House of Representatives

Explanatory Memorandum

(Circulated by authority of the Hon Janice Crosio MP Parliamentary Secretary to the Minister for Social Security representing the Minister for Social Security)

OUTLINE AND FINANCIAL IMPACT STATEMENT

The Social Security (Parenting Allowance and Other Measures) Legislation Amendment Bill 1994 is the last of three social security bills to be introduced in the 1994 Spring Sittings that gives legislative effect to measures announced in the 1994 Budget and the White Paper on Employment and Growth.

This Bill also gives effect to one non-Budget measure.

The legislation affected by this Bill is:

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the Social Security Act 1991;

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the Social Security Legislation Amendment Act (No. 4) 1991;

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the Data-matching Program (Assistance and Tax) Act 1990;

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the Income Tax Assessment Act 1936;

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the Veterans' Entitlements Act 1986;

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the National Health Act 1953; and

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the Health Insurance Act 1973.

Unless otherwise indicated, the measures in this Bill have nil or negligible financial impact.

AMENDMENTS TO THE SOCIAL SECURITY ACT 1991

Introduction of parenting allowance

From 1 July 1995, a new payment, parenting allowance, will be available through the social security system. So as to avoid having two payments serving a similar purpose, the new allowance will incorporate home child care allowance which was introduced on 29 September 1994. The new allowance will retain the major elements of the home child care allowance.

Parenting allowance will be payable to partnered persons who have dependent children under the age of 16 years.

The maximum rate of parenting allowance will be the same as the partnered rate of a social security pension or benefit (currently $268.20 per fortnight). The new allowance will be income and asset tested. Income of both members of a couple will be taken into account. However, as home child care allowance will be merged into parenting allowance, an amount of $61.00 per fortnight of parenting allowance (an estimated maximum rate of home child care allowance from 1 January 1995) will be available to a recipient of the allowance regardless of the partner's income or assets held by either partner. This amount may be reduced further only by income of the parenting allowance recipient.

Parenting allowance in excess of $61.00 per fortnight will be taxable.

It is estimated that this measure will have program costs of $347.2m in 1995-96, $366.7m in 1996-97 and $393.3m in 1997-98.

Social Security Benefit Income Tests

This Bill modifies Benefit Rate Calculators A and B from 1 July 1995 to:

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remove the earnings disregard and introduce a 70% taper for the income test; and

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abolish the joint income test for benefit couples and introduce a new independent spousal income test.

Partner Allowance

Partner allowance will be modified from 1 July 1995 by this Bill to:

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provide that partner allowance is payable to persons who have an age, disability wage supplement, disability support pension, mature age allowance pensioner partner or a partner who is receipt of rehabilitation allowance. This is a consequence of abolishing wife pension and mature age partner allowance; and

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restrict partner allowance to recipients with little or no recent workforce experience who are over 40 years of age and without dependant children under 16 years of age. All persons who are over 40 and without dependant children under 16 will remain on partner allowance regardless of recent workforce experience. All persons who have children under 16 may be qualified parenting allowance; and

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provide that persons who no longer qualify for partner allowance after 1 July 1995 will be granted their partner's unemployment duration if they are at risk of long-term unemployment. This will allow partners at risk of long-term unemployment to have access to the same newstart programs and job compact as their job search allowance/newstart allowance partners; and

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provide that partner allowance is payable to a person where a job search/newstart allowance non-payment period has been imposed on the person's partner; and

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subject to the income and assets test, provide that a person can remain qualified for partner allowance after the person's partner ceases to receive a social security benefit or pension.

Estimated program savings of these two measures are $94.4m in 1995-96, $93.2m in 1996-97 and $94.8m in 1997-98.

Introduction of widow allowance and renaming of widowed person allowance

The Bill provides for the introduction of a new social security benefit, widow allowance and will be payable from 1 January 1995. This initiative was announced following the White Paper on Employment and Growth and the 1994 Budget.

Essentially, widow allowance will be payable to a woman who is aged 50 or more, who is no longer partnered, who became widowed, separated or divorced after turning 50 and who has no recent workforce experience. It will be paid at the same rate and under the same income and assets tests as apply to job search allowance and newstart allowance but will not be activity tested.

Women receiving a social security benefit or pension immediately before 1 January 1995 may transfer to widow allowance on 1 January 1995 without having to meet the no recent workforce experience requirement, providing that they meet the other criteria and apply to transfer to widow allowance before the date of implementation.

Women receiving widow allowance will have access to labour market assistance to find work, including the Jobs, Education and Training (JET) program but will not be eligible for assistance under the Job Compact. Women receiving widow allowance will be able to apply for payment of an employment entry payment and an education entry payment.

No new claims for widow allowance will be able to be granted on or after 1 July 2005 unless a woman claiming the allowance was born before 1 July 1955.

As a consequence of the introduction of widow allowance, the existing widowed person allowance is to be renamed bereavement allowance. There are no other changes to that payment.

Estimated total savings of this measure are $0.0m in 1994 -95, $1.2m in 1995-96, and $1.4m in 1996-97.

Phasing out of wife pension, mature age partner allowance and special needs wife pension

This Bill contains measures to phase out wife pension as a discrete payment under the Principal Act. Women who claim and qualify for wife pension on or before 30 June 1995 will have their entitlement "saved". Equivalent amendments are being made for mature age partner allowance and special needs wife pension.

Wife pension is currently available to a woman whose partner is receiving age pension, disability support pension, disability wage supplement or rehabilitation allowance in certain circumstances. Mature age partner allowance is available to a person whose partner is receiving mature age allowance. Special needs wife pension is available to a woman who has a partner who is receiving special needs age pension or special needs disability support pension.

There will be no new grants of any of these payments on or after 1 July 1995. To be paid from that date on, the woman or person (as the case may be) will have to have claimed and qualified for the payment on or before 30 June 1995.

This measure will commence on 1 July 1995.

The estimated savings from this measure are $3.4m in 1995-96, $9.7m in 1996-97 and $15.3m in 1997-98.

Education Entry Payment

This Bill introduces an education entry payment for recipients of wife pension, partner allowance, parenting allowance, widow allowance and mature age partner allowance. The payment of $200 is made in recognition of the costs involved in starting education. It is designed to provide encouragement to take on study which may in effect improve the persons' chances of re-entry into employment.

It is estimated that 1500 clients will benefit from this measure each year and this measure will involve program costs of $0.3 million in 1995-96, $0.4 in 1996-97, and $0.4 in 1997-98.

AMENDMENTS TO THE SOCIAL SECURITY LEGISLATION AMENDMENT ACT (NO. 4) 1991

Repeal of sunset clause operating on advance pharmaceutical allowance

The advance pharmaceutical allowance was introduced in 1990-91 as an interim measure to assist pensioners of limited means with high pharmaceutical requirements to adjust to the changes in the Pharmaceutical Benefits Scheme and was originally proposed to be discontinued after 31 December 1992 through the operation of a sunset clause. The availability of the advance has been of great assistance to those social security recipients who are chronically ill and decisions were taken in 1992 and 1993 to continue the advance for a further year. The sunset clause is now due to come into operation on 1 January 1995.

Amendments contained in this Bill remove the sunset clause so that advance pharmaceutical allowance will continue on an indefinite basis.

AMENDMENTS OF THE DATA-MATCHING PROGRAM (ASSISTANCE AND TAX) ACT 1990

Part 4 of Schedule 1 make consequential amendments to this Act as a result of the introduction of parenting allowance.

Part 3 of Schedule 4 make consequential amendments to this Act as a result of the introduction of widow allowance and the renaming of widowed person allowance as bereavement allowance.

AMENDMENTS OF THE INCOME TAX ASSESSMENT ACT 1936

Part 3 of Schedule 4 makes consequential amendments to this Act as a result of the introduction of widow allowance and the renaming of widowed person allowance as bereavement allowance.

AMENDMENTS OF THE VETERANS' ENTITLEMENTS ACT 1986

Part 3 of Schedule 4 makes consequential amendments to this Act as a result of the introduction of widow allowance and the renaming of widowed person allowance as bereavement allowance.

AMENDMENTS OF THE HEALTH INSURANCE ACT 1973

Division 2 of Part 3 of Schedule 4 makes amendments to this Act such that health care concession cards will be available to recipients of widow allowance or for up to 6 months after a woman previously in receipt of widow allowance has joined the workforce.

Part 4 of Schedule 1 and Part 2 of Schedule 3 make similar consequential amendments to this Act as a result of the introduction of parenting allowance and its subsequent impact on partner allowance.

AMENDMENTS OF THE NATIONAL HEALTH ACT 1953

Part 2 of Schedule 3 makes amendments to this Act such that it ensures that pensioner concession cards will be available to a person who is receiving a widow or partner allowance, has turned 60 and has been receiving a social security benefit or social security pension or any combination of social security pension and benefit continuously for the last 12 months.

SCHEDULE 1

AMENDMENTS RELATING TO PARENTING ALLOWANCE

1. Summary of proposed changes

Amendments made by Schedule 1 introduce a new payment, parenting allowance, that will be available from 1 July 1995. The home child care allowance, introduced on 29 September 1994, will be merged with parenting allowance.

Generally, parenting allowance will be an income and assets tested payment. It will be payable to partnered persons who have dependent children under the age of 16 years. In order to qualify for the payment, a person must be a resident of Australia and be physically present in Australia. However, temporary absences from Australia of up to 13 weeks will be allowed.

Parenting allowance will be subject to the new income test arrangements for allowees that will be introduced from 1 July 1995. The new income test will encourage both members of a couple to seek work by providing separate and more generous income test arrangements that recognise that either or both members of a couple can be job seekers.

The maximum rate of parenting allowance will be the same as the partnered rate of a social security pension or benefit (currently $268.20 per fortnight). When calculating the rate of parenting allowance, income of both members of a couple will be taken into account. However, as home child care allowance will be merged into parenting allowance, the person receiving parenting allowance will retain an amount of $61.00 per fortnight (the maximum basic component rate), irrespective of their partner's income. That is, where the recipient of parenting allowance has nil income, income of the partner that is in excess of $763.43 per fortnight will reduce the rate of the allowance to $61.00. The $61.00 amount represents an estimated maximum rate of home child care allowance that will apply from 1 January 1995. The $61.00 amount can be reduced further only by the income of the parenting allowance recipient.

Both the maximum parenting allowance rate ($268.20) and the maximum rate of basic component ($61.00) will be indexed twice a year in March and September.

Any amount of parenting allowance up to $61.00 per fortnight will be free of tax.

2. Background

Parenting allowance is being introduced in recognition of the contribution to society and the family of those who care for their children by providing them with an independent source of income. Parenting allowance will ensure a higher family income where at least one partner is working than if both partners are unemployed. It will also provide extra cash to low income working families because of the income test that will apply. This will give parents more choice as to whether one partner stays home to care for children or both partners work part-time.

Home child care allowance is being merged into parenting allowance to avoid having two payments serving a similar purpose. That is, both payments recognise the contribution to the community and the family of those who care for their children. In order to maintain the major elements of the home child care allowance payment, parenting allowance will comprise a non-taxable component, equivalent to the maximum amount of home child care allowance, that will be available to families irrespective of the income of the main earner in the family.

3. Clauses involved in the changes

Clause 2: specifies the commencement day as 1 July 1995.

Clause 3: provides that the Principal Act is amended as set out in Schedule 1.

Schedule 1: provides amendments relating to parenting allowance.

Part 1: substitutes new Part 2.18 - Parenting allowance - in the Principal Act.

Part 2: inserts new Part 3.6A - Parenting allowance rate calculator - in the principal Act

Part 3: makes some consequential amendments to the Principal Act.

Part 4: makes some consequential amendments to the Data-matching Program (Assistance and Tax) Act 1990 and the Health Insurance Act 1973

Part 5: deals with transitional provisions relating to the introduction of parenting allowance.

4. Explanation of the changes

Clause 3 provides that the Principal Act is amended as set out in Schedule 1 of the Amending Act.

Schedule 1 repeals Part 2.18 - Home child care allowance and substitutes new Part 2.18 - Parenting allowance. A new Part 3.6A - Parenting allowance rate calculator is inserted in the Principal Act. Schedule 1 also makes some consequential amendments to the Principal Act and to some other Commonwealth Acts.

PART 1 - THE PARENTING ALLOWANCE

NEW PART 2.18 - PARENTING ALLOWANCE

New Division 1 - Parenting allowance child status

One of the basic qualification criteria for parenting allowance is that a person has at least one "parenting allowance child" (see new section 901). New Division 1 sets out the rules for establishing whether a child is a parenting allowance child.

New section 901: Parenting allowance child

New section 901 provides that a parenting allowance child is a child who has not turned 16 and is a dependent child of a person.

A note to this section refers the reader to the definition of "dependent child" in subsections 5(2) to (9).

New section 902: Parenting allowance child - child absent from Australia for more than 13 weeks

Under subsection 5(7) of the Principal Act, a child is not a dependent child of an Australian resident if the child is not an Australian resident or is not living with the adult. New subsection 902(1) provides that, if a dependent child leaves Australia temporarily and continues to be absent from Australia for more than 13 weeks, the child ceases to be a parenting allowance child after the child has been outside Australia for 13 weeks.

New subsection 902(2) specifies three factors that need to be taken into account when determining whether an absence is temporary: the purpose of the absence, the intended duration of the absence and the frequency of such absences.

If a determination is made that the absence is not temporary, the child is not a parenting allowance child.

New section 903 - Parenting allowance child - child born outside Australia

New subsection 903 provides that, if a dependent child is born outside Australia and continues to be absent from Australia for more than 13 weeks, the child ceases to be a parenting allowance child after the 13 week period while the child remains outside Australia.

New section 904 - Parenting allowance child - child subsequently departs Australia

New section 904 further provides that, if a dependent child is not a parenting allowance child

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because of having been absent from Australia for more than 13 weeks (sections 902 and 903 refer), or

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because of the previous application of this section

and the child comes to Australia and subsequently leaves Australia within 13 weeks of arriving in Australia, the child is not a parenting allowance child during the whole period of the subsequent overseas absence.

The effect of this provision is that a child who has lost status of a parenting allowance child after 13 weeks of absence from Australia and then comes to Australia and leaves again within 13 weeks will not regain parenting allowance child status for any period of subsequent overseas absence unless the child comes to Australia and stays in Australia for a continuous period of at least 13 weeks.

New Division 2 - Qualification for and payability of parenting allowance

New Subdivision A - Qualification for parenting allowance

New section 905: Qualification for parenting allowance

New section 905 sets out the basic qualification criteria for parenting allowance.

A person qualifies for parenting allowance if the person:

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is a member of a couple; and

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has a parenting allowance child; and

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is an Australian resident or has a qualifying residence exemption for parenting allowance; and

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is in Australia or satisfies the requirements of section 906.

Note 1 refers the reader to section 4 to see whether a person is a member of a couple.

Note 2 directs the reader to the definitions of "Australian resident" and "qualifying residence exemption" in section 7.

New section 906: Qualification for parenting allowance - temporary absences from Australia

New subsection 906(1) provides that a person satisfies the requirements of this section if the person is temporarily absent from Australia for no longer than 13 weeks. If the temporary absence is longer, the person satisfies the requirement of this section only for the first 13 weeks of absence.

New subsection 906(2) specifies three factors that need to be taken into account when determining whether an absence is temporary: the purpose of the absence, the intended duration of the absence and the frequency of such absences.

Where a person who has lost qualification for the allowance because he or she has been overseas for more than 13 weeks returns to Australia, the person will be qualified from the time the person returns to Australia. If the person subsequently leaves Australia again, at any time within the next 13 weeks, the person loses qualification for the allowance from the day the person leaves Australia.

New subsection 906(3) applies in situations where a person does not satisfy the requirements of new section 906 (because the person's absence from Australia is not temporary or because the person has been outside Australia for more than 13 weeks) and the person comes to Australia and leaves again within 13 weeks. In such a case, on leaving

New section 907: Qualification for parenting allowance - assurance of support

New section 907 provides that a person is not qualified for parenting allowance if the Secretary is satisfied that

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an assurance of support is in force in respect of the person (the assuree), and

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the person who gave the assurance of support is willing and able to provide an adequate level of support to the assuree, and

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it would be reasonable for the assuree to accept that support.

A note signposts the definition of the "assurance of support" in subsection 23(1).

New section 908: Qualification for parenting allowance - unemployment due to industrial action

New section 908 deals with the situation where a person is involved in industrial action and, as a consequence, becomes unemployed and claims parenting allowance.

New subsection 908(1) applies in cases where a person has claimed parenting allowance but not received it yet, and was unemployed at the time the claim was lodged. In that case, the person is not qualified for parenting allowance unless the Secretary is satisfied that the person's unemployment is not due to the person being engaged, or having been engaged, in industrial action or a series of industrial actions.

New subsection 908(2) provides that a person is not to be taken to be engaged in industrial action or in a series of industrial actions if the Secretary is satisfied that:

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the person's unemployment was due to other people being engaged in industrial action or a series of industrial actions; and

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the people, or some of the people, were members of a trade union which was involved in the industrial action; and

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the person was not a member of that union.

New subsection 908(3) provides that the general rule in subsection (1) does not prevent a person from qualifying for parenting allowance on a payday that occurs after the industrial action or series of industrial actions has stopped.

A note at the end of new section 908 directs the reader to the definitions of 'industrial action'.

New Subdivision B - Payability of parenting allowance

New section 909: Parenting allowance not payable in certain circumstances

New subsection 909 lists the situations in which parenting allowance is not payable to a person and includes reference to the relevant sections that provide the substantive provisions.

Parenting allowance may not be payable for any of the following reasons:

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the allowance has not commenced to be payable (sections 910 and 938 refer);

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the person has not provided a tax file number for the person (section 912 refers) or the person's partner (section 913 refers);

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another person is receiving parenting allowance in respect of the same child (section 914 refers);

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the person's partner is receiving parenting allowance (section 915 refers);

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a social security benefit or a youth training allowance is payable to the person (section 916 refers);

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the person is receiving a payment under certain educational schemes (section 917 refers);

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the person is receiving income that is paid by a community or group from funds provided under a Commonwealth funded employment program (section 918 refers);

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the person is receiving a payment under a LEAP program (section 919 refers);

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the person is subject to a newly arrived resident's waiting period (section 920 refers);

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the person is subject to an unused annual leave waiting period (section 923 refers);

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the person is subject to a non-payment period for job search or newstart allowance (section 926 refers);

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the person has not nominated a bank, building society or credit union account for payment of the allowance (section 943 refers);

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the person is in gaol (see Part 3.13); or

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the person is subject to a compensation preclusion period (see Part 3.14).

New subsections 909(2) and (3) provide that parenting allowance is not payable if the person's rate of the allowance would be nil unless this has occurred only because the person has been paid an advance pharmaceutical allowance under either the Principal Act or the Veterans' Entitlements Act 1986.

New section 910: Commencement of parenting allowance

New section 910 provides that parenting allowance is not payable to a person before the person's provisional commencement day. The provisional commencement day is identified in new section 911.

New section 911: Provisional commencement day

New section 911 deals with the concept of a provisional commencement day.

General rule

New subsection 911(1) provides the general rule to establish a person's provisional commencement day. The general rule is that a person's provisional commencement day is the day on which the person claims parenting allowance. Exceptions to this rule are provided for in new subsections 911(2) to (7).

Claim made within 4 weeks of becoming qualified

New subsection 911(2) provides that a provisional commencement day of a person who claims parenting allowance within 4 weeks after becoming qualified for the allowance is the day on which the person became qualified.

Initial incorrect or inappropriate claim followed by claim for parenting allowance

New subsection 911(3) provides that if:

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a person makes a claim (the "initial claim") for:

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a social security pension, a service pension or a social security benefit (other than parenting allowance); or

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a pension, benefit or allowance or other payment under another Act, or a program administered by the Commonwealth, that is similar in character to a parenting allowance; and

the claimant was qualified for parenting allowance when the initial claim was lodged; and

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the claimant subsequently lodges a claim for parenting allowance; and

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the Secretary considers it reasonable for this provision to apply,

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then the person's provisional commencement day is the day on which the person made the initial claim.

Early claim

New subsection 911(4) provides that a person's provisional commencement day is the first day on which the person was qualified for parenting allowance if:

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the person claims parenting allowance; and

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the person is not qualified on the day on which the person claimed the allowance; and

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the person becomes qualified for parenting allowance during the

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period of 13 weeks after the day the claim was lodged.

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Partner allowee not required to make claim

New subsection 911(5) provides that a provisional commencement day of a person who by virtue of new subsection 927(3) is not required to make a claim for parenting allowance is the day on which the person becomes qualified for parenting allowance.

Under new subsection 927(3), a partner allowee who becomes qualified for parenting allowance does not have to make a claim for parenting allowance. A person in this situation can be transferred automatically from partner allowance to parenting allowance.

Claim resulting from a major disaster

New subsection 911(6) provides that a provisional commencement day of a person who:

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claims and qualifies for a disaster relief payment, and

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as a result of the major disaster to which the disaster relief payment relates claims parenting allowance within 14 days of claiming the disaster relief payment is the day on which the person was affected by the disaster.

Transferees

New subsection 911(7) provides that a person who is a "transferee" to parenting allowance and who claims parenting allowance within 14 days of their transfer day will be taken to have their transfer day as their provisional commencement day.

A Note to this provision directs the reader to subsections 23(6) and (7) that define "transferee" and "transfer day". A person is considered to be a transferee to parenting allowance if immediately before becoming qualified for parenting allowance the person is receiving a social security or service pension or a social security benefit or Youth Training Allowance and ceases to receive that payment on becoming qualified for parenting allowance. The transfer day will be the person's last pension payday if the person was previously receiving a pension, or the day on which the person ceases to receive the allowance if the person was previously receiving a social security benefit or Youth Training Allowance.

New section 912: Provision of person's tax file number

New subsection 912(1) provides that parenting allowance is not payable to a person if the person is requested to provide a statement of the person's tax file number (a requirement under new section 932) or to apply for a tax file number and give the Secretary a written statement of the person's tax file number once it has been issued (a requirement under new section 948) and the person has not, after 28 days, satisfied the request.

New subsections 912(2) and (3) detail the situations in which a person is taken to satisfy the above request.

New subsection 912(2) covers the situation where:

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the person completes a declaration stating that the person has a tax file number but does not know what the number is and has asked the Commissioner of Taxation (the Commissioner) to advise the number; and

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the person authorises the Commissioner to tell the Secretary whether the person has a tax file number and, if so, what that tax file number is; and

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the Commissioner has not told the Secretary that the person does not have a tax file number.

New subsection 912(3) covers the situation where:

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the person completes a declaration that states that an application for a tax file number is pending; and

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the person authorises the Commissioner to tell the Secretary the person's tax file number or that the application has been refused or withdrawn; and

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the Commissioner has not told the Secretary that the person's application for a tax file number has been refused; and

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the application for the tax file number has not been withdrawn.

New section 913: Provision of partner's tax file number

New section 913 provides that parenting allowance is not payable to a person if a requirement exists under the Principal Act for the person to provide a statement of the person's partner's tax file number and the person fails to satisfy that requirement.

New subsection 913(1) provides the general rule that if a person is required by the Secretary under new section 933 or 949 to give the Secretary a written statement of the person's partner's tax file number and the person fails to provide the required statement or a declaration under new subsection 913(2) or (3) within 28 days of the requirement, then parenting allowance is not payable to the person.

New subsections 913(2) and (3) detail the situations in which a person is taken to have provided the person's partner's tax file number.

New subsection 913(2) covers the situation where:

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the partner completes a declaration stating that the partner has a tax file number but does not know what the number is and has asked the Commissioner of Taxation (the Commissioner) to advise the number; and

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the partner authorises the Commissioner to tell the Secretary whether the partner has a tax file number and, if so, what that tax file number is; and

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the Commissioner has not told the Secretary that the partner does not have a tax file number.

New subsection 913(3) covers the situation where:

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the partner completes a declaration that states that an application for a tax file number is pending; and

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the partner authorises the Commissioner to tell the Secretary the partner's tax file number or that the application has been refused or withdrawn; and

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the Commissioner has not told the Secretary that the partner's application for a tax file number has been refused; and

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the application for the tax file number has not been withdrawn.

New subsection 913(4) enables the Secretary to waive the requirement that a person provide a statement of the person's partner's tax file number. This requirement may be waived if the Secretary is satisfied that the person does not know the partner's tax file number and cannot obtain either the partner's tax file number, a statement of the partner's tax file number or a declaration by the partner in a form approved by the Secretary.

New section 914: Parenting allowance not payable to more than one person for the same child

Parenting allowance is not payable to more than one person in respect of the same child. This general rule is laid down in new subsection 914(1).

New subsection 914(2) deals with the situation where more than one person qualifies for and claims parenting allowance in respect of the same child, whether or not one of the people is receiving parenting allowance in respect of the child (eg two persons lodge a claim for parenting allowance in respect of the same child at the same time or one person claims parenting allowance while another person is already receiving the allowance for the same child). In that situation, a written determination must be made by the Secretary specifying one of the persons as the person to whom parenting allowance is payable in respect of the child and a copy of the determination will be given to each of the claimants.

New subsection 914(3) provides that if the determination referred to in new subsection 914(2) is made, parenting allowance is not payable to any person other than the person specified in the determination.

New section 915: Parenting allowance not payable to more than one member of a couple

New section 915 deals with the situation where both members of the same couple qualify for parenting allowance in respect of different children.

New subsection 915(1) provides that if both members of the same couple qualify for parenting allowance and one of them is receiving the allowance, parenting allowance is not payable to the other member of the couple.

New subsection 915(2) provides that if both members of the same couple qualify for parenting allowance and both claim the allowance (whether or not either is currently receiving parenting allowance), a written determination must be made by the Secretary specifying one of the persons as the person to whom parenting allowance is payable and a copy of the determination must be given to each of the claimants.

New subsection 915(3) states that parenting allowance is only payable to the person specified in the determination.

New section 916: Multiple entitlement exclusion

New subsection 916(1) provides that parenting allowance is not payable to a person if the person is already receiving a social security benefit or a Youth Training Allowance.

New subsection 916(2) provides that parenting allowance is not payable to a person if a person is receiving parenting allowance and a social security benefit or a Youth Training Allowance becomes payable to the person.

Note 1 indicates to the reader that another payment is generally not payable to a person unless the person claims that payment.

Note 2 signposts new section 951B as the provision which specifies the day on which parenting allowance ceases to be payable in these circumstances.

Note 3 refers the reader to subsection 23(1) for the definition of "Youth Training Allowance".

New subsection 916(3) provides that parenting allowance is payable to an armed services widow who is receiving a social security benefit at the rate limited by subsection 1068(3).

A Note directs the reader to the definition of the "armed services widow" in subsection 4(1).

New section 917: Educational schemes exclusion

In general terms, new section 917 precludes payment of parenting allowance where a person is receiving a payment under certain educational schemes.

New section 917 provides that parenting allowance is not payable to a person who is receiving a payment under the AUSTUDY Scheme, the ABSTUDY Scheme (other than payments under the ABSTUDY Tertiary Scheme as a part-time student) or the Student Financial Supplement Scheme.

New section 918: Commonwealth funded employment program exclusion

New section 918 provides that parenting allowance is not payable to a person if the person is receiving income that is paid under a Commonwealth funded employment program.

A Note to this provision directs the reader to the definition of "Commonwealth funded employment program" in subsection 23(1) of the Principal Act.

New section 919: LEAP exclusion

New section 919 provides that parenting allowance is not payable to a person if the person is receiving a payment under a LEAP program.

A note to this new provision directs the reader to the definition of "LEAP program" in subsection 23(1) of the Principal Act.

New section 920: Newly arrived residents

New section 920 provides that parenting allowance is not payable to a person who is subject to a newly arrived resident's waiting period (as set out in new section 921) and the period has not ended (as per new section 922).

New section 921: Newly arrived resident's waiting period

New subsection 921(1) sets out the general rule that a person who entered Australia on or after 1 January 1993 and holds a permanent visa is subject to a newly arrived resident's waiting period. A note to this subsection signposts the definitions of 'holder' and 'permanent visa' in subsection 7(1) of the Principal Act.

However, there are exceptions to this general rule.

First, new subsection 921(2) states that the rule does not apply to a person who has a qualifying residence exemption for parenting allowance (a note to this subsection signposts the definition of 'qualifying residence exemption' in subsection 7(6) of the Principal Act).

Second, new subsection 921(3) states that the rule does not apply to a person:

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if, immediately before this section commenced, the person had held a valid designated temporary entry permit continuously for 26 weeks (the definition of 'designated temporary entry visa' in subsection 7(1) of the Principal Act is signposted by the note to this subsection); or

•

if, immediately before this section commenced, the person had held such a permit for less than 26 weeks (the permit period), the permit was continued in force as a temporary visa made under the Migration Reform Act 1992 and the total period of the permit period and the period that the temporary visa continued, is at least 26 weeks.

Third, new subsection 921(4) states that the rule does not apply to a person if the person was a member of a couple immediately before entering Australia and the person's partner had been an Australian resident for at least 26 weeks when the person entered Australia. A note signposts the definition of 'Australian resident' in subsection 7(2).

Fourth, new subsection 921(5) states that the rule does not apply to a person if either the person is already subject to a newly arrived resident's waiting period or has already served a newly arrived resident's waiting period or the person had previously entered Australia and held a permanent entry permit granted under the Migration Act 1958 as then in force, or a permanent visa, before the person's last departure from Australia.

New section 922 - Duration of newly arrived resident's waiting period

New subsection 922(1) provides that if a person is subject to a newly arrived resident's waiting period, then the period starts on the day on which the person's permanent visa comes into force and ends on the day worked out under new subsection 922(2) or (3).

New subsection 922(2) states that if:immediately before this section commenced, the person held a valid designated temporary entry permit; and that permit was continued in force as a temporary visa by regulations made under the Migration Reform Act 1992; and that temporary visa was in force immediately before the person was granted a permanent visa; the newly arrived resident's waiting period ends 26 weeks after the day on which the designated temporary entry permit was granted to the person. The definition of 'temporary entry payment' is signposted by a note to this subsection.

New subsection 922(3) states that if new subsection 922(2) does not apply, then the newly arrived resident's waiting period ends 26 weeks after the day on which the person was granted a permanent visa.

New section 923: Unused annual leave

New section 923 provides that parenting allowance is not payable to a person if the person is subject to an unused annual leave waiting period and that period has not ended. "Unused annual leave waiting period" is defined in new section 924 and the duration of that waiting period is specified in new section 925.

New section 924: Unused annual leave waiting period

New subsection 924(1) states that a person is subject to an unused annual leave waiting period if, at the end of the person's employment, the person became entitled to a payment for unused annual leave and the person's provisional commencement day occurs within the notional leave period.

Note 1 to this subsection signposts the definition of 'unused annual leave' in subsection 23(1) of the Principal Act.

Note 2 refers the reader to new section 911 for the person's provisional commencement day.

New subsection 924(2) provides that a person's notional leave period is the period that starts on the day after the day on which the person's employment ended and runs for the number of days for which the person has unused annual leave as calculated under new subsections 924(3) and (4).

New subsection 924(3) provides for the calculation of the number of days for which the person has unused annual leave. If the period of unused annual leave is expressed in weeks, the number of weeks (including fractions of weeks) are to be multiplied by 7. In any other cases, the number of working weeks (including fractions of weeks) represented by the period of unused annual leave is to be multiplied by 7. Any resulting fractions are to be disregarded.

New subsection 924(4) limits the number of days for which a person has unused annual leave to 28 days.

New section 925: Duration of unused annual leave waiting period

New section 925 provides that a person's unused annual leave waiting period starts on the person's provisional commencement day (new section 911 refers) and finishes on the last day of the notional leave period (as worked out under section 924).

Note 1 refers the reader to section 911 for the person's provisional commencement day.

Note 2 refers the reader to section 924 for the notional leave period.

New section 926: Non-payment periods for job search allowance and newstart allowance

New subsection 926(1) provides that parenting allowance is not payable to a person if a period of non-payment of job search allowance or newstart allowance has been applied to the person under paragraph 526(1)(j) or 608(1)(j) of the Principal Act. This subsection ensures that a person who is a member of a couple with children cannot avoid the application of a non-payment period for job search or newstart allowance by claiming parenting allowance as an alternative payment. This avoidance of the non-payment period may involve the members of a couple swapping the payments they are claiming. That is, the member of the couple that was initially receiving parenting allowance may claim job search or newstart allowances in the knowledge that no period of non-payment would be imposed upon the person while the person's partner who is subject to a non-payment period would claim parenting allowance.

Paragraphs 526(1)(j) or 608(1)(j) of the Principal Act list the situations in which a period of non-payment can be imposed on a person for the purposes of job search allowance and newstart allowance respectively.

New subsection 926(2) provides the Secretary with the discretion not to apply subsection 927(1) to a person who may have a non-payment period imposed under paragraph 526(1)(j) or 608(1)(j). The Secretary may use this discretion to protect a person who, for example, inadvertently claims job search allowance or newstart allowance instead of parenting allowance and has a non-payment period imposed upon them, from being disadvantaged by the lodgement of the initial incorrect claim.

New Division 3 - Claim for parenting allowance

New section 927: Need for a claim

New subsection 927(1) provides that a person who wants to be granted parenting allowance must make a proper claim for the allowance.

A note to this provision signposts sections new sections 928, 929 and 930 which outline the requirements of a proper claim. These provisions relate to the form of the claim, where the claim needs to be lodged and requirements relating to residency and physical presence in Australia.

New subsection 927(2) provides that if, at the time a person makes a claim for parenting allowance, the person is not qualified for that allowance, the claim will be taken not to have been made. This will not apply to early claims (new subsection 911(4) refers).

New subsection 927(3) provides that a person does not have to make a claim for parenting allowance if the person is receiving partner allowance and becomes qualified for parenting allowance by virtue of having a parenting allowance child. In those cases, the person is automatically transferred to parenting allowance. A note at the end of this section signposts new sections 901 to 904 that define the meaning of "parenting allowance child".

New section 928: Form of claim

New section 928 provides that a claim for parenting allowance must be in writing and in accordance with a form approved by the Secretary.

New section 929: Lodgment of claim

New section 929 provides that a claim for parenting allowance must be lodged at an office of the Department of Social Security or at a place, or with a person, approved by the Secretary. The Secretary is not able to approve a place, or a person, for lodgment of claims unless the place or person is in Australia.

New section 930: Claimant must be Australian resident and in Australia

New section 930 provides that a person claiming parenting allowance must be an Australian resident and in Australia on the day on which the claim is lodged.

A note directs the reader to the definitions of "Australian resident" and "qualifying residence exemption" in section 7 .

New section 931: Claim may be withdrawn

New section 931 provides that a claim for parenting allowance can be withdrawn at any time before the claim is determined. The withdrawal can be made orally or in writing. A claim that is withdrawn is taken to have not been made.

New section 932: Secretary may request claimant to give statement of claimant's tax file number

New subsection 932(1) provides that a claimant for parenting allowance may be requested but not compelled by the Secretary to provide a written statement of the person's tax file number or, if the claimant does not have a tax file number, to apply to the Commissioner of Taxation for a tax file number and provide written statement of the number once it is issued.

New subsection 932(2) provides that parenting allowance is not payable to a person if at the end of 28 days after the request has been made, the person does not satisfy the request and the Secretary has not exempted the claimant from having to satisfy the request.

A note indicates that in order to satisfy the request it may be possible for the person to provide a declaration about the person's tax file number and an authority to the Commissioner of Taxation authorising the Commissioner to provide information about the tax file number to the Secretary. This is provided for in new subsections 912(2) and (3).

New section 933: Secretary may request claimant to give statement of partner's tax file number

New subsection 933(1) provides that a claimant for parenting allowance may be requested but not compelled by the Secretary to provide a written statement of the person's partner's tax file number. The request may only be made if the person's partner is in Australia.

New subsection 933(2) provides that parenting allowance is not payable to the claimant if, at the end of 28 days after the request has been made, the claimant does not satisfy the request and the Secretary has not exempted the claimant from having to satisfy the request.

Note 1 indicates that in order to satisfy the request it may be possible for the claimant to provide a declaration from the person's partner about the partner's tax file number and an authority to the Commissioner of Taxation authorising the Commissioner to provide information about the tax file number to the Secretary. This is provided for in new subsections 913(2) and (3).

Note 2 directs the reader to new subsection 913(4) that allows the Secretary to waive the requirement to provide the partner's tax file number in certain circumstances.

New Division 4 - Determination of claim

New section 934: Secretary to determine claim

New section 934 provides that the Secretary must determine, in accordance with the Principal Act, a claim for parenting allowance.

New section 935: Grant of claim

New section 935 provides that the Secretary must determine that a claim for parenting allowance is to be granted if the Secretary is satisfied that the person is qualified for the allowance and the allowance is payable.

New section 936: Date of effect of determination

New subsection 936(1) specifies the date of effect of a determination under new section 935, except where new subsection 936(2), (3) or (4) apply. The determination takes effect on the day on which the determination is made or on such later or earlier day as is specified in the determination.

New subsections 936(2), (3) and (4) specify the date of effect of a determination granting a claim that results from a person asking for a review of an original decision rejecting the claim.

Notified decision - review sought within 3 months

New subsection 936(2) deals with the situation where an applicant for parenting allowance:

•

is notified in writing of a decision to rejects the person's claim; and

•

applies to the Secretary under section 1240, within 3 months after written notification of the decision is given, for a review of that decision; and

•

is granted parenting allowance as a result of the review.

The determination to grant the claim takes effect on the day on which the original decision to reject it took effect. This enables arrears to be paid back to that date.

Notified decision - review sought after 3 months

New subsection 936(3) deals with the situation where an applicant for parenting allowance:

•

is notified in writing of a decision to reject the person's claim; and

•

applies to the Secretary under section 1240, more than 3 months after the written notification of the decision is given, for a review of the decision; and

•

is granted parenting allowance as a result of the review.

In this case, the determination to grant the claim takes effect on the day on which the person sought the review.

Decision not notified

New subsection 936(4) deals with the situation where an applicant for parenting allowance:

•

is not notified in writing of a decision to reject the person's claim; and

•

applies to the Secretary under section 1240 at any time for a review of the decision; and

•

is granted parenting allowance as a result of the review.

In this case, the determination to grant the claim takes effect on the day on which the original decision rejecting the claim took effect. As is the case with new subsection 936(2), this enables arrears to be paid back to the date of the original decision.

New Division 5 - Rate of parenting allowance

New section 937: How to work out a person's parenting allowance

New section 937 provides that the rate of parenting allowance is calculated according to the Parenting Allowance Rate Calculator at the end of section 1068A.

New Division 6 - Payment of parenting allowance

New section 938: Commencement of parenting allowance

New section 938 provides that parenting allowance becomes payable to a person on the first day on which the person is qualified for the allowance and there is no provision in the Principal Act that makes the allowance not payable.

Note 1 directs the reader to the qualification provisions for parenting allowance in new section 905.

Note 2 directs the reader to new section 909 that describes the circumstances in which parenting allowance is not payable.

New section 939: Payment by instalments

New section 939 provides that a full instalment of parenting allowance is payable to a person on each parenting allowance payday on which the person is qualified for the allowance and the allowance is payable.

A note directs the reader to the new definition of "parenting allowance payday" in subsection 23(1).

New section 940: Effect on instalments of backdating claim

New section 940 provides that, if a person's provisional commencement day for parenting allowance is before the day on which the person claimed the allowance (the person's claim day), arrears of the allowance that are due to the person are paid on the payday on or after the claim day.

Note 1 to the section directs the reader to section 911 that provides for the person's provisional commencement day.

Note 2 to the section directs the reader to the definition of "parenting allowance payday" in subsection 23(1).

New section 941: Calculation of amount of instalment

New section 941 provides the method of calculating the amount of an instalment of parenting allowance payable to a person.

New subsection 941(1) provides that the amount of an instalment of parenting allowance is the fortnightly rate of the allowance .

New subsections 941(2) and (3) provide that the amount is to be rounded to the nearest 10 cents.

New subsection 941(4) deals with the situation where an amount of pharmaceutical allowance is added to the person's provisional rate of parenting allowance in working out the amount of an instalment of parenting allowance and the instalment of parenting allowance ends up being less than the person's fortnightly pharmaceutical allowance rate. In this situation, the amount of the instalment is to be increased to the person's fortnightly pharmaceutical allowance rate.

A note at the end of new subsection 941(4) signposts Step 3 of point 1068A-A3 that defines the provisional rate of parenting allowance.

New subsection 941(5) provides that where an instalment would be less than $1.00 (but greater than nil), then it is rounded up to $1.00.

New section 942: Instalments to be paid to person or nominee

New section 942 provides that instalments of a person's parenting allowance are to be paid to that person unless the Secretary directs that the whole or part of the instalments are to be paid to someone else on behalf of the person (new subsections 942(2) and (3) refer).

New section 943: Payment into bank account etc.

New subsections 943(1), (2) and (3) provide that payments of a person's parenting allowance are to be made by direct deposit to an account with a bank, credit union or building society nominated and maintained by the person. The account can be maintained by the person either alone or jointly or in common with another person.

Where a person has not nominated an account, then, unless new subsections 943(6) and (7) apply, the person will not be paid until the person nominates an account (see new subsections 943(4) and (5)).

The Secretary may decide in the circumstances of a particular case that some other manner of payment is appropriate and that payment of some or all of the parenting allowance should be paid in some other way. This would normally be done in the case of persons with no reasonable access to banking or like facilities (see new subsections 943(6) and (7)).

New section 944: Where allowance payday would fall on public holiday etc.

New section 944 provides a discretion to the Secretary to direct the earlier payment of an instalment of parenting allowance payment if it cannot be paid on the normal day, eg, because of a public or bank holiday.

New section 945: Payment of allowance after death

New subsection 945(1) provides that where a person to whom parenting allowance is payable dies and an amount of allowance is outstanding at the date of death, the Secretary may pay the outstanding amount to another person who, in the Secretary's opinion, is best entitled to it. That person must apply to receive the amount within 6 months of the death or within a further period allowed by the Secretary in special circumstances.

New subsection 945(2) makes it clear that once a payment has been made under new subsection 945(1), the Commonwealth has no liability to another person in respect of that amount.

New Division 7 - Protection of parenting allowance

New section 946: Parenting allowance to be absolutely inalienable

New section 946 provides that parenting allowance is to be absolutely inalienable except in the circumstances specified in new subsections 946(2) and (3) and section 1359.

Payments to Commissioner of Taxation at person's request

New subsection 946(2) provides that, at the request of the person, the Secretary may make deductions from the person's instalments of parenting allowance and direct those deductions to the Commissioner of Taxation.

A note to the subsection alerts the reader to the fact that section 1359 provides that the Secretary must make deductions from a person's social security payment if requested to do so by the Commissioner of Taxation.

Deductions from instalments with recipient's consent

New subsection 946(3) provides that, with the consent of the person, the Secretary may make deductions from instalments of the person's parenting allowance to recover a debt incurred by another person. Consent to such deductions is given by the person under section 1234A of the Principal Act.

A note to the subsection indicates that section 1234A enables the Secretary to recover a debt from a person other than the debtor if the person is receiving a social security payment and consents to deductions being made.

New section 947: Effect of garnishee or attachment order

New section 947 protects a "saved amount" of parenting allowance in a recipient's bank account from garnishment by third party creditors. The "saved amount" is calculated by working out the amount of the instalments of parenting allowance credited to the person's account in the 4 week period immediately before the court order came into force and deducting from that amount the total amount withdrawn from the account during the same period. The bank account may be maintained by the person alone or jointly or in common with another person.

A note directs the reader's attention to the fact that a person may have other saved amounts under section 1061X of the Principal Act if the person receives telephone allowance .

New Division 8 - Recipient obligations

New section 948: Secretary may request recipient to give statement of recipient's tax file number

New section 948 provides that a recipient of parenting allowance may be requested but not compelled by the Secretary to provide a written statement of the person's tax file number or, if the recipient does not have a tax file number, to apply to the Commissioner of Taxation (the Commissioner) for a tax file number and provide a written statement of the number once it is issued.

New subsection 948(2) provides that parenting allowance is not payable to a person if, at the end of 28 days after the request has been made, the person does not satisfy the request and the Secretary has not exempted the person from having to satisfy the request.

A note indicates that in order to satisfy the request it may be possible for the person to provide a declaration about the person's tax file number and an authority to the Commissioner of Taxation authorising the Commissioner to provide information about the tax file number to the Secretary. This is provided for in new subsections 912(2) and (3).

New section 949: Secretary may request recipient to give statement of partner's tax file number

New subsection 949(1) provides that a recipient of parenting allowance may be requested by the Secretary but not compelled to provide a written statement of the person's partner's tax file number. The request may only be made if the person's partner is in Australia.

New subsection 949(2) provides that parenting allowance is not payable to a person if, at the end of 28 days after the request has been made, the person does not satisfy the request and the Secretary has not exempted the person from having to satisfy the request.

Note 1 indicates that in order to satisfy this requirement it may be possible for the person to provide a declaration from the person's partner about the partner's tax file number and an authority to the Commissioner of Taxation authorising the Commissioner to provide information about the tax file number to the Secretary. This is provided for in new subsections 913(2) and (3).

Note 2 directs the reader to new subsection 913(4) that allows the Secretary to waive the person's requirement to provide the person's partner's tax file number in certain circumstances.

New section 950: Secretary may require notice of the happening of an event or a change in circumstances

New subsections 950(1) and (2) enable the Secretary to give a person receiving parenting allowance a notice requiring the person to notify the Department if a specified event or change in circumstances that might affect payment occurs or is likely to occur. An event or change of circumstances cannot be specified in such a notice unless the occurrence of that event or change of circumstances might affect payment of the allowance.

New subsection 950(3) requires the notice to:

•

be in writing; and

•

be given personally or by post; and

•

specify how the information is to be given to the Department; and

•

specify the period in which the information must be given; and

•

specify that the notice is a recipient notification notice given under the Principal Act.

A note to new subsection 950(3) refers the reader to the definition of "recipient notification notice" in subsection 23(1) of the Principal Act.

New subsection 950(4) provides that a recipient notification notice is not invalid merely because it fails to comply with those paragraphs of new subsection 950(3) requiring a notice to specify how information is given to the Department and requiring the notice to be described as a "recipient notification notice".

New subsection 950(5) provides that the period specified in the notice must end at least 14 days after the day on which the event or change in circumstances occurs or after the day on which the person becomes aware that the event or change in circumstances is likely to occur.

New subsection 950(6) provides that if a person is required by a notice to inform the Department of any proposal by the person to leave Australia, the 14 day period under new subsection 950(5) does not apply to that requirement.

New subsection 950(7) provides that if the notice requires the giving of information about a compensation payment, the period of compliance set out in the notice must end at least 7 days after the day on which the person becomes aware that he or she is to receive the compensation payment.

New subsection 950(8) sets out the compliance conditions for new subsection 950(1) and the penalties for contravening the provisions. If a person receiving parenting allowance is capable of complying with a notice but refuses or fails to do so, the person may be imprisoned for 6 months.

A note refers the reader to the subsections of the Crimes Act 1914 that allow a court to impose an appropriate fine instead of, or in addition to, the specified term of imprisonment.

New subsection 950(9) allows new section 950 to operate outside Australia. It extends to acts, omissions, matters and things outside Australia, whether or not in a foreign country. It also extends to all persons to whom it normally applies regardless of their nationality or citizenship.

New section 951: Secretary may require recipient to give particular information relevant to payment of parenting allowance

New subsection 951(1) allows the Secretary to give a person to whom parenting allowance is being paid a notice requiring the person to give the Department a statement about a matter that might affect the payment of the person's parenting allowance.

New subsection 951(2) requires the notice to:

•

be in writing; and

•

be given personally or by post; and

•

specify how the information is to be given to the Department; and

•

specify the period within which the statement must be given to the Department; and

•

specify that the notice is a recipient statement notice given under the Principal Act.

A note signposts the definition of "recipient statement notice" in subsection 23(1).

New subsection 951(3) provides that a recipient statement notice is not invalid merely because it fails to comply with paragraph 2(c) or (e) of new subsection 951(2) that requires a notice to specify how information is to be given to the Department and that requires the notice to be described as a "recipient statement notice".

New subsection 951(4) provides that the period specified in the notice must end 14 or more days after the notice is given to the person.

New subsection 951(5) provides that the recipient statement notice must be in writing and in a form approved by the Secretary.

New subsection 951(6) sets out the compliance conditions for new subsection 951(1) and the penalties for contravening the provisions. If a person receiving parenting allowance is capable of complying with a notice under new subsection 951(1) but refuses or fails to do so, then he or she may be imprisoned for 6 months.

A note refers the reader to the subsections of the Crimes Act 1914 that allow a court to impose an appropriate fine instead of, or in addition to, a term of imprisonment.

New subsection 951(7) allows new section 951 to operate outside Australia. It extends to acts, omissions, matters and things outside Australia, whether or not in a foreign country. It also extends to all persons to whom it would normally apply if they resided in Australia, regardless of their nationality or citizenship.

New Division 9 - Continuation, variation and termination

New Subdivision A - General

New section 951A: Continuing effect of determination

Entitlement determination

New subsection 951A(1) provides that a decision that parenting allowance is granted or is payable continues until:

•

parenting allowance stops being payable automatically under new section 951B, 951C, 951D or 951E; or

•

a decision to cancel or suspend under new section 951P or 951Q has taken effect.

Notes signpost the provisions that give effect to these decisions and the provision dealing with changes made to a person's parenting allowance payments by computer.

Rate determination

New subsection 951A(2) provides that a decision regarding the rate of payment of parenting allowance continues in effect until:

•

parenting allowance becomes payable at a lower rate under new section 951G, 951H, 950J or 950K; or

•

a decision to vary the rate under new section 951M or 951N has taken effect.

A note signposts section 951R dealing with changes to the payment by computer.

New Subdivision B - Automatic termination

New section 951B: Automatic termination - transfer to new payment type

New section 951B provides that when a person receives parenting allowance and a social security benefit (not being a parenting allowance) or Youth Training Allowance becomes payable to the person, then parenting allowance stops being payable to the person immediately before the day on which that new benefit becomes payable to the person.

New section 951C: Automatic termination - person complying with section 950 notification obligations

New section 951C deals with the situation where a recipient of parenting allowance complies with a new section 950 notice by informing the Department of the occurrence of a specified event or a change in circumstances. If the recipient notifies the Department within a specified notification period and the allowance is not cancelled before the end of the notification period and, as a result of the event or change:

•

the person stops being qualified for the allowance; or

•

the allowance would, except as provided in this new section, stop being payable to the person,

•

the allowance continues to be payable until the end of the notification period and then stops being payable.

A note points out that an automatic rate reduction is not applicable when a person complies with the notice if the event or change in circumstances would give rise to payment at a lower rate. In that case, the determination to reduce the rate would be made under new section 951N.

New section 951D: Automatic termination - person not complying with section 950 notification obligations

New section 951D applies where a recipient of parenting allowance fails to comply with a new section 950 notice by failing to inform the Department of the occurrence of an event or change in circumstances within a specified notification period and, as a result of the event or change:

•

the person stops being qualified for the allowance; or

•

allowance stops being payable to the person.

In that situation, parenting allowance stops being payable on the day immediately after the day on which the event or change in circumstances occurs.

New section 951E: Automatic termination - failure to provide section 951 statement

New subsection 951E(1) caters for the situation where a person who is receiving parenting allowance is given a notice under new section 951 requiring the person to give the Secretary a statement, the notice relates to payment of parenting allowance during the period specified in the notice and the person fails to comply with the notice. In this situation, parenting allowance ceases to be payable to the person from the first day in the period specified in the notice.

New subsection 951E(2) qualifies new subsection 951E(1) by allowing the Secretary to determine that subsection 951E(1) does not apply to the person from the day specified by the Secretary in that determination. Such a decision would be made if the Secretary is satisfied the special circumstances of the case warrant such action. The day specified in the determination made by the Secretary under new subsection 951E(2) may be before or after the making of the determination (new subsection 951E(3) refers).

New section 951F: Changes to payments by computer following automatic termination

This new section applies where parenting allowance is being paid to a person based upon information held in a computer and the payment is automatically terminated under the Principal Act through the operation of a computer program approved by the Secretary. In such a case, the Secretary is taken to have decided that the automatic termination applies to the person's parenting allowance.

A note at the end of this provision indicates to the reader that the decision that is taken to have been made is a decision of an officer for the purposes of review by the Secretary and the Social Security Appeals Tribunal (sections 1239, 1240 and 1247 of the Principal Act refer).

New Subdivision C - Automatic rate reduction

New section 951G: Automatic rate reduction - recipient not complying with section 950 notification obligations

This new section applies where a recipient of parenting allowance fails to comply with a new section 950 notice by failing to inform the Department of the occurrence of a specified event or a change in circumstances within a specified notification period and, as a result of the event or change, the person's payment rate is to be reduced. In such a case, the reduced rate becomes payable on the day immediately after the day on which the event or change occurs.

New section 951H: Automatic rate reduction - failure to inform Department of payment for remunerative work where earnings credit account balance available

This new section provides that if a recipient of parenting allowance is given a notice under new section 950 requiring the person to inform the Department of income for remunerative work undertaken by the person or the person's partner, the person fails to comply with that requirement and the person has an earnings credit account balance (see Division 5 of Part 3.10 of the Principal Act), then the reduced rate becomes payable from the first payday after the person's earnings credit account balance is reduced to nil.

New section 951J: Automatic rate reduction - receipt of social security pension or service pension

New section 950J deals with the situation when a person is receiving parenting allowance at a rate that exceeds the maximum basic component of parenting allowance, a social security or a service pension becomes payable to the person and the person's rate of parenting allowance is reduced. In that situation, the reduced rate of parenting allowance is payable to the person immediately before the day on which the social security pension or service pension becomes payable to the person.

A note signposts the relevant point in the Parenting Allowance Rate Calculator at the end of new section 1068A where the 'maximum basic component of parenting allowance' is specified.

New section 951K: Automatic rate reduction - partner receiving AUSTUDY allowance that includes dependent spouse allowance

New section 951K provides that if a person is receiving parenting allowance at a rate that exceeds the maximum basic component of parenting allowance, and the person's partner starts to receive a dependent spouse allowance under the AUSTUDY Scheme and, as a result of this, the person's rate of parenting allowance is reduced, the reduced rate of parenting allowance becomes payable to the person on the day on which the partner starts to receive that pension, benefit or allowance.

A note refers reader to the Parenting Allowance Rate Calculator at the end of new section 1068A for the "maximum basic component" of parenting allowance.

New section 951L: Changes to payments by computer following automatic reduction

This new section applies where parenting allowance is being paid to a person based upon information held in a computer and the rate of that payment is automatically reduced under the Principal Act through the operation of a computer program approved by the Secretary. In such a case, the Secretary is taken to have decided that the automatic rate reduction applies to the person's allowance.

A note at the end of this provision indicates to the reader that a decision that is taken to have been made is a decision of an officer for the purposes of review by the Secretary and the Social Security Appeals Tribunal (sections 1239, 1240 and 1247 of the Principal Act refer).

New Subdivision D - Determinations

New section 951M: Rate increase determination

This new section gives the Secretary the power to increase the rate of parenting allowance paid to a person if the Secretary is satisfied that the rate being paid to the person is less than the rate the person is entitled to under the Principal Act.

A note signposts the provision that sets out the date of effect of a decision under this new section, that is, new section 951T.

New section 951N: Rate reduction determination

This new section gives the Secretary the power to reduce the rate of a parenting allowance paid to a person if the Secretary is satisfied that the rate being paid to the person is more than the rate the person is entitled to under the Principal Act.

Note 1 points out that this provision does not apply if automatic rate reduction provisions apply (new sections 951G, 951H, 951J and 951K refer).

Note 2 signposts the provision that sets out the date of effect of a decision under this new section, that is, new section 951U.

New section 951P: Cancellation or suspension determination

This new section gives the Secretary the power to cancel or suspend payment of parenting allowance to a person if the Secretary is satisfied that the allowance is not, or was not, payable to the person.

Note 1 points out that this provision does not apply if automatic termination provisions apply (new sections 951B, 951C, 951D, and 951E refer).

Note 2 signposts the provision that sets out the date of effect of a decision under this new section, that is, new section 951U.

New section 951Q: Cancellation or suspension for failure to comply with section 951, 1304 or 1305 notice

This new section provides a specific cancellation or suspension power if a person who is receiving parenting allowance fails to comply with a notice given to him or her under either section 951, 1304 or 1305.

Note 1 points out that this provision does not apply in the case where new section 951E or 951N applies.

Note 2 signposts the provision that sets out the date of effect of a decision under this new section, that is, new section 951U.

New section 951R: Changes to payments by computer

This new section applies where parenting allowance is being paid to a person based upon information held in a computer and that payment is increased, decreased, cancelled or suspended through the operation of a computer program approved by the Secretary and the program causes the change for a reason for which the Secretary could determine the change. In such a case, the increase, decrease, cancellation or suspension is taken to have been made through a decision of the Secretary for that reason.

This provides a legal mechanism for cancelling, suspending or varying the rate of payment through the use of computers. However, the effect is limited to areas of decision-making where there is no discretionary element. In these cases, a computer program operating under the new section could validly cancel or suspend the allowance.

A note points out that a determination to change a payment under the new section is reviewable by the Secretary and by the Social Security Appeals Tribunal.

New section 951S: Resumption of payment after cancellation or suspension

New subsection 951S(1) allows the Secretary to make a decision that parenting allowance is to be reinstated if it was stopped incorrectly.

New subsection 951S(2) allows the decision that gave rise to the payments being stopped to be reconsidered following either a formal application to the Secretary for review under section 1240 or at the Secretary's instigation.

A note signposts new section 951T that specifies the date of effect of a determination to resume payment of parenting allowance.

New Subdivision E - Date of effect of determinations

New section 951T: Date of effect of favourable determination

New subsection 951T(1) provides for the date of effect of a favourable determination (ie, a determination made under new section 951M or 951S).

Notified decision - review sought within 3 months

New subsection 951T(2) provides that if a person requests review of parenting allowance decision within 3 months of being notified in writing of the decision and a favourable decision results, then the favourable determination takes effect on the date on which the previous decision took effect. This enables arrears of up to 3 months to be paid.

Notified decision - review sought after 3 months

New subsection 951T(3) provides that if a person requests review of a parenting allowance decision more than 3 months after being notified in writing of the decision and a favourable decision results, then the favourable decision takes effect on the day that the person sought the review.

Decision not notified

New subsection 951T(4) provides that if a person requests review of a parenting allowance decision about which he or she was not notified in writing and a favourable decision results, then the decision takes effect on the date on which the previous decision took effect. This enables arrears to be paid to the date of original decision.

Notified change of circumstances

New subsection 951T(5) provides that if a favourable decision results from a recipient informing the Department of a change in circumstances, then it takes effect on the date on which the Department received the information or the date on which the change occurred, whichever is later. Therefore, arrears can be paid back to the later of those dates.

Other determinations

New subsection 951T(6) provides that, in any other case, a favourable determination takes effect on the determination date or on such later or earlier date as is specified in the determination (not being more than 3 months before the determination date).

New section 951U: Date of effect of adverse determination

New subsection 951U(1) provides for the date of effect of an adverse determination (ie, a determination under new section 951N, 951P or 951Q).

A note signposts sections 1241 and 1251 of the Principal Act that allow the Secretary to continue payment pending the outcome of a review if the adverse determination under review depends on a discretion or opinion.

New subsection 951U(2) sets the date of effect of an adverse determination as the date on which it is made or another date specified in the determination.

New subsection 951U(3) ensures that, if the date of effect of an adverse determination is specified but is not the day of the determination, it must be a later date unless any of subsections (4) to (8) apply.

New subsections 951U(4), (5) and (6) address those situations in which the date of effect of an adverse determination can be before the date of the determination. This can occur when:

•

the parenting allowance recipient contravenes a provision of the Principal Act, except section 951, 1304, 1305, 1306 or 1307 (new subsection 951U(4)); or

•

a person (any person) makes either a false statement or a misrepresentation which causes the allowance to be paid when it should not have been paid (new subsection 951U(5)); or

•

a person (any person) makes either a false statement or a misrepresentation which causes the allowance to be paid at a higher rate than that at which it should have been paid (new subsection 951U(6)).

In addition, new subsections 951U(7) and (8) provide that where a person receives a payment of arrears of periodic compensation payments (the person or the person's partner being in receipt of parenting allowance at the time of the event which gave rise to the compensation) and a determination is made that the person has been overpaid as a result of receiving the arrears of compensation, the day from which the person has been overpaid can be earlier than the day of the determination.

New Division 10 - Bereavement payments

New Subdivision A - Preliminary

New section 951V: Surviving partner and deceased partner

New section 951V is a definition section. If a person is receiving parenting allowance and the person's partner dies, then the person is referred to as the surviving partner and the person's partner is referred to as the deceased partner.

New Subdivision B - Death of parenting allowance children

New section 951W: Death of parenting allowance children - continuation of application for 14 weeks in some cases

New section 951W extends the period of qualification of a person for parenting allowance to 14 weeks after the death of a parenting allowance child if:

•

the person has no other dependent children that qualify the person for parenting allowance; and

•

immediately before the child's death the person was receiving additional family payment for the child or a service pension was payable to the person (or the person's partner) at the rate that included a dependant child add-on for the child or guardian allowance in respect of the child.

New section 951X: Death of parenting allowance children

- continuation of qualification for 4 weeks

New section 951X extends the period of qualification of a person for parenting allowance to 4 weeks after the death of a parenting allowance child if:

•

the person has no other dependent children that qualify the person for parenting allowance; and

•

the person is not qualified for parenting allowance under new section 951W; and

•

immediately before the child's death, the person was not receiving additional family payment or, if a person (or the person's partner) was receiving a service pension, the pension did not include a dependant child add-on for the child or guardian allowance in respect of the child.

New Subdivision C - Death of recipient

New section 951Y: Death of recipient of parenting allowance during period for payments under Subdivision B

New section 951Y provides that if a person receiving parenting allowance dies and at the time of death the person -

•

- was qualified for parenting allowance because of the death of the person's child, or

•

- would have been qualified for the allowance because of the death of the person's child (under new section 951W or 951X) if the person had not died,

then the amount of parenting allowance that would have been payable to the person under new section 951W or 951X if the person had not died is payable to the person's partner.

New Subdivision D - Continuation of parenting allowance following death of recipient's partner

New section 951Z Continuation of parenting allowance for bereavement period.

Normally, a person would cease to be qualified for parenting allowance when the person's partner dies. New subsections 951Z(1) and (2) deem a surviving partner to be qualified for parenting allowance for the bereavement period (a term defined in Part 1.2 of the Principal Act as the period of 14 weeks from the date of death) but only if immediately before the death of the partner

•

the surviving partner was a long-term social security recipient, and

•

the deceased partner

-

was a long-term social security recipient, or

-

was receiving a social security pension or a service pension or a rehabilitation allowance (regardless of the duration of receipt of these payments).

Parenting allowance rate during bereavement rate continuation period

New subsection 951Z(3) provides that, during the bereavement rate continuation period (defined in section 21 of the Principal Act), the person's rate of parenting allowance is the rate that would have been payable to the person if the partner had not died. In the case where the couple was an illness separated or a respite care couple - the parenting allowance rate that applies during the bereavement rate continuation period is the rate applicable to a member of a couple who is not a member of an illness separated or respite care couple. The total payment to the surviving person, including the deceased partner's payments under new section 951ZB, is not to exceed the couple's former total payment.

Parenting allowance rate during bereavement lump sum period

Generally, during the bereavement lump sum period (as defined in section 21 of the Principal Act), the rate of a social security payment payable to a surviving partner is the new correct rate that takes into account the partner's death (eg, if the rate payable during the bereavement continuation period was the partnered rate, the rate applicable during the bereavement lump sum period is the single rate).

New subsection 951Z(4) provides that the surviving partner's new correct rate of parenting allowance during the bereavement lump sum period is the rate at which newstart allowance would be payable to the person assuming that the surviving partner qualifies for newstart allowance at the rate applicable to a single person with a child.

This correct current rate forms part of the lump sum payment calculation under new section 951ZC, so that the total amount received by the person would not exceed the total amount that would have been payable to the couple in respect of that period if the partner had lived.

Note 1 refers the reader to the definitions of 'long-term social security recipient' in subsection 23(1).

Note 2 refers the reader to the definitions of ' bereavement period', bereavement rate continuation period' and 'bereavement lump sum period' in section 21.

Note 3 refers the reader to the definition of 'illness separated couple' and 'respite couple' in subsections 4(7) and 4(8) respectively.

New Subdivision E - Bereavement payments for person receiving parenting allowance following death of the person's partner

New section 951ZA: Qualification for payments under this Subdivision

New subsection 951ZA(1) lists the qualification criteria for bereavement payments under Subdivision E (ie, payments that represent the deceased partner's entitlements) to cover the "bereavement period" (a term defined in Part 1.2 of the Principal Act as the period of 14 weeks from the date of death). New subsections 951ZA(1) provides that a surviving partner qualifies for bereavement payments during the bereavement period only if immediately before the death of the partner

•

the surviving partner was a long-term social security recipient, and

•

the deceased partner

-

was a long-term social security recipient , or

-

was receiving a social security pension or a service pension or a rehabilitation allowance (regardless of the duration of receipt of those payments).

"Long-term social security recipient" is defined in subsection 23(1) of the Principal Act as a person who has been receiving a social security pension, benefit, Youth Training Allowance or service pension continuously for the past 52 weeks.

Notes 1 and 2 refer to the two different forms that bereavement payments take:

•

Under new section 951ZB, the surviving partner is paid pension or allowance instalments that would have be payable to the deceased partner up to the "first available bereavement adjustment payday" if the partner had not died (ie the continued payment of the deceased partner's entitlement). "First available bereavement adjustment payday" is defined in section 21 of the Principal Act as being the first payday after the Secretary becomes aware of the death and for which it is practicable to terminate or adjust payments to take account of the death.

•

Under new section 951ZC, the surviving partner is paid a lump sum representing the balance of the pension or allowance instalments that would have been payable to the deceased partner from the first available bereavement adjustment payday up to the end of the bereavement period had the partner not died.

Note 3 directs the reader to the definition of 'bereavement period' in section 21 in the Principal Act.

New subsection 951ZA(2) allows a surviving partner to choose not to receive the bereavement payments.

New subsection 951ZA(3) makes it clear that an election under new subsection 951ZA(2) must be in writing. It may be made after one or more payments under this Subdivision have been made, and cannot be withdrawn once the Department has completed action to put the election into effect.

New section 951ZB: Continued payment of deceased partner's previous entitlement

This section authorises the payment to a qualified surviving partner, on each of the deceased partner's paydays in the "bereavement rate continuation period", of the amount that would have been payable to the deceased partner on that payday if he or she had not died. The "bereavement rate continuation period" is defined in section 21 of the Principal Act. It begins at the beginning of the bereavement period and ends either on the day before the first available bereavement adjustment payday or at the end of the bereavement period, whichever is earlier.

New section 951ZC: Lump sum payable in some circumstances

This section provides for the payment to a surviving partner of a lump sum amount representing the balance of pension or allowance instalments that would have been payable to the deceased partner from the first available bereavement adjustment payday up to the end of the bereavement period if the partner had not died. The lump sum is payable where the first available bereavement adjustment payday occurs before the end of the bereavement period. Where it occurs after the end of the bereavement period, the full bereavement entitlement would have already been paid under the provisions of new section 951ZB.

The lump sum is worked out in accordance with the following steps:

steps 1 to 3 - involve adding up the amount that would be payable to both the surviving partner and the deceased partner if the deceased partner had not died. In the case where the couple had been an illness separated or a respite care couple - the amount that would be payable to both the surviving partner and the deceased partner is the amount that would be payable to both persons if they were not an illness separated or respite care couple.

This produces the "combined rate";

step 4 - produces "the surviving partner's notional rate" by working out the newstart allowance rate that would be payable to the surviving partner on the surviving partner's payday immediately before the first available bereavement adjustment payday if a newstart allowance had been payable to the surviving partner on that payday at the maximum rate applicable to a single person with a child;

step 5 - involves the deduction of the "surviving partner's notional rate" from the "combined rate" to get the "deceased partner's instalment component";

step 6 - requires ascertaining the number of paydays in the bereavement lump sum period;

step 7 - involves multiplying the 'deceased partner's instalment component' by the number of paydays arrived at in step 6.

A note at the end of this section directs the reader to the definitions of 'bereavement period', bereavement lump sum period and 'first available bereavement adjustment payday' in section 21 of the Principal Act.

New section 951ZD: Effect of death of surviving partner

This section allows bereavement payments to be converted to a lump sum and paid to such person as the Secretary thinks appropriate where:

•

a surviving partner is qualified for partner bereavement payments under Subdivision E; and

•

the surviving person dies within the bereavement period which applies to his/her deceased partner; and

•

the Secretary becomes aware of the deceased partner's death only after the surviving partner's death.

The lump sum is worked out using the lump sum calculator at the end of new section 951ZD and involves the following steps.

steps 1 to 3 - involve adding up the amount that would be payable to both the surviving partner and the deceased partner if the deceased partner had not died. In the case where the couple had been an illness separated or a respite care couple - the amount that would be payable to both the surviving partner and the deceased partner is the amount that would be payable to both persons if they were not an illness separated or respite care couple.

This produces the "combined rate";

step 4 - produces "the surviving partner's notional rate" by working out the newstart allowance rate that would be payable to the surviving partner on the surviving partner's payday immediately after the day on which the surviving partner died if a newstart allowance had been payable to the surviving partner on that payday at the maximum rate applicable to a single person with a child;

step 5 - involve the deduction of the "surviving partner's notional rate" from the "combined rate" to get the "deceased partner's instalment component";

step 6 - requires ascertaining the number of the surviving partner's paydays in the period that commences on the day after the surviving partner dies and ends on the day on which the bereavement period ends;

step 7 - involves multiplying the 'deceased partner's instalment component' by the number of paydays arrived at in step 6. The result is the amount of the lump sum payable under this section.

A note at the end of this section directs the reader to the definitions of 'bereavement period' in section 21 of the Principal Act.

New section 951ZE: Matters affecting payments under this Subdivision

New section 951ZE allows the Department to recover amounts already paid by way of continuation payments if they exceed the total amount payable to a person under this Subdivision. It also ensures that such continuation payments are not paid again under this Subdivision.

New subsection 951ZE(1) applies to a person qualified under this Subdivision where, after his or her partner's death, an amount in respect of the partner under the Principal Act or under Part III of the Veteran's Entitlements Act 1986 (VEA) has been paid, and the Secretary is not satisfied that the person has not had the benefit of that amount (ie, the Secretary believes that the person has received the amount and it would be for the person or another information source to convince the Secretary otherwise). In this case, the amount is not recoverable by the Department except to the extent (if any) that it exceeds the amount payable under this Subdivision, but it is treated as a deduction from the amount payable under this Subdivision (ie, so it is not received twice).

Subsection 951ZE(2) deals with the situation where an amount in respect of a person's deceased partner is paid under the Principal Act or under Part III of the VEA within the bereavement period into an account with a bank, credit union or building society (called the "financial institution"). If the person is qualified for payments under this Subdivision and if the financial institution pays any of the amount to the person from the account, then the financial institution is not liable to any action, claim or demand by the Commonwealth, the representative of the partner or any other party in respect of that money.

New Division 11 - Fringe benefits

New section 951ZF: Fringe benefits

New subsection 951ZF(1) provides that a person receiving benefit parenting allowance qualifies for fringe benefits if the person has turned 60, is an Australian resident or has a qualifying residence exemption, is in Australia and has been receiving a social security or service pension or a social security benefit (or a combination of any of those payments) continuously for the last 12 months.

Note 1 to new subsection 951ZF directs the reader to the Parenting Allowance Rate Calculator for 'benefit parenting allowance'.

Note 2 signposts the provisions which define the terms 'Australian resident' and 'qualifying residence exemption'.

New subsection 951ZF(2) states that fringe benefits comprise benefits and concessions of various kinds made available by the Commonwealth, State and Territory governments and local authorities.

A note points out that an example of Commonwealth benefits and concessions can be found in the National Health Act 1953.

PART 2 - THE PARENTING ALLOWANCE RATE CALCULATOR

Clause 2 inserts a new Part 3.6A into the Principal Act - the Parenting Allowance Rate Calculator.

1. Summary and Background

Part 1 of Schedule 1 outlines the qualification and payability rules applicable to the new parenting allowance (PgA).

With some exceptions (specified below), PgA will be payable under the same new income test arrangements that will apply to social security beneficiaries. The new rate calculator in Part 2 outlines the method of calculating a person's rate of payment of PgA having regard to matters such as income, assets and any rent paid by the person.

Recognition of the Home Child Care Allowance Component of Parenting Allowance

Given that home child care allowance (HCCA) will be incorporated into PgA, a component of PgA will not be assets tested and will be income tested only on the personal income of the PgA recipient. This amount is referred to as the "maximum basic component" of PgA.

The maximum basic component of PgA will be $60 per fortnight. This amount represents the current HCCA rate before indexation on January 1995 (See transitional provisions in Part 5 of Schedule 1). Both the maximum basic rate and the maximum basic component of PgA will be indexed twice yearly (on 20 March and 20 September) in line with other social security benefits.

2. Clauses Involved in the Changes

Part 2 inserts a new PgA rate calculator.

3. Explanation of the Changes

Point 1068A-A1 - method of calculating rate of PgA

This point provides that the rate of PgA is worked out in accordance with the PgA Rate Calculator.

Point 1068A-A1 provides that the rate of PgA is a fortnightly rate.

The point also provides for two methods of working out the rate of PgA - one for benefit PgA (point 1068A-A3) and one for non-benefit PgA (point 1068A-A2). The reader is referred to Module B to determine which category of PgA applies to a person.

Point 1068A-A2 - Method of calculating rate - non-benefit PgA

This point provides the method statement that applies in calculating non-benefit PgA. If the person is a non-benefit PgA person, the rate of PgA is worked out as follows:

Step 1 Work out the person's maximum basic rate using Module C. (Point 1068A-C1 then provides that the maximum basic rate is equal to the maximum basic component of PgA).

Step 2 Apply the income test in Module D to work out the income reduction. Point 1068A-D15 provides that the partner's income does not affect the person's income reduction. Therefore, only the personal income test applies when calculating the income reduction.

Step 3 The rate of PgA is calculated by subtracting the income reduction from the person's maximum basic rate.

Point 1068A-A3 - Method of calculating rate - benefit PgA

This point provides a method statement for calculating the rate of a benefit PgA.

Step 1 Work out the person's maximum basic rate using point 1068-C2 in Module C.

Step 2 Apply the ordinary income test in Module D to obtain the person's income reduction.

Step 3 Subtract the income reduction from the person's maximum basic rate to obtain the provisional rate of PgA.

The provisional rate of PgA may be a negative amount. In allowing a negative amount, this rate calculator differs from Benefit Rate Calculators A and B. In the latter rate calculators it is possible to add pharmaceutical allowance and rent assistance to the maximum basic rate before applying the income test. In the PgA rate calculator, it is necessary to apply the income test to the maximum basic rate alone in order to determine whether a person has a benefit or non-benefit PgA because pharmaceutical allowance and rent assistance can only be added to a benefit PgA.

Step 4 The rate of PgA is the provisional rate of PgA plus pharmaceutical allowance, rent assistance, and remote area allowance (if any of these are payable to the person under the relevant modules).

If the provisional rate of PgA plus rent assistance plus pharmaceutical allowance results in a positive amount, then that is the amount of PgA that is payable to the person. If, after adding the extra amounts to the provisional rate of PgA, there is a nil amount or a negative amount of PgA then no PgA is payable to the person.

Point 1068A-A4 - Maximum Payment Rate

This point provides the method for calculating a person's maximum payment rate of PgA. The maximum payment rate definition is used in the debt recovery provisions of the Act. The maximum payment rate is equal to the sum of:

•

the person's maximum basic rate (Module C);

•

the amount of pharmaceutical allowance per fortnight (if any) (Module E); and

•

any rent paid per fortnight (Module F).

Module B - Non-benefit and Benefit Parenting Allowance

Point 1068A-B1 - Non-benefit PgA and benefit PgA

This point provides a method statement for determining whether PgA is benefit or non-benefit PgA.

Steps 1 and 2 provide that PgA is automatically a non-benefit PgA if point 1068A-B2 applies or if the person's assets exceed the assets limits in points 1068A-B3 to 1068A-B5.

Step 3 provides that, if a person is not a non-benefit PgA person under steps 1 or 2, then the income test in Module D applies to the person.

Step 4 provides that PgA is benefit PgA if the person would be entitled to an amount of PgA that exceeds the maximum basic component of PgA after the application of the income reduction to the person's maximum basic rate.

Step 5 provides that if the income reduction reduces the person's maximum basic rate below the maximum basic component of PgA, then to determine whether the PgA is a benefit PgA:

•

work out the person's benefit rate using Benefit Rate Calculator B; and

•

if the rate under Benefit Rate Calculator B is greater than nil, then the allowance is a benefit PgA.

Step 5 is necessary to take account of the maximum basic component of PgA that incorporates the old HCCA payment. A person who was entitled to any benefit under Benefit Rate Calculator B was given all the entitlements that may be available to a social security beneficiary under the Act. HCCA, however, was not treated as a social security benefit and HCCA recipients did not qualify to receive those entitlements to which a social security beneficiary may be entitled (for example, pharmaceutical allowance). Accordingly, a person who is not entitled to a benefit is only entitled to the same entitlements as a HCCA person.

Step 6 provides that any person who would have received a nil rate of payment under Benefit Rate Calculator B is a non-benefit PgA person. This step covers those persons who would only have been entitled to a HCCA payment and would not have qualified for a social security benefit under the Act.

Non-Benefit PgA recipients

Point 1068A-B2 - PgA received by certain persons taken to be non-benefit PgA

Point 1068A-B2 provides that a person is taken to be receiving a non-benefit PgA if:

•

the person is receiving a social security pension, a service pension or a rehabilitation allowance; or

•

the person is a armed services widow or widower; or

•

the person's partner is receiving an AUSTUDY allowance that includes a dependant spouse allowance; or

•

the application of the following compensation provisions would reduce the person's entitlement to the maximum basic component of PgA:

•

subsection 1164(4B) (the partner of a person fails to take action to obtain compensation when required to do so);

•

subsection 1164(5B) (the person fails to take action to take action obtain compensation when required to do so); or

•

subsection 1165(2B) (partner receives a lump sum compensation payment that reduces PgA entitlement to the maximum basic component of PgA).

Social security pensioners, rehabilitation allowees, service pensioners and armed services widows/widowers can be entitled to a payment of HCCA. To protect the entitlement of these people, point 1068A-B2 provides that they may receive PgA. However, they are only to be treated as non-benefit PgA recipients.

If the compensation provisions specified above reduce a PgA recipient's entitlement to the maximum basic component of PgA, then the person is treated as a non-benefit PgA recipient (and therefore subject only to the personal income test that applies to non benefit PgA recipients).

Point 1068A-B3 - Method of working out assets value limit

This point provides a method for working out a person's assets value limits. A table sets out the relevant value limits having regard to the person's family situation and whether or not the person or the person's partner are homeowners.

Notes 1 and 2 refer the reader to the definition of terms used in the Table.

Note 3 states that where a person's partner is not getting a benefit or pension all the assets of both the person and the person's partner are to be taken into account. In other cases, only half the combined assets of the couple are assessed.

Note 4 refers the reader to the hardship provisions in sections 1131 and 1132.

Note 5 states that the assets value limits in item 2 are indexed under sections 1191 to 1194.

Note 6 states that the assets value limits in item 1 are indexed under subsections 1240(2) and (3).

Point 1068A-B4 - partner not receiving pension or benefit

This point states that a person whose partner is not receiving a social security pension, a service pension or a social security benefit has the value of all the person's and the person's partner's assets taken into account under the assets test. A note reminds the reader that social security pension includes a sheltered employment or rehabilitation allowance.

Point 1068A-B5 - partner receiving pension or benefit

This point states that a person whose partner is receiving a social security pension, a service pension or a social security benefit has 50% of the value of all the person's and the person's partner's assets taken into account under the assets test.

Point 1068A-B6 - maximum basic component of PgA

This point defines the maximum basic component as an amount equal to $60 per fortnight.

A note advises the reader that this amount is indexed 6 monthly in line with CPI increases (clause 33A of the table in section 1191 of the Act).

The $60 component represents the old HCCA amount that is payable to a HCCA recipient prior to the introduction of PgA. The transitional provisions provide that the $60 will be indexed on 1 January 1995 in line with the HCCA indexation provisions.

Module C - Maximum Basic Rate

Point 1068A-C1 - Maximum basic rate - non-benefit PgA

This point provides for the maximum basic rate of PgA that is payable to the recipient of a non-benefit PgA. The maximum basic rate is an amount equal to the maximum basic component of PgA (ie, $60 per fortnight).

Point 1068A-C2 - Maximum basic rate - benefit PgA

Point 1068A-C2 provides for the maximum basic rate of PgA that is payable to the recipient of a benefit PgA. A table is provided for working out the maximum basic rate, depending on the person's family situation. Note 1 refers the reader to definitions for terms used in new Table C and note 2 advises that the rates in the Table are indexed under sections 1191 to 1194.

Module D - Income Test

Point 1068A-D1 - Effect of income on maximum payment rate

Point 1068A-D1 provides an 11 step method statement for working out the effect the ordinary income of a person and the person's partner has on the person's maximum basic rate of PgA.

Step 1 Provides that ordinary income is to be assessed on a fortnightly basis (see point 1068A-D9 below for the period over which income is assessed).

Two notes refer the reader to the different treatment of income given to person's who have a partner receiving a social security pension or a service pension or who receive an amount from a friendly society.

Step 2 States that the partner income free area should be calculated under point 1068A-D12 (this is the amount of income that would cause the partner to cease receiving a social security benefit). Only partner's income in excess of the partner income free area can reduce a person's entitlement to the maximum basic component of PgA (see point 1068A-D15).

Step 3 Work out whether the partner's ordinary income exceeds the partner income free area.

Step 4 If the partner's income does not exceed the partner income free area or if the partner is receiving a social security pension or a service pension, then the partner's income has no effect on the person's PgA entitlement. (See point 1068A-D21 for the income test that applies to partner's who are receiving a social security pension or a service pension.)

Step 5 Calculate the partner's income excess by determining the excess partner's income that remains (if any) after the point where the partner's income (when rounded up to the nearest dollar) would cause the partner's benefit to be paid at a nil rate.

Step 6 The partner's income excess is used to calculate the person's partner income reduction under points 1068A-D14 and D15. The partner income reduction cannot reduce a person's entitlement below the maximum basic component of PgA (point 1068A-D15).

Step 7 Work out whether the person's ordinary income exceeds the person's ordinary income free area (currently $60) (point 1068A-D16). A note refers the reader to the meaning of the person's ordinary income free area.

Step 8 If the person's ordinary income does not exceed the person's ordinary income free area, the person's ordinary income excess is nil. If the ordinary income excess is nil, then the person's ordinary income does not affect the person's PgA rate of payment.

Step 9 If the person's ordinary income exceeds the person's ordinary income free area, then the amount of the excess is equal to the ordinary income less the person's income free area (point 1068A-D17).

Step 10 Points 1068A-D18 to 1068A-D22 are used to calculate the person's ordinary income reduction.

Step 11 The person's income reduction is worked out by adding the person's ordinary income reduction and the person's partner income reduction to obtain the person's ordinary income reduction.

Notes signpost the ordinary income definition, the person's income reduction provisions, and the provisions that affect the application of the ordinary income test.

Point 1068A-D2 - Ordinary income of certain couples

This point provides a special income test that applies to a person who has a partner receiving a social security pension or a service pension or a rehabilitation allowance. Such a person, subject to point 1068A-D3, has an ordinary income amount equal to half the sum of the person's ordinary income plus the person's partner's ordinary income.

This provision recognises that pensioners will continue to be subject to the joint income test that applies under the pension rate calculators (for example, see point 1064-E2 of the Principal Act). For this reason, a PgA person with a pensioner partner will also be subject to the joint income test, except for the maximum basic PgA component which can only be affected by the PgA recipient's personal income (see point 1068A-D21). This is highlighted in the note to this section.

Point 1068A-D3 - Partner's VEA earnings credit to be taken into account

This point provides that where:

•

the person's partner is receiving a service pension; and

•

the partner has the amount disregarded under the earnings credit provision in section 49 of the Veteran's Entitlements Act;

that amount is also disregarded for the purposes of working out the PgA recipient's ordinary income under point 1068A-D2.

Point 1068A-D4 - Ordinary income of pensioners, rehabilitation allowees and armed services widows

This point saves part of the old HCCA income test. A person who is receiving a pension, a service pension, a rehabilitation allowance or is an armed services widow is taken to be receiving income that includes any pension, service pension or rehabilitation allowance (other than rent assistance, pharmaceutical allowance or remote area allowance). An armed services widow also has his or her social security benefits taken into account as income.

Point 1068A-D5 - Friendly Society amounts

This point states that ordinary income of a person does not include any income that is paid to a person's partner if that income is an amount from an approved friendly society that is paid in respect of the incapacity for which the partner is receiving sickness allowance.

A note signposts the definition of an "approved friendly society".

Point 1068A-D6 - Ordinary income includes certain periodical payments from relatives

This point provides that, except where point 1068A-D7 applies, a person's income for the purposes of module D includes a periodical payment of benefit by way of gift or allowance from the person's father, mother, son, daughter, brother or sister.

A note indicates that this point reverses paragraph 8(8)(z) that excludes these amounts from the definition of ordinary income.

Point 1068A-D7 - Board and Lodging

This point provides that a payment to a person for board and lodging provided by the person to his or her father, mother, son, daughter, brother or sister is not to be treated as ordinary income.

Point 1068A-D8 - Termination payments

This point provides that any lump sum termination payment to which a person is entitled is to be taken to have been received on the day on which the person's employment was terminated.

Points 1068A-D9 and 1068A-D10 - Fortnightly rate of ordinary income

Points 1068A-D9 and 1068A-D10 provide that the period over which income can be taken into account is determined by the Secretary and is to be a period not exceeding 12 months. This provision allows income over a period to be assessed and an estimate of the average of the income taken into account as ordinary income on each PgA payday.

The income will be assessed for the period over which it was earned, derived or received. For example, a person who is receiving a salary of $100 per week would have an income of $200 per PgA payday assessed for the purposes of the income test. A person who receives $600 for 28 days work would have $300 assessed for each PgA payday. An estimate of the annual dividend from a partnership may be assessed by estimating the total annual dividend and dividing the total by the number of PgA paydays in a year to reduce the figure to a fortnightly amount of income.

The income of a PgA person can be continually reassessed throughout the year as the person's income details change.

Point 1068A-D11 - payments of arrears of periodic compensation payments

This point provides that if:

•

a person is receiving PgA at the time of an event that gives rise to an entitlement to compensation; and

•

in relation to that entitlement the person receives a payment of arrears of periodic compensation;

then the person is taken to receive on each day falling within the periodic payment period, an amount calculated by dividing the amount received by the number of days in the periodic payments period.

A note signposts the meaning of a periodic payment period.

The partner income reduction

Point 1068A-D12 introduces the concept of a "partner income free area".

In general, where a PgA recipient is a member of a couple, the person's payment will only be affected by the person's own income. However, where the partner's income is sufficient to reduce the partner's benefit to nil (or would be if the partner was receiving a benefit), the partner's income will have an effect on the PgA recipient's entitlement.

A person with a pensioner partner is subject to the different income test provided for at point 1068A-D21.

The new partner income free area will only apply where a partner's income is sufficient (when rounded up to the nearest dollar) to cause that person's benefit to be paid at a nil rate. Under these circumstances, subject to point 1068A-D15, points 1068A-D12 and 1068A-D13 will cause the PgA recipient's entitlement to be reduced at the rate of 70 cents in the dollar for any income over the income required to reduce the partner's entitlement to nil (the 'partner income excess').

Point 1068A-D15 provides a limit on the amount that a PgA recipient's partner's ordinary income can reduce the PgA entitlement. As Home Child Care Allowance (HCCA) is being incorporated into PgA, there will be a component of PgA that will be income tested only on the personal income of the PgA recipient, not the income of the recipients partner.

Accordingly, point 1068-D15 provides that the person's partner income reduction cannot reduce the PgA entitlement below the value of the maximum basic component of PgA ($60 per fortnight). The maximum basic component of PgA is equal to the old HCCA entitlement.

An example is provided to demonstrate the effect of the partner income reduction.

Ordinary income reduction

Point 1068A-D16 provides that a PgA person's ordinary income free area is $60.

Point 1068A-D17 provides that a PgA person's ordinary income excess is the amount by which the person's ordinary income exceeds the person's income free area.

Point 1068A-D18 provides that (subject to point 1068A-D21 that provides for PgA persons with a pensioner partner) a person's "ordinary income reduction" is the sum of:

(a)

the person's lower range reduction; and

(b)

the person's upper range reduction.

Points 1068A-D19 and D20 explain the meaning of the terms used in point 1068A-D18.

These points provide that if a person has an ordinary income excess (see point 1068A-D17):

•

50% of the part of the excess equal to or below $80 is the lower range reduction; and

•

70% of the part of the excess (if any) that is above $80 is the upper range reduction.

An example demonstrates how these amounts are worked out.

Point 1068A-D21 - Limitation on ordinary income reduction for members of certain couples

This point provides the income test that applies if one member of a couple is receiving a social security pension, service pension or rehabilitation allowance and the other member of the couple is receiving a benefit PgA. (If a person is receiving a non-benefit PgA then only the personal income test is applied under point 1068A-A2.)

A different income test is required for PgA recipients with a pensioner partner because the pension rate calculators still use a joint income test and it is most equitable to continue to apply the joint income test to these PgA recipients. However, in order to ensure equitable treatment for these couples, the joint income test only reduces PgA below the maximum basic component if that reduction is less than the reduction that would result from applying the personal income test to the maximum basic component of PgA.

The method statement contains 6 steps:

Step 1 Work out the person's ordinary income reduction under point 1068A-D18 applying the joint income test under point 1068A-D2. Apply the ordinary income reduction to the person's maximum basic rate of PgA to determine if the rate of PgA is less than the maximum basic component of PgA (see point 1068A-B6).

A note advises the reader that the joint income test under point 1068A-D2 applies and therefore there is no partner income reduction (paragraph 1068A-D13(b) provides that the partner income reduction does not apply to a person with a pensioner partner).

Step 2 If the rate of PgA under step 1 is greater than the maximum basic component of PgA, then the couple's combined income does not reduce the person's maximum basic component of PgA and therefore there is no need to apply a separate personal income test to the maximum basic component of PgA. In this case, only the joint income test applies to the person and this point does not apply to affect the person's ordinary income reduction calculated under points 1068A-D16 to 1068A-D20.

Step 3 If the person's ordinary income reduction would reduce entitlement to an amount less than the maximum basic component of PgA, then the amount by which the maximum basic component is reduced is the lesser of:

•

the person's "excess amount" (see step 4); and

•

the person's personal income reduction (see step 5).

Step 4 Apply the ordinary income reduction under points 1068A-D16 to 1068A-D20 to obtain the amount that the person's ordinary income reduction reduces the maximum basic rate of PgA below the maximum basic component of PgA. This amount is defined as the person's "excess amount".

Step 5 Apply the personal income test to the maximum basic component of PgA to obtain the "personal income reduction". This step applies the personal income test as if the person were a non-benefit PgA person and point 1068A-D2 (the joint income test) did not apply.

This step calculates the amount of reduction that a person would be subject to if:

•

they were entitled to a maximum basic rate of PgA equal to the maximum basic component of PgA; and

•

they were subject to the personal income test (not the joint income test under point 1068A-D2).

Step 6 Apply the income reduction that would reduce the person's maximum basic rate of PgA to the maximum basic component of PgA This step ensures that a person is not paid more than the maximum basic component of PgA.

The person's entitlement is then reduced below the maximum basic component by the lesser of the excess amount and the personal income reduction.

Step 6 ensures that a person is not disadvantaged by the application of the personal income test to the maximum basic component of PgA. If the person would have a greater entitlement under the joint income test than the personal income test, then this is the amount that the person is entitled to.

An example describes the operation of the above test.

Module E - Pharmaceutical Allowance

Point 1068A-E1 - Qualification for Pharmaceutical Allowance (PA)

A person will generally have an additional amount for PA added to the person's PgA if the person:

•

is receiving a benefit PgA; and

•

is an Australian resident or has a qualifying residence exemption for a PgA; and

•

is in Australia; and

•

is over 60; and

•

has been a beneficiary or pensioner for at least 6 months.

A note refers the reader to the definitions referred to in this point.

The situations in which a person is precluded from receiving PA under the Act are:

•

the person is receiving PA under the Veteran's Entitlement's Act (the VEA) (point 1068A-E2);

•

the person's partner is receiving PA under the VEA and the person's partner is not a service pensioner (point 1068A-E3). A note advises the reader that if point 1068A-E3 applies, the person's partner is receiving PA under the VEA at a higher rate than is payable under this Act;

•

the person has received an advance PA under either the Principle Act or the VEA and the advance payment period has not ended (point 1068A-E4). A note refers the reader to the definition of "advance payment period";

•

the advance payment period starts on the day on which the advance PA is paid and ends after the number of paydays covered by the advance has elapsed (point 1068A-E5). A note advises the reader that a beneficiary may have received an advance while in receipt of a pension; and

•

the person has received his or her annual limit of PA (being the sum of fortnightly PA plus advances of PA (see Part 2.23) in a calendar year) (see point 1068A-E6). Note 1 refers the reader to the meaning of amount "paid" by way of PA and note 2 advises the reader of factors that affect the annual limit of PA.

Point 1068A-E7 - VEA payments taken into account

This point provides that the references to "advance PA" and "PA" in points 1068A-E5 and 1068A-E6 include advance PA and PA paid under the VEA.

Point 1068A-E8 - Amount of PA

This point sets out the fortnightly limits of PA in Table E depending on the person's family situation.

A note signposts the definitions of "illness separated couple", "respite care couple", "partnered" and "partnered (partner in gaol)". Another note advises the reader that pharmaceutical allowance amounts are indexed annually.

Module F - Rent Assistance

Point 1068A-F1 - Qualification for rent assistance

This point sets out the conditions to be satisfied before a person can be paid an additional amount for rent assistance. A person can be paid rent assistance if:

•

the person is receiving a benefit PgA; and

•

the person is not an ineligible homeowner; and

•

the person pays, or is liable to pay, private rent (other than Government rent) in respect of the period; and

•

the rent is more than the rent threshold rate; and

•

the person is in Australia throughout the period; and

•

the person's partner is not receiving a rent increased pension (see point 1068A-F3); and

•

neither the person, nor the person's partner is qualified for additional family payment for a dependent child of the person.

Notes signpost the definitions of "rent", "Government rent", "ineligible homeowner", "rent threshold rate" and "rent increased pension".

Point 1068A-F2 - Rent threshold rate

This point provides a table that sets out the fortnightly rent threshold rates applicable in various family situations.

Notes 1 and 2 refer the reader to definitions of "illness separated couple", "respite care couple", "temporarily separated couple", "partnered" and "rent increased benefit".

Note 3 advises the reader that the amounts in Table F1 are indexed 6 monthly in line with CPI increases.

Point 1068A-F3 - Partner with rent increased pension

This point provides that, for the purposes of point 1068A-F1, a person has a partner with a rent increased pension if:

•

the partner is living with the person in their home; and

•

a social security or service pension is payable to the partner; and

•

the partner's rate of pension includes a amount for rent assistance.

A note points out that the term "social security pension" includes sheltered employment and rehabilitation allowances.

Point 1068A-F4 - Factors affecting rate of rent assistance

This point provides that the rate of rent assistance depends upon:

•

the fortnightly rent paid or payable by the person; and

•

whether or not the person has a partner who has a rent increased benefit (see point 1068A-F5).

Point 1068A-F5 - Partner with rent increased benefit

A person's partner has a rent increased benefit if the partner is living with the person in their home and is receiving a social security benefit the rate of which is increased to take account of rent (or would be increased except that benefit is payable at a nil rate because of the application of the income test provisions).

Point 1068A-F6 - Rate of rent assistance

This point provides a Table to be used to work out a person's rate of rent assistance. The rate of PgA will depend on the person's family situation and will be the lesser of Rate A or Rate B (set down in columns 3 and 4 of Table F2 respectively).

Notes 1 and 2 signpost the provisions that explain the meaning of the terms used in Table F2. Notes 3 and 4 indicate that the rates in Columns 3 and 4 are indexed every 6 months in line with the relevant indexation provisions.

Point 1068A-F7 - Fortnightly rent

This point provides that "fortnightly rent" referred to in point 1068A-F6 is the fortnightly rent paid or payable by the person whose rate is being determined.

Point 1068A-F8 - Rent paid by a person's partner

This point provides that, if a PgA person's partner is living in the same home as the person, any rent paid or payable by the person's partner is treated as paid or payable by the person.

Point 1068A-F9 - Rent paid by a member of an illness separated couple

This point provides that, if a person is a member of an illness separated couple, any rent that the partner pays, or is liable to pay, is to be treated as rent paid or payable by the person.

A note refers the reader to the definition of an "illness separated couple".

Module G - Remote Area Allowance

Point 1068A-G1 - Remote Area Allowance (RAA)

This point sets out the conditions to be met by a person before an amount of RAA can be added to the person's rate of payment of PgA (see also point 1068A-G2). The conditions are that:

•

the person is receiving a benefit PgA (see point 1068A-B1); and

•

either:

•

the person's rate of PgA apart from this point is greater than nil; orapart from this point the person's rate of benefit would be nil merely because an advance pharmaceutical allowance has been paid to the person under Part 2.23 of the Principal Act or Division 2 of Part VIIA of the Veteran's Entitlement's Act; and

•

the person's usual place of residence is in the remote area; and

•

the person is physically present in the remote area.

Note 1 signposts the definition of "remote area". Note 2 indicates that a person may be treated as being physically present in a remote area during temporary absences and signposts the relevant provision.

Point 1068A-G2 - Partner physically present in remote area

This point provides that an amount by way of remote area allowance is to be added to a person's rate if the person is absent from the remote area for a period of longer than 8 weeks and:

•

the person is receiving a benefit PgA; and

•

either:

•

the person's rate of benefit apart from this point is greater than nil; or

•

apart from this point the person's rate of benefit would be nil merely because an advance pharmaceutical allowance has been paid to the person; and

•

the person's usual place of residence is in the remote area; and

•

the person has a partner whose usual place of residence is in the remote area and who is physically present in the remote area.

Point 1068A-G3 - Rate of remote area allowance

This point states that Table G is to be used to work out the rate of RAA payable to a qualified person. An amount in the "basic allowance" column of Table G is to be added to a person's rate depending on the person's family situation. An additional amount specified in column 4 is also payment to a person for each AFP child of the person.

Note 1 signposts the definition of "illness separated couples" and "partnered (partner in gaol)". Note 2 indicates that item 3 of the Table includes illness separated couples.

Point 1068A-G4 - Meaning of remote area allowance

This point provides that, for the purposes of Module G, RAA means an amount added to a person's social security pension or benefit by way of RAA or an amount payable under the specified provisions of the Veteran's Entitlements Act.

Point 1068A-G5 - In remote area

This point provides that, for the purposes of Table G in point 1068A-G3, a person is in a remote area if the person's usual place of residence is in the remote area and the person is physically present in the remote area.

Point 1068A-G6 - Dependent children must be physically present in Australia

This point prevents payment of additional RAA for a dependent child who is outside Australia.

Point 1068A-G7 - Special rule where partner has an AFP child but is not receiving a pension

This point provides that a person can be paid additional RAA where the person is qualified for additional RAA, the person's partner has an AFP child and the person's partner is not receiving a pension or benefit.

Point 1068A-G8 - Special rule where partner has an AFP child but is not receiving additional allowance for the AFP child

This point provides that a person can be paid additional RAA where the person is qualified for additional RAA, the person's partner has an AFP child and the person's partner is not receiving additional allowance for the AFP child.

PART 3 - CONSEQUENTIAL AMENDMENTS OF THE PRINCIPAL ACT

This Part contains amendments consequential upon the introduction of parenting allowance.

The amendments remove references to 'home child care allowance' from various provisions in the Principal Act and make changes to a number of provisions to ensure that parenting allowance is treated appropriately under these provisions.

Distinction between benefit and non-benefit parenting allowance

A reference to parenting allowance is inserted by Item 25 in the definition of 'social security benefit' in subsection 23(1) of the Principal Act. Only parenting allowance other than non-benefit parenting allowance has the status of a social security benefit. A non-benefit parenting allowance is defined in subsection 23(1) by reference to Module B of the Parenting Allowance Rate Calculator. Generally, the following parenting allowance recipients receive a non-benefit parenting allowance:

•

social security pensioners, rehabilitation allowees, service pensioners and armed services widows/widowers;

•

those whose assets exceeds the assets value limit;

•

those whose student partners are receiving a dependent spouse allowance under the AUSTUDY Scheme;

•

those whose partners do not take action as specified by the Secretary in subsection 1164(2) of the Principal Act to claim or obtain compensation payments or whose partners receive lump sum compensation payments; and

•

parenting allowance recipients, other than specified above, whose rate of parenting allowance is equal to or less than $61 per fortnight if their rate of parenting allowance calculated under Benefit Rate Calculator B is nil.

The distinction between a benefit parenting allowance and a non-benefit parenting allowance results from the Government's decision to incorporate home child care allowance (HCCA) into parenting allowance while preserving major elements of HCCA. The non-benefit parenting allowance represents, generally, the HCCA amount. HCCA, unlike social security pensions and benefits that are asset tested and dependent on income of both members of a couple, was a non-assets tested, non-taxable social security payment payable to a child carer regardless of the income of the carer's partner. It did not therefore attract the same treatment under the Social Security Act 1991 as social security benefits. Consequently, the component of parenting allowance that represents HCCA (basic parenting allowance component) remains similar in character to HCCA. The non-benefit parenting allowance is not asset tested, not taxable and does not depended on the partner's income.

Therefore, the provisions of the Principal Act that refer to a 'social security benefit' do not automatically apply to a non-benefit parenting allowance. This is not appropriate in all circumstances. The more significant of those circumstances in which parenting allowance (whether or not it is a benefit or non-benefit allowance) should be treated in the same manner as a social security benefit are as follows:

•

income tax (subsections 9(1), 1072A(1)(Note), 1074C(2), section 1082, paragraphs 1106(2)(a) and(b)) - Items 7 and 59 to 62 refer;

•

assets test (subsections 11(10), 11(10A), 12C(5), paragraphs 1123(2)(a) and (b) and subsection 1131(2)) - Items 8, 9, 10, 67 and 68 refer;

•

debt recovery (subparagraph 1223(2)(b)(x), subsections 1223(5) d (6)(Note), paragraphs 1223A(1)(a) and 1223A(1)(b), subsections 1223A(3) and 1223B(2))- Items 146 to 151 refer;

•

review of decisions (paragraph 1239(1)(b), subsection 1239(1)(Note 1), paragraph 1240(1)(b), sections 1240(Note 1), 1247(Note) and paragraph 1250(1)(d)) - Items 152 to 157 refer; and

•

the lodgement of initial incorrect or inappropriate claims (subsections 46(2), 100(2), 150(2), 201(2), 255(2), 318(2), 366(2), section 408CC, subsections 415(2), 533(2), 615(2), 660XCC(2), section 689 and subsections 731(2), 771HN(2), 784(2) and 1002(2)) - Items 38 to 54 refer.

Investment income definitions (subsection 9(1)), assets test definitions (subsections 11(10), 11(10A) and 12C(5)), compensation recovery definitions (subsections 17(1) and 17(7)), pharmaceutical allowance definitions (subsections 19A(2), 4, 5, and 6 and section 19A) and bereavement definitions (subsection 21(1)) are amended to include references to parenting allowance or to take parenting allowance into account otherwise. Items 7, 8, 9, and 11 to 18 provide for these amendments.

The following general definitions in subsection 23(1) are amended to include parenting allowance: "assurance of support debt", compensation arrears debt", "newly arrived resident's waiting period", "payday", "recipient notification notice", "recipient statement notice", "social security benefit", "unused annual leave waiting period", and "waiting period". Also subsection 23(1) (served waiting period) is amended to include a reference to parenting allowance. The above definitions are amended by Items 19 to 28.

All references to "parenting allowance" without any further qualification denote parenting allowance, whether benefit or non-benefit.

New definitions are provided by Item 30 in section 23 specifically for the parenting allowance purposes: "benefit parenting allowance", maximum basic component of parenting allowance", "non-benefit parenting allowance", and "parenting allowance payday".

Notes in subsections 42(2) and (3) refer to social security benefits as period-based payments and to social security pensions and family payment as payday-based payments. Items 36 and 37 amend the Notes to include parenting allowance in the category of payday-based payments.

Telephone allowance

Recipients of benefit parenting allowance will qualify for telephone allowance if they have been receiving a social security or service pension or a social security benefit or a combination of any of those payments for the last 12 months and have turned 60 and are telephone subscribers as defined in subsection 1061Q(5) of the Principal Act. Recipients of non-benefit parenting allowance will not qualify for telephone allowance. Telephone allowance will be payable to qualifying parenting allowance recipients on the first parenting allowance payday that falls on or after: 1 January, 20 March, 1 July and 20 September. Amendments made to subsections 1061Q(3), 1061Q(3A) and 1061U(2) of the Principal Act by Items 55 to 58 give effect to the above.

Earnings credit

Earnings credits will be available to recipients of benefit parenting allowance. This is effected by amendments made to section 1113(Note), 1115A(1)(Note), subsections 1115C-A4, and 1115C-C1 (Note 2) by Items 63 to 66. Earning credits provisions will not apply to recipients of non-benefit parenting allowance.

Imprisonment

Parenting allowance (benefit and non-benefit) will not be payable to a person on a parenting allowance payday if on that payday the person is in gaol or in psychiatric confinement following criminal charge and if that payday is not the first parenting allowance payday and not the last parenting allowance payday in the period of imprisonment or confinement. New subsection 1162 is inserted in Part 3.13 of the Principal Act -(Imprisonment) by Item 74 to give effect to the above.

Compensation payments

Item 75 inserts a reference to parenting allowance in subsection 1163(1) to ensure that parenting allowance may be affected by compensation payments.

A number of amendments are made to compensation recovery provisions to ensure that the basic parenting allowance component is not affected by lump sum or periodic compensation payments received by a parenting allowee's partner.

Items 76 and 77 amend section 1165 to provide that the payability of the maximum basic component of parenting allowance to a person is not affected if the person's partner does not take action specified by the Secretary to claim or obtain compensation payments.

Items 76 and 77 amend section 1165 to provide that parenting allowance at the rate of the maximum basic component may be granted to a person if the person's partner does not take action specified by the Secretary to claim or obtain compensation payments.

Parenting allowance (benefit and non-benefit) may be affected by compensation payments received by a parenting allowee or the allowee's partner in the following way:

Compensation in the form of a lump sum

Item 81 inserts new subsection 1165(2A) providing that if a person is qualified for parenting allowance, and the person receives compensation in the form of a lump sum (whether before or after the person become qualified for the allowance), the allowance (the taxable and non-taxable components) is not payable for the lump sum preclusion period.

If a person is qualified for parenting allowance that is payable at the rate equal to or less than the maximum basic component rate ($ 61 per fortnight or less), and the person's partner receives compensation in the form of a lump sum (whether before or after the person became qualified for the allowance), the allowance continues to be payable at an unchanged rate (new paragraphs 1165(2B)(a), (b) and (c) inserted by Item 81 refer).

New paragraphs 1165(2B)(a),(b) and (d) inserted by Item 81 provide that if a person is qualified for parenting allowance the rate of which exceeds the maximum basic component rate (more than $61 per fortnight), and the person's partner receives compensation in the form of a lump sum (whether before or after the person became qualified for the allowance), the person becomes entitled to an amount of parenting allowance worked out by applying the personal income test to the non-benefit maximum basic parenting allowance rate. The resultant rate is payable to the person for the lump sum preclusion period. If an amount exceeding the maximum basic component is payable to the person for the lump sum preclusion period, the amount so paid constitutes a recoverable amount.

Amendments to the Recoverable Amount Table in subsections 1166(2) and to section 1166 of the Principal Act made by Items 82 to 90 ensure the correct calculation of recoverable amounts of parenting allowance.

Periodic compensation payments

If a parenting allowee receives a series of periodic compensation payments, the rate of parenting allowance is to be reduced for the periodic payments period in the same way as any other social security benefit. Periodic payments of compensation will be directly deducted from the amount of parenting allowance (including the basic $61 component). Amendments made by Items 26 to 32 in Schedule 2 provide for the above.

New subsection 1168(7) inserted by Item 32 in Schedule 2 provides that if a parenting allowee's partner receives a series of periodic compensation payments and parenting allowance is payable at the rate equal to or less than the maximum basic component rate ($ 61 per fortnight or less), the allowance continues to be payable at an unchanged rate.

New subsection 1168(6) inserted by Item 32 in Schedule 2 provides that if parenting allowance is payable to a person at a rate that exceeds the maximum basic component rate (more than $61 a fortnight) and the person's partner receives a series of periodic compensation payments, the person's parenting allowance rate is reduced by the partner's excess compensation rate. However, the partner's excess compensation payment cannot affect the $61 maximum basic parenting allowance amount that is payable to the parenting allowee regardless of the partner's periodic compensation payments. Any amount higher than $61 paid to a parenting allowee during the periodic payments period constitutes a recoverable amount.

Amendments to the Reduction Table in subsection 1168(3) of the Principal Act provide for the method of working out the reduced amount of parenting allowance (Items 91 to 99 refer). Amendments to the Recoverable Amount Table in subsection 1170(2) and to section 1170 ensure the correct calculation of recoverable amounts of parenting allowance (Items 100 to 109 refer).

Compensation payers and insurers

The rule that a partner's compensation does not affect the basic component of parenting allowance is reflected in an amendment to section 1174 of the Principal Act that states how to work out recoverable amounts that are specified in a notice to a compensation payer and in an amendment to section 1179 that states how to work out recoverable amounts that are specified in a notice to an insurer. The above amendments are made by Items 110 to 113.

New Enterprise Incentive Scheme

An amendment to paragraph 1187(1A)(a) of the Principal Act made by Item 114 ensures that a person's parenting allowance rate (regardless of whether it is a benefit or non-benefit parenting allowance) is to be reduced in respect of a period during which a payment is made to the person under the New Enterprise Incentive Scheme or the Aboriginal Employment Incentive Scheme.

Indexed and Adjusted Amounts

Items 115 to 140 amend sections 1190 (Indexed and Adjusted Amounts Table) and 1191 (CPI Indexation Table) to provide for the indexation and adjustment of the specified parenting allowance amounts.

Portability

Section 1211 of the Principal Act provides the rule that certain social security payments, including social security benefits, are not payable to a person who is outside Australia because presence in Australia is required to qualify for payment. Parenting allowance is also not payable overseas. Items 144 and 145 amend section 1211 to ensure non-payability of parenting allowance overseas.

PART 4 - CONSEQUENTIAL AMENDMENTS OF OTHER ACTS

Consequential amendment is made in this Part to the Data-matching Program (Assistance and Tax) Act 1990 so as to add a reference to parenting allowance in the definition of 'personal assistance' (Item 157 refers).

Items 158 to 161 amend the Health Insurance Act 1973 so as to ensure that parenting allowees whose allowance is treated as a social security benefit will be able to receive health care card concessions. This group of allowees is included in the category of "disadvantaged persons" under this Act.

Under new section 5EB:

•

if a parenting allowee's partner is receiving a social security benefit, the Secretary must declare a parenting allowee to be a disadvantaged person in respect of the same period for which the partner is declared to be a disadvantaged person under section 5D of this Act; and

•

if a parenting allowee's partner is not receiving a social security benefit, the Secretary must declare a parenting allowee to be a disadvantaged person in respect of the period during which the allowee is receiving a benefit parenting allowance.

An amendment is also made to the definition of "dependant" in subsection 3(1) of this Act to include a parenting allowance child that is an AFP child and a parenting allowee's partner.

Minor amendments that are consequential upon the above amendments are made to section 5F and subsection FG(1) of this Act.

PART 5 - TRANSITIONAL ARRANGEMENTS FOR PARENTING ALLOWANCE

Item 164 amends Schedule 1 of the Principal Act to provide for the following transitional arrangements.

The transition from home child care allowance and partner allowance to parenting allowance

After the introduction of parenting allowance on 1 July 1995, home child care allowance (HCCA) will cease to exist and entitlement to partner allowance (PA) will be restricted to persons who are over 40 years of age, have little or no workforce experience and no dependent children under 16.

On 1 July 1995, recipients of HCCA and PA with children under 16 may qualify for parenting allowance. Those recipients will have their entitlement to parenting allowance assessed without the necessity of lodging a claim for that allowance.

Generally, this Part deals with transitional provisions in respect of :

(a)

the transition from HCCA to parenting allowance( new clause 76); and

•

the transition from PA to parenting allowance (new clause 77).

The transitional provisions deal specifically with the treatment of:

•

HCCA and PA claims lodged before 1 July 1995 that are undetermined at that date;

•

HCCA and PA claims lodged after 1 July 1995;

•

bereavement payments in respect of HCCA and PA; and

•

parenting allowance claims lodged before or after 1 July 1995.

(a) Transition from HCCA to parenting allowance

HCCA claims lodged and determined before 1 July 1995

If, on 30 June 1995, a person was receiving HCCA or was granted HCCA but had not yet been paid, the person is taken to have made a claim for parenting allowance on 1 July 1995 (new paragraphs 76(2)(a) and (b) refer).

HCCA claims lodged before 1 July 1995 but not determined before 1 July 1995

If a person lodged a claim for HCCA before 1 July 1995 and the claim had not been determined before that date, a determination will be made in respect of the person's entitlement to HCCA for a period to 30 June 1995. If the person's claim for HCCA is granted, the claim is then deemed to be a claim for parenting allowance lodged on 1 July 1995 and a determination will be made in respect of the person's entitlement to parenting allowance for a period from 1 July 1995 (new paragraphs 76(1)(b) and 76(2)(c) refer).

HCCA claims lodged on or after 1 July 1995

Despite the repeal of Part 2.18 - home child care allowance on 1 July 1995, a person may lodge a claim for HCCA on or after 1 July 1995 in respect of the person's entitlement before 1 July 1995. If HCCA is granted to the person, that claim is deemed to be a proper parenting allowance claim lodged on 1 July 1995 in respect of the person's entitlement from 1 July 1995 ne paragraphs 76(1)(a) and 76(2)(d) refer).

Specific arrangements in respect of the payment of parenting allowance are as follows:

(i)

If a person lodges a claim for HCCA on or after 1 July 1995 and the person's parenting allowance provisional commencement day is on or before 6 July 1995, the person's provisional commencement day is taken to be 1 July 1995 (new subclause 76(4) refers). The parenting allowance rate is the rate calculated under the Parenting Allowance Rate Calculator (the rate may be higher than the amount of the maximum basic parenting allowance component).

(ii)

If a person lodges a claim for HCCA on or after 1 July 1995 and the person's parenting allowance provisional commencement day is after 6 July 1995, parenting allowance is payable for a period from 1 July (new subclause 76(5) refers). The person's maximum basic rate of parenting allowance for a period from 1 July 1995 until the person's parenting allowance provisional commencement day is equal to the maximum basic parenting allowance component ($61 per fortnight) as applicable to non-benefit parenting allowance (new subclause 76(6) refers). The parenting allowance rate for a period from the person's parenting allowance provisional commencement date is the rate as calculated under the Parenting Allowance Rate Calculator (the rate may be higher than the maximum basic parenting allowance component).

The following example illustrates the arrangement referred to in (ii):

Example:

On 15 August 1995, H claims HCCA for a child born on 1 June 1995. HCCA provisional commencement day is 1 June 1995 (subsection 910(5) allows 13 weeks backdating of a claim in this situation). H is paid HCCA at the fortnightly rate of up to $61 during the period 1 June 1995 - 30 June 1995 (the rate is determined by H's personal income).

H's provisional commencement date for parenting allowance is 18 July 1995 (new subsection 912(2) allows 4 weeks backdating of a claim in this situation). Therefore, during the period 1 July 1995 - 17 July 1995 H's maximum rate of parenting allowance is equal to the maximum basic component rate ($61 per fortnight). This rate may be reduced further by H's personal income. From 18 July 1995 - the parenting allowance rate is calculated under the Parenting Allowance Rate Calculator and may be above $61 per fortnight.

HCCA shared custody cases

HCCA may be payable to more than one person (not being members of the same couple) in respect of the same child (section 938 of the HCCA provisions refers). When the Secretary makes a declaration that each person is qualified for HCCA in relation to a child, he also specifies the share of HCCA that each person is to receive.

Parenting allowance, however, will not be payable to more than one person for the same child. If, on 30 June 1995, a person was receiving, or was granted, HCCA the share of which was declared to be less than 50%, the person will not be taken to have lodged a claim for parenting allowance on 1 July 1995 (new subclause 76(3) refers). Only a person whose share of HCCA was declared to be at least 50% will be taken to have made a claim for parenting allowance on 1 July 1995.

Bereavement payments in respect of a HCCA child

If, on 30 June 1995, a person was entitled to HCCA bereavement payments and the bereavement period had not ended, the person remains qualified for HCCA until the end of the bereavement period (new subclause 76(7) refers).

Review of entitlements

If HCCA is not payable on 30 June 1995 but, as a result of a review process, a person's entitlement to HCCA on 30 June 1995 has been established, the above transitional arrangements will apply to the person (new subclause 76(8) refers).

Transition from PA to parenting allowance

The following arrangements in respect of PA claims will apply.

PA claims lodged and determined before 1 July 1995

If, on 30 June 1995, a person was receiving PA or was granted PA but had not yet been paid, the person is taken to have made a claim for parenting allowance on 1 July 1995 (new paragraphs 77(2)(a) and (b) refer).

PA claims lodged before 1 July 1995 and not determined before 1 July 1995

If a person who, on 30 June 1995, had a dependent child under the age of 16 years, lodged a claim for PA before 1 July 1995 and the claim had not been determined before 1 July 995, a determination will be made in respect of the person's entitlement to PA before 1 July 1995. If a determination is made that PA is to be granted, the PA claim is deemed to be a proper claim for parenting allowance lodged on 1 July 1995 (new paragraphs 77(1)(b) and 77(2)(c) refer).

PA claims lodged on or after 1 July 1995

Despite the amendments made by Schedule 3 to the Social Security (Parenting Allowance and Other Measures) Legislation Amendment Act 1991 to the PA qualification provisions, a person with a dependent child under 16 may still lodge a PA claim on or after 1 July 1995 in respect of the person's entitlement before 1 July 1995. If a determination is made that PA is to be granted in respect of a period that occurred before 1 July 1995, then the PA claim is deemed to be a proper claim for parenting allowance in respect of the person's entitlement from 1 July 1995 (new paragraphs 77(1)(a) and 77(2)(d) refer).

If a person is granted PA and a determination is made that parenting allowance is to be granted as a result of the claim for PA lodged on or after 1 July 1995, the person's parenting allowance provisional commencement date is taken to be 1 July 1995 (new subclause 77(3) refers).

If a person's provisional commencement day for parenting allowance is 1 July 1995 and a fortnightly instalment of PA was paid to the person between 19 June 1995 and 29 June 1995 (inclusive), PA is payable to the person in respect of the period starting on the day after the day on which the instalment was paid and finishing immediately before 1 July 1995 (new subclause 77(4) refers). In other words, in cases where the full PA instalment would, but for this amendment, be payable on the 3rd, 4th or 5th July 1995, only part of the fortnightly instalment representing a period from the day after the last instalments was paid to 30 June 1995 (inclusive) will be payable.

PA bereavement payments

If, on 30 June 1995, a person was entitled to PA bereavement payments and the bereavement period had not ended, and the person does not qualify for PA after 1 July 1995 because of the changes to PA qualification provisions that commence on 1 July 1995, the person remains qualified for partner allowance after 1 July 1995 until the end of the bereavement period (new subclause 77(5) refers).

Review of entitlements

If PA is not payable on 30 June 1995 but, as a result of a review process, a person's entitlement to PA on 30 June 1995 has been established, the above PA transitional arrangements will apply to the person (new subclause 77(6) refers).

(c) Parenting allowance claims

Parenting allowance claims lodged before 1 July 1995

If a person lodges a parenting allowance claim before 1 July 1995 that would have been a proper parenting allowance claim if it was lodged on or after 1 July 1995, the claim is deemed to be a claim for HCCA in respect of the period to 30 June 1995 and a claim for parenting allowance lodged on 1 July 1995 in respect of the period from 1 July 1995 (new subclause 78(1) refers).

Parenting allowance claims lodged on or after 1 July 1995

If a person lodges a parenting allowance claim on or after 1 July 995, the claim will also be taken to be a claim for HCCA and PA in respect of the person's entitlement before 1 July 1995 if HCCA or PA would be payable to the person on 30 June 1995 (new subclause 78(2) refers).

If HCCA or PA is payable to a person on 30 June 1995, parenting allowance is payable to the person from 1 July 1995.

If a person's HCCA is payable on 30 June 1995, eg as a result of the application of HCCA backdating provisions, and the person's parenting allowance provisional commencement day is after 6 July 1995, the maximum rate of parenting allowance from 1 July 1995 to the person's parenting allowance provisional commencement day is equal to the maximum basic parenting allowance component ($61 per fortnight) as applicable to non-benefit parenting allowance. The parenting allowance rate from the person's parenting allowance provisional commencement day is calculated under the Parenting Allowance Rate Calculator (the rate may be higher than the maximum basic parenting allowance component).

Indexation of parenting allowance amounts

The rates provided in the Parenting Allowance Rate Calculator in Part 2 of this Schedule are the rates as indexed on 20 September 1994. New clause 79 provides for indexation of those rates on the specified indexation dates that fall between 20 September 1994 and the parenting allowance commencement date, that is 1 July 1995.

5. Commencement

These changes commence on 1 July 1995 (clause 2).

SCHEDULE 2

AMENDMENTS RELATING TO INCOME TESTS FOR JOB SEARCH ALLOWANCE AND NEWSTART ALLOWANCE

1. Summary of changes

This group of amendments amend the income tests applicable to recipients of job search allowance, newstart allowance, sickness allowance, partner allowance and widow allowance.

In short, the amendments made by Schedule 2 will:

•

remove the earnings disregard and introduce a 70% taper for the income test; and

•

abolish the joint income test for benefit couples.

2. Background

These amendments are part of a package of measures to encourage unemployed persons to obtain work. In particular the joint income test for couples will be abolished and a new income test introduced to allow each member of a couple to have access to his or her own income free area. In addition, the changes will remove the existing 100% taper for persons who receive more than $140 income a fortnight and replace it with a 70% taper.

Under the current benefit income tests, couples are treated as a single economic unit. As a result the rate of payment of a benefit is determined by reference to the combined income of both members of a couple. Accordingly, the social security entitlement of both members of a couple are reduced if one member of the couple earns income over the relevant free area.

As a result of the amendments, benefit couples will no longer be treated as a single economic unit. The joint income test will be abolished and each member of a couple will be subject to the standard income test with each having access to his or her own income free area. Income will only affect the entitlement of a person's partner if the income is sufficient to preclude the first member of that couple from entitlement.

In addition, the amendments will abolish the existing 100% taper that applies if a person receives income in excess of $140 in a fortnightly period. Instead a 70% taper will apply to all income received over $140. That is, there will be a standard $60 per fortnight free area, a 50% taper between $60 and $140 and a 70% taper for any income over $140.

The earnings disregard currently allows beneficiaries to earn extra amounts of income from employment before the beneficiary's rate of payment is reduced. The earnings disregard was originally introduced to encourage beneficiaries to obtain part-time or casual employment. The more generous taper and the abolition of the joint income test will now mean that this additional incentive is no longer required.

3. Clauses involved in the changes

Clause 2: specifies the commencement day as 1 July 1995.

Clause 4: provides that the Principal Act is amended as set out in Schedule 2.

Schedule 2: amends various provisions in the Principal Act relating to the benefit income test, as follows:

Item 1: inserts a new paragraph into subsection 8(8) (amounts excluded from the ordinary income test). The new provision excludes income that is received by a social security beneficiary or a recipient of parenting allowance (PgA) if that income is given to the recipient by the person's partner.

Item 2: makes a minor technical amendment to point 1067-A1 (Step 7).

Item 3: amends paragraph 1067-F12(b) to specify that a partner with a rent increase benefit includes a benefit payable at a nil rate.

Item 4: makes a minor technical amendment to the heading of Module H

Item 5: amends the method statement in point 1067-H1 to provide for the new income test.

Item 6: inserts note 2 at the end of point 1067-H1 to refer to the new income test.

Item 7: omits point 1067-H2 and 1067-H2A and substitutes a new point 1067-H2 to provide that beneficiaries with a pensioner partner will continue to be treated as a single economic unit and will have half the combined income of the couple taken into account.

Item 8: amends several points to omit references to obsolete points; and

omits the old income test for persons earning over $60 a fortnight and introduces a new income test incorporating a 70% taper and allowing each member of a benefit couple to have access to his or her own free area.

Items 9 - 15: make similar amendments to Benefit Rate Calculator B in section 1068.

Items 16, 17: insert new subsections into section 1109 (disposal of ordinary income) as a consequence of the new income test.

Items 18 - 25: amend sections 1115A, 1115B and 1115C (earnings credits - benefits) to reflect the new separate income test.

Items 26 - 33: amend section 1168 (periodic compensation reduction) to reflect the new separate income test.

4. Explanation of the Changes

Subsection 8(8) lists amounts that are not included in the ordinary income test. Item 1 excludes from the definition of income that is received either directly or indirectly from a person's partner if the person is receiving a social security benefit or a parenting allowance. Under the new income test, a social security beneficiary's income is taken into account separately from his or her partner. This amendment prevents the same income being taken into account twice if one partner gives his or her income directly or indirectly to his or her partner.

Items 2 and 4 amend point 1067-A1 and the heading to Module H of Benefit Rate Calculator A as a consequence of the changes to the income tests.

Rent Assistance - point 1067-F12

Paragraph 1067-F12(b) presently provides that a partner is a "partner with a rent increased benefit" even if the partner's income is payable at a nil rate.

Where a couple qualify for rent assistance, half the rent assistance is paid to each member of the couple. However, amendments are necessary to cover the situation where one member of a couple earns sufficient income to cause that person's benefit (which includes half the married rate of rent assistance) to be payable at a nil rate. By deeming that person to be receiving rent assistance, item 3 prevents the other member of the couple (who is entitled to some benefit) from "double-dipping" and getting the full married rate of rent assistance even though the person's partner already had rent assistance added prior to the income test being applied to the partner's benefit. Accordingly, where both members of a couple are receiving a rent increased benefit, each member of the couple will continue to be entitled to half the married rate of rent assistance.

Point 1067-H1 - Effect of income on maximum payment rate

The method statement in point 1067-H1 is amended by item 5 as follows:

Note 1 at the end of step 1 is amended to alert the reader that a different income test applies to those beneficiaries who have a pensioner partner. The note refers the reader to the new points 1067-H2 and 1067-H3.

Steps 2 to 6 inclusive of the method statement (application of the ordinary income test) are omitted and new steps 2 to 11 are inserted.

The method statement provides that the new income test will apply as follows:

•

work out the partner income free area (if a member of a couple) (a note to this step explains this concept) (see point 1067-H9);

•

work out whether the partner has a partner income excess;

•

if the person's partner's ordinary income does not exceed the partner income free area, the person's partner income excess is nil;

•

if the person's partner's ordinary income exceeds the partner income free area, the person's partner income excess is the person's ordinary income less the partner income free area (see point 1067-H10); and

•

use the partner income excess to work out the person's partner income reduction (see point 1067-H11); and

•

work out the person's ordinary income free area (point 1067-H12). A note advises the reader that the person's ordinary income free area is the maximum amount of income the person can have without affecting the person's benefit (currently $60).

•

if the person's ordinary income does not exceed the person's ordinary income free area, the person's ordinary income excess is nil;

•

if the person's ordinary income does exceed the person's ordinary income free area, the person's ordinary income excess is the person's ordinary income less the person's ordinary income free area (1067-H13);

•

use the person's ordinary income excess to work out the person's ordinary income reduction (see points 1067-H12 to 1067-H16); and

•

add the person's ordinary income reduction and partner income reduction to obtain the person's income reduction.

Item 6 makes consequential amendments to note 2 at the end of point 1067-H1.

Point 1067-H2 - ordinary income of certain couples

Point 1067-H2 has been omitted and a new point substituted by item 7 so that a beneficiary with a pensioner partner will continue to be treated as a single economic unit. That is, the income of the beneficiary and the pensioner will be added to form a total income. The couple's total income will then be halved before being taken into account in applying the new income test to the couple. Pensioner/beneficiary couples will continue to have both of their entitlements reduced if one member of a couple earns income over the relevant income free area.

A pensioner will continue to be subject to the joint income test under the pension rate calculators (rather than the new separate income test that applies to beneficiaries). As a consequence, social security beneficiaries with a pensioner partner will also be subject to a joint income test.

Point 1067-H2A is also omitted by item 7. Point 1067-H2A currently provides that AUSTUDY, ABSTUDY, financial supplements under the Student Financial Supplement Scheme and payments under a LEAP program paid to the partner of an allowee are not included in the ordinary income of the couple.

Points 1067-H9 to 1067-H16 - Introduction of new income test

Item 8 amends the old income test by omitting points 1067-H9, 1067-H9A, 1067-H10, 1067-H11, 1067-H12 and 1067-H13. Item 8 then inserts new points 1067-H9 to H16 provide for the new income test. The new income test provides that each member of a beneficiary couple (or a beneficiary and non-beneficiary/pensioner partner) will only have their entitlements affected by their own personal income if one member of the couple earns sufficient income to cause that person's entitlement to be payable at a nil rate.

Point 1067-H9 - partner income free area

Point 1067-H9 defines "partner income free area".

Where the person's partner is not in receipt of a social security benefit, the partner free area is defined as the amount of income (when rounded up to the nearest dollar) that would cause the partner's job search allowance be paid at a nil rate if the partner were receiving a job search allowance (JSA). This amendment deems a partner to be in receipt of JSA for the purposes of the partner income free area so that a person can access the new separate income tests even if the person's partner is not in receipt of a social security benefit (paragraph 1067-H9(a)).

Where the person's partner is in receipt of a social security benefit, the partner free area is defined as the amount of income (when rounded up to the nearest dollar) to cause that person's benefit to be paid at a nil rate (paragraph 1067-H9(b)).

Point 1067-H10 - partner income excess

Point 1067-H10 defines the partner income excess. This point specifies that, where a person is a member of a couple and the person's partner is not in receipt of a social security or service pension, and the partner's ordinary income exceeds the partner income free area for the partner, then the person has a partner income excess equal to the amount that the partner's ordinary income exceeds the partner income free area.

If a person's partner is receiving a social security pension or a service pension, the person is subject to the joint income test (point 1067-H2) and not the separate income test. A person who is subject to the joint income test only has income assessed under the ordinary income test provisions at points 1067-H12 to 1067-H16.

Point 1067-H11 - partner income reduction

If the person has a partner income excess under point 1067-H10, point 1067-H11 will cause the person's entitlement to be reduced at a rate of 70 cents in the dollar for any income over the partner income excess.

Each partner has access to his or her own income test. Therefore, this point provides that a partner's income only reduces the person's entitlement where the partner has income that is greater than the income necessary to reduce the partner's social security benefit entitlement to nil.

An example explains the operation of the partner income test.

Point 1067-H12 - ordinary income free area

Point 1067-H12 provides that a person's ordinary income free area is $60 per fortnight.

A note advises the reader that the income free area applies to fortnightly income.

Point 1067-H13 - ordinary income excess

Point 1067-H13 defines a person's "ordinary income excess" as the amount by which the person's income exceeds the person's income free area (ie, $60 per fortnight).

Point 1067-H14 - ordinary income reduction

Point 1067-H13 specifies that where a person has an ordinary income excess, the person's "ordinary income reduction" is the sum of:

(a)

the person's lower range reduction; and

(b)

the person's upper range reduction.

Point 1067-H15 - lower range reduction

Point 1067-H15 defines the lower range reduction. This is any income between $60 and $140 per fortnight. The effect is that any income in this range will result in a 50 cents in the dollar reduction in the person's entitlement.

Point 1067-H16 - upper range reduction

Point 1067-H16 introduces the new 70% taper for income in excess of $140 per fortnight (that is, in excess of the lower range reduction under point 1067-H15).

Prior to these amendments any income in excess of $140 per fortnight was subject to a 100% taper. Any income that exceeds $140 per fortnight is defined as the "upper range reduction" and will now be subject to a 70% taper until entitlement to benefit is precluded.

An example at the end of point 1067-H16 explains how the new income test provisions work.

Example of operation of income test

The difference between the previous income test and the current income test can be illustrated as follows:

Gertrude is receiving job search allowance. Her income is $170 pf.

Gertrude's ordinary income free area under point 1067-H9 is $60.

Her ordinary income exceeds her ordinary income free area. She therefore has an ordinary income excess under point 1067-H10 of $170 - $60 = $110.

1. Applying the previous test, where a 100% taper applied:

As her ordinary income excess exceeds $80:

•

her lower range reduction under point 1067-H12 is 50% of $80 = $40; and

•

her upper range reduction under point 1067-H13 is 100% of $30 = $30.

Her ordinary income reduction under point 1067-H11 is therefore $40 + $30 = $70.

2. Applying the test, where a 70% taper applied:

As her ordinary income excess exceeds $80:

•

her lower range reduction under point 1067-H12 is 50% of $80 = $40; and

•

her upper range reduction under point 1067-H13 is 70% of $30 = $21.

Her ordinary income reduction under point 1067-H11 is therefore $40 + $21 = $61.

Benefit Rate Calculator B

Items 9 to 15 make similar amendments to Benefit Rate Calculator B in point 1068 of the Principle Act.

Subsection 1109(1) - disposal of ordinary income

Section 1109 of the Principal Act is amended by items 16 and 17 to take account of the changes to the income test. New subsections 1109(1A) and 1109(1B) are inserted into the Principal Act to apply in situations where a person is a member of a couple and has disposed of ordinary income.

New subsection 1109(1A) specifies that the amount of the disposition is to be included in the person's ordinary income until the application of the income test reduces the person's entitlement to nil.

New subsection 1109(1B) applies in situations where the total of the amount of the disposition and the person's ordinary income would be sufficient to reduce the person's benefit to nil. In that case, the excess disposition is to be included in the person's partner's ordinary income. This amendment reflects the separate income tests introduced in this Schedule.

Earnings credit (benefits)

Consequential amendments are required to the earnings credits provisions that currently apply to social security benefits as a result of the introduction of the new income test.

A person gets a credit (up to a maximum of $500) that the person can access before the person's entitlement is reduced by the income test. Under current rules, the earning credit can be accessed by the JSA/NSA recipient for income that was earned either by that person or the person's partner.

With the introduction of the separate income tests, these provisions are no longer appropriate.

Item 19 omits current subsection 1115A(2) and substitutes new subsection 1115A(2) and (3). These new provisions have the effect of providing that each member of a couple can only access to his or her own earnings credit.

New subsection 1115A(2) allows a person to access the earnings credit provisions if the person's rate of benefit is greater than zero after the application of the person's partner's income to that rate. This is consistent with the earnings credit provision that apply to single allowees who are not allowed to access their earnings credit if their rate is reduced to nil (even if the rate would not be reduced to nil if the person had access to the earnings credits).

This amendment is consequential on the abolition of the joint income test and the introduction of separate social security entitlement for members of a couple.

New subsection 1115A(3) provides that the earnings credit provisions only apply to income that is received for remunerative work done by the person (that is, the credits only apply to "earnings" of a person).

Item 20 omits the partner earnings credit accounts in subsections 1115B(2) and (3) as a consequence of the amendments in item 19.

Items 21 and 22 make consequential amendments to omit point 1115C-A5 (earnings credit accounting period for partner's earning credit) and amends note 1 at the end of point 1115C-C1 to omit the reference to point 1115C-A5.

Item 23 amends section 1115C as a consequence of the abolition of the earnings disregard provisions Benefit Rate Calculators A and B. Prior to these amendments an earning credit for an EC accounting period was $90 ($60 earnings credit and $30 earnings disregard). With the abolition of the earnings disregard, the earnings credit for an EC accounting period is now $60.

Item 24 makes a minor technical amendment to point 1115-D2 as a result of omitting subsection 1115B(2).

Item 25 omits point 1115-D2. This amendment is a consequence of introducing the new income test. With the abolition of the combined income test, it is no longer appropriate that a beneficiary should access his or her partner's earning credit. Each person can now access his or her own earnings credit, but not that of their partner.

Amendments to subsections 1115B(2) and 1115B(3) and point 1115C-A5 are consequential on the abolition of the joint income test and the introduction of separate social security entitlement for partners.

Section 1168 - Rate reduction where periodic compensation received

Items 26 to 31 make minor technical amendments to section 1168.

Item 32 introduces new subsections 1168(4) and (5) as a consequence of the introduction of separate income testing of members of a couple.

In general terms, periodic compensation will reduce only the compensation recipient's social security benefit unless the compensation reduces his or her entitlement to nil. Where the person is a member of a couple, both parties receive a social security benefit, and the person's benefit has been reduced to nil because the person receives a series of compensation payments, the excess compensation is called the 'partner excess compensation rate'. If there is a partner's excess compensation rate, this will be applied to reduce the rate of benefit payable to the compensation recipient's beneficiary partner.

New subsection 1168(4) applies to a person or the person's partner who:

(a) receives a series of periodic compensation payments;

(b) is qualified for a social security benefit for the periodic payment period;

(c) has a partner who is qualified for a social security benefit for the periodic payment period; and

(d) was not receiving the social security benefit referred to in paragraph (b) at the time of the event giving rise to the compensation.

If subsection 1168(4) applies to a person, the person's benefit is to be reduced for the periodic payments period in accordance with the formula set out in new subsection 1168(5).

Note 1 signposts the definition of "periodic payments period".

Note 2 advises the reader that, if the person or the person's partner was receiving a compensation affected payment at the time of the event that gave rise to a compensation entitlement, the compensation is treated as ordinary income.

New subsection 1168(5) states that if a person's benefit or PgA is reduced under subsection (4) then the person's reduced rate is worked out as follows. If:

the person's compensation is sufficient to reduce the person's social security benefit to nil; and

the person's compensation rate is greater than the amount of compensation required to reduce the benefit to a nil rate;

then, the partner's benefit will be reduced by the amount of compensation that exceeds the compensation required to reduce the person's benefit to nil (the partner's "excess compensation rate").

After the person's rate of payment has been reduced by the partner's excess compensation rate (if any), the person's entitlement is reduced by the person's own periodic compensation (if any) (called the person's compensation rate).

Two notes explain the application of the section.

Note 1 advises the reader that the partner's excess compensation rate can only reduce a PgA recipient's entitlement to the maximum basic component of PgA (see the PgA rate calculator in Part 2 of Schedule 1). This limitation is applied by subsection 1168(6).

Note 2 advises the reader that the order of reduction under subsection 1168(5) is set out in section 1207 (maximum basic rate, then rent assistance is reduced).

New subsection 1168(6) applies where the person is qualified for parenting allowance and the person's rate is greater than the person's maximum basic component of parenting allowance. If section 1168 were applied to the person's parenting allowance and would reduce the rate of that payment below the maximum basic component of parenting allowance, then the partner's excess compensation rate under section 1168 only reduces the person's parenting allowance to the maximum basic parenting allowance component.

Subsection 1168(6) ensures that section 1168 cannot reduced a person's PgA entitlement below the maximum basic component of PgA by the PgA partner's compensation.

Items 33 and 34 insert a new example to explain the compensation changes.

SCHEDULE 3

AMENDMENTS RELATING TO PARTNER ALLOWANCE

1. Summary of proposed changes

The rules relating to partner allowance (PA) will be modified to:

•

provide that PA is payable to persons who have a partner who is in receipt of an age pension, disability wage supplement, disability support pension, mature age allowance or rehabilitation allowance. This is a consequence of abolishing wife pension and mature age partner allowance; and

•

restrict PA to people who are over 40 years of age, have little or no recent workforce experience and no dependant children under 16 years of age and have not received JSA, NSA or SA in the 13 weeks prior to claiming PA. All persons who are over 40 and without dependant children under 16 will remain on PA regardless of recent workforce experience. All persons who have children under 16 may be qualified for parenting allowance; and

•

provide that PA is payable to a person where a job search/newstart allowance non-payment period has been imposed on the person's partner; and

•

subject to the income and assets test, provide that a person can remain qualified for PA after the person's partner ceases to receive a social security benefit or pension; and

•

provide technical amendments to various provisions in the Principal Act that relate to PA .

2. Background

Until 1 July 1995, PA is payable only to partners of job search allowance (JSA), newstart allowance (NSA), sickness allowance (SA) and special benefit recipients. From 1 July 1995, PA will be extended to persons who have a partner receiving age pension, disability support pension (DSP), disability wage supplement (DWS), mature age allowance or rehabilitation allowance. That is people who could have qualified for wife pension or mature age partner allowance if they had claimed prior to those pensions being abolished on 1 July 1995, may claim PA from 1 July 1995.

In addition, from 1 July 1995, PA will be restricted to persons who are over 40 years of age, without dependant children, who have little or no recent workforce experience and who have not received JSA, NSA or SA in the 13 weeks prior to claiming PA. Recent workforce experience will be defined as employment of 20 hours per week for a total of 13 weeks at any time within the last 12 months or employment of 20 hours per week or more at the time the person claims PA.

A period of non-payment may be imposed upon a person who breaches specific requirements set out in the JSA/NSA payment modules. Prior to 1 July 1995, PA will not be payable to a person whose partner is serving a period of non-payment under the JSA/NSA provisions. While PA is not payable, the person is currently required to establish an entitlement in his or her own right for the period of non-payment, usually to special benefit or JSA.

It is considered more equitable and administratively simpler to allow PA to be paid to the a person whose partner is qualified for JSA or NSA but is serving a period of non-payment. These amendments will give effect to this approach. There will be an exception where a non-payment period is imposed because the JSA/NSA recipient is a seasonal worker. In such a case, a non-payment period would only be imposed if the Secretary is satisfied that the seasonal worker has sufficient income to maintain the worker and his or her dependants.

Finally, the PA provisions will be amended to allow a person to remain qualified for PA if the person's partner ceases to receive a specified social security benefit or pension.

Prior to 1 July 1995, PA is payable to a person only while the person's partner is receiving a social security benefit. Amendments will allow PA to continue to be paid to a PA recipient after grant regardless of the social security status of the person's partner. If the partner of a PA recipient ceases to receive a specified social security benefit or pension, subject to the income and assets tests, PA will be paid until the PA recipient loses entitlement to PA.

Part 2 of Schedule 3 makes consequential amendments to the Health legislation to allow partner allowees to be issued a health care card in their own right from 1 July 1995.

3. Clauses involved in the changes

Clause 2: specifies the various commencement days.

Clause 5: provides that the Principal Act is amended as set out in Schedule 3.

Schedule 3: amends various provisions in the Principal Act relating to PA.

PART 1 OF SCHEDULE 3:

Item 1: inserts PA into the definition of "assurance of support debt".

Item 2: makes a minor technical amendment to subsection 771HA to include a reference to new subsection 771HA(1A).

Item 3: amends paragraph 771HA(1)(c) to provide that a person may be qualified for PA if the person has a partner who is receiving an age pension, disability wage supplement, disability support pension, mature age allowance or rehabilitation allowance.

Item 4: amends paragraph 771HA(1)(d) to restrict PA to people who have little or no recent workforce experience, who are over 40 years of age, without dependant children under 16 years of age, and who have not received JSA/NSA/SA in the previous 13 weeks.

Item 5: inserts new subsections into section 771HA to provide:

•

that subject to the income and assets tests, a person can remain qualified for PA after the person's partner ceases to receive a social security benefit or pension (proposed section 771HA(1A); and

•

that PA is payable to a person where a job search/newstart allowance non-payment period has been imposed on the person's partner (proposed section 771HA(1B); and

•

a definition of "recent workforce experience" for the purposes of the amendments made by item 3 above (proposed section 771HA(1C).

Item 6: makes a minor technical amendment to correct a cross-reference.

Items 7 and 8 omit subsection 771NC (automatic termination if partner ceases to receive JSA, NSA, SA or special benefit) and make a consequential amendment to new section 771NA.

Items 9 - 11: amend section 771NH (automatic rate reduction - partner starting to receive benefit) to provide for partners starting to receive a pension.

Items 12 and 13: amend 771NU (continuation of PA for bereavement period) as a consequence of paying PA to persons with a pensioner partner.

Item 14: makes a minor technical amendment to paragraph 771NV(1)(c).

Items 15 - 19: amend section 771NX (lump sum bereavement payments) as a consequence of extending PA to persons with a pensioner partner.

Items 20 and 21: amend section 771NY (lump sum calculator - bereavement payments) as a consequence of extending PA to persons with a pensioner partner.

Item 22: inserts a new section 771NZA to provide that certain partner allowees aged over 60 are qualified for fringe benefits.

Item 23: amends subsection 1061Q(3) (qualification provisions for telephone allowance) to include partner allowees.

Items 24 and 25: make minor technical amendments to paragraph 1187(1A)(b) (NEIS and AEIS payments) and subsection 1223AA(2) (debts arising from prepayments).

Item 26: inserts two new clauses into the savings and transitional provisions in Schedule 1A of the Principal Act to provide that:

(1)

a person who is receiving PA immediately prior to the changes in this Schedule, does not have to satisfy the requirement that the person have no recent workforce experience in order to qualify for PA; and

(2)

a person who loses qualification for PA and claims JSA or NSA and is assessed as being at risk of long-term unemployment because of these amendments will be deemed to have the same period of CES registration as the person's partner.

PART 2 OF SCHEDULE 3

Items 27 to 35: amend the Health Insurance Act 1953 and the National Health Act 1953 to allow partner allowees to receive a health care card in their own right (previously partner allowees were covered as a dependant on their partner's health care card).

4. Explanation of the changes

PART 1 - AMENDMENTS OF THE SOCIAL SECURITY ACT 1991

Item 1 includes PA as a payment that is subject to an "assurance of support debt" by amending the definition of an "assurance of support debt" in subsection 23(1) of the Act.

Item 2 makes a minor technical amendment to the qualification provisions in subsection 771HA(1).

Item 3 amends paragraph 771HA(1)(c) to extend the qualification provisions of PA. The paragraph currently allows partner allowance to be paid to a partner of a person who is receiving JSA, NSA, SA or special benefit. This amendment allows PA to be paid if the person's partner is receiving an age pension, disability wage supplement, disability support pension, mature age allowance or rehabilitation allowance.

Item 4 amends paragraph 771HA(1)(d) to restrict PA to people who have little or no recent workforce experience, are over 40 years of age without dependent children under 16 years of age and have not received JSA/NSA/SA in the previous 13 weeks.

Item 5 inserts new subsections 771HA (1A), (1B) and (1C) into the Principal Act.

New subsection 771HA(1A) provides that, subject to the income and assets test, a person can remain qualified for PA after the person's partner ceases to receive a social security benefit or pension.

A person cannot be granted PA unless the person's partner is receiving a pension or benefit specified in paragraph 771HA(1)(c). However, after grant the person can remain qualified for PA even if the person's partner ceases to receive the specified pension or benefit. PA will only continue to be paid to such a person until the person ceases to qualify for PA or PA ceases to be payable to the person. If PA ceases to be paid to a person the person must re-claim and satisfy all the qualification provisions, including paragraph 771HA(1)(c) (partner in receipt of specified benefit or pension) before payment of PA can be resumed.

New subsection 771HA(1B) provides that PA is payable to a person where a JSA/NSA non-payment period has been imposed on the person's partner. Prior to these changes PA is only payable to a person whose partner is "receiving" a social security benefit. At present, 'receiving' is defined in section 23 of the Principal Act as meaning that a particular payment is payable. Subsection 771HA(1B) deems a person's partner to be receiving JSA or NSA if the partner is serving a non-payment period under paragraphs 526(1)(j) or 608(1)(j). From 1 July 1995, this amendment allows a partner to qualify for PA if the partner is serving a JSA or NSA non-payment period.

An exception is made if the partner is serving a non-payment period under the seasonal worker provisions (subparagraphs 526(1)(j)(viii) and 608(1)(j)(x)). Seasonal workers only have a non-payment period imposed if the Secretary is satisfied that the person has sufficient income from their seasonal work to maintain the person and the person's partner.

New subsection 771HA(1C) defines "recent workforce experience" for the purposes of qualification under paragraph 771HA(1)(h) of the Principal Act. Recent workforce experience is defined as:

•

employment of 20 hours per week for at least 13 weeks during the 12 months prior to the claim for PA; or

•

employment of 20 hours per week or more at the time the person claims PA.

This amendment is designed to better recognise the labour force potential of women and reduce poverty by encouraging women under 40 and those women with recent workforce experience to return to work. However, it also recognises that it may be unreasonable to expect some older women to return to the labour market. These are women who have partners and have little or no recent workforce experience.

Item 6 corrects an incorrect reference in subparagraph 771HE(4)(b)(ii).

Item 8 repeals section 771NC of the Principal Act (automatic termination if partner ceases receiving JSA, NSA, SA or special benefit). This amendment is made because PA can continue to be paid even if the person's partner ceases receiving a social security benefit or pension (item 4 above). Item 7 omits a reference to section 771NC in section 771NA.

Items 9, 10 and 11 amend paragraph 771NH(b) (automatic rate reduction - partner starting to receive benefit) to provide for automatic rate reduction where the PA's partner starts to receive a different pension.

Item 12 amends subsection 771NU(1) to provide that PA continues to be payable during a bereavement period if the pensioner partner of a PA recipient dies. This amendment is a consequence of changing the PA qualification provisions to allow a person with a pensioner partner to qualify for PA (item 2 above). The amendment allows a person to remain qualified for PA during the bereavement period if the deceased partner was receiving a pension and was a long-term social security recipient.

Item 13 inserts a new paragraph 771NU(3)(e) which applies when the pensioner partner of a PA recipient dies. In that case, the rate of PA payable is the rate that would be payable if the PA recipient (in the legislation referred to as the surviving partner) had been qualified for JSA and was not a member of a couple. This amendment allows the non-partnered JSA rate to be paid to the surviving member of the couple.

Item 14 makes a minor technical amendment to paragraph 771NV(1)(c).

Item 15 amends the method statement in section 771NX (bereavement lump sum calculator). The amended method statement provides that, for the purposes of working out a lump sum bereavement payment, if the couple are an illness separated couple or a respite care couple, then they are not to be treated as an illness separated/respite care couple.

Notes after the substituted steps in the method statement direct the reader to a definition of "illness separated couple" and "respite care couple".

Item 16 makes a minor technical amendment to step 4 of subsection 771NX(1) to substitute "(5) or (6)" for (5).

Item 17 makes a consequential amendment to the note to step 4 of the lump sum calculator method statement in subsection 771NX(1). The amendment includes a reference to the new pensions inserted by item 2.

Item 18 makes a minor technical amendment to step 6 of subsection 771NX(1) to replace the term "lump sum bereavement" with the term "bereavement lump sum".

Item 19 inserts a new subsection 771NX(6). Subsections 771NX(1) to (5) provide for the PA recipient's notional rate of payment that is used in calculating lump sum bereavement payments for a deceased partner who was receiving a social security benefit. New subsection 771NX(6) provides for the PA recipient's notional rate of payment to be used where the deceased partner was in receipt of a pension. The new subsection states that the surviving partner's notional rate is to be calculated as if the surviving member was not a member of a couple and the person was receiving JSA. This amendment recognises that the surviving partner (ie, the PA recipient) would no longer be a member of a couple and would therefore lose qualification for PA. Accordingly, the person is likely to claim JSA at the end of the bereavement period.

Item 20 amends the method statement in section 771NY (bereavement lump sum calculator). The amended method statement provides that, for the purposes of working out a lump sum bereavement payment, if the couple are an illness separated couple or a respite care couple, then they are not to be treated as an illness separated/respite care couple.

Notes after the substituted steps in the method statement direct the reader to a definition of "illness separated couple" and "respite care couple".

Item 21 makes a minor technical amendment to section 771NY to substitute the correct section cross-reference.

Item 22 inserts a new fringe benefits provision (new section 771NZA). This provision mirrors the fringe benefit provisions in the other social security benefit modules of the Principal Act. A person may qualify for fringe benefits if the person is receiving PA and has been receiving a pension or benefit continuously for the past 12 months. In addition, the person must be over 60, an Australian resident and be residing in Australia. A note signposts the definition of "Australian resident".

New subsection 771NZA(2) alerts the reader to the fact that, if the person is qualified for fringe benefits, the person may be qualified for various benefits and concessions from the Commonwealth, State and Territory governments and authorities and local authorities. A note points out that some examples of these Commonwealth concessions and benefits are contained in the National Health Act.

Item 23 inserts a reference to PA in subsection 1061Q(3) to allow a person to qualify for telephone allowance if the person meets the qualification requirements in section 1061Q. Prior to this amendment, partner allowees qualified for telephone allowance under subsection 1061Q(3A) which required that the person have a partner in receipt of a social security benefit. This amendment is required because PA will be extended to partners of certain pensioners.

Item 24 amends section 1187 (reduction in payment where NEIS or AEIS payments are received). Paragraph 1187(1A)(b) will be amended to provide that a person's benefit may be reduced if NEIS or AEIS is paid "in respect of" that person.

This amendment is made because NEIS and AEIS payments may include a component that is made in respect of a person's partner. Where a NEIS or AEIS payment is made in respect of the person's partner, that component of the payment will be taken into account in reducing the benefit of the person's partner (rather than the AEIS or NEIS recipient) under Part 3.15 of the Act.

Item 25 amends section 1223AA (debts arising from prepayments). Subsection 1223AA(2) is amended to provide that a prepayment includes an early PA payment made under section 771KL because of a public holiday etc. This provision allows the Commonwealth to recover a debt if a person is overpaid because the person is issued an early payment under section 771KL.

Item 26 inserts two new clauses into the savings and transitional provisions in Schedule 1A of the Principal Act.

Under new clause 74, a person who is receiving PA immediately prior to the changes in this Schedule, does not have to satisfy paragraph 771HA(1)(h). Such a person will remain qualified for PA despite having had recent workforce experience (clause 74). Subclause 74(2) provides that this exemption only applies to a partner allowee until PA ceases to be payable to the person; and

Under new clause 75, certain PA recipients who lose qualification for PA because of the amendments in this Schedule, will be granted their partner's period of CES registration. This will allow transferees who are at risk of long-term unemployment to qualify for NSA and have access to NSA programs.

Clause 75 applies to a person who:

•

as at 30 June 1995 is under 40, has no dependent children and is receiving PA;

*transfers from PA to JSA or NSA; and

•

is assessed by the Employment Secretary as being at risk of long-term unemployment.

A person who is granted their partner's unemployment duration under clause 75 will be deemed to be registered with the CES in an allowance category as unemployed for that period. A person who is deemed to be registered as unemployed for a period of 12 months or more may qualify for NSA under paragraph 593(1)(h).

PART 2 - AMENDMENTS OF OTHER ACTS

Items 27 to 33 amend the Health Insurance Act 1973 (the Health Act). Items 34 to 35 amend the National Health Act 1953 (the NHA).

Amending the definition of "DSS benefit dependant"

Item 27 amends the definition of "DSS benefit dependant" in subsection 3(1) of the Health Act to include a person who has a partner in receipt of PA. This amendment allows a person receiving a social security benefit to have their PA recipient partner included on their health care cards.

This amendment will take effect from 20 September 1994 to ensure that partner allowees do not lose any health care card entitlements as a consequence of the introduction of PA.

Item 28 amends the definition of "DSS benefit dependant" in subsection 3(1) of the Health Act to omit partner allowee's from the definition. This amendment takes effect from 1 July 1995 as partner allowees will be eligible to receive health care cards in their own right from 1 July 1995.

Amending the definition of "unemployment benefit"

Item 29 amends subsection 3(1AAA) of the Health Act (definition of "unemployment benefit") to include a reference to PA.

Amending the definition of "disadvantaged persons"

Items 30 to 33 amend subsection 4D(1) and section 5D (definition of disadvantaged persons) of the Health Act to include a reference to PA.

These amendments will allow a health care card to be issued to partner allowees under subsection 84(1) of the Health Act.

Amending the definition of "pensioner"

Items 31 and 32 amend subsection 4(1) (definition of "pensioner") of the NHA. A "pensioner" is currently defined as any JSA/NSA/SA or special beneficiary over 60 years of age who has been in continuous receipt of benefit for at least 12 months (that is, any social security beneficiary who is over 60 and has continuously received benefit for 12 months or more).

As a consequence of introducing new payment types into the Principal Act, a consequential amendment will be made to section 4 of the NHA to substitute the term "social security benefit" for the term "widow allowance, widow B pension, unemployment benefit or special benefit". This will allow a Pensioner Concession Card to be issued to all beneficiaries over 60 years of age who are in continuous receipt of benefit for at least 12 months without requiring the section to be amended every time a new social security benefit is introduced to the Act. (Item 34 refers)

Item 35 makes a separate amendment to include the new widow allowance that will be introduced on 1 January 1995.

SCHEDULE 4

AMENDMENTS RELATING TO WIDOW ALLOWANCE

1. Summary of the proposed changes

This initiative, announced following the White Paper on Employment and Growth and the 1994 Budget, introduces a new social security benefit called widow allowance. The payment will be available from 1 January 1995.

Essentially, widow allowance will be payable to a woman who is aged 50 or more, who is no longer partnered, who became widowed, separated or divorced after turning 50 and who has no recent workforce experience. It will be paid at the same rate and under the same income and assets tests as apply to job search allowance and newstart allowance but will not be activity tested.

Women receiving a social security benefit or pension immediately before 1 January 1995 may transfer to widow allowance on 1 January 1995 without having to meet the no recent workforce experience requirement, providing that they meet the other criteria and apply to transfer to widow allowance before the date of implementation.

Women receiving widow allowance will have access to labour market assistance to find work, including the Jobs, Education and Training (JET) program but will not be eligible for assistance under the Job Compact. Women receiving widow allowance will be able to apply for payment of an employment entry payment and an education entry payment (provision for this payment to widow allowees is dealt with in Schedule 5).

No new claims for widow allowance will be able to be granted on or after 1 July 2005 unless a woman claiming the allowance was born before 1 July 1955.

As a consequence of the introduction of widow allowance, the existing widowed person allowance is to be renamed bereavement allowance. There are no other changes to that payment.

2. Background

A decision was made in 1987 to phase out widow B pension. Widow B pension is a social security payment that was payable initially to women over the age of 50 who had no ongoing caring responsibilities; that is to say, they were not looking after children, not caring for a disabled relative or were not themselves disabled.

The premise behind that decision was basically to shift the assumptions made about women's participation in the paid workforce. There has been a major transformation in recent years in the degree of female participation in the workforce. Taking women in the 45 to 54 year age group, approximately 70% of single women and approximately 65% of partnered women are active workforce participants. From a labour market viewpoint, the idea that women are considered to be dependent simply by virtue of their gender irrespective of whether they have caring responsibilities or not, was considered to be anachronistic.

However, there is a need to recognise that many older women have grown up with a set of expectations about their role. The experience of the phasing out of widow B pension has shown that a number of such women have experienced significant difficulties. Many have had no recent workforce experience and have faced difficulties in readapting to the workforce.

The position of these women has been reviewed in the light of initiatives arising out of the White Paper. The introduction of a widow allowance will ensure a close alignment in treatment of those older women who currently have a partner and those who have lost the support of a partner.

3. Clauses involved in the changes

Clause 2(4): states that paragraph 6(1)(a), clause 13 and Part 1 of Schedule 4

are taken to have commenced on 1 July 1994.

Clause 2(5): states that paragraph 6(1)(b), subclauses 6(2) and (3), clauses 14 and 15

and Parts 2 and 3 of Schedule 4 commence on 1 January 1995.

Clause 6(1): states that the Principal Act is amended as set out in Schedule 4.

Clause 6(2): states that the other Acts referred to in Part 3 of Schedule 4 are amended

as set out that Part.

Clause 13: deals with transitional provisions relating to qualifying residence exemption

of widow allowance.

Clause 14: deals with transitional provisions relating to the income tax treatment of

widowed person allowance.

Clause 15: states that the amendments of the Income Tax Assessment Act 1936 made

by subclause 6(2)and Divisions 1 and 2 of Part 3 of Schedule 4 apply in

relation to payments made on or after 1 July 1994.

Schedule 4:

Part 1: inserts a new Part 2.8A after Part 2.8 of the Principal Act to provide for widow allowance.

Part 2: makes some consequential amendments to the Principal Act.

Part 3: makes some consequential amendments to the Data-matching Program

(Assistance and Tax) Act 1990, the Income Tax Assessment Act 1936,

the Veterans' Entitlements Act 1986 and the Health Insurance Act 1973.

4. Explanation of the changes

Clause 6 provides that the Principal Act and other Acts are amended as set out in Schedule 4 of the amending Act.

New Part 2.8A of the Principal act is to be taken to have commenced on 1 July 1994. Some of the provisions in that new Part refer to a "qualifying residence exemption for widow allowance". However, as the concept of a "qualifying residence exemption" will not be introduced into the Principal Act until it is amended by the Social Security (1994 Budget and White Paper) Amendment Act 1994 on 1 January 1995, there is a need for a transitional provision - clause 13 - to provide that for the purposes of new Part 2.8A, the concept applies from 1 July 1994.

The name of the payment type, widowed person allowance, is to be renamed bereavement allowance from 1 January 1995. Consequential amendments are to be made to the Income Tax Assessment Act 1936 to reflect this name change. A transitional provision such as clause 14 is necessary so that any payments of widowed person allowance from 1 July 1994 until 31 December 1994 will be taken to be payments of bereavement allowance.

Clause 15 states that the amendments of the Income Tax Assessment Act 1936 made by subclause 6(2)and Divisions 1 and 2 of Part 3 of Schedule 4 apply in relation to payments made on or after 1 July 1994.

Item 1 of Part 1 of Schedule 4 inserts a new Part 2.8A after Part 2.8 of the Principal Act to provide for widow allowance. Item 1 is taken to have commenced on 1 July 1994. The purpose of a retrospective commencement date is to allow claims for those women transferring from other social security pensions or benefits to be lodged and processed before 1 January 1995. No payments of widow allowance, however, will be made before 1 January 1995.

PART 1 - AMENDMENT TO INSERT NEW PART 2.8A IN THE SOCIAL SECURITY ACT 1991

NEW PART 2.8A - WIDOW ALLOWANCE

New Division 1 - Time limits on grants of widow allowance

New section 408AA - Time limit on grants

New section 408AA imposes a time limit on the grant of claims for widow allowance.

No claims will be able to be granted on or after 1 July 2005 unless the claimant was born before 1 July 1955.

This is in recognition of the fact that many of the women who might otherwise claim widow allowance will either have reached age pension age or have had recent workforce experience.

New Division 2 - Qualification for and payability of widow allowance

New Subdivision A - Qualification

New section 408BA

New subsections 408BA(1) and (2) provide alternative criteria upon which a woman may qualify for widow allowance.

New subsection 408BA(1) effectively provides for a transitional group - those women already receiving a social security pension or benefit immediately before 1 January 1995 and who transfer to widow allowance from that date.

A woman qualifies for widow allowance under new subsection 408BA(1) in respect of a period, if the woman:

•

turned 50 after 1 July 1987 but before 1 January 1995; and

•

was a member of a couple and since turning 50, her partner died, she separated from her partner or she was divorced from her husband; and

•

claims widow allowance before 1 January 1995; and

•

was receiving a social security pension or a social security benefit immediately before 1 January 1995; and

throughout the period she:

•

is not a member of a couple; and

•

is an Australian resident or has a 'qualifying residence exemption' for a widow allowance (this applies to refugees); and

•

is in Australia.

Notes signpost the definitions of 'member of a couple', 'Australian resident' and qualifying residence exemption'.

A note also alerts the reader to new subsection 408BA(4) that allows certain temporary absences to be treated as presence in Australia.

New subsection 408BA(2) sets out the qualification criteria that will operate for all claims made on or after 1 January 1995.

Under new subsection 408BA(2), a woman qualifies for widow allowance in respect of a period, if the woman:

•

has turned 50; and

•

was a member of a couple and since turning 50, her partner died, she separated from her partner or she was divorced from her husband; and

•

satisfies the Secretary that she has no recent workforce experience when she claims widow allowance; and

•

either:

•

has been an Australian resident continuously for 26 weeks immediately before the day she lodged her claim for widow allowance; or

•

has at any time been an Australian resident for a continuous period of at least 10 years; or

•

has a 'qualifying residence exemption' for a widow allowance (this applies to refugees)

both the woman and her partner were Australian residents at the time when her partner died or she separated from her partner or she divorced from her husband; and

•

throughout the period she:

•

is not a member of a couple; and

•

is in Australia.

The same notes included for subsection 408BA(1) are repeated for subsection (2). An additional note signposts the definition of 'recent workforce experience' in subsection (3).

New subsection 408BA(3) defines what is meant by 'recent workforce experience' for the purposes of new subsection (2) above. It is employment of 20 hours or more a week for a total of 13 weeks or more at any time during the 12 months immediately before the day the woman lodged her claim for widow allowance.

As noted above, new subsection 408BA(4) that allows certain temporary absences to be treated as presence in Australia. If a temporary absence is no longer than 3 months, then the woman is taken to be in Australia for the whole of that period. If the temporary absence is longer, the woman is taken to be in Australia only for the first 3 months of that period. New subsection 408BA(5) provides that the purpose and intended duration of the absence, together with the frequency of such absences are to be considered when determining whether an absence is 'temporary'.

New section 408BB - Assurance of support

This section may operate to disqualify a woman from widow allowance in respect of a period even if the woman meets the qualification criteria set out in new subsection 408BA(1) or (2).

New section 408BB provides that a woman is not qualified for widow allowance in respect of a period if the Secretary is satisfied that:

•

an assurance of support is in force in respect of the woman for that period; and

•

that throughout the period the person who gave the assurance of support is likely to be willing and able to provide an adequate level of support to the assuree (that is, the woman); and

•

that throughout the period it would be reasonable for the assuree to accept that support.

A note signposts the definition of 'assurance of support'.

New Subdivision B - Payability

New section 408CA - Widow allowance not payable in some circumstances

New subsection 408CA(1) lists the situations in which widow allowance is not payable to a woman and includes references to the relevant sections that provide the substantive provisions. Widow allowance may not be payable to a woman for the following reasons:

•

the allowance has not commenced to be payable (new sections 408CB and 408GA of the Principal Act);

•

she has not provided her tax file number (new section 408CD of the Principal Act);

•

the value of her assets exceeds the widow allowance assets value limit (new section 408CE); or

•

a pension or another benefit is being paid to her (new section 408CF);

•

she is receiving a payment under certain educational schemes (new section 408CF); or

•

she is receiving payments under a LEAP program (new section 408CF); or

•

she is receiving payments under a scheme providing allowances to refugees (new section 408CF); or

•

she is receiving income that is paid by a community or group from funds provided under a Commonwealth funded employment program (new section 408CG); or

•

she is in gaol (see Part 3.13 of the Principal Act); or

•

the woman is subject to a compensation preclusion period (Division 3 of Part 3.14 of the Principal Act)

New subsection 408CA(2) provides that widow allowance is not payable if the woman's rate of payment would be nil.

New section 408CB - Widow allowance generally not payable before claim

New section 408CB provides that widow allowance is not payable to a woman before the woman's provisional commencement day. New section 408CC identifies the provisional commencement day.

New section 408CC - Provisional commencement day

New section 408CC introduces the concept of a provisional commencement day.

General rule

New subsection (1) provides the general rule. It specifies that a woman's provisional commencement day is:

(a)

1 January 1995 or

(b)

subject to exceptions outlined below, the day on which the woman claims widow allowance whichever is the latter.

The reference to 1 January 1995 has been included so as to make it clear that widow allowance will not be payable under any circumstances before that date, even if a woman lodges a claim before that date.

Exceptions to (b) are provided for in new subsections 408CC(2) to (6).

Initial incorrect claim followed by claim for widow allowance

New subsection 408CC(2) sets out the circumstances in which widow allowance may be payable from a day before it is claimed. It provides that if:

•

a woman makes a claim (the "initial claim") for:

•

a different social security pension, a service pension or a social security benefit; or

•

a pension, benefit or allowance or other payment under another Act, or a program administered by the Commonwealth, that is similar in character to widow allowance; and;

•

the woman was qualified for widow allowance when the initial claim was lodged; and

•

the woman subsequently lodges a widow allowance claim; and

•

the Secretary considers it reasonable for this provision to apply,

then the woman's provisional commencement day is the day on which the woman made the initial claim.

Transferees

New subsection 408CC(3) provides that if a woman is a 'transferee' to widow allowance ('transferee' is defined in subsection 23(6) of the Principal Act) and she claims widow allowance within 14 days after the 'transfer day' (defined in subsection 23(7) of the Principal Act), then her provisional commencement day is her transfer day.

A note signposts the definitions of 'transferee' and 'transfer day'.

Early claim

New subsection 408CC(4) allows a claimant for widow allowance to lodge a claim up to 3 months before the woman becomes qualified.

If the woman becomes qualified for widow allowance within the 3 month period after lodging the claim, then the first day on which she becomes qualified for widow allowance is her provisional commencement day.

Claim resulting from major disaster

New subsection 408CC(5) provides that a claim may be backdated to the day the claimant was affected by a major disaster if the woman:

•

claims a disaster relief payment; and

•

is qualified for the disaster relief payment; and

•

as a result of the major disaster to which the payment relates, claims widow allowance within 14 days of claiming the disaster relief payment.

New subsection 408CC(6) provides that if a woman's partner dies and she lodges a claim for widow allowance within 4 weeks after the day on which her partner died, then her provisional commencement day is the day her partner died.

New subsection 408CD - Provision of woman's tax file number

New section 408CD provides that widow allowance is not payable to a woman if the Secretary makes a request under the Principal Act that she provide a written statement of her tax file number and she does not satisfy that request.

New subsection 408CD(1) provides the general rule that if a woman is requested by the Secretary under new section 408DF or 408LB to give the Secretary a written statement of her tax file number and the woman fails to provide the requested statement or a declaration by the woman under new subsection 408CD(2) or (3) within 28 days of the requirement, then widow allowance is not payable to the woman.

New subsections 408CD(2) and (3) detail the situations in which a woman is taken to have provided a tax file number.

New subsection 408CD(2) covers the situation where the woman:

•

completes a declaration that states that she has a tax file number but does not know what it is and has asked the Commissioner of Taxation (the Commissioner) to advise her of the number; and

•

authorises the Commissioner to tell the Secretary whether the woman has a tax file number and, if so, what that tax file number is; and

•

the Commissioner has not told the Secretary that the woman does not have a tax file number.

New subsection 408CD(3) covers the situation where the woman:

•

completes a declaration that states that an application for a tax file number is pending; and

•

authorises the Commissioner to tell the Secretary her tax file number or that the application has been refused or withdrawn; and

the Commissioner has not told the Secretary either that the woman has not applied for a tax file number or that her application for a tax file number has been refused and the application for that tax file number has not been withdrawn.

New section 408CE - Assets test - allowance not payable if assets value limit exceeded

New section 408CE sets out the assets test for claimants of widow allowance.

New subsection 408CE(1) states that a widow allowance is not payable to a woman if the value of her assets (as defined in Part 1.2 of the Principal Act) exceeds the applicable assets value limit.

New subsection 408CE(2) indicates that a woman's assets value limit is worked out using the table set out in the subsection. The reader selects the situation applicable to the woman and picks the corresponding value in the 'assets value limit' column of the table.

A notes signposts the definition of 'homeowner' used in the table. Other notes indicate that the values are indexed annually or adjusted and that financial hardship provisions might apply.

New section 408CF - Multiple entitlement exclusion

The purpose of this section is to avoid double dipping.

New subsection 408CF(1) provides that widow allowance is not payable to a woman if the woman is receiving a service pension.

New subsection 408CF(2) provides that if a woman is receiving widow allowance and another social security benefit, a social security pension or a service pension becomes payable to her then widow allowance is not payable to her.

The notes indicate that another payment type will generally not become payable to the woman until she claims it. Note 3 directs the reader to new section 408KA to determine the day on which the widow allowance ceases to be payable to the woman.

New subsection 408CF(3) provides that widow allowance is not payable to a woman if she is an 'armed services widow' (note 1 directs the reader to the definition of 'armed services widow') and she is receiving a pension under certain sections of the Veterans' Entitlements Act 1986 unless she has been receiving that pension continuously since before 1 November 1986 and before that date she was also receiving a social security benefit.

New subsection 408CF(4), subject to new subsections 408CF(5) and (6), provides that widow allowance is not payable to a woman if a payment has been made or may be made in respect of the woman for that period under:

•

a prescribed educational scheme other than the ABSTUDY Tertiary Scheme to the extent that it applies to part-time students; or

•

the scheme to provide an allowance known as the Maintenance Allowance for Refugees; or

•

a LEAP program.

Notes signpost the definitions of 'prescribed educational scheme' and 'LEAP program'.

New subsection 408CF(5) qualifies new subsection 408CF(4) by stating that if a woman enrols in a full-time course of education and one of the payments referred to above may be made in respect of her, then the Secretary may nevertheless decide that widow allowance is payable to her for a period before she starts the course.

New subsection 408CF(6) qualifies new subsection 408CF(4). It states that if the woman enrols in a full-time course of education that is to last for 6 months or more, an application is made in respect of the woman under the AUSTUDY Scheme, ABSTUDY Schools Scheme or the ABSTUDY Tertiary Scheme and she was receiving widow allowance immediately before starting the course, then the Secretary may nevertheless decide to pay widow allowance to her until the application is determined or the end of 3 weeks commencing on the day that the course starts, whichever happens first.

New section 408CG - Commonwealth funded employment program exclusion

The purpose of this section is to avoid double dipping.

New section 408CG provides that widow allowance is not payable for a period if a woman has received, or may receive, income for that period that is paid by a community or group from funds provided under a Commonwealth funded employment program.

New Division 3 - Claim for Widow Allowance

New section 408DA - Need for a claim

New subsection 408DA(1) provides that a woman who wants to be granted widow allowance must make a proper claim for that payment.

In order to be considered a proper claim, the claim will need to conform with the requirements of new sections 408DB, 408DC and 408DD relating to the form of the claim, where the claim is to be lodged and requirements relating to residency and physical presence in Australia. A note directs the reader to those sections.

If at the time a woman makes a claim for widow allowance, the woman is not qualified for widow allowance, the claim will be taken not to have been made (new subsection 408DA(2)). This will not, however, apply to early claims covered by new subsection 408CC(4).

New section 408DB - Form of claim

New section 408DB provides that a claim for widow allowance must be in writing and in accordance with a form approved by the Secretary.

New section 408DC - Lodgment of claim

New section 408DC provides that a claim for widow allowance must be lodged at an office of the Department or at a place, or with a person, approved by the Secretary. The Secretary will not be able to approve a place, or a person, for lodgment of claims unless the place or person is in Australia unless the claim is made under an international agreement.

A note refers the reader to international agreements in Part 4.1 of the Principal Act.

New section 408DD - Claimant must be Australian resident and in Australia

New section 408DD provides that a woman claiming widow allowance must be an Australian resident and in Australia on the day on which the claim is lodged.

New section 408DE - Claim may be withdrawn

New section 408DE provides that a claim for widow allowance may be withdrawn at any time before the claim is determined. The withdrawal may be made orally or in writing. A claim that is withdrawn is taken to have not been made.

New section 408DF - Secretary may request claimant to give statement of claimant's tax file number

New subsection 408DF provides that a claimant for widow allowance may be requested but not compelled by the Secretary to:

•

provide a written statement of her tax file number if she has one; or

•

if she does not have a tax file number, apply for one and give the Secretary a written statement of her tax file number after the Commissioner of Taxation has issued it.

New subsection 408DF(2) provides that widow allowance is not payable if at the end of 28 days after the request has been made, the woman does not satisfy the request and the Secretary has not exempted the claimant from having to satisfy the request.

A note indicates that in order to satisfy the request it may be possible for the woman to provide a declaration about her tax file number and an authority to the Commissioner of Taxation to authorise the Commissioner to provide information about the woman's tax file number to the Secretary. This is provided for in new subsections 408CD(2) and (3).

New section 408DG - Secretary may require claimant to take action to obtain a comparable foreign payment

New subsection 408DG provides that a claimant may be given a notice by the Secretary requiring the woman to take reasonable action to obtain a comparable foreign payment (CFP) from a CFP country.

New subsections 408DG(2) and (3) set out the requirements for notices issued under subsection 408DG(1). The notice must:

•

be in writing; and

•

be given personally or by post; and

•

specify the period within which the statement must be given to the Department (at least 14 days after the notice is given).

New subsection 408DG(4) provides that the Secretary may reject a claim if the Secretary is satisfied that the claimant has not taken reasonable action to obtain a CFP payment.

New subsection 408DG(5) provides that the claimant only satisfies subsection (4) if she takes reasonable action to obtain a CFP payment at the highest possible rate.

New Division 4 - Determination of claim

New section 408EA - Secretary to determine claim

New section 408EA provides that the Secretary must determine, in accordance with the Principal Act, a claim for widow allowance.

New section 408EB - Grant of claim

New section 408EB provides that the Secretary must determine that a claim for widow allowance is to be granted if the Secretary is satisfied that the woman is qualified for widow allowance and widow allowance is payable.

New section 408EC - Determination of claims by computer

This section authorises the determination of claims for widow allowance of those women transferring from another social security benefit or pension. It will be particularly useful in the case of those women making claims for widow allowance prior to 1 January 1995 as it will enable a determination of a claim to be granted or rejected by the operation of a computer program approved by the Secretary.

Where such a determination is made, then it is taken to be a decision by the Secretary under new section 408EB determining that the claim is to be either granted or rejected. section 408EC provides that if a woman is a transferee and she claims widow allowance

New section 408ED - Date of effect of determination

New section 408ED specifies the date of effect of a determination under new section 408EB, except where new subsection 408ED(2), (3) or (4) applies. The determination takes effect on the day on which the determination is made or on such later day as is specified in the determination.

New subsections 408ED(2), (3) and (4) specify the date of effect of a determination granting a claim that results from a woman asking for a review of the original decision rejecting the claim.

New subsection 408ED(2) deals with the situation where an applicant for widow allowance:

•

is notified of a decision to reject the woman's claim; and

•

applies to the Secretary under section 1240, within 3 months after the notification is given, for a review of that decision; and

•

is granted widow allowance as a result of the review.

The determination to grant the claim in this situation takes effect on the day on which the decision to reject it took effect. This enables arrears to be paid to the date on which the decision to reject the claim took effect.

New subsection 408ED(3) deals with the situation where an applicant for widow allowance:

•

is notified of a decision to reject the woman's claim;

•

applies to the Secretary under section 1240, more than 3 months after the notification is given, for a review of that decision; and

•

is granted widow allowance as a result of the review.

In this case, the determination to grant the claim takes effect on the day on which the woman requested a review of the decision to reject the claim.

New subsection 408ED(4) deals with the situation where an applicant for widow allowance:

•

is notified of a decision to reject the woman's claim; and

•

applies to the Secretary under section 1240 at ant time for a review of the decision; and

•

is granted widow allowance as a result of the review.

In this case, the determination to grant the claim takes effect on the day on which the decision to reject it took effect. As was the case with new subsection 408ED(2), this enables arrears to be paid to the date on which the decision to reject the claim took effect.

New Division 5 - Rate of Widow Allowance

New section 408FA - How to work out a woman's widow allowance rate

New section 408FA provides that a woman's rate of widow allowance is worked out using the Benefit Rate Calculator B at the end of section 1068.

A note alerts the reader to the special rule that may apply on a person's release from gaol.

New section 408FB - Widow allowance training supplement

New section 408FB provides for the payment of a widow allowance training supplement to certain women who start vocational training.

New subsection 408FB(1) provides for an increase in the amount payable to a widow allowee where the woman is undertaking a course of vocational training approved by the Employment Secretary for the purposes of this provision.

Under new subsections 408FB(2) and (6), the Employment Secretary is to have regard to training expenses, living away from home expenses, the expenses associated with maintaining the woman's usual place of residence while away on training and the woman's age, in calculating the amount of the increase, if any.

The maximum amount of the increase for the various components is specified in each of new subsections 408FB(3), (4) and (5).

New Division 6 - Payment of Widow Allowance

New section 408GA - Commencement of payment of widow allowance

New section 408GA provides that widow allowance becomes payable to a woman on the first day on which the woman is qualified for widow allowance and there is no provision in the Principal Act that makes widow allowance not payable.

Note 1 directs the reader to the qualification provision for widow allowance: new section 408BA.

Note 2 directs the reader to section 408CA that describes the circumstances in which widow allowance is not payable.

New section 408GB - Instalments

This section provides that widow allowance is to be paid by instalments, for periods and at times determined by the Secretary.

New section 408GC - Instalments for period less than a fortnight

New section 408GC specifies the formula for working out the instalment of widow allowance if it is for a period of less than a fortnight, or if the period consists of a number of whole fortnights plus part of a fortnight. The widow allowance rate is multiplied by the number of week days in the period that is less than a fortnight and divided by 10. Any instalments representing whole fortnights are then added.

New section 408GD - Rounding off instalment

New subsection 408GD(1) specifies that an instalment is to be increased or decreased to the nearest whole cent if it would otherwise contain a part of a cent.

New subsection 408GD(2) makes it clear that, if the part of such a cent is 0.5, it is to be increased to the next whole cent rather than decreased.

New subsection 408GD(3) and 408GD(4) ensure that if an amount of pharmaceutical allowance is to be added to a woman's maximum basic rate in working out the amount of an instalment of widow allowance and, then the minimum amount that she can receive is the fortnightly amount of pharmaceutical allowance.

New subsection 408GD(5) provides that in any event, if the amount of an instalment is would be less than $1.00, the amount is to be increased to $1.00.

New section 408GE - Instalments to be paid to woman or nominee

New subsection 408GE(1) provides that instalments of a woman's widow allowance are to be paid to her unless the Secretary directs that the whole or part of the instalments is to be paid to someone else on her behalf ( new subsections 408GE(2) and (3)).

New section 408GF - Payment into bank account etc

New subsections 408GF(1), (2) and (3) provide that payments of widow allowance are to be made by direct deposit into an account with a bank, credit union or building society nominated and maintained by the woman or her nominee (if applicable). The account can be maintained by the person either alone or jointly or in common with another person.

Unless new subsections 408GF(6) and (7) apply, where a person has not nominated an account, then he or she will not be paid until the person subsequently nominates an account (new subsections 408GF(4) and (5)).

The Secretary may decide in the circumstances of a particular case that some other manner of payment is appropriate and that payment of all or some of the widow allowance should be paid in that other way. This would normally be done in the case of persons with no reasonable access to banking or like facilities (new subsections 408GF(6) and (7)).

New section 408GG - Where allowance payday would fall on public holiday etc

New section 408GG provides a discretion to the Secretary to direct the earlier payment of widow allowance if it cannot be paid on the normal day, for example, because of a public or bank holiday.

New section 408GH - Payment of allowance after death

If a woman to whom widow allowance is payable dies and an amount of the allowance is outstanding at the date of death, new subsection 408GH(1) allows the Secretary to pay the outstanding amount to another person who, in the Secretary's opinion is best entitled to it. That person must apply to receive the amount within 6 months of the death or within a further period allowed by the Secretary in special circumstances.

New subsection 408GH(2) makes it clear that once a payment has been made under new subsection 408GH(1), the Commonwealth has no liability to any other person in respect of that amount.

New Division 7 - Protection of widow allowance

New section 408HA - Widow allowance to be absolutely inalienable

New subsection 408HA(1) provides that, except when new subsections 408HA(2) or (3) or section 1359 applies, a woman's widow allowance is to be absolutely inalienable, whether by way of, or in consequence of, sale, assignment, charge, execution, bankruptcy or otherwise.

Payments to the Commissioner of Taxation at recipient's request

New subsection 408HA(2) and section 1359 enable the Secretary to make deductions from a woman's widow allowance instalments for taxation purposes. The first is a discretionary provision that flows from the recipient asking the Secretary to make the deductions and pay them to the Commissioner of Taxation. The other provision is mandatory and flows from a request from the Commissioner of Taxation to the Secretary to make deductions to the Commissioner under subsection 218(6B) of the Income Tax Assessment Act 1936.

A note directs the reader to section 1359 and requires the Secretary to make deductions from a person's pension, benefit or allowance if requested by the Commissioner of Taxation.

Deductions from instalments with recipient's consent

New subsection 408HA(3) enables the Secretary to make deductions from a woman's widow allowance instalments when the woman consents under section 1234A of the Principal Act.

A note indicates that section 1234A allows the Secretary to recover a debt from a person other than the debtor if the person is receiving a social security payment and consents to the Secretary making the deductions.

New section 408HB - Effect of garnishee or attachment order

New section 408HB protects a "saved amount" of widow allowance instalments in a recipient's bank account from garnishment by third party creditors. The "saved amount" is calculated by working out the amount of the instalments of widow allowance credited to the woman's account in the 4 week period immediately before the court order came into force and deducting from that amount the total amount withdrawn from the account during the same period.

The bank account may be maintained by the woman alone or jointly or in common with another person.

A note advises the reader that a person affected by a garnishee order may have other saved amounts if the person receives telephone allowance (section 1061X of the Principal Act) or pharmaceutical allowance (section 1061EB of the Principal Act).

New Division 8 - Recipient's obligations

New section 408JA - Secretary may request recipient to give statement of recipient's tax file number

New subsection 408JA provides that a recipient of widow allowance may be requested but not compelled by the Secretary to:

•

provide a written statement of her tax file number if she has one; or

•

if she does not have a tax file number, apply for one and give the Secretary a written statement of her tax file number after the Commissioner of Taxation has issued it.

New subsection 408DF(2) provides that widow allowance is not payable if at the end of 28 days after the request has been made, the woman does not satisfy the request and the Secretary has not exempted the recipient from having to satisfy the request.

A note indicates that in order to satisfy the request it may be possible for the woman to provide a declaration about her tax file number and an authority to the Commissioner of Taxation to authorise the Commissioner to provide information about the woman's tax file number to the Secretary. This is provided for in new subsections 408CD(2) and (3).

New section 408JB - Secretary may require notice of the happening of an event or change in circumstances

New subsections 408JB(1) and (2) enable the Secretary to give a woman receiving widow allowance a notice requiring the woman to notify the Department if a specified event or change in circumstances occurs or is likely to occur that might affect payment.

New subsection 408JB(3) requires the notice to:

•

be in writing; and

•

be given personally or by post; and

•

specify how the information is to be given to the Department; and

•

specify the period within which the information must be given; and

•

specify the authority for the notice; and

•

describe itself as a "recipient notification notice".

New subsection 408JB(4) provides that the notice is not invalid merely because it fails to specify how the notice is to be given to the Department or it fails to specify the authority for the notice.

New subsection 408JB(5) provides that the period specified in the notice must end 7 or more days after the day on which the event or change in circumstances occurs or after the day on which the woman becomes aware that the event or change in circumstances is likely to occur.

New subsection 408JB(6) provides that if a woman is required by a notice to inform the Department of any proposal by the woman to leave Australia, the 7 day period under subsection 408JB(5) does not apply to that requirement.

New subsection 408JB(7) provides that, if a notice requires information about receipt of compensation, the period specified in the notice must end at least 7 days after the day on which the person becomes aware that she has received, or is about to receive, a compensation payment.

New subsection 408JB(8) sets out the compliance conditions for new subsection 408JB(1) and the penalties for contravening the conditions. If a woman receiving widow allowance is capable of complying with the notice but fails or refuses to do so, she may be fined or sent to gaol or both.

A note refers the reader to sections of the Crimes Act 1914 that allows a court to impose an appropriate fine instead of, or in addition to, a term of imprisonment.

New subsection 408JB(9) allows section 408JB to operate outside Australia. It extends to acts, omissions, matters and things outside Australia, whether or not in a foreign country. It also extends to all persons to whom it would normally apply, regardless of their nationality or citizenship.

New section 408JC - Secretary may require recipient to give particular information relevant to payment of widow allowance

New subsection 408JC(1) provides for the Secretary to give a woman to whom widow allowance is being paid a notice requiring her to give the Department of Social Security a written statement in an approved form about a matter that might affect payment of widow allowance.

New subsection 408JC(2) requires the notice to:

•

be in writing; and

•

be given personally or by post; and

•

specify how the information is to be given to the Department; and

•

specify the period within which the statement must be given; and

•

specify that the notice is a recipient statement notice given under the Principal Act.

New subsection 408JC(3) provides that a notice is not invalid merely because it fails to state how the information is to be given to the Department or what the authority for the notice is.

New subsection 408JC(4) provides that the period specified in the notice must end 7 or more days after the notice is given to the woman.

New subsection 408JC(5) provides that a statement given in response to a request under subsection 408JC(1) must be in writing and in a form approved by the Secretary.

New subsection 408JC(6) sets out the compliance conditions for subsection 408JC(1) and the penalties for contravening those conditions. If a woman receiving widow allowance is capable of complying with a notice under subsection (1) but refuses to do so, then she may be fined or sent to gaol or both.

A note refers the reader to the sections of the Crimes Act 1914 that allow a court to impose an appropriate fine, instead of, or in addition to, a term of imprisonment.

New subsection 408JC(7) allows section 408JC to operate outside Australia. It extends to acts, omissions, matters and things outside Australia, whether or not in a foreign country. It also extends to all persons to whom it would normally apply, regardless of their nationality or citizenship.

New section 408JD - Secretary may require recipient to take action to obtain a comparable foreign payment

New section 408JD provides that a recipient may be given a notice by the Secretary requiring the woman to take reasonable action to obtain a comparable foreign payment (CFP) from a CFP country.

New subsections 408JD(2) and (3) set out the requirements for notices issued under subsection 408JD(1). The notice must:

•

be in writing; and

•

be given personally or by post; and

•

specify the period within which the statement must be given to the Department (at least 14 days after the notice is given).

New subsection 408JD(4) provides that the recipient only satisfies this section if she takes reasonable action to obtain a CFP payment at the highest possible rate.

New Division 9 - Continuation, variation and termination

New Subdivision A - General

New section 408KA - Continuing effect of determination

Entitlement determination

New subsection 408KA(1) provides for the continuity of a decision regarding the granting or payability of widow allowance until:

•

it stops being payable automatically under new section 408LA, 408LB or 408LC or 408LD ; or

•

a decision is made to cancel or suspend under new section 408NC or 408ND.

Notes signpost the provisions that give effect to these decisions and the provision dealing with changes to the payment by computer.

Note 1 refers the reader to section 408EB that provides for a determination granting a claim for widow allowance.

Note 2 directs the reader to section 408NF that provides that changes to payment made by computer are to be taken to be decisions made by the Secretary.

Note 3 directs the reader to section 408NG that allows the Secretary to rescind a cancellation or suspension determination if the Secretary is satisfied that widow allowance was payable to the woman for some or all of the period for which the woman was cancelled or suspended.

Rate determination

New subsection 408KA(2) provides for the continuity of a decision regarding the rate of payment until:

•

it becomes payable at a lower rate under new section 408MA or 408MB; or

•

a further decision under new section 408NA or 408NB has taken effect.

A note signposts the provision dealing with changes to the payment by computer.

New Subdivision B - Automatic termination

New section 408LA - Automatic termination - transfer to new payment type

New section 408LA provides for the automatic termination of a woman's widow allowance if another specified payment becomes payable to the woman. In this case, the widow allowance stops being payable immediately before the day on which the new payment becomes payable. This is one of the provisions referred to in new subsection 408CF(2) as bringing to an end a determination regarding the granting or payability of widow allowance.

New section 408LB - Automatic termination - recipient complying with section 408JB notification obligations

New section 408LB provides that, when a recipient of widow allowance complies with a new section 408JB notice by informing the Department of the occurrence of an event or a change in circumstances within a specified notification period and, as a result of the event or change:

•

the woman stops being qualified for widow allowance; or

•

widow allowance would, except as provided in this new section, stop being payable to her,

then widow allowance continues to be payable until the end of the notification period and then stops being payable, bringing the entitlement determination to an end.

A note points out that it does not follow that there is an automatic rate reduction when a woman complies with the notice if the event or change in circumstances would give rise to a payment at a lower rate. In that case, the determination to reduce the rate would be made under new section 408NB.

New section 408LC - Automatic termination - recipient not complying with section 408JB notification obligations

Under new section 408LC, if a recipient of widow allowance fails to comply with a section 408JB notice by failing to inform the Department of the occurrence of an event or change in circumstances within a specified notification period and, as a result of the event or change:

•

the woman stops being qualified for widow allowance; or

•

widow allowance stops being payable to her,

then it stops being payable immediately after the day on which the event or change in circumstances occurs and thus brings the entitlement determination to an end.

New section 408LD - Automatic termination - failure to provide section 408JC statement

New subsection 408LD(1) applies to the situation where a woman in receipt of widow allowance is required to give the Department a statement under new section 408JC relating to the payment of widow allowance in respect of a specified period and the woman fails to comply with the notice. If this occurs, widow allowance ceases to be payable to the woman as from the first day in that period.

New subsection 408LD(2) states that the Secretary may determine in writing that new subsection 408LD(1) does not apply to a woman from a day specified in the determination (that may be before or after the making of the determination - new subsection 408LD(3) refers) if satisfied that, in the special circumstances of the case, it is appropriate to make such a determination.

New section 408LE - Changes to payments by computer

following automatic termination

This new section provides that, if widow allowance is being paid to a woman based upon information held in a computer and that payment is automatically terminated through the operation of a computer program approved by the Secretary, then the Secretary is taken to have decided that the automatic termination applies to the woman's payment.

A note points out that a determination to change a payment under the new section is reviewable by the Secretary and by the Social Security Appeals Tribunal.

New Subdivision C - Automatic rate reduction

New section 408MA - Automatic rate reduction - recipient not complying with section 408JB notification obligations

This new section provides that, when a recipient of widow allowance fails to comply with a new section 408JB notice by failing to inform the Department of the occurrence of an event or change in circumstances within a specified notification period and, as a result of the event or change, the woman's payment rate is to be reduced, then the reduced rate becomes payable on the day immediately after the day on which the event or change occurs.

New section 408MB - Automatic rate reduction - failure to inform Department of payment for remunerative work where earnings credit account balance available

This new section provides that, if a recipient of widow allowance fails to inform the Department about payments received for remunerative work performed by her and she has an earnings credit account balance (see Division 5 of Part 3.10), then the reduced rate becomes payable to her from the first payday after the day on which her earnings credit account balance is reduced to nil.

New section 408MC - Changes to payments by computer following automatic reduction

This new section provides that, if widow allowance is being paid to a woman based upon information held in a computer and that payment is automatically reduced through the operation of a computer program approved by the Secretary, then the Secretary is taken to have decided that the automatic rate reduction applies to the woman's payment.

A note points out that a determination to change a payment under the new section is reviewable by the Secretary and by the Social Security Appeals Tribunal.

New Subdivision D - Determinations

New section 408NA - Rate increase determination

This new section gives the Secretary the power to decide to increase the rate of widow allowance paid to a woman if the Secretary is satisfied that the rate being paid to the woman is less that the rate the woman is entitled to under the Principal Act.

A note signposts the provision that sets out the date of effect of a decision under this new section.

New section 408NB - Rate reduction determination

This new section gives the Secretary the power to decide to reduce the rate of widow allowance paid to a woman if the Secretary is satisfied that the rate being paid to the woman is more than the rate the woman is entitled to under the Principal Act.

Note 1 points out that this provision does not apply if an automatic rate reduction provision applies.

Note 2 signposts the provision that sets pout he date of effect of a decision under this new section.

New section 408NC - Cancellation or suspension determination

This new section gives the Secretary the power to suspend or cancel payment of widow allowance to a woman if the Secretary is satisfied that the woman is not, or was not entitled to widow allowance.

Note 1 points out that this provision does not apply if an automatic termination provision applies.

Note 2 signposts the provision that sets out the date of effect of a decision under this new section.

New section 408ND - Cancellation or suspension for failure to comply with section 408JC, 1304 or 1305 notice

This new section provides a specific cancellation or suspension power if a woman who is receiving widow allowance fails to comply with a notice given to her under new section 408JC, 1304 or 1305.

Note 1 points out that this provision does not apply in a case where new section 408LD or new section 408NC applies.

Note 2 signposts the provision that sets out the date of effect of a decision under this new section.

New section 408NE - Cancellation or suspension for failure to take action to obtain a comparable foreign payment

This new section provides a specific cancellation or suspension power if a woman who is receiving a widow allowance is given a notice under section 408JD and the Secretary is satisfied that the woman has not taken reasonable action to obtain a CFP during the period specified in the notice.

New subsection 408NE(2) provides that a woman takes reasonable action to obtain a CFP only if she takes reasonable action to obtain that payment at the highest rate applicable to the woman.

New section 408NF - Changes to payments by computer

This new section provides that, if widow allowance is being paid to a woman based upon information held in a computer and that payment is increased, decreased, cancelled or suspended through the operation of a computer program approved by the Secretary, then the increase, decrease, cancellation or suspension is taken to have been made through a decision by the Secretary.

This provides a legal mechanism for cancelling, suspending or varying the rate of payment through the use of computers. However, the effect is limited to areas of decision making where there is no discretionary element. In these cases, a computer program operating under the new section could validly cancel, suspend or vary the rate of widow allowance.

A note points out that a determination to change a payment under the new section is reviewable by the Secretary and by the Social Security Appeals Tribunal.

New section 408NG - Resumption of payment after cancellation or suspension

New subsection 408NG(1) provides for the Secretary to make a decision that widow allowance is to be reinstated if it was stopped incorrectly. An example might be when a woman's widow allowance was stopped for a month because a decision maker believed that the woman had gone overseas for 4 months but a subsequent review revealed that the woman had only gone overseas for 3 months. This provision enables the Secretary to decide that widow allowance is to be paid to the woman in respect of that month.

New subsection 408NG(2) allows the decision that gave rise to the payments being stopped to be reconsidered following either a formal application to the Secretary for review under section 1240 of the Principal Act or at the Secretary's instigation.

A note signposts the relevant date of effect provision.

New Subdivision E - Date of effect of determinations

New section 408PA - Date of effect of favourable determination

New subsection 408PA(1) provides that this new section governs the date of effect of a favourable determination ( that is, a determination made under new section 408NA or 408NG).

Notified decision - review sought within 3 months

New subsection 408PA(2) provides that if a recipient of widow allowance appeals against an adverse decision within 3 months of being notified of the decision and a favourable decision results, then it takes effect on the date on which the adverse decision took effect. This enables arrears of up to 3 months to be paid.

Notified decision - review sought after 3 months

New subsection 408PA(3) provides that if a recipient appeals against an adverse decision more than 3 months after being notified of the decision and a favourable decision results, then it takes effect on the day that the woman appealed.

Decision not notified

New subsection 408PA(4) provides that if a recipient appeals against an adverse decision about which she was not notified and a favourable decision results, then it takes effect on the date on which the adverse decision took effect. This enables full arrears to be paid.

Notified change of circumstances

New subsection 408PA(5) provides that if a favourable decision results from a recipient informing the Department of a change in circumstances (except one involving a fall in maintenance receipts), then it takes effect on the date on which the Department received the information or the date on which the changes occurred, whichever is the later. Therefore, arrears are paid back to the later of those dates.

Other determinations

New subsection 408PA(6) provides that in any other case, a favourable determination takes effect on the determination date or on such later or earlier date as is specified in the determination (not being more than 3 months before the determination date).

New section 408PB - Date of effect of adverse determination

New subsection 408PB(1) provides that this new section sets down the date of effect of an adverse determination ( that is, a determination under new sections 408NB, 408NC, 408ND or 408NE). A note signposts the provisions in Chapter 6 of the Principal Act that allow the Secretary to continue payment pending the outcome of a review if the adverse determination under review depends on a discretion or opinion.

New subsection 408PB(2) sets the date of effect of an adverse determination as the date on which it is made or another date specified in the determination.

New subsection 408PB(3) ensures that if the date of effect of an adverse determination is specified but is not the day of the determination, it must be a later date unless subsection (4), (5) or (6) apply.

New subsections 408PB(4), (5) and (6) address those situations in which the date of effect of an adverse determination can be before the date of the determination. The situations are when the adverse decision results from:

•

a widow allowance recipient contravening a provision of the Principal Act (except sections 408JC, 1304, 1305, 1306 or 1307) - new subsection 408PB(4) refers; or

•

any woman making either a false statement or misrepresentation if this causes widow allowance to be paid when it should not have been paid - see new subsection 408PB(5); or

•

any woman making either a false statement or a misrepresentation if this causes widow allowance to be paid at a higher rate than at which it should have been paid - see new subsection 408PB(6).

New subsections 408PB(7) and (8) provide that where a woman receives a payment of arrears of periodic compensation payments (the woman being in receipt of widow allowance at the time of the event which gave rise to the compensation) and the woman has been overpaid as result of receiving the arrears payment, the day from which the woman has been overpaid can be earlier than the day the decision is taken that the woman has been overpaid.

New Division 10 - Fringe benefits

New section 408QA - Fringe benefits

New subsection 408QA(1) provides that a woman who is receiving widow allowance, has been receiving social security pension or benefit or service pension continuously for 12 months (this may be a combination of those payments, not necessarily 12 months continuous receipt of one of them), has turned 60, is an Australian resident or has a qualifying residence exemption for a widow allowance and is in Australia, then she is qualified for fringe benefits.

A note refers the reader to the definitions of 'Australian resident' and 'qualifying residence exemption'.

New subsection (2) states that fringe benefits comprise benefits and concessions of various kinds made available by the Commonwealth, State and Territory governments and local authorities.

A note points out that an example of Commonwealth benefits and concessions can be found in the National Health Act 1953.

PART 2 - CONSEQUENTIAL AMENDMENTS OF THE SOCIAL SECURITY ACT 1991

Division 1 - Amendments to change the name of widowed person allowance to bereavement allowance

So as to avoid confusion between the new payment type 'widow allowance' and the existing payment type 'widowed person allowance', the name of the latter payment is being change to 'bereavement allowance'.

Accordingly, there is a need to omit all references to 'widowed person allowance' in the Principal Act and replace them with references to 'bereavement allowance'. This is done by Items 2 to 7.

Division 2 - Other consequential amendments of the Social Security Act 1991

Division 2 of Part 2 contains a number of amendments to the Social Security Act 1991 consequential upon the introduction of widow allowance.

Items 8 to 12 insert references to 'widow allowance' in various definitions that already apply to other social security benefits. (A widow allowance is to be a social security benefit).

Item 13 provides that a woman who was receiving widow allowance immediately before she commenced employment and had been a long-term social security recipient may be qualified for an employment entry payment of $100.00 providing that certain qualification criteria are satisfied. The criteria are similar to those applying for job search allowance and newstart allowance.

Item 14 ensures that a woman receiving widow allowance will qualify for a telephone allowance if she has been receiving social security pension or benefit or service pension continuously for 12 months (this may be a combination of those payments, not necessarily 12 months continuous receipt of one of them), has turned 60 and is a telephone subscriber.

This will place widow allowees satisfying these criteria in the same position as other social security beneficiaries.

Items 15 to 19 deal with the rate of widow allowance to be paid to widow allowees.

These amendments ensure that the rate of widow allowance is calculated in accordance with Benefit Rate Calculator B (Items 15 to 16 refer).

Certain widow allowees will be entitled to have pharmaceutical allowance added to their rate of widow allowance. Providing that a woman receiving widow allowance is an Australian resident and is in Australia, she will qualify for payment of pharmaceutical allowance if either she is incapacitated for work or she has turned 60 and has been receiving social security pension or benefit (this can be a combination of pensions and/or benefits) continuously for at least 6 months. Again, this is consistent with the treatment of other social security beneficiaries in similar circumstances. Items 17 to 19 provide for this.

Item 20 provides for a double payment of widow allowance if a woman is released from gaol after spending at least 7 days in gaol, claims widow allowance within 7 days after being released and widow allowance is payable to her on the day on which she makes the claim.

Item 21 provides that a woman's rate of widow allowance is to be reduced in respect of a period if a payment under the New Enterprise Incentive Scheme or the Aboriginal Employment Incentive Scheme is payable to her during that same period.

Items 22 and 23 provides for the indexation and adjustment of amounts included in the woman's assets value limit table in new section 408CE.

Section 1211 sets out the rule that certain social security payments, including social security benefits, are not payable to a person who is outside Australia because presence in Australia is specified as an essential condition of qualification. This is the case with widow allowance although an exception is provided for in new section 408BA. Items 24 to 26 make the appropriate amendments to section 1211 (including the notes) so as to include references to widow allowance.

Items 27 and 28 make amendments to certain debt recovery provisions in the Principal Act so as to include appropriate references to widow allowance. This will ensure consistency in treatment between widow allowance and other social security benefits.

Sections 1239 and 1240 respectively provide that the Secretary may review certain decisions, including decisions under the Principal Act and that a person affected by a decision made by an officer under the Principal Act may apply for a review of that decision. Notes to those sections deal with decisions made by computers under certain sections of the Principal Act.

Items 29 to 32 make amendments to the Notes to both of those sections so as to include appropriate references to sections relating to widow allowance.

Item 33 amends section 1250 so that a decision made under either new section 408DB or 408DC (form and place of lodgment of claim) cannot be reviewed by the Social Security Appeals Tribunal. This is consistent with the treatment of other social security benefits.

Item 34 amends subclause 1(2) of Schedule 1A of the Principal Act so as omit a provision that a widowed person's allowance under the Social Security Act 1947 and a widowed person allowance under the Social Security Act 1991 corresponds to each other. Item 35 amends subclause 1(2) so as to provide that a widowed person's allowance under the Social Security Act 1947 and a bereavement allowance under the Social Security Act 1991 corresponds to each other.

Item 36 inserts a new clause in Schedule 1A so as to provide that:

•

a determination in force immediately before 1 January 1995 granting a claim for widowed person allowance is preserved as if it were a determination granting a claim for bereavement allowance; and

•

claims for widowed person allowance lodged but not determined before 1 January 1995 are to be treated as claims for bereavement allowance. If granted on or after 1 January 1995, the determination may have a date of effect before 1 January 1995 and if such a determination is made, the payability and rate of a person's bereavement allowance are worked out on the basis that the Act as in force on 1 January 1995 was operating on that earlier date. However, the total amount of bereavement allowance payable to a person in these circumstances may not exceed what would have been payable under the Principal Act if the amendments made as a result of the introduction of widow allowance and the renaming of widowed person allowance, had not been made.

PART 3 - CONSEQUENTIAL AMENDMENTS OF OTHER ACTS

Division 1 - Amendments of other Acts as a result of the change of name of the widowed person allowance to bereavement allowance

Consequential amendments are made in this Division to the Data-matching Program (Assistance and Tax) Act 1990, the Income Tax Assessment Act 1936 and the Veterans' Entitlements Act 1986 so as to substitute references in those Acts to widowed person allowance with references to bereavement allowance or to add references to bereavement allowance, as appropriate.

These amendments, made by Items 37 to 42, are necessary as a result of the decision to change the name of widowed person allowance to bereavement allowance.

Division 2 - Other consequential amendments to other Acts

Consequential amendments are made in this Division by Item 43 and Items 47 to 50 to the Data-matching Program (Assistance and Tax) Act 1990, the Income Tax Assessment Act 1936 and the Veterans' Entitlements Act 1986 so as to add references to widow allowance consistent with the treatment of other social security benefits.

Items 44 to 46 amend the Health Insurance Act 1973 so that widow allowees may be declared as 'disadvantaged persons' under that Act. The consequence of this declaration is that a person becomes entitled to a health care concession card.

This measure is also to extend for up to 6 months after a woman who was formerly in receipt of widow allowance, becomes employed.

These amendments are to commence on 1 January 1995.

Certain widow allowees will be issued with pensioner concession cards. Amendments to health legislation to enable pensioner concession cards to be issued to certain social security beneficiaries (including certain widow allowees) are provided for elsewhere in the amending Act.

5. Commencement

Clause 13 and the changes made by Part 1 of Schedule 4 to introduce a new widow allowance are taken to have commenced on 1 July 1994.

Clauses 14 and 15 and the consequential amendments to the Principal Act (Part 2 of Schedule 4) and the consequential amendments to other Acts (Part 3 of Schedule 4) commence on 1 January 1995.

SCHEDULE 5

AMENDMENTS RELATING TO EDUCATION ENTRY PAYMENT FOR WIFE PENSION AND WIDOW, MATURE AGE PARTNER, PARTNER AND PARENTING ALLOWANCE RECIPIENTS

1. Summary of proposed changes

Schedule 5 inserts several new Divisions in Part 2.13A of the Principal Act. Part 1 of this Schedule extends the education entry payment to recipients widow allowance. Part 2 of Schedule 5 inserts new Divisions 9 to 12 in Part 2.13A of the Principal Act, extending the education entry payment to recipients of wife pension, mature age partner, partner and parenting allowances.

2. Background

The education entry payment will assist with the up-front costs of taking up study, such as enrolment fees, purchasing books, student union fees and course fees.

The amendments relating to widow allowance will have effect from 1 January 1995 while the education entry payment for recipients of wife pension and partner, mature age partner and parenting allowances will be available from 1 July 1995. The education entry payment will only be available for widow, partner and parenting allowance recipients who have been in receipt of the payment for at least 12 months. This is in line with the provision of education entry payments to recipients of social security benefits (ie, job search, newstart and sickness allowances). As a special transitional measure, the qualifying period can also include periods when another person receives an additional payment in respect of the person. See for example, Module C in Benefit Rate Calculator B at point 1068 of the Act. This is only necessary for the period from 1 January 1995 to 20 September 1995 (which is twelve months from the date of commencement of partner allowance) for widow allowance, and 1 July 1995 to 20 September 1995 for partner and parenting allowances. Beyond this date, partner allowance would have been in operation for at least twelve months, and all women would have been in receipt of a social security payment in their own right, and would therefore meet the qualification requirements for the education entry payment.

There is no requirement that a wife pensioner or mature age partner allowance recipient be in receipt of the payment for at least 12 months. This is in line with the treatment of education entry payments for pensions (see for example, current Division 1 of Part 2.13A which relates to sole parent pension).

The range of situations can probably best be illustrated with the following examples:

Emme is a recipient of widow allowance and makes a claim for an education entry payment on 1 April 1995. Emme has previously been in receipt of newstart allowance for the past two years. She has never previously received an education entry payment. Provided Emme commences an AUSTUDY approved course and meets the qualification requirements, Emme could claim and receive an education entry payment.

Ann is in receipt of widow allowance, and has been in receipt of the payment for 2 months. On 1 March 1995, Ann claims an education entry payment. Prior to January 1995, Ann's partner was in receipt of job search allowance for eleven months and received an increased rate of payment of job search allowance in respect of Ann. However, Ann's partner died and Ann claimed widow allowance. For the purposes of education entry payment, however, Ann has been in 'receipt' of a social security payment for the previous 13 months.

Jay is a recipient of wife pension, and has been in receipt of the pension since January 1995. She has never previously received an education entry payment. Provided Jay commences an AUSTUDY approved course etc, Jay could claim and receive an education entry payment.

Kaye has been in receipt of parenting allowance since 1 July 1995. Kaye claims an education entry payment on 1 August 1995. Prior to receiving parenting allowance and for the previous 11 months, Kaye was in receipt of job search allowance. For the purposes of education entry payment, however, Kaye has been in 'receipt' of a social security payment for the previous 12 months.

Elle is in receipt of partner allowance and claims an education entry payment on 1 August 1995. She has been in receipt of this payment since 20 September 1994. Prior to that time, Elle 's partner was in receipt of newstart allowance for a period of 15 months, and received an add-on in respect of Elle. Elle would qualify for the education entry payment as she was in receipt of a social security payment (or had a social security payment made in respect of her) for the past 26 months (thereby satisfying the 12 month rule).

3. Clauses involved in the changes

Clause 2(1): specifies the commencement date for wife pension and mature age partner, partner and parenting allowance eduction entry payments as 1 July 1995.

Clause 2(6): specifies the commencement date for widow allowance eduction entry payments as 1 January 1995.

Clause 7: provides that the Principal Act is amended as set out in Schedule 5.

Clause 11: specifies the transitional provisions which apply to widow allowance education

entry payment.

Clause 12: specifies the transitional provisions which apply to the partner allowance and

parenting allowance education entry payment.

Schedule 5: inserts new Divisions 8 to 12 in Part 2.13A of the Principal Act. These Divisions provide the new education entry payment for recipients of wife pension and widow, mature age partner, partner and parenting allowances.

4. Explanation of the changes

Clause 2(1) provides that the commencement date for the wife pension, partner, parenting and mature age partner allowance education entry payments are 1 July 1995.

Clause 2(6) provides that the commencement date for the widow allowance education entry payment is 1 January 1995.

Clause 7 provides that the Principal Act is amended as set out in Schedule 5.

Clause 11 specifies the transitional provisions which apply to widow allowance. In order to receive an education entry payment, a widow allowance recipient must be a long term social security recipient. This term is defined in section 23 of the Principal Act. In effect, the person must have received a social security pension or benefit, or a service pension for at least 52 weeks (although paragraph (b) of this definition provides that if the person is not in receipt of a payment for six weeks during this period, they still qualify as a social security recipient).

However, prior to the introduction of partner allowance (ie 20 September 1994), it was possible that a person did not receive a social security pension benefit or service pension in their own right, but their partner received an additional payment of job search allowance or newstart allowance under module C of Benefit Rate Calculator A or B in respect of her. In such a case the person would have received status as a long term social security recipient as a result of the inclusion of the term "benefit increase partner" in the definition of long term social security recipient. "Benefit increase partner" is defined in subsection 4(10).

However, after the implementation of the partner allowance package in 1994, a person must qualify for a social security payment in their own right. Accordingly, the term "benefit increase partner" has been removed from the Principal Act.

Accordingly, it is possible that a person only began to receive a social security benefit in their own right on and after 20 September 1994. Given the requirement that the woman (in respect of widow allowees) be a social security recipient, it would be impossible for that woman to qualify for the education entry payment, as, at 1 January 1995, it is possible that her maximum period on a social security benefit was only three months. Accordingly, it is necessary to include a transitional provision in this initiative, to reinstate the definition of "benefit increase partner" for a nine month period after the implementation of the education entry payment.

Accordingly, proposed section 11 provides that the section 665ZC applies for nine months as if the amended definition of social security recipient status (for the purposes of long term social security recipient) in section 11(a) applies. Furthermore, paragraph 11(b) provides that, at least for the purposes of this initiative, the amendments omitting the definition of "benefit increase partner" in subsection 4(10), and Module C of Benefit Rate Calculators A and B in the Social Security (Home Child Care and Partner Allowances) Legislation Amendment Act 1994 had not occurred.

Clause 12 specifies the transitional provisions that apply to partner and parenting allowances. These transitional provisions will be similar to those applying to widow allowance, but will only be necessary for a three month period, given the difference commencement date for the partner and parenting allowance education entry payments. As the education entry payment for these recipients will be available from 1 July 1995, the transitional provisions are only necessary for the period of 1 July 1995 to 20 September 1995.

Schedule 5 inserts new Divisions 8 to 12 in Part 2.13A of the Principal Act. These Divisions provide the new education entry payment for recipients of wife pension and widow, partner, mature age partner and parenting allowances, as follows:

PART 1 - AMENDMENTS RELATING TO EDUCATION ENTRY PAYMENT FOR WIDOW ALLOWANCE RECIPIENTS

New Division 8 - Widow allowance recipients

New Section 665ZC: Payment to a widow allowance recipient

New section 665ZC sets out qualification provisions for an education entry payment for widow allowees. To qualify for an education entry payment, the allowee must:

•

satisfy the secretary that she intends to enrol in a full-time or part time course that is an AUSTUDY or ABSTUDY approved course; or

•

is actually enrolled in such a course; and

•

immediately before the course commences, the woman must be in receipt of widow allowance and be a long term social security recipient; and

•

not have received an educational entry payment within the last 12 months.

The use of the 'social security recipient' definition ensures that the woman has been in receipt of a social security pension or benefit for the previous year, or another person has been in receipt of a payment in respect of the woman for any period of the previous year when the woman was not personally in receipt of the payment. A note refers the reader to the definition of 'long term social security recipient'.

New Section 665ZD: Amount of section 665ZC payment

New section 665ZD sets out the amount of an education entry payment at $200.

New Section 665ZE: Need for a claim

New section 665ZE contains provision regarding the need to make a claim in writing and in a form approved by the Secretary.

New Section 665ZF: Claim may be withdrawn

New section 665ZF provides that a claimant or a person acting on behalf of the claimant may withdraw the claim orally or in writing before the determination of the claim. The withdrawn claim is taken not to have been made.

PART 2 - AMENDMENTS RELATING TO EDUCATION ENTRY PAYMENT FOR WIFE PENSION AND MATURE AGE PARTNER, PARTNER AND PARENTING ALLOWANCE RECIPIENTS

New Division 9 - Mature age partner allowance

New section 665ZG - Payment to a mature age partner allowance recipient

New section 665ZG sets out qualification provisions for an education entry payment for mature age partner allowees. To qualify for an education entry payment, the allowee must:

•

satisfy the Secretary that he or she intends to enrol in a full-time or part time course that is an AUSTUDY or ABSTUDY approved course; or

•

is actually enrolled in such a course; and

•

immediately before the course commences, the person must be in receipt of mature age partner allowance; and

•

not have received an educational entry payment in the current calendar year.

New section 665ZH - Amount of section 665ZG payment

Proposed section 665ZH sets out the amount of an education entry payment at $200.

New section 665ZJ - Need for a claim

New section 665ZJ specifies that a person is not qualified for an education entry payment unless the person has made a claim in writing and in a form approved by the Secretary.

New section 665ZK - Claim may be withdrawn

Proposed section 665ZK provides that a claimant, or a person acting on behalf of the claimant, may withdraw the claim orally or in writing before the determination of the claim. The withdrawn claim is taken not to have been made.

Division 10 - Wife pension recipients

New section 665ZL - Payment to a wife pensioner

New section 665ZL sets out qualification provisions for an education entry payment for wife pension recipients. To qualify for an education entry payment, the pensioner must:

•

satisfy the Secretary that she intends to enrol in a full-time or part time course that is an AUSTUDY or ABSTUDY approved course; or

•

is actually enrolled in such a course; and

•

immediately before the course commences, the woman must be in receipt of wife pension; and

•

not have received an educational entry payment in the current calendar year.

New section 665ZM - Amount of section 665ZL payment

Proposed section 665ZM sets out the amount of an education entry payment at $200.

New section 665ZN - Need for a claim

New section 665ZN specifies that a person is not qualified for an education entry payment unless the person has made a claim in writing and in a form approved by the Secretary.

New section 665ZP - Claim may be withdrawn

Proposed section 665ZP provides that a satisfy the secretary that she intends to enrol in a full-time course that is an AUSTUDY or ABSTUDY approved course; or

•

is actually enrolled in such a course; and

•

immediately before the course commences, the woman must be in receipt of partner allowance and be a long term social security recipient; and

•

not have received an educational entry payment within the last 12 months.

The use of the 'social security recipient' definition ensures that the woman has been in receipt of a social security pension or benefit for the previous year, or another person has been in receipt of a payment in respect of the woman for any period of the previous year when the woman was not personally in receipt of the payment. A note refers the reader to the definition of 'long term social security recipient'.

New section 665ZR - Amount of section 665ZQ payment

Proposed section 665ZR sets out the amount of an education entry payment at $200.

New section 665ZS - Need for a claim

New section 665ZS specifies that a person is not qualified for an education entry payment unless the person has made a claim in writing and in a form approved by the Secretary.

New section 665ZT - Claim may be withdrawn

Proposed section 665ZT provides that a claimant, or a person acting on behalf of the claimant, may withdraw the claim orally or in writing before the determination of the claim. The withdrawn claim is taken not to have been made.

Division 12 - Parenting allowance recipients

New section 665ZU - Payment to a parenting allowance recipient

New section 665ZU sets out qualification provisions for an education entry payment for parenting allowance recipients. To qualify for an education entry payment, the allowee must:

•

satisfy the Secretary that she intends to enrol in a full-time or part-time course that is an AUSTUDY or ABSTUDY approved course; or

•

is actually enrolled in such a course; and

•

immediately before the course commences, the woman must be in receipt of 'benefit parenting allowance' and be a long term social security recipient; and

•

not have received an educational entry payment within the last 12 months.

The use of the 'social security recipient' definition ensures that the woman has been in receipt of a social security pension or benefit for the previous year. The transitional provisions in proposed clause 12 of this amending Act specifies that a woman would also be a 'long term social security recipient' if another person has been in receipt of a payment in respect of the woman for any period of the previous year when the woman was not personally in receipt of the payment. A note refers the reader to the definition of 'long term social security recipient'.

A second note refers the reader to the definition of 'benefit parenting allowance' in subsection 23(1) of the Principal Act.

New section 665ZV - Amount of section 665ZU payment

Proposed section 665ZV sets out the amount of an education entry payment at $200.

New section 665ZW - Need for a claim

New section 665ZW specifies that a person is not qualified for an education entry payment unless the person has made a claim in writing and in a form approved by the Secretary.

New section 665ZX - Claim may be withdrawn

Proposed section 665ZX provides that a claimant, or a person acting on behalf of the claimant, may withdraw the claim orally or in writing before the determination of the claim. The withdrawn claim is taken not to have been made.

5. Commencement

The education entry payment for widow allowees commences on 1 January 1995. The education entry payment for the other payment types commence on 1 July 1995.

SCHEDULE 6

AMENDMENTS RELATING TO THE PHASING OUT OF WIFE PENSION, SPECIAL NEEDS WIFE PENSION AND MATURE AGE PARTNER ALLOWANCE

1. Summary of proposed changes.

This Bill contains measures to phase out wife pension as a discrete payment under the Principal Act. Women who claim and qualify for wife pension on or before 30 June 1995 will have their entitlement "saved". Equivalent amendments are being made for special needs wife pension and mature age partner allowance.

2. Background.

Wife pension is currently available under the Principal Act to a woman whose partner is receiving either age pension, disability support pension, disability wage supplement or rehabilitation allowance in certain circumstances. Wife pension is a strictly dependency based payment now at odds with the generally needs based social security system. Accordingly, there will be no new grants of wife pension on or after 1 July 1995 except in certain circumstances.

Current wife pensioners will be "saved". To be paid wife pension under the new regime, a woman will have to have claimed and qualified for the payment on or before 30 June 1995. This new rule applies in spite of any other provision in the wife pension Part of the Act (Part 2.4) other than section 183.

Therefore, the new limitation on grant overrides provisions such as subsection 150(3). That provision allows a woman to make an early claim for wife pension even if she is not qualified at that time, as long as she qualifies at some time within the following three months. In that case, her provisional commencement day would be the day on which she qualifies. Under the new regime, the latest she can qualify and still be granted wife pension will be 30 June 1995.

The new regime also recognises the operation of subsection 150(2). That provision addresses the situation of a woman who is qualified for wife pension but who makes an initial claim for an incorrect or inappropriate payment before she actually claims wife pension. In that case, her provisional commencement day for wife pension is the day on which she claimed the initial incorrect or inappropriate payment. For the purposes of determining whether a woman lodges her claim for wife pension before, on or after 30 June 1995, and therefore whether or not she can be granted wife pension under the new regime, she is taken to have lodged her wife pension claim on the day on which she lodged her initial incorrect or inappropriate claim.

Section 183 will continue to operate as it does now despite the new limitation on grant. Section 183 provides for resumption of payment of wife pension following the Secretary reconsidering a decision to cancel or suspend payment. This applies only if the Secretary is satisfied that, because of the decision to cancel or suspend, the woman did not receive, or is not receiving, a wife pension that was, or is, payable to her. Therefore, a woman will be able to resume payment in these circumstances even on or after 1 July 1995 and not be affected by the general limitation on new grants.

Section 183 is also being extended to specifically provide for resumption of payment of wife pension in a particular circumstance. This is when a woman's wife pension has been suspended because her partner's payment has been suspended. If he subsequently resumes payment and a wife pension was, or is, still payable to her, then payment of her wife pension may be resumed even on or after 1 July 1995 and not be affected by the general limitation on new grants.

Equivalent amendments are being made for special needs wife pension. Special needs wife pension is paid to a woman whose partner is receiving either special needs age pension or special needs disability support pension. It is necessary to impose the new limitation on grant so that, if wife pension may not be obtained domestically, it is not available through the special needs program either.

Equivalent amendments are also being made for mature age partner allowance. Mature age partner allowance is paid to a person whose partner is receiving mature age allowance.

Women who might have been paid wife pension, special needs wife pension or mature age partner allowance under the legislation as it stands now may apply for another suitable social security payment in their own right.

3. Clauses and Schedule involved in the changes.

Clause 2(1): provides that the amendments will commence on 1 July 1995.

Clause 8: provides that the Principal Act is amended as set out in Schedule 6.

Schedule 6

Part 1 provides amendments relating to the phasing out of wife pension and special needs wife pension.

Item 1: inserts in Part 2.4 (Wife Pension) a new Division 1A (Time limit on grant of wife pension) containing new section 146V.

Item 2: omits subsection 147(1A).

Item 3: repeals section 155C.

Item 4: inserts in section 183 a new subsection (3).

Item 5: inserts in Part 2.16 (Special Needs Pensions) a new Division 1A (Time limit on grant of special needs wife pension) containing new section 771P.

Item 6: inserts in section 819 a new subsection (3).

Part 2 of Schedule 6 provides amendments relating to the phasing out of mature age partner allowance.

Item 7: omits the existing section 660XAB and inserts a new section 66XAB,

of which subsection (1) deals with a time limit on claims for mature age

allowance and subsections (2), (3) and (4) deal with a time limit on claims

for mature age partner allowance.

Item 8: inserts in section 660XJO a new subsection (3).

4. Explanation of the changes.

Clause 4 inserts the amendments contained in Schedule 6 into the Principal Act. They are outlined below.

Item 1 in Part 1 of Schedule 6 inserts in Part 2.4 (Wife Pension) a new Division 1A (Time limit on grant of wife pension) containing new section 146V. New subsection 146V(1) provides that a woman is not to be granted a wife pension unless she claims and is qualified for the pension on or before 30 June 1995. This limitation applies in spite of any other provision of Part 2.4 except for section 183. Section 183 will continue to operate as it does now to resume payment after cancellation or suspension in certain circumstances. It will also operate to resume payment in a new situation introduced by item 4.

New subsections 146V(2) and (3) make sure that, if subsection 150(2) applies (incorrect or inappropriate initial claim), then the woman is taken to have lodged her claim for wife pension on the day on which she lodged the initial claim. Therefore, if a woman lodges her incorrect or inappropriate initial claim on or before 30 June 1995 but does not lodge her wife pension claim until after that date, wife pension may still be granted to her if subsection 150(2) applies despite the general limitation on new grants after 30 June 1995.

Items 2 and 3 omit and repeal two provisions that will have no application in the new regime. These are subsection 147(1A) and section 155C. Subsection 147(1A) sets down that women in a certain category are not qualified for wife pension. After 30 June 1995, it will be immaterial who is not qualified since, to be granted wife pension, women will have to have been qualified on or before that date. Section 155C provides for the Secretary to require a claimant of wife pension or her partner to take action to obtain a comparable foreign payment. This requirement will become redundant since there will be no grants of wife pension after 30 June 1995.

Item 4 inserts new subsection 183(3) to provide a new power to resume payment of wife pension to a woman. This will apply if her pension has been suspended because her partner's payment has been suspended, if he subsequently resumes payment, and if the Secretary is satisfied that she did not receive, or is not receiving, a wife pension that was, or is, payable to her.

Item 5 inserts in Part 2.16 (Special Needs Pensions) a new Division 1A (Time limit on grant of special needs wife pension) containing new section 771P. The new section exactly mirrors for special needs wife pension new section 146V for wife pension (inserted by item 1).

Item 6 inserts new subsection 819(3) in the special needs pension provisions to exactly mirror for special needs wife pension new subsection 183(3) for wife pension (inserted by item 4).

Item 7 in Part 2 of Schedule 6 omits the existing section 660XAB and inserts a new section 66XAB. New subsection 660XAB(1) deals with a time limit on claims for mature age allowance and new subsections 660XAB(2), (3) and (4) deal with a time limit on claims for mature age partner allowance.

New subsection 660XAB(1) provides that a person is not to be granted a mature age allowance unless the person's claim for that allowance is lodged on or before 30 June 1996. This subsection merely restates the existing position for mature age allowance before these amendments.

New subsections 660XAB(2), (3) and (4) exactly mirror for partner allowance new section 146V for wife pension (inserted by item 1).

Item 8 inserts new subsection 660XJO(3) to exactly mirror for mature age partner allowance new subsection 183(3) for wife pension (inserted by item 4).

5. Commencement.

These changes commence on 1 July 1995.

SCHEDULE 7

CONTINUATION OF ADVANCE PHARMACEUTICAL ALLOWANCE

1. Summary of the proposed changes

The sunset clause that is due to come into operation on 1 January 1995 so as to provide for the cessation of payment of advance pharmaceutical allowance, is to be repealed. This will allow the advance pharmaceutical allowance to continue on an indefinite basis.

2. Background

The advance pharmaceutical allowance was introduced in 1990-91 as an interim measure to assist pensioners of limited means with high pharmaceutical requirements to adjust to the changes in the Pharmaceutical Benefits Scheme and was originally proposed to be discontinued after 31 December 1992 through the operation of a sunset clause. The availability of the advance has been of great assistance to those social security recipients who are chronically ill and decisions were taken in 1992 and 1993 to continue the advance for a further year. The sunset clause is now due to come into operation on 1 January 1995.

There has been bi-partisan support for the indefinite continuation of the advance pharmaceutical allowance.

3. Clauses involved in the changes

Clause 2(8): states that clause 9 and Schedule 7 commence on, or are taken

to have commenced on, 1 December 1994.

Clause 9: states that the Social Security Act 1991 and the Social Security

Legislation Amendment Act (No. 4) 1991 are amended as set

out in Schedule 7.

Schedule 7: amends the Social Security Act 1991 and the Social Security

Legislation Amendment Act (No. 4) 1991 so as to remove an

unnecessary note and repeal the sunset clause, respectively.

4. Explanation of the changes

Section 49, together with subsection 2(6) of the Social Security Legislation Amendment Act (No. 4) 1991, provide for a sunset clause to come into effect on 1 January 1995 to repeal the provisions in the Social Security Act 1991 relating to advance pharmaceutical allowance. Effectively, this would prevent any further payments of advance pharmaceutical allowance.

Item 1 in Part 1 of Schedule 7 omits a note to subsection 1061F(1) of the Social Security Act 1991. The note related to the existence of a sunset clause.

Items 2 and 3 in Part 2 of Schedule 7 operate so as to repeal the sunset clause with effect from 1 December 1994. This will ensure the continued operation of the provisions relating to advance pharmaceutical allowance on and after 1 January 1995.

5. Commencement

These changes commence on, or are taken to have commenced on, 1 December 1994.

SCHEDULE 8

AMENDMENTS RELATING TO ASSURANCE OF SUPPORT

1. Background

An assurance of support debt may arise under the Migration Regulations that are made under the Migration Act 1958. A debt may arise under the Principal Act if a person receives a payment specified in the definition of an "assurance of support debt" in subsection 23(1) of the Act.

Subsection 23(1) of the Act currently provides that an assurance of support debt may arise under Part 5 of the Migration (1993) Regulations as in force on or after 1 February 1993.

As part of the recent reforms to the Migration legislation, the Migration Regulations were redrafted. Although there was no change to the concept of an assurance of support debt, it is necessary to amend the Principal Act to reflect the different provisions that deal with assurance of support debts in the Migration Regulations.

3. Clauses involved in the changes

Clause 2: specifies the commencement day as 1 September 1994 (the date that the new Migration (1994) Regulations commenced operation.

Clause 10: provides that the Principal Act is amended as set out in Schedule 3.

Schedule 8: amends the definition of "assurance of support" in subsection 23(1).

Item 1: inserts a new paragraph (ca) in the definition of assurance of support debts to include a reference to the new Migration Regulations.

4. Explanation of the changes

The definition of "assurance of support" in subsection 23(1) is amended by Item 1 to state that an assurance of support debt includes a debt due and payable to the Commonwealth or a liability of a person to the Commonwealth because of the operation of Division 7 of Part 2 of the Migration Regulations as in force on or after 1 September 1994.