House of Representatives

Explanatory Memorandum

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

Schedule 4 - Australian Government Disaster Recovery Payment

Summary

Schedule 4 to the bill introduces into the Social Security Act a new payment called the Australian Government Disaster Recovery Payment (AGDRP), which will provide an immediate, short-term payment to Australians adversely affected by a major or widespread disaster. Adult Australian residents who are affected by an eligible natural or non-natural disaster, whether within Australia or offshore, can claim the payment and receive financial assistance for themselves and their children to aid with their recovery.

The AGDRP is to be exempt from all Australian Government means testing arrangements and will be tax exempt.

Background

This measure provides a streamlined and co-ordinated payment, AGDRP, that can be activated in the event of an emergency or disaster, so that Australians can receive assistance in a timely manner. The AGDRP provides a flexible disaster recovery assistance payment, which could be used for either offshore disasters, in situations similar to the 2002 and 2005 Bali bombings, the 2004 Asian Tsunami and the 2005 London bombings, or onshore disasters, similar to the 2005 Eyre Peninsula bushfires or Tropical Cyclone Larry earlier this year. Given the successful ex-gratia government assistance provided in response to these events, the AGDRP is intended to standardise the provision of Australian Government assistance. The AGDRP is largely aimed at providing the government with a flexible response option for Australians affected by onshore or offshore disaster events, complementing existing arrangements and providing choice in the way the government may wish to respond.

Explanation of the changes

Part 1 - Main amendments

Social Security Act 1991

Item 1 inserts the new definition of 'adversely affected' into subsection 23(1) of the Social Security Act. One of the eligibility criteria for receiving an AGDRP is that a person be 'adversely affected' by a 'major disaster'. 'Major disaster' is defined in new section 36 (see item 4) . 'Adversely affected' is defined in new section 1061L (see item 5) .

Item 2 inserts a new acronym definition into subsection 23(1) being 'AGDRP', which represents the Australian Government Disaster Recovery Payment.

Item 3 defines both the term Australian Government Disaster Recovery Payment and the acronym AGDRP as the new payment being made under Part 2.24 of the Social Security Act.

Item 4 repeals and replaces section 36 of the Social Security Act. New section 36 allows the Minister to determine that a particular event is a major disaster for the purposes of allowing a person to claim AGDRP. In determining that an event is a major disaster, the Minister may take into account the number of individuals affected by, and the nature and extent of, the disaster. A disaster can be both a natural and non-natural disaster and may occur within or outside of Australia, or both. Where an event affects 2 locations, the Minister can make a single determination, if both locations are within Australia, or separate determinations for each location. A determination made under this provision is not a legislative instrument within the meaning of section 5 of the Legislative Instruments Act 2003 as the determination is administrative in character, not legislative.

Item 5 repeals Part 2.24 of the Social Security Act and replaces it with new Part 2.24. This replacement part provides the qualification rules for AGDRP and amount of this payment.

New section 1061K provides the qualification rules for AGDRP. Firstly, this payment is, generally, only payable to adults who have been adversely affected by a major disaster. An adult is a person who is at least 16 years of age, or who is receiving a social security payment. The adult must also be:

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an Australian resident; or

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receiving a social security payment, other than a payment of youth allowance not at the 'independent' rate ('independent' is defined at Part 3.5 of the Social Security Act); or

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an Australian citizen who is not currently a resident, but who is a member of a class of citizens determined by the Minister to be able to qualify for AGDRP in regard to a particular major disaster; or

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the holder of a visa that is in a class of visas determined by the Minister for the purposes of subparagraph 729(2)(f)(v) of the Social Security Act.

A determination that a particular class of non-resident Australian citizens can be paid AGDRP in regard to a particular major disaster is a legislative instrument, but the disallowance requirement in section 42 of the Legislative Instruments Act 2003 does not apply to this determination. The determination is exempt from disallowance to ensure the Minister can respond quickly and with certainty to the needs of Australians who are affected by a major disaster. Such a determination will therefore enable assistance to be provided to people who are not classed as Australian residents, such as holders of spouse provisional visas and interdependency visas, but whom the government would like to assist.

New subsection 1061K(5) provides that a person can only receive one payment of AGDRP in respect of a particular major disaster. New section 1061L provides that the Minister may determine, in writing, the circumstances in which a person is adversely affected by a disaster and would thereby satisfy the 'adversely affected' qualification requirement in new paragraph 1061K(1)(c). The circumstances where the Minister may consider a person to be adversely affected may include, for example, where:

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a person was present at the location of the disaster, or at a place where medical, or similar, assistance was given to victims of the disaster (for example, a hospital or a morgue), and suffered either a serious physical injury or a serious psychological injury or psychological trauma;

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the disaster caused the death of an immediate family member;

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a person's principal home is rendered uninhabitable for a period of at least 2 weeks or destroyed; or

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if the disaster occurs outside of Australia, the person incurs necessary personal expenditure, which is not covered by insurance or other compensation. This may include the replacement of clothing or similar personal items.

This determination is a legislative instrument, but section 42 of the Legislative Instruments Act 2003 does not apply to this determination, that is, it is not subject to disallowance. The reason for a determination made under section 1061L not being subject to disallowance is to ensure that the Minister can offer assistance to those people adversely affected by a disaster as quickly, responsively and efficiently as possible, without the uncertainty of disallowance.

New section 1061M provides that, for a disaster occurring in a location that is part of Australia, a person is able to claim an amount of AGDRP equal to the adult rate of AGDRP for the financial year during which the disaster was declared by the Minister, plus the child rate for that same financial year multiplied by the number of children in relation to whom the person is the principal carer. The child rate of AGDRP is not paid to an adult in regard to a child who is receiving the 'independent' rate of youth allowance.

The adult rate of AGDRP will initially be $1,000 until the Minister makes a determination as to the rate in regard to a particular financial year. Where the Minister has not made a determination in relation to a particular financial year, the adult rate of AGDRP will be that rate most recently determined by the Minister or, where no determination has ever been made, $1,000.

The child rate of AGDRP will initially be $400 until the Minister makes a determination as to the rate in regard to a particular financial year. Where the Minister has not made a determination in relation to a particular financial year, the child rate of AGDRP will be that rate most recently determined by the Minister or, where no determination has ever been made, $400.

New section 1061N provides that, for a disaster occurring outside of Australia, a person is able to claim an amount of AGDRP determined by the Minister under subsection 1061P(4), which cannot be greater than the adult rate, plus the amount determined by the Minister under subsection 1061P(5), which cannot be more than the child rate, multiplied by the number of children in relation to whom the person is the principal carer. Young people who are receiving the 'independent' rate of youth allowance will not be counted as a child of an adult for the purposes of determining the amount of AGDRP payable to the person, as they can claim AGDRP in their own right.

New section 1061P provides for the determination of various rates of AGDRP that will be payable to a person in respect of onshore and offshore disasters and at an adult rate and child rate. This determination is a legislative instrument, but section 42 of the Legislative Instruments Act 2003 does not apply to this determination, that is, it is not subject to disallowance. The reason for determinations made under section 1061P not being subject to disallowance is to enable the rate of payments to be set and commence with certainty without waiting for the conclusion of a disallowance period in the event of a major disaster. This would then enable the Minister to make an urgent determination that would provide certainty for the making of payments.

Part 2 - Other amendments

Income Tax Assessment Act 1997

Item 6 inserts reference to the AGDRP into the table in section 52-10 of the Income Tax Assessment Act 1997 , making it a social security payment that is exempt from income tax.

Item 7 repeals item 8.1 in the table in section 52-10 of the Income Tax Assessment Act 1997 , being reference to the old disaster relief payment, which is now being replaced by AGDRP.

Item 8 inserts reference to the AGDRP into the table in section 52-40 of the Income Tax Assessment Act 1997 . This table indicates where in the Social Security Act a reader may find the operative provisions about payments that are exempt from income tax. In this case, readers can find these provisions in regard to AGDRP at Part 2.24.

Item 9 repeals the reference to the now replaced disaster relief payment at item 8 of the table in section 52-40 of the Income Tax Assessment Act 1997 . This old payment has now been replaced by AGDRP.

Social Security Act 1991

Item 10 inserts new paragraph 14A(1)(da) into the Social Security Act. This new provision provides that a payment of AGDRP will not be included when assessing a social security customer's liquid assets, which can have an effect on the customer's eligibility for certain social security payments. This provision is worded in such a way that, if it appears to the Secretary that the person has not spent their AGDRP some time after having received it, it is open to him or her to continue to exempt the amount as a liquid asset in regard to the person's social security payment for a reasonable period of time. Alternatively, if it appears that the person had spent the AGDRP immediately, it would probably not be reasonable for the Secretary to exempt the amount as a liquid asset for any further period of time.

Item 11 amends the definition of liquid assets in subsection 19B(1) of the Social Security Act and provides that an AGDRP payment will not be included in the liquid assets of a person when determining their eligibility for a social security payment under the financial hardship rules. As per item 10 , above, this provision is worded in such a way that, if it appears to the Secretary that the person has not spent their AGDRP some time after having received it, it is open to him or her to continue to exempt the amount as a liquid asset in regard to the person's social security payment for a reasonable period of time. Alternatively, if it appears that the person had spent the AGDRP immediately, it would probably not be reasonable for the Secretary to exempt the amount as a liquid asset for any further period of time.

Item 12 repeals certain words in subsection 746(2) of the Social Security Act that are no longer necessary because of the repeal of the disaster relief payment and its replacement by AGDRP.

Item 13 repeals the note at the end of subsection 746(2) of the Social Security Act, which is no longer necessary because of the repeal of the disaster relief payment and its replacement by AGDRP.

Item 14 repeals certain words in subsection 771KE(2) of the Social Security Act that are no longer necessary because of the repeal of the disaster relief payment and its replacement by AGDRP.

Item 15 repeals the note at the end of subsection 771KE(2) of the Social Security Act, which is no longer necessary because of the repeal of the disaster relief payment and its replacement by AGDRP.

Item 16 amends section 1061JJ of the Social Security Act to make it now subsection 1061JJ(1) in preparation for the insertion of new subsection 1061JJ(2), at item 18 below.

Item 17 amends section 1061JJ of the Social Security Act, to replace the reference to 'a disaster relief payment' to include now 'an AGDRP or other disaster relief payment'. This provision affects a customer's ability to claim crisis payment in respect of an extreme circumstance for which they are also able to receive AGDRP or another disaster relief payment.

Item 18 inserts new subsection 1061JJ(2) into the Social Security Act. This provision provides that, once the Minister has declared a major disaster for the purposes of AGDRP, a person will no longer be also able to claim crisis payment in respect of this same disaster. However, persons who have made a claim for crisis payment prior to the Minister making a declaration will have their claim determined.

Social Security (Administration) Act 1999

Item 19 replaces subsection 16(6) of the Social Security Administration Act with paragraphs 16(6)(a) and (b) and provides that the Secretary may approve a place outside of Australia for the purposes of a person lodging a claim for AGDRP in respect of a major disaster occurring outside Australia.

Item 20 inserts new Subdivision FA into Division 1 of Part 3 of the Social Security Administration Act. This adds new section 27A, which provides that a claim for AGDRP must be made within six months of the declaration of a major disaster. However, a claim will be accepted more than six months after the declaration where there are special circumstances that affected the person being able to lodge the claim within the prescribed time limit, and the claim is made within a reasonable period having regard to the circumstances affecting the person. Given the nature of the payment, being affected by the disaster that has been declared would be unlikely to be enough, by itself, to justify a late claim as these circumstances would, obviously, also apply to all other claimants.

Item 21 inserts new subsection 31(1) into the Social Security Administration Act, which provides that a person does not have to comply with the general rule that relates to social security payments, that a customer must be in Australia to make a claim, where the person's claim relates to a disaster that occurred at a location outside of Australia.

Item 22 inserts new section 46A. Although AGDRP will generally be paid as a lump sum (see item 23 below), this provision enables the Secretary to determine that, if it is appropriate to do so, the person's payment can be paid in instalments.

Item 23 inserts new paragraph (aa) into the definition of 'lump sum benefit' in subsection 47(1) of the Social Security Administration Act, to include AGDRP. The effect is that an AGDRP is to be paid as a lump sum to the person, except when it is paid in instalments.

Item 24 repeals paragraph (c) of the definition of 'lump sum benefit' in subsection 47(1) of the Social Security Administration Act, removing the old disaster relief payment from the definition. This payment has now been replaced by AGDRP.

Item 25 replaces the reference to disaster relief payment in paragraph 13(a) of Schedule 2 to the Social Security Administration Act with a reference to AGDRP. This provision allows the limited backdating of an application for a social security payment, in certain circumstances, where the applicant has firstly applied for AGDRP.

Item 26 inserts new paragraph 13(ba) into Schedule 2 to the Social Security Administration Act. This new paragraph provides that for clause 13 of Schedule 2 to apply in relation to a customer, the customer must be in Australia when making his or her claim for a social security payment.

Item 27 substitutes a reference to disaster relief payment with a reference to the AGDRP. The effect of the provision remains otherwise unchanged; that is, if a person qualified for an AGDRP makes a claim for this payment and, within 14 days of making a claim for AGDRP, makes a claim for another social security payment, the person's start day in relation to the payment that is not AGDRP is the same day as when the person was qualified for AGDRP.