House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Families, Community Services and Indigenous Affairs, the Hon Mal Brough MP)

Outline and financial impact statement

Outline

This Bill gives effect to measures announced in the 2007 Budget to provide extra assistance for certain older Australians, carers and members of the veteran community. The first and second measures involve one-off payments to be made to certain older Australians and certain carers. The third measure provides a one-off compensation payment to certain veteran and civilian prisoners of war interned in Europe during World War Two or their surviving widows or widowers. The fourth measure increases the amount of funeral benefits payable in respect of veterans. The fifth measure increases the rate of veterans' special rate and intermediate rate disability pension. The sixth measure extends backdating periods in relation to war widow/widower pensions.

The 2007 payments to older Australians, which are generally to be paid in June 2007, are as follows:

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A 2007 one-off payment to persons who have reached pension age on or before Budget night 2007 (8 May 2007) and who are receiving income support payments paid under the Social Security Act 1991.

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A 2007 one-off payment to members of the veteran community who have reached qualifying age on or before 8 May 2007 and who are receiving service pension or income support supplement under the Veterans' Entitlements Act 1986.

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A 2007 one-off payment to persons who are currently qualified for seniors concession allowance on 8 May 2007 under the Social Security Act 1991 or would so qualify because the person has lodged a claim for the seniors health card on or before 8 May 2007 and the person is eligible for the card on 8 May 2007.

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A 2007 one-off payment to members of the veteran community who are currently eligible for seniors concession allowance on 8 May 2007 under the Veterans' Entitlements Act 1996 or would be so eligible because the person has lodged a claim for the seniors health card on or before 8 May 2007 and the person is eligible for the card on 8 May 2007.

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A 2007 one-off payment to persons who are receiving a widow allowance, a mature age allowance, or a partner allowance for a period that includes 8 May 2007 because of a claim made on or before 8 May 2007.

The 2007 one-off payments for carers, which are generally to be paid in June 2007, are as follows:

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A 2007 one-off payment of $1,000 to recipients of carer payment on Budget night 2007 (8 May 2007).

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A 2007 one-off payment of $1,000 to people receiving wife pension in addition to carer allowance on 8 May 2007.

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A 2007 one-off payment of $1,000 to people receiving partner service pension in addition to carer allowance on 8 May 2007.

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A 2007 one-off payment of $1,000 to recipients of carer service pension on 8 May 2007.

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A 2007 one-off payment to recipients of carer allowance on 8 May 2007, generally payable as an amount of $600 for each person being cared for who attracts carer allowance.

The Bill contains provisions to enable administrative schemes to be established in relation to the one-off payments. In broad terms, the purpose of the administrative scheme will be to provide payments in circumstances where the statutory one-off payments regime does not produce an appropriate result. The relevant Ministers will determine the details of the scheme by legislative instrument.

This Bill also gives effect to various 2007 Budget measures to assist certain members of the veteran community. Specifically, the Bill will:

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provide for a once-only compensation payment to veteran and civilian prisoners of war interned by enemy forces in Europe during World War Two, or their surviving widows or widowers generally to be paid in June 2007;

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increase the maximum amount of funeral benefit payable from $1000 to $2000 in respect of deaths occurring on or after 1 July 2007;

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increase the amount of special rate and intermediate rate disability pension from 3 July 2007; and

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from 1 July 2007, extend the maximum backdating period in relation to claims for war widow/widower pension from three to six months for those persons who claim within six months of the death of their veteran partner.

Financial impact statement

* Departmental costs have not been included.

Notes on clauses

Clause 1 sets out how the Act is to be cited, that is, as the Social Security and Veterans' Affairs Legislation Amendment (One-off Payments and Other 2007 Budget Measures) Act 2007.

Clause 2 provides for the commencement of the various provisions in the Act. Sections 1 to 3 and anything in the Act not elsewhere covered in the table of commencement will commence on Royal Assent. Schedules 1 to 5 commence on Royal Assent. Schedules 6 to 8 commence on 1 July 2007.

Clause 3 provides that each Act that is specified in a Schedule is amended or repealed as set out in the applicable items of the Schedule concerned and that any other item in a Schedule has effect according to its terms (see notes on the following pages).

This Explanatory Memorandum uses the following abbreviations:

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'Social Security Act' means the Social Security Act 1991;

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'Social Security Administration Act' means the Social Security (Administration) Act 1999;

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'Veterans' Entitlements Act' means the Veterans' Entitlements Act 1986.

Schedule 1 - 2007 one-off payments to older Australians

Summary

This Schedule provides for a one-off payment to be made to a person who has reached pension age on or before Budget night 2007 (8 May 2007) and receives income support payments for a period that includes 8 May 2007 under the Social Security Act. Provision is also made for one-off payments to be made to members of the veteran community who have reached qualifying age on or before Budget night 2007 (8 May 2007) and who are receiving service pension or income support supplement under the Veterans' Entitlements Act for a period that includes 8 May 2007.

In addition, provision is made for a one-off payment to persons who are currently qualified for seniors concession allowance on 8 May 2007 under the Social Security Act or would so qualify because the person has lodged a claim for the seniors health card on or before 8 May 2007 and the person is eligible for the card on 8 May 2007. Similarly, provision is made for a one-off payment to members of the veteran community who are currently eligible for seniors concession allowance on 8 May 2007 under the Veterans' Entitlements Act, or who would be so eligible because the person has lodged a claim for the seniors health card on or before 8 May 2007 and is eligible for the card on 8 May 2007.

Finally, provision is made for a one-off payment to persons who are receiving a widow allowance, a mature age allowance, or a partner allowance for a period that includes 8 May 2007 because of a claim made on or before 8 May 2007.

Background

In broad terms, this Schedule introduces new 2007 one-off payments for older Australians, to be paid as a lump sum payment, generally before 30 June 2007. There would not be a claim process attached to the 2007 one-off payment. The amount of one-off payment is $500 per person.

Explanation of the changes

Part 1 - Main amendments

Amendments of the Social Security Act

Item 1 inserts new Part 2.2D into Chapter 2 of the Social Security Act.

New Part 2.2D contains the provisions relevant to the 2007 one-off payment to older Australians.

New section 93ZA contains the qualification criteria for the 2007 one-off payment to older Australians.

New subsection 93ZA(1) provides that a person is qualified for a 2007 one-off payment to older Australians if subsection 93ZA(2), (3) or (4) applies to the person.

New subsection 93ZA(2) applies where a person is qualified for the 2007 one-off payment because of certain income support payments. Subsection 93ZA(2) provides that a person is qualified for a 2007 one-off payment if the person meets the following criteria:

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the person has reached pension age on or before 8 May 2007 (The pension age is 65 for males and currently age 63 for females according to age equalisation rules set out in subsection 23(5C) of the Social Security Act); and

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the person was receiving an income support payment, as defined in section 23(1) of the Social Security Act (other than a service pension or income support supplement paid under the Veterans Entitlements Act) in respect of a period that includes 8 May 2007; and

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the person was paid an instalment of that payment because of a claim the person made on or before 8 May 2007; and

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on 8 May 2007 the person:

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was in Australia; or

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was temporarily absent from Australia and had been so for a continuous period not exceeding 13 weeks.

Subsection 93ZA(2) reflects the intention to pay the one-off bonus only in circumstances where the income support payment (other than service pension or income support supplement) was payable to the person in respect of a period that includes 8 May 2007. Subsection 23(2) of the Social Security Act provides that a person is taken to be receiving a payment under this Act from the earliest day on which the payment is payable to the person even if the first instalment of the payment is not actually paid until a later day. Subsection 93ZA(2) therefore applies to people who are granted the relevant payments after 8 May 2007 provided that the payments in question are payable to the person for a period that includes 8 May 2007.

New subsection 93ZA(3) applies where the person is qualified for the 2007 one-off payment because of being qualified for seniors concession allowance. Subsection 93ZA(3) provides that a person is qualified for a 2007 one-off payment to older Australians if:

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the person was qualified for seniors concession allowance under section 1061U of the Social Security Act on 8 May 2007 (seniors concession allowance is provided under Part 2.25B of the Social Security Act); or

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the person meets both of the following criteria:

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the person made a claim for the seniors health card and had not withdrawn that claim on or before 8 May 2007; and

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on 8 May 2007, the person was either qualified for the card or would have been so qualified but for being temporarily absent from Australia for a continuous period not exceeding 13 weeks.

Subsection 93ZA(4) applies where the person is qualified for the 2007 one-off payment because he or she is receiving a widow allowance, a mature age allowance or a partner allowance in respect of a period that includes 8 May 2007. In addition, the claim must be made on or before 8 May 2007 and on 8 May 2007, the person has to be in Australia or temporarily absent from Australia for a period that does not exceed 13 weeks.

Subsection 93ZA(5) clarifies that a person is entitled to only one one-off payment under section 93ZA, regardless of how many times the person qualifies under this section.

Subsection 93ZA(6) clarifies that a person is not qualified for a one-off payment under section 93ZA if the person is eligible for a payment under section 118ZZG of the Veterans' Entitlements Act.

Section 93ZB provides that the amount of the one-off payment under section 93ZA is $500

Item 2 clarifies that the effect of a decision of the Secretary made after 8 May 2007 for the purposes of section 15 of the Social Security Administration Act (dealing with certain incorrect or inappropriate claims) is to be disregarded. This is intended to restrict access to the one-off payments to cases where any relevant decision for the purposes of section 15 is made before or on 8 May 2007. If this provision was not inserted, there would be potential for persons to seek to establish that they have made an incorrect or inappropriate claim solely for the purposes of obtaining a one-off payment.

Items 3 to 11 make consequential amendments to section 1223ABAA (which deals with debts arising in respect of one off payments to older Australians) to include references to the 2007 one-off payments to older Australians and related provisions.

Item 3 amends subsection 1223ABAA(1) to introduce the concept of the 'relevant payment' which is either the 2006 one-off payment to older Australians under Part 2.2C or 2007 one-off payment to older Australians under Part 2.2D.

Items 4 to 8 and 11 inserts references to various provisions in subsection 93ZA to ensure that they apply with respect to both the 2006 and 2007 one-off payments.

Item 9 inserts subsection 1223ABAA(4A) to introduce the concept of 'the relevant day' in respect to a relevant payment, which is either 9 May 2006 for the 2006 one-off payment to older Australians or 8 May 2007 for the 2007 one-off payment to older Australians.

Item 10 omits '9 May 2006' in subsection 1223ABAA(5) and substitutes with 'the relevant day' to ensure that the provision applies to both 9 May 2006 (for the 2006 one-off payments) and 8 May 2007 (for the 2007 one-off payments).

Amendments of the Social Security Administration Act

Item 12 repeals section 12AAA and substitutes a new section which clarifies that a claim is not required for either a 2006 one-off payment to older Australians or for a 2007 one-off payment to older Australians.

Item 13 inserts new paragraph (gb) into the definition of 'lump sum benefit' in subsection 47(1) to clarify that the 2007 one-off payment to older Australians is to be regarded as a lump sum benefit.

Item 14 inserts new section 47AB to provide that the 2007 one-off payment to older Australians must be paid to the individual in a single lump sum on the earliest practicable date, and in such manner, as the Secretary considers appropriate. It is anticipated that the majority of the 2007 one-off payments will be paid before the end of the financial year ending 30 June 2007.

Amendments of the Veterans' Entitlements Act

Item 15 inserts new Part VIIE into the Veterans' Entitlements Act after Part VIID.

New Part VIIE gives effect to the 2007 Budget measure to provide a one-off payment to certain older Australians.

New subsection 118ZZG(1) provides that a person is eligible for a 2007 one-off payment to older Australians if subsection 118ZZG (2) or 118ZZG (3) applies to the person.

New subsection 118ZZG(2) provides that a person is eligible for a 2007 one-off payment to older Australians if the person meets the following criteria:

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the person has reached qualifying age on or before 8 May 2007. Qualifying age is defined in subsection 118OA(2) of the Veterans' Entitlements Act; and

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a service pension or income support supplement was payable to the person in respect of a period that includes 8 May 2007; and

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the pension or supplement was payable to the person because of a claim that the person made on or before 8 May 2007; and

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the person is in Australia; or

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the person was temporarily absent from Australia and that absence was for a continuous period not exceeding 13 weeks.

New subsection 118ZZG(3) provides that a person is eligible for a 2007 one-off payment to older Australians if:

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the person was eligible for seniors concession allowance on 8 May 2007. Seniors concession allowance is provided for under section 118PA of the Veterans' Entitlements Act; or

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the person meets both the following criteria:

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the person made a claim for a seniors health card on or before 8 May 2007 and that claim had not been withdrawn on or before 8 May 2007; and

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the person was eligible for a seniors health card on 8 May 2007 or the person would have been eligible for the seniors health card except for being temporarily absent from Australia for a continuous period not exceeding 13 weeks.

New subsection 118ZZG(4) provides that a person is entitled to one payment of the 2007 one-off payment only, regardless of how many times the person may be eligible under new section 118ZZG.

New section 118ZZH provides that the amount of the one-off payment under section 118ZZG is $500.

New section 118ZZI provides that a person does not have to claim for the 2007 one-off payment to older Australians.

New subsection 118ZZJ provides that the Commission must pay the 2007 one-off payment for older Australians to an eligible individual:

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in a single lump sum; and

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on the earliest date that is reasonably practicable; and

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in such a manner as the Commission considers appropriate.

New section 118ZZK provides for the circumstances under which a debt may arise in respect of a 2007 one-off payment to older Australians. In very broad terms, a one-off payment will be a debt where it is established that the recipient knowingly made a false or misleading statement (or provided false information) and, if the true circumstances had been known, the determination in relation to the relevant payment or card (which gave rise to the qualification for the one-off payment) would not have been made.

New subsection 118ZZK(7) provides that the other provisions of this Act under which debts arise do not apply in relation to payments to which section 118ZZK applies.

New subsection 118ZZK(8) provides that a debt that arises under section 118ZZK is a recoverable amount within the meaning of subsection 205(8).

Part 2 - Related amendments

Amendments of the Income Tax Assessment Act 1936

The Separate Net Income (SNI) of the dependants of a taxpayer is used to determine the taxpayer's eligibility to certain dependant offsets. SNI is income and other specified amounts earned, derived or received, less certain expenses incurred in earning that income. Payments such as carer allowance, child care benefit and family tax benefit (FTB) are not included as part of SNI. As it is not intended that the one-off payments to older Australians (or any payment under an administrative scheme determined under Schedule 2 of the Bill) form part of SNI, item 16 makes the necessary amendments to subsection 159J(6) of the Income Tax Assessment Act 1936 to clarify this.

Amendments of the Income Tax Assessment Act 1997

The effect of items 17 to 26 is to make one-off payments to older Australians (as well as payments to older Australians under the administrative scheme determined under Schedule 2 to the Bill) exempt from income tax.

Amendments of the Social Security Act

Item 27 inserts new paragraphs 8(8)(yd) and (ye) to provide that the one-off payments (any payment under an administrative scheme determined under Schedule 2 of the Bill) are not to be treated as income for the purposes of the Social Security Act.

Amendments of the Veterans' Entitlements Act

Item 16 amends paragraph 5H(8)(zzac) and (zzad) to provide that the one off payments are not to be treated as income for the purposes of the Veterans' Entitlements Act.

Schedule 2 - Administrative schemes for 2007 one-off payments to older Australians

Summary

This Schedule contains provisions to enable administrative schemes to be established. In broad terms, the purpose of each administrative scheme will be to provide payments in circumstances where the statutory one-off payments regime provided for in Schedule 1 does not produce an appropriate result in relation to circumstances that occur in the 2006-07 income year. The relevant Minister will determine the details of the scheme by legislative instrument.

Background

This Schedule enables an administrative scheme to be established alongside the statutory regime providing for one-off payments to older Australians.

Explanation of the changes

Item 1 provides for the establishment of an administrative scheme by the relevant Minister administering the Social Security Act, under which one-off lump sum payments can be made to older Australians in specified circumstances. The purpose of the scheme is to provide payments in circumstances where the statutory one-off payments regime does not produce an appropriate result in relation to circumstances that occur in the 2006-07 income year.

The details of the administrative scheme (including such matters as eligibility, amount of the payment and administrative matters) would be set out in a legislative instrument.

Payments under the administrative scheme would be made out of the Consolidated Revenue Fund (in accordance with subitem 1(4)) .

Item 2 provides for the establishment of an administrative scheme by the Minister administering the for Veterans' Entitlements Act under which one-off lump sum payments can be made to older Australians (veterans) in specified circumstances. The purpose of the scheme is to provide payments in circumstances where the statutory one-off payments regime does not produce an appropriate result in relation to circumstances that occur in the 2006-07 income year.

The details of the administrative scheme (including such matters as eligibility, amount of the payment and administrative matters) would be set out in a legislative instrument.

Payments under the administrative scheme would be made out of the Consolidated Revenue Fund (in accordance with subitem 2(4)) .

Schedule 3 - 2007 one-off payments to carers

Summary

In broad terms, this Schedule introduces new one-off payments for certain carers, which will be paid as a lump sum payment generally before 30 June 2007. The bonuses are to be paid to people who will have received targeted payments in an instalment period that includes 8 May 2007. It will also be paid to those people who have lodged a claim, or have contacted Centrelink about and indicated an intention to apply, for a targeted payment on or shortly before 8 May 2007 and are subsequently granted that payment in respect of that claim or contact.

Background

This Schedule provides for a one-off payment to eligible carers that will be paid automatically and without the need for a claim.

Specifically, and subject to qualification, a payment of $1,000 will be paid to persons who are paid an instalment of:

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carer payment in respect of a period that includes 8 May 2007;

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wife pension in respect of a period that includes 8 May 2007 where that person is also paid an instalment of carer allowance in respect of a period that includes that same date;

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carer service pension under the Veterans' Entitlements Act in respect of a period that includes 8 May 2007; and

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partner service pension under the Veterans' Entitlements Act in respect of a period that includes 8 May 2007 where that person is also paid an instalment of carer allowance in respect of a period that includes that same date.

Further, and subject to qualification, carers will be entitled to $600 in respect of each care receiver in relation to whom the person receives an instalment of carer allowance for a period that includes 8 May 2007. Where the care of the care receiver is shared, the $600 will also be shared. Where qualification for carer allowance depends on the person providing care for two or more eligible care receivers, the payment will also be $600.

Explanation of the changes

Part 1 - Main amendments

Amendments of the Social Security Act

Item 1 inserts new Parts 2.5H, 2.5J, 2.5K and 2.5L into Chapter 2 of the Social Security Act. It is noted that people who qualify for one-off payments under this item may also qualify for another one-off payment under item 2 of this Schedule.

New Part 2.5H applies to the 2007 one-off payment to people eligible for carer payment.

New section 261 provides that a person is qualified for a one-off payment if the person has been paid an instalment of carer payment in respect of a period that includes 8 May 2007 and the person was paid that instalment because of a claim the person made on or before 8 May 2007.

New section 262 provides that the amount of the 2007 one-off payment is $1,000. The Note to the provision makes it clear that the maximum available to a person is $1,000, regardless of the number of people in relation to whom the qualified person provides care.

New Part 2.5J applies to the 2007 one-off payment to certain carers eligible for wife pension.

New section 263 provides that a person is qualified for a one-off payment if the person has been paid an instalment of wife pension and an instalment of carer allowance, both in respect of a period that includes 8 May 2007, where three conditions are satisfied in relation to one or more instalments of carer allowance that have been paid to the person. These conditions are that: the instalment was in respect of a period that includes 8 May 2007; the reason that the instalment covered 8 May 2007 was not only because of clause 16 or 17 of Schedule 2 to the Social Security Administration Act; and the person was paid that instalment because of a claim the person made on or before 8 May 2007. The second requirement is not to be taken to limit the third requirement in any way.

New section 264 provides that the amount of the 2007 one-off payment is $1,000. The Note to the provision makes it clear that the maximum available to a person is $1,000, regardless of the number of people in relation to whom the qualified person provides care.

New Part 2.5K applies to the 2007 one-off payment to certain carers eligible for partner service pension.

New section 265 provides that a person is qualified for a one-off payment if the person has been paid an instalment of partner service pension under Part 3 of the Veterans' Entitlements Act and an instalment of carer allowance, both in respect of a period that includes 8 May 2007 where three conditions are satisfied in relation to one or more instalments of carer allowance that have been paid to the person. These conditions are that: the instalment was in respect of a period that includes 8 May 2007; the reason that the instalment covered 8 May 2007 was not only because of clause 16 or 17 of Schedule 2 to the Social Security Administration Act; and the person was paid that instalment because of a claim the person made on or before 8 May 2007. The second requirement is not to be taken to limit the third requirement in any way.

New section 266 provides that the amount of the 2007 one-off payment is $1,000. The Note to the provision makes it clear that the maximum available to a person is $1,000, regardless of the number of people in relation to whom the qualified person provides care.

New Part 2.5L applies to the 2007 one-off payment to people eligible for carer service pension.

The only people receiving carer service pension are those whose entitlement to carer service pension was preserved under savings and transitional provisions under subclause 8(2) or (4) of Schedule 5 to the Veterans' Entitlements Act). This is because the Veterans' Affairs Legislation Amendment (Budget and Compensation Measures) Act 1997 made changes that removed all carer provisions from the Veterans' Entitlements Act, allowing the recipients to transfer to carer payments that were available at that time under the Social Security Act. Because, at the time of these changes, it was recognised that a number of people would be adversely affected by those changes, they could elect to remain on the carer service pension rather than transferring to carer payment.

New section 267 provides that a person is qualified for a one-off payment if the person has been paid an instalment of carer service pension as a result of the operation of subclause 8(2) or (4) of Schedule 5 to the Veterans' Entitlements Act and the person was paid the instalment because of a claim the person made on or before 8 May 2007.

New section 268 provides that the amount of the 2007 one-off payment is $1,000. The Note to the provision makes it clear that the maximum available to a person is $1,000, regardless of the number of people in relation to whom the qualified person provides care.

Item 2 inserts a new Part 2.19D into Chapter 2 of the Social Security Act.

Part 2.19D applies to the 2007 one-off payment to people eligible for carer allowance. It is noted that people who qualify for a one-off payment under this item may also qualify for another one-off payment under item 1 of this Schedule.

New section 992WA sets out the criteria to be satisfied in order for a person to qualify for a 2007 one-off payment to carers (carer allowance related). In effect, subsection 992WA(1) sets out three requirements that must be met in relation to one or more instalments of carer allowance that have been paid to the person. The first requirement is that the instalment of carer allowance was paid to the person in respect of a period that includes 8 May 2007. The second requirement is that the operation of clause 16 or 17 of Schedule 2 to the Social Security Administration Act (which deal with 'backdating') must not be the reason that the instalment covered 8 May 2007. The third requirement is that the person was paid the instalment because of a claim the person made on or before 8 May 2007. The second requirement is not to be taken to limit the third requirement in any way.

The effect of subsection 992WA(2) is that each instalment that meets all three requirements of subsection 992WA(1) is a 'qualifying instalment'.

The broad operation of the scheme is that a qualified person will receive payment in respect of each 'eligible care receiver' in relation to the person. The concept of who is an 'eligible care receiver' is dealt with in new section 992WB. Subsection 992WB(1) essentially provides for the general rule that, where providing care to a person gives rise to a qualifying instalment of carer allowance, that person is an 'eligible care receiver' in relation to the qualified person. However, there are situations where a person's qualification for an instalment of carer allowance arises on account of the care the person provides for two disabled children (subsection 953(2) of the Social Security Act). Accordingly, subsection 992WB(2) qualifies the general rule by providing that, where subsection 953(2) applies in relation to the qualifying instalment, the two disabled children are treated as a single 'eligible care receiver'.

New section 992WC is concerned with working out the amount of the one-off payment. Subsection 992WC(1) provides that the amount is worked out by adding together the amounts applicable for each eligible care receiver. Subsection 992WC(2) provides that the applicable amount for an eligible receiver is $600 unless subsection 992WC(3) applies. Subsection 992WC(3) is concerned with situations where two people are qualified for carer allowance because they share the care of a care receiver (or care receivers). In those circumstances, subsection 981(1) of the Social Security Act provides for the Secretary to make a written determination specifying the share of carer allowance that each of the two people is to receive. The effect of subsection 992WC(3) is that, where the qualifying instalment was paid on the basis of a determination as to a particular share of carer allowance, the amount applicable for an eligible care receiver in relation to a qualified person is that same share of $600.

Item 3 is concerned with determining whether a person has made a claim, or should be taken to have made a claim, on or before 8 May 2007. In determining whether this has occurred, the effect of section 12 and section 15 of the Social Security Administration Act is to be disregarded.

In relation to section 12, subitem 3(a) provides that a person should not be paid a one-off payment where he or she has claimed a payment (for example, age pension), subsequently become qualified for another payment (for example, carer payment) and after 8 May 2007 is transferred to that latter payment by virtue of section 12 of the Social Security Administration Act.

In relation to section 15, subitem 3(b) clarifies that the effect of a decision of the Secretary made after 8 May 2007 for the purposes of section 15 of the Social Security Administration Act (dealing with certain incorrect or inappropriate claims) is to be disregarded. This is intended to restrict access to the one-off payments to cases where the relevant decision for the purposes of section 15 is made before or on 8 May 2007.

Items 4 to 6 deal with overpayment arising in respect of the five 2007 one-off payments. These amendments ensure that section 1223ABA of the Social Security Act (which applies in relation to the payments made under the Family Assistance Legislation Amendment (More Help for Families - One-off Payments) Act 2004 and under the Social Security Legislation Amendment (One-off Payment for Carers) Act 2005) will also apply to the 2007 one-off payments. Section 1223ABA, in very broad terms, provides that a one-off payment (or part of a one-off payment) will be a overpayment where it is established that the recipient knowingly made a false or misleading statement (or provided false information) and, if the true circumstances had been known, the determination in relation to the relevant instalment (which gave rise to the qualification for the one-off payment) would not have been made.

Item 7 inserts new section 12AD into the Social Security Administration Act. It provides that a claim is not required in order to be paid any of the five 2007 one-off payments

Item 8 inserts a reference to the five new one-off payments into the existing definition of 'lump sum benefit' contained in subsection 47(1) of the Social Security Administration Act.

Item 9 inserts new section 47E. In broad terms, it provides that the Secretary must pay the payments provided for by this Schedule on the date that the Secretary determines is the earliest reasonably practicable date on which to do so. The manner of payment is that manner which the Secretary considers is appropriate.

Part 2 - Related amendments

Amendments of the Income Tax Assessment Act 1936

The Separate Net Income (SNI) of the dependants of a taxpayer is used to determine the taxpayer's eligibility to certain dependant offsets. SNI is income and other specified amounts earned, derived or received, less certain expenses incurred in earning that income. A payment of carer allowance is not included as part of SNI. As it is not intended that any of the 2007 one-off payments to carers form part of SNI, items 10 and 11 make the necessary amendments to the Income Tax Assessment Act 1936.

Item 12 amends the Income Tax Assessment Act 1936 to provide that payment to carers made under the administrative scheme determined under Schedule 4 of this Bill is not included as part of SNI.

Amendments of the Income Tax Assessment Act 1997

The 2007 one-off payments to carers, and a payment made under the scheme determined under Schedule 4 to this Bill, will be exempt from income tax. Amendments are made to section 52-10 of the Income Tax Assessment Act 1997 to achieve this effect ( items 14 to 16 ).

A consequential amendment is also made to the table in section 11-15 to add in references to the 2007 one-off payments to carers and a payment made under the scheme determined under Schedule 4 to this Bill ( item 13 ).

Amendments of the Social Security Act

Item 17 inserts a new paragraph 8(8)(jae) into the Social Security Act. This ensures that any payment made under the administrative scheme determined under Schedule 4 to this Bill, do not count as income for the purposes of the social security law.

Amendments of the Veterans' Entitlements Act

Item 18 inserts a new paragraph 5H(8)(zzd) in the Veterans' Entitlements Act. This ensures that any payment made under the administrative scheme determined under Schedule 4 to this Bill, do not count as income for the purposes of the Veterans' Entitlements Act.

Schedule 4 - Administrative scheme for 2007 one-off payments to carers

Summary

This Schedule contains provisions to enable an administrative scheme to be established. In broad terms, the purpose of the administrative scheme will be to provide payments in circumstances where the statutory one-off payments regime provided for in Schedule 3 does not produce an appropriate result in relation to circumstances that occur in the 2006-2007 financial year. The Minister for Families, Community Services and Indigenous Affairs can determine the details of the scheme by legislative instrument.

Background

This Schedule enables an administrative scheme to be established alongside the statutory one-off payment scheme.

Explanation of the changes

Item 1 provides for the establishment of an administrative scheme by the Minister for Families, Community Services and Indigenous Affairs by legislative instrument, under which one-off lump sum payments can be made to carers in specified circumstances. The purpose of the scheme is to provide payments in circumstances where the statutory one-off payments regime does not produce an appropriate result in relation to circumstances that occur in the 2006-2007 financial year.

The details of the administrative scheme (including such matters as eligibility, amount of the payment, debt recovery and administrative matters) would be set out in a legislative instrument.

Payments under the administrative scheme would be made out of the Consolidated Revenue Fund (in accordance with subitem 1(4)).

Schedule 5 - Compensation payments in respect of certain World War Two internment

Summary

This Schedule gives effect to the 2007 Budget measure that will provide for a once-only compensation payment to veteran and civilian prisoners of war interned by enemy forces in Europe during World War Two, or their surviving widows or widowers.

Background

The Government has previously made once-only compensation payments to persons interned by the Japanese and the North Koreans. Prisoners of war of enemy forces in Europe also experienced extreme brutality and starvation and also suffered from some of the same diseases that affected prisoners of war of the Japanese.

Explanation of the changes

Item 1 defines a number of terms for the purposes of this Part.

Item 2 sets out the eligibility criteria to be applied to determine whether a person is eligible for a compensation payment.

Veteran

To be an eligible person as a 'veteran' as set out in subitem 2(1), the following conditions must be met:

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the veteran must have been interned by the military forces of an enemy State at any time between 3 September 1939 and 11 May 1945 inclusive; and

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the veteran was alive at the beginning of 1 January 2007.

Partner of deceased veteran

To be an eligible person as a 'partner of a deceased veteran' as set out in subitem 2(2), the following conditions must be met:

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the person must be alive at the beginning of 1 January 2007, and

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the person must be the partner of a veteran who died before 1 January 2007; and

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the person must have been the partner of the veteran immediately before the veteran's death; and

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the veteran must have been interned by the military forces of an enemy State at any time between 3 September 1939 and 11 May 1945 inclusive.

Civilians

To be an eligible person as a 'civilian' as set out in subitem 2(3), the following conditions must be met:

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the person must be alive at the beginning of 1 January 2007, and

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the person must have been interned by the military forces of an enemy State at any time between 3 September 1939 and 11 May 1945 inclusive; and

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the person must have been domiciled in Australia immediately before their interment.

Partner of deceased civilians

To be an eligible person as a 'partner of a deceased civilian as set out in subitem 2(4) the following conditions must be met:

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the person must be alive at the beginning of 1 January 2007, and

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the person must be the partner of a civilian who died before 1 January 2007; and

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the person must have been the partner of the civilian immediately before the civilian's death; and

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the civilian must have been interned by the military forces of an enemy State at any time between 3 September 1939 and 11 May 1945 inclusive; and

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the civilian must have been domiciled in Australia immediately before the civilian's interment.

Subitem 2(5) provides that a person is entitled to only one compensation payment under this item regardless of whether they meet the criterion for an eligible person more than once under a particular subitem, or under more than one subitem.

Item 3 provides that the compensation payment is a one-off payment of $25,000.

Item 4 provides that the Secretary may determine procedures for the making of claims for a compensation payment under this Part.

Subitem 4(1) provides that a claim for a compensation payment must be made in accordance with procedures determined by the Secretary under subitem 4(2) of this Schedule.

Subitem 4(2) provides that the Secretary may make a written determination setting out the procedures for making a claim for a compensation payment under this Schedule.

This will enable the Secretary to set in place procedures that will assist persons, wishing to establish their eligibility for a payment, to provide sufficient information to confirm eligibility and arrangements for payment.

A Note has been inserted after subitem 4(1) to make it clear that compensation payments will be made automatically to those eligible persons of whom the Department is aware.

Item 5 provides for the determination of claims.

Subitem 5(1) provides that claims are to be determined by the Commission.

Subitem 5(2) provides a review right for a person who is dissatisfied with a decision of the Commission in relation to the claim for a compensation payment under this Schedule. Subitem 5(2) provides such a person with a right of merit review by the Administrative Appeals Tribunal.

Item 6 provides that if an eligible person dies before receiving a compensation payment, then the payment will be made to the eligible person's estate. A Note has been inserted after item 6 to make it clear that a payment cannot be made unless a claim has been received. So for a payment to be made to an eligible person's estate, a claim must have been received in respect of that person's payment. The claim may be made by another person on behalf of that person.

Item 7 provides that certain provisions of the Veterans' Entitlements Act apply to this Schedule as if this Schedule was part of the Veterans' Entitlements Act. The provisions that will apply are:

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Subsection 119(1) - Commission not bound by technicalities;

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Section 128 - Secretary may obtain information etc.;

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Section 208 - Offences;

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Section 213 - Delegation by Commission;

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Section 214 - Delegation by Secretary; and

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any other provisions that are incidental to the provisions mentioned above.

Subsection 119(1) of the Veterans' Entitlements Act provides a context for the consideration, hearing and determination of a claim or application by the Commission. The same circumstances will apply to the Commission when determining a claim for a compensation payment. Briefly, this means that the Commission:

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is not bound by any rules of evidence, but may inform itself on any matter it thinks just;

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shall act according to substantial justice and the substantial merits of the case without regard to legal form and technicalities; and

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shall take into account any difficulties in ascertaining the existence of any fact, matter, cause or circumstance including the passage of time and any deficiency in relevant official records.

Section 128 of the Veterans' Entitlements Act authorises the Secretary to require a person capable of supplying information which might affect the grant or payment of a pension, benefit or allowance under the Veterans' Entitlements Act, to produce that information or give evidence. Item 7 extends this power to a claim for a compensation payment under this Schedule.

Section 208 of the Veterans' Entitlements Act provides for offences and penalties in relation to the intentional making of a false claim or statement in connection with a claim or application for a pension, allowance or benefit under the Veterans' Entitlements Act. Item 7 extends these offences and penalties to a claim for a compensation payment under this Schedule.

Sections 213 and 214, respectively, of the Veterans' Entitlements Act provide that the Commission and the Secretary may delegate all or any of their powers under the Veterans' Entitlements Act, other than the power of delegation, to certain persons as specified in subsection (4) of the respective provisions. Item 7 means that the Secretary or Commission will also be able to delegate their powers authorised by this Schedule in relation to determining a claim for a compensation payment.

Item 8 provides for the recovery of any overpayments of compensation payments. An overpayment may be recovered in a court of competent jurisdiction.

Item 9 provides that compensation payments made under this Schedule are exempt from income tax.

Item 10 provides that the compensation payment will not be affected by the assets test under the Veterans' Entitlements Act and the social security law.

Subitem 10(1) provides that, for the purposes of the assets test under the Veterans' Entitlements Act, the value of a person's assets is to be reduced by the amount of a compensation payment received by the person under this Schedule. The reduction is a permanent $25,000 reduction in the value of the person's assets.

Subitem 10(2) provides for the same reduction in the value of the person's assets for the purposes of the social security law.

Item 11 provides that the Consolidated Revenue Fund is appropriated for the purposes of the compensation payments.

Schedule 6 - Increase in funeral benefits

Summary

These amendments to the Veterans' Entitlements Act will give effect to the 2007 Budget measure to increase the maximum amount of funeral benefit payable from $1000 to $2000.

Background

Funeral benefit is paid to assist with meeting funeral expenses. Funeral benefit is paid to the estate of a deceased veteran if, immediately before the veteran died, the veteran was being paid an extreme disablement adjustment, special rate, a pension increased by items 1 to 8 of section 27 or had been a prisoner of war.

Other circumstances where funeral benefit may be paid include for a veteran whose death was war-caused, for a veteran who died in indigent circumstances and for certain dependants of veterans where the dependant died in indigent circumstances. Funeral benefit may also be payable if the person was receiving treatment at Departmental expense prior to their death.

The eligibility criteria for this benefit is much less restrictive, unlike the Military Rehabilitation and Compensation Act 2004, which only provides funeral assistance where a person's death is accepted as actually caused by defence service or the person was severely impaired.

Explanation of the changes

Amendments of the Veterans' Entitlements Act

Item 1 amends subsection 98B(2) by omitting '$1,000' and substituting '$2,000'.

Item 2 amends paragraph 99(4)(a) by omitting '$1,000' and substituting '$2,000'.

Item 3 amends subsection 100(2) by omitting '$1,000' and substituting '$2,000'.

Item 4 is an application provision and provides that the increased funeral benefit applies only in respect of persons whose death occurs on or after the commencement date of 1 July 2007.

Schedule 7 - Increase in rate of certain pensions

Summary

These amendments to the Veterans' Entitlements Act will give effect to the 2007 Budget measure to increase the amount of special rate and intermediate rate disability pension. The changes will increase the amount of intermediate rate disability pension by $25 per fortnight and the amount of special rate disability pension by $50 per fortnight.

Background

Pensions paid under Parts II and IV of the Veterans' Entitlements Act are generally referred to as disability pensions. Disability pensions are paid to Australian veterans and mariners, certain members of the Forces and members of a Peacekeeping Force for incapacity from injuries or diseases (disabilities) that are accepted as war or defence-caused. The disability pension is non-taxable and non means tested. Disability pensions are indexed twice annually.

There are four categories of disability pension:

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general rate;

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extreme disablement adjustment;

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intermediate rate; and

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special rate.

For veterans whose employability is affected by their war or defence caused disabilities alone, the two higher rates of disability pension, the intermediate rate and the special rate, apply. Briefly, the special rate is paid to veterans assessed as unable to undertake remunerative work for more than eight hours a week as a result of their service-related incapacity alone. The intermediate rate is paid to veterans assessed as unable to undertake remunerative work for more than 20 hours a week as a result of their service-related incapacity alone.

Explanation of the changes

Amendments of the Veterans' Entitlements Act

Item 1 amends subsection 23(4) by omitting '$394.50' and substituting '$619.80'.

Item 2 amends subsection 24(4) by omitting '571.70' and substituting '$919.40'.

Item 3 is an application provides and provides that the increased rates of intermediate and special rate disability pension apply to pension periods that start after 1 July 2007.

Schedule 8 - Backdating of war widow and widower pensions

Summary

These amendments to the Veterans' Entitlements Act give effect to the 2007 Budget measure to extend the maximum backdating period in relation to claims for war widow/er pension from three to six months for those persons who claim within six months of the death of their veteran partner.

For those eligible widow/ers who claim within six months of the death of their veteran partner, the war widow/er pension will be backdated to the day after the date of death of the veteran.

This extension of time to the permissible backdating period will allow those dependants of veterans who are not automatically eligible for the war widow/er pension more time in which to lodge a claim for the pension and will ensure that they are not financially disadvantaged during such a difficult time.

The extended maximum six month backdating period will only apply where the claim has been lodged within six months of the death of the veteran. Claims for war widow/er pension lodged more than six months after the death of the veteran will continue to be backdated for a maximum period of three months.

Background

A war widow/er pension is payable under the Veterans' Entitlements Act as compensation for the widow or widower (including a partner) of a veteran, a mariner, a member of the Forces, or a member of a Peacekeeping Force, whose eligible service has caused or contributed to their death.

A war widow/er pension may be granted to the surviving partner, if the person who had eligible service covered by the Veterans' Entitlements Act has had death determined as war-caused or defence-caused, or died as a result of an injury or disease which is accepted as war-caused or defence-caused.

A war widow/er pension is automatically payable where the deceased had been receiving a disability pension at the Special Rate, an Extreme Disablement Adjustment, or a disability pension, at an increased rate due to being a double amputee, or had been a former Australian prisoner of war.

Many persons eligible for war widow/er pension are automatically paid the payment under section 13A of the Veterans' Entitlements Act and a formal claim is not required. If not paid automatically, a formal claim for the payment of the pension is required.

Currently, under the Veterans' Entitlements Act, war widow/er pension is able to be backdated up to a maximum of three months from the date of lodgement of the claim or back to the day after the date of the veteran's death, whichever is the later date.

Explanation of the changes

Amendments of the Veterans' Entitlements Act

Item 1 amends paragraph (b) of the definition of application day in subsection 19(9) by inserting '20(2B)' after '20(2)'.

Item 2 further amends paragraph (b) of the definition of application day in subsection 19(9) by inserting '20(2B)(a)' after '20(2)(a)'.

Item 3 amends subsection 20(1) by inserting the words '(other than a claim to which subsection (2A) applies)' after the words 'is granted'.

Item 4 amends paragraph 20(2)(a) by inserting the words '(other than a claim to which subsection (2B) applies)' after the words 'in writing'.

Item 5 inserts new subsections (2A) and (2B) after subsection 20(2).

New subsection 20(2A) provides that the Commission may, subject to the Act, specify that a determination under subsection 19(3) may take effect from a date that is not earlier than six months earlier than the date on which the claim for pension was received by the Department if:

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a claim made in accordance with section 14 is granted for a pension for a dependant who is the widow or widower of a deceased veteran; and

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the claim is in accordance with a form approved for the purposes of paragraph 14(3)(a) and is thus a proper claim, and the claim was received by the Department less than six months after the death of the veteran.

New subsection 20(2B) provides that the Commission may, subject to the Act, specify that a determination under subsection 19(3) may take effect from a date that is not earlier than six months earlier than the date on which the claim for pension was received by the Department if:

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an informal claim is made other than in accordance with paragraph 14(3)(a), for a pension for a dependant who is the widow or widower of a deceased veteran; and

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the informal claim is made less than six months after the death of the veteran; and

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a proper claim is subsequently made, in accordance with a form approved for the purposes of paragraph 14(3)(a); and

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the proper claim in accordance with an approved form is made either:

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before the Department has notified the person that it is necessary to make a proper claim in accordance with an approved form; or

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within six months of the person being notified by the Department that it is necessary to make a proper claim in accordance with an approved form; and

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a pension for a widow or widower dependant of a deceased veteran is granted.

Item 6 is an application provision that provides that the amendments made by this Schedule apply in relation to a claim for a pension for a dependant widow or widower of a deceased veteran only if the veteran's death occurs on or after 1 July 2007.