House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Social Security the Hon B Howe, MP)

SOCIAL SECURITY ACT 1947

Education Leaver Deferment Period

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Students who re-apply for job search allowance or unemployment benefit within 4 weeks after attempting a return to full-time study would not be required to serve a second 13 week education leaver deferment period. This measure would come into effect on 1 January 1990.

This measure has negligible financial impact.

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From 1 October 1989, the 4 week period of grace for education leavers to register with the CES after leaving study would be abolished.

Estimated program savings from this measure are $1.58m in 1989-90 and $2.10m in 1990-91.

Compensation

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From 1 January 1990, it would be made clear that the Commonwealth would be able to take recovery action against State authorities liable to indemnify a person against the liability of the person to make compensation payments to another person and against employers and insurers where the decision to pay a compensation claim is discretionary.

Estimated program savings from this measure are $1.00m in 1989-90 and $2.20m in 1990-91.

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Where an employer or insurer is liable to make a compensation payment to a client and has been notified that the Commonwealth may have an interest in the compensation award because of previous social security payments to the client, the employer or insurer would be required to repay to the Commonwealth any debt arising under the Social Security Act notwithstanding that the compensation money has already been released to the client. This measure would come into effect on 1 January 1990.

Estimated program savings from this measure are $2.50m in 1989-90 and $6.40m in 1990-91.

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From 1 January 1990, where a person with continuing entitlement to social security payment incurs a debt to the Commonwealth because of receiving a compensation payment, that debt could be satisfied by the Department withholding an amount from ongoing social security payments until the debt is satisfied.

Estimated program savings from this measure are $2.00m in 1989-90 and $5.00m in 1990-91.

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From the day of Royal Assent, periodic payments of compensation would be disregarded when applying the income test to the recipient's spouse. This would correct an anomaly whereby periodic payments can reduce the recipient's pension by direct deduction and the pension of the recipient's spouse under the income test.

This measure has negligible financial impact.

Labour Market Initiatives

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A recipient of unemployment benefit or job search allowance who changes residential location and thereby worsens his or her job prospects would have benefit cancelled and, on re-application for benefit, would be subject to a postponement period of 12 weeks. This measure would come into effect on 1 November 1989.

Estimated savings from this measure are $3.70m in 1989-90 and $9.00m in 1990-91.

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From 1 November 1989, persons who claim or have claimed unemployment or sickness benefit would be required to supply a tax file number as a precondition to receiving or continuing to receive payment.

Estimated savings from this measure are $32.80m in 1989-90 and $48.90m in 1990-91.

Family Payments

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Notifiable events which occurred before date of grant of family allowance supplement at any time during the current or previous financial year would be taken into account in assessing entitlement. This measure would come into effect on 1 January 1990.

Estimated program savings from this measure are $3.90m in 1989-90 and $7.80m in 1990-91.

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From 1 January 1990 recipients of family allowance would be required to inform the Department of notifiable events which occur during the calendar year and which may affect the rate of payment of family allowance.

Estimated program savings from this measure are $15.20m in 1989-90 and $30.40m in 1990-91.

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Low income parents who are also full-time students receiving AUSTUDY or another prescribed education payment, would be entitled to maximum rate of family allowance supplement, subject to the application of the assets test. This measure would come into effect on 1 December 1989.

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Where family allowance supplement is payable under the 25% reduction rule, recipients would be entitled to retain that rate of payment if a subsequent assessment based on the year of income that ended in the preceding calendar year would produce a lesser amount. This measure would come into effect on 1 January 1990.

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From 1 December 1989, family allowance supplement would be assessed on the basis of the current year of income where the current year of income is expected to be below the income threshold, regardless of whether there had been a fall in income of at least 25%.

Estimated program costs of these measures are $3.80m in 1989-90 and $5.10m in 1990-91.

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From 1 January 1990, where family allowance supplement is being paid on the basis of income assessed in accordance with a person's tax assessment notice, provision would be made for a re-assessment of the rate of allowance where the tax assessment was amended as a result of an appeal by the person.

This measure has negligible financial impact.

Child Support

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From the day of Royal Assent, access to the special maintenance concession for pensioners and beneficiaries eligible to apply for administratively assessed child support would be restricted. The concession would operate as a hardship rule for claimants who have an agreement which provides them with substantial in-kind support but insufficient cash.

This measure has negligible financial impact.

Others

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Also included are minor technical amendments which have negligible financial impact.