses incurred during part-time work as a part of a
labour market program. Payments provided to an employee to cover expenses that
they have no discretion over, such as amounts for a uniform, are not income for
the income test. These provisions will align the VEA income test provisions
with like provisions in the SSA, where such income is also exempt. It is not
likely that many VEA income support recipients would be undertaking a labour
market program. The main income support payment under the VEA is age service
pension which is paid to retired aged veterans.
However, there are some income tested income support payment
that are payable to a person of working age, for example, Invalidity Service
Pension[1] and Income Support Supplement (ISS).[2]
Some of these recipients may have income for work expenses for part-time work
while undertaking a labour market program.
The provisions presented in the Bill will require a person’s
partner to claim any foreign pension entitlement. Currently, the recipient of
an income support payment provided under the VEA is required to claim but not
his/her partner. All income support pensions and payments provided by the
Commonwealth are subject to an income and asset test. The rationale for those
tests is that persons who have the means to support themselves should use their
own resources before calling upon the public purse for financial assistance.
That being the case, where a VEA payment recipient or their partner has an
entitlement to a foreign pension they will, under the proposed amendments in
this Bill, be compelled to claim and receive that payment. These provisions
will align the VEA income test provisions with like provisions in the SSA.
Where a person claims a foreign pension, it may take some
time for the overseas paying agency to determine entitlement, the rate payable
and to deliver the payment. Often when payments eventually commence, there is
also an amount for arrears owed. Under the current pensions’ income test, lump-sum
payments are treated as income in the year of receipt. This is because the
rate of pension paid is an annual rate based on the assessed level of annual
income. This annual rate is then reduced to a fortnightly rate to provide
fortnightly payments.
The amendments to the VEA presented in the Bill are to apportion
any lump-sum arrears of foreign pension received over the period for which it
has been paid, rather than as a lump-sum amount in the year of receipt. This
will align the VEA income test provisions with like provisions in the SSA.
For most persons receiving a small lump-sum amount apportioned
over a period of less than a year there will not be much of a change to their
payments. It will depend on their level of other income and their rate will
only be affected if their total income exceeds the income test free areas.[3]
For those overpaid, there will be the creation of a debt and
recovery action, but this applies under the current arrangements. Those who
will be more adversely affected will be those who receive a large lump-sum
amount for a period covering more than 12 months. This will result in a debt for
a period that would not have normally arisen; that is for a period of more than
a year prior to the receipt of the arrears. A debt will be created for the
past period the lump-sum represents and a debt raised and recovered.
Generally, where a person has monies or valuable
consideration in an investment, a property or a business, the value of the
investment can be regarded as an asset under the assets test and any income
realised is counted under the income test in calculation the rate of pension
payable. However, in some circumstances the value of the investment can be
disregarded.
The Bill presents amendments to the provisions in the VEA
for the disregard of an asset. The proposed amendments to the VEA will align it
with like provisions in the SSA. The Minister will be empowered to disregard a
particular asset under the assets test. This might commonly occur where it is
considered the person is unable to access their value in the assets, for
example, where the asset has gone bankrupt for asset test purposes.
Deprivation refers to where a person gives away or disposes
of an asset without adequate return or value and the asset value then continues
to be maintained as an asset value for five years. This power, for the Minister
to disregard an asset, will not impact on any pre-existing application of the
deprivation provisions that may have been applied in a case.
The Bill contains only one schedule. All proposed
amendments are to the VEA.
Items 1, 4 and 28 remove references to
‘benevolent homes’ from the VEA. Item 27 is a consequential amendment
to a heading arising from those changes.
Items 5, 9, 13, 17 and 23 contains amendments
which will empower the Secretary to issue a notice to a person claiming certain
VEA payments requiring their partner to claim a foreign pension where the
Secretary considers they may have an entitlement to a foreign pension.
Item 29 inserts a new section 204 which refers to an
arrears payment of a foreign pension which has been received is to be regarded
as income over the period of periodic payments it has been paid for. Any
excess payment of income support under the VEA in that arrears period is then a
debt.
Concluding
comments
The amendments to the VEA presented in this Bill are
generally beneficial. Much of the provisions are to align the VEA with like
provisions in the SSA. This alignment is sustained to ensure consistency in
treatment of like means tested income support payments between the two acts.
The main example of this is the age pension in the SSA with the service pension
in the VEA, which have the same income and asset testing provisions. There a
few minor exemptions to the like treatment of income and assets.
The only ‘losers’ might be those very few income support
recipients who receive a lump-sum arrears of foreign pension that exceeds 12
months in periodic payments, who may now have a larger debt than under the
current provisions. The numbers will be very small and it could be argued that
to recover any excess amount of Australian income support payment over the
whole of any arrears period of foreign pension paid is appropriate.
Members, Senators and
Parliamentary staff can obtain further information from the Parliamentary
Library on (02) 6277 62772479.
Peter Yeend
18 March 2010
Bills Digest Service
Parliamentary Library
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