Explanatory Statement

Issued by the Authority of the Minister for Families, Community Services and Indigenous Affairs

EXPLANATORY STATEMENT

Social Security (International Agreements) Act 1999

Subsection 8(1) of the Social Security (International Agreements) Act 1999 (the Act) provides that a Schedule setting out the terms of an agreement between Australia and another country may be added to the Act by regulations, if the agreement relates to reciprocity in social security or superannuation matters.

Subsection 8(2) of the Act provides that regulations made by virtue of subsection 8(1) must not come into operation on a day earlier than the day on which the agreement concerned comes into operation for Australia.

Section 25 of the Act provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient for carrying out or giving effect to the Act.

The purposes of the Regulations are to:

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insert a Supplementary Agreement on Social Security between the Government of Australia and the Government of the Federal Republic of Germany (the Supplementary Agreement) within Schedule 14 to the Act;

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insert an Agreement on Social Security between the Government of Australia and the Government of the Republic of Korea (the Agreement with Korea) as new Schedule 21 to the Act; and

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insert an Agreement on Social Security between the Government of Australia and the Government of the Hellenic Republic (the Agreement with Greece) as new Schedule 22 to the Act.

The German Supplementary Agreement done at Berlin on 9 February 2007 is inserted within Schedule 14 to the Act. Schedule 14 is amended to comprise two Parts as follows:

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Part A - the initial International Agreement with Germany

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Part B - the new Supplementary Agreement with Germany

The existing Agreement between Australia and Germany will not be affected and will continue to help people to get pensions from both countries. The German Government has confirmed that the Supplementary Agreement could enter into force on 1 July 2008.

The Supplementary Agreement contains provisions to avoid "double coverage." Double coverage can arise when employees are sent to another country to work. The Supplementary Agreement regulates this so that contributions do not need to be made into both countries' compulsory pension/superannuation systems for employees who are seconded to work temporarily in the other country. Seconded workers from Germany will continue to be covered by the German social security system and will not be subject to Australia's Superannuation Guarantee. Similarly, Australian workers seconded to Germany will remain subject to Australia's Superannuation Guarantee and will not need to make contributions to the German social security system.

The Agreement with Korea done at Canberra on 6 December 2006 is inserted as new Schedule 21 to the Act. The Agreement would coordinate the social security schemes of the two countries to give better welfare protection for people who move between Australia and Korea. The Government of the Republic of Korea has confirmed that the Agreement could enter into force on 1 July 2008.

Under the Agreement with Korea, Australia and Korea will contribute fairly to the support of people who have spent part of their working lives in both countries. People will be able to move between Australia and Korea knowing that their pension rights are recognised in both countries. Generally speaking, people living in either country will be able to add periods of Australian working life residence (ie the period between 16 years of age and age pension age) that are employment related to insurance periods in Korea in order to qualify for pensions from either or both countries.

The Agreement with Korea covers Australian age pension and Korean old age pension and lump sum refund. Once this Agreement comes into effect, former residents of Australia will be able to claim Australian age pensions without leaving Korea, and people who worked in Korea now living in Australia will be able to lodge claims for Korean pensions covered by this Agreement.

The Agreement with Greece done at Canberra on 23 May 2007 is inserted as new Schedule 22 to the Act. The Agreement would coordinate the social security schemes of the two countries to give better welfare protection for people who move between Australia and Greece. The Government of the Hellenic Republic has confirmed that the Agreement could enter into force in 2008.

Australia and Greece will contribute fairly to the support of people who have spent part of their working lives in both countries. People will be able to move between Australia and Greece knowing that their pension rights are recognised in both countries. Generally speaking, people living in either country will be able to add periods of residence in Australia to insurance periods in Greece in order to qualify for pensions from either or both countries.

The Agreement with Greece covers Australian and Greek Age Pensions. Once the Agreement starts, people of Age Pension age will be able to claim an Age Pension in either country and eligible pensioners can continue to receive that pension indefinitely in either country as long as they remain otherwise qualified.

The Agreements with Korea and Greece also include provisions covering Australia's Superannuation Guarantee scheme. These provisions will eliminate the need for compulsory contributions into both countries' systems in respect of the same work when employees are sent to work temporarily in the other country.

The new Agreements with Korea and Greece complement similar agreements with Austria, Belgium, Canada, Chile, Croatia, Cyprus, Denmark, Germany, Ireland, Italy, Malta, the Netherlands, New Zealand, Norway, Portugal, Slovenia, Spain and the United States of America.

All international intergovernmental agreements specify 'entry into force' requirements, which stipulate that each party notify the other party by an exchange of diplomatic notes or by ratification that all constitutional, legislative and any other matters that are necessary to be done have been done. An agreement would then come into operation on a date specified by reference to the exchange of diplomatic notes or instruments of ratification.

The Supplementary Agreement provides for entry into force on the first day of the second month following the month in which the instruments of ratification have been exchanged.

The Agreement with Korea provides for entry into force on the first day of the third month following the month in which notes are exchanged by the Contracting States through the diplomatic channel notifying each other that all constitution or legislative matters as are necessary to give effect to the Agreement have been finalised.

The Agreement with Greece provides for entry into force on the first day of the second month following the final day of the month in which notes are exchanged by the Parties through the diplomatic channel notifying each other that all matters as are necessary to give effect to the Agreement have been finalised.

The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003. Section 12 of this Act provides when provisions of legislative instruments take effect. In particular paragraph 12(1)(c) provides that a legislative instrument takes effect from the day, or day and time, of the commencement of an Act, or of a provision of an Act, or of the occurrence of an event, that is specified in the instrument for the purposes of the commencement of the instrument or provision.

For the Supplementary Agreement with Germany, four separate groups were contacted as part of the treaty process. These were German community groups (33), welfare organisations (12), all State and Territory Governments and employer groups consulted by The Treasury (8).

Letters and an information sheet outlining the Supplementary Agreement were sent to each group on 28 February 2007 seeking their views and asking for a response by 23 March 2007.

Three responses were received from the New South Wales and Queensland Governments and the Sunshine Coast German Club. No concerns were raised.

The German community organisations consulted were:

The welfare organisations consulted were:

The organisations The Treasury consulted were:

For the new Agreement with Korea, four separate groups were contacted as part of the treaty process. These were Korean community groups (41), welfare organisations (20), all State and Territory Governments and organisations consulted by The Treasury (8).

Letters and an information sheet outlining the new Agreement were sent to each group on 5 March 2007 seeking their views and asking for a response by 23 March 2007.

One formal response was received. The NSW Government advised that it was in 'caretaker' mode and could not provide any comment.

The Korean community groups consulted were:

The welfare organisations consulted were:

The organisations The Treasury consulted were:

For the new Agreement with Greece, four separate groups were contacted as part of the treaty process. These were Greek community groups (382), welfare organisations (12), all State and Territory Governments, and organisations consulted by The Treasury (8).

Responses were received from four correspondents: two in Australia and two in Greece. While some respondents were supportive, concerns were also raised about the formula (the 44 year denominator) for calculating the rate of Australian pension for former Australian residents who returned to live permanently in Greece before qualifying for Age Pension and before the Agreement commences. Clarification was also sought about the impact on pension entitlement, health and pharmaceutical benefits for those who divide their time between the two countries.

382 Greek community groups were provided with information and invited to submit their views, including the peak groups the Australian Hellenic Council and the World Council of Hellenes Abroad (SAE). Meetings were also held with representatives from the Australian Hellenic Council and, at their request, Government officials addressed members of the Greek Orthodox community in Sydney. Information has also been distributed by the Southern Cross Group, a lobby group representing the needs of the Australian expatriate community.

Welfare organisations consulted were:

Organisations consulted by The Treasury were:

The Regulations will commence on the day after they are registered, with the Schedules containing the Supplementary Agreement and two new Agreements commencing when each enters into force for Australia (all expected to be in 2008). These commencement provisions satisfy the requirements of subsection 8(2) of the Act that regulations not come into operation on a day earlier than the day the relevant agreement comes into effect for Australia and also satisfy paragraph 12(1)(c) of the Legislative Instruments Act 2003.