Senate

Explanatory Memorandum

Circulated By the Authority of the Attorney-General, the Hon Robert Mcclelland Mp

Schedule 3 - Defence amendments

169 This Schedule contains amendments to the Defence Force Retirement and Death Benefits Act 1973 (the DFRDB Act) and the Defence Forces Retirement Benefits Act 1948 (the DFRB Act), the acts which govern the superannuation schemes for members and former members of the Australian Defence Forces.

170 The amendments in this Schedule commence on the same day that the amendments in Schedule 1 to the Bill are proclaimed to commence. This will ensure a consistent commencement for changes in the various superannuation schemes.

171 The amendments provide for the payment of benefits to the same-sex partner, and to an eligible child who is the product of a same-sex relationship, of an eligible scheme member who dies on or after the commencement of the amendments. These classes of person have been excluded from the scope of the benefits provided under military superannuation schemes as they fall outside the scope of relevant definitions. The extension of the DFRDB Act to these previously excluded persons is achieved by amending definitions under the Act to provide that they are inclusive of same-sex partners and children that are the product of a same-sex relationship of an eligible scheme member. These new potential beneficiaries are required to meet tests for eligibility, the same as opposite-sex partners and children currently included in the scheme.

172 The amendments to the DFRB Act provide for the payment of benefits for the classes of person described above without amendment of individual definitions. As contributions to this scheme were closed from the commencement of the DFRDB Act, only recipient members remain. Rather than making extensive changes to the sources of entitlement in this scheme, a power is provided to allow payment to be made to persons who would meet the requirements for payment under the DFRDB Act, but for the deceased member having been a member of the 1948 scheme.

173 The amendments also provide for consistent use of terminology relating to the pension benefits that may be paid to a person who is entitled to be paid a spouse pension throughout the DFRDB Act. This will assist readers to more easily understand the various pension benefits conferred under that Act.

174 The Military Superannuation and Benefits Act 1991 is not amended by Schedule 3 to the Bill, because the changes necessary to effect the policy described above will be made by the Minister for Defence under section 5 of that Act, by amendment of the Military Superannuation and Benefits Trust Deed .

Defence Force Retirement and Death Benefits Act 1973

Item 1

175 This item, along with item 2, provides for the insertion of a new subparagraph (a)(iii) into the definition of child in subsection 3(1) of the DFRDB Act.

Item 2

176 Item 2 inserts a new subparagraph (a)(iii) into the extended definition of ' child' in paragraph 3(1)(a) of the DFRDB Act. The item expands the classes of children that may be taken to be a child of the member for the purpose of determining whether benefits may be paid to the child on the death of the member.

177 If the child is the product of the member's relationship with a partner, then that child may be taken to be the member's child. The definition applies regardless of the gender of the member's partner.

178 Subparagraph 3(6) additionally requires that in order to be a product of a relationship, the child must also have been connected to that relationship as the biological or birth child of a person in the relationship

Item 3

179 Item 3 inserts a new paragraph (c) into the definition of ' child' in section 3 of the DFRDB Act. The new item provides that a child can be considered to be the member's for the purpose of the scheme where the child is the child of the member's partner and the product of a relationship that the partner had with another person. Subparagraph (c)(ii) requires that the child was wholly or substantially dependent on the member at the time the member died.

180 Subparagraph 3(6) additionally requires that in order to be a product of a relationship, the child must also have been connected to that relationship as the biological or birth child of a person in the relationship.

181 Proposed new subparagraph (a)(iii) and paragraph (c) of the definition of ' child' are intended to extend the scope of the definition to children who are the product of same-sex relationships. The new definition is limited by new subsection 3(6) inserted by item 9 and by its interaction with the existing elements of the definition of ' child' . For this reason, an administrative note is inserted at the end of new paragraph (c) to ensure that the relevance of subsection 3(6) is drawn to the reader's attention.

182 Examples 1-3 below show how the amendments may extend the definition. Example 4 shows the limits on this extension and also the way that existing parts of the definition may extend to the child of a person in a same-sex or opposite-sex couple relationship.

Example 1

J is a scheme member and forms a relationship as a couple with S. During the relationship J and S decide that S will undergo an artificial conception procedure using gametes from S and a donor. The procedure takes place and S gives birth to H. Whilst H is the biological child of S, he is not the biological child of J.

183 H can be considered J's child for the purposes of the definition of ' child' in the DFRDB Act. That is, H is the product of the relationship between J and S and is S's biological child. This would continue to be the case even if the relationship between J and S were to break down at a later time.

Example 2

J is a scheme member and forms a relationship as a couple with S. During the relationship J and S decide that S will undergo an artificial conception procedure using donated gametes. The procedure takes place and S gives birth to H. Whilst H is the birth child of S, he is not the biological child of either J or S.

184 H can be taken to be J's child for the purposes of the definition of ' child' under the DFRDB Act. That is, H is the product of the relationship between J and S and S is H's birth mother. This would continue to be the case even if the relationship between J and S were to break down at a later time.

Example 3

J is a scheme member and forms a relationship as a couple with S. The couple decide to provide long-term foster-care for a child, H, whose biological mother is permanently unable to provide care.

H has no biological connection to the couple but is taken to be the child of J for the purposes of the definition of ' child' under the scheme, because J has formally fostered H. This would continue to be the case even if the relationship between J and S were to break down, providing that J continued to foster H. Recognition of foster children is already expressly provided for under the DFRDB Act.

Example 4

J is a scheme member and forms a relationship as a couple with S. S has a child, H, from a previous relationship.

185 H cannot be considered J's child within the meaning of ' eligible child' in the DFRDB Act. Whilst H is S's biological child, and S is in the relationship, H is not the product of the relationship between J and S. H's connection with J only arose because J commenced a relationship with S. It did not arise from any actions of the couple to add a child to their relationship. H does not depend on J for economic support.

Item 4

186 This item inserts a signpost into the listing of definitions in section 3 of the DFRDB Act, to indicate that the term ' couple relationship' is to be interpreted subject to section 6A of the DFRDB Act.

Item 5

187 This item inserts words into the definition of ' eligible orphan' to ensure that a spouse pension provided under the DFRDB Act is taken into account when working out whether a pension may be payable to a child on the death of a member. Apart from same-sex partners, this change does not have the effect of extending benefits to any persons not currently taken to be eligible under the scheme. Rather, it reflects the change of terminology from ' widow' to ' spouse' that was originally introduced by the Commonwealth Superannuation Schemes Amendment Act 1992 . However, this terminology has not been consistently applied through the DFRDB Act since that time. This amendment ensures that the current terminology can be easily related to the pension entitlements provided under sections 38 and 39 of the DFRDB Act.

Item 6

188 This item inserts a new definition of the term ' partner' . This amendment replaces the phrase ' husband or wife' with the term ' partner' to extend the range of persons who can be considered to be eligible for death benefits to include a person in a same-sex relationship with a scheme member. This amendment operates in conjunction with the amendments proposed to section 6A and 6B of the Act.

Item 7

189 This item inserts words into the definition of ' pension benefit' to ensure that a spouse pension provided under the Act is included under the broad term. The amendment reflects the change of terminology from ' widow' to ' spouse' that was originally introduced by the Commonwealth Superannuation Schemes Amendment Act 1992 . However, this terminology has not been consistently applied through the Act since that time. This amendment ensures that the current terminology can be easily related to the pension entitlements provided under sections 38 and 39 of the DFRDB Act.

Item 8

190 This item inserts a signpost into the listing of definitions in section 3 of the Act, to indicate that the term 'spouse' is to be interpreted subject to section 6B of the Act.

Item 9

191 This item inserts proposed new subsection 3(6) into the DFRDB Act. The new subsection makes it clear that a child for the purposes of the DFRDB Act may only be the product of a person's relationship with a partner if the child is the biological child of at least one of the persons in the relationship, or is born to a woman in the relationship.

Item 10

192 The express wording of section 6A, as including only a ' marital relationship' restricted to persons ordinarily living together as ' husband or wife' , means that only persons in a marriage or an opposite-sex de facto relationship could previously be considered for the purposes of benefits payable on the death of a spouse who was a member under the DFRDB Act.

193 The amendments made by this item replaces the term ' marital relationship' with the term ' couple relationship' in subsection 6A(1) of the DFRDB Act, and in the section title. The effect of this amendment and the amendments in item 11 is to ensure that the definition of a relationship, for the purpose of the payment of death benefits under the DFRDB Act, includes a same-sex relationship as well as an opposite-sex relationship. The inclusion of same-sex relationships within this definition is not intended to change the treatment of married or opposite-sex de facto couples. It removes same-sex discrimination but does not change or re-define any other indicia of a relationship.

Item 11

194 The amendments made by this item replace the phrase ' husband or wife' with the term ' partner' in subsection 6A(1) of the DFRDB Act. The effect of this amendment is to ensure that the definition of a relationship, for the purpose of the payment of death benefits under the DFRDB Act, includes a same-sex relationship as well as an opposite-sex relationship. The inclusion of same-sex relationships within this definition is not intended to change the treatment of married or opposite-sex de facto couples. It removes same-sex discrimination but does not change or re-define any other indicia of a relationship. The factual indicia set out in subsection 6A(4) are applied to couples in the same way whether the couples are the same sex or different sexes.

Item 12

195 This item amends subsection 6A(2) as a consequence of the amendment made by item 11.

Item 13

196 This item amends subsection 6A(3) as a consequence of the amendment made by item 10.

Items 14 and 15

197 Subsection 6(4) of the DFRDB Act outlines circumstances which may be relevant for arriving at an opinion that a person in a relationship of less than 3 years duration ordinarily lived with the other person as their partner on a permanent and bona fide domestic basis. The circumstances listed are not intended as an exhaustive list but do cover some of the more common circumstances, such as where the couple are married or have a child or jointly own their home.

198 Items 14 and 15 insert a new paragraph 6A(4)(ba) and subparagraph 6A(4)(c)(iii) into the DFRDB Act to reflect that the concepts of spouse and child used within the DFRDB Act, for the purpose of the payment of death benefits, have been extended to cover persons in same-sex relationships. Item 15 also includes a note that provides that new subsection 3(6) is relevant to working out when a child is a product of a relationship for the purposes of the new subparagraph 6A(4)(c)(iii).

199 Relevant evidence will now include whether:

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the persons' relationship is registered under a State or Territory law prescribed for the purposes of paragraph 4AB(4)(ba) of the Judges' Pensions Act 1968 as a kind of relationship prescribed for the purposes of that paragraph; and

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there is a child who is the product of the relationship between the persons (see item 2).

200 The amendments made by items 14 and 15 of the Bill will assist the Defence Force Retirement and Death Benefits Authority in determining whether two persons of the same sex had a ' couple relationship' where the relationship has less than 3 years duration.

201 As it is intended that the prescribed relationships and prescribed State and Territory legislation should be the same for the Commonwealth civilian and military (defined benefit) superannuation schemes, for administrative convenience they will be specified in the Judges' Pensions Act.

Item 16

202 This item amends subsections 6B(2) and (3) of the DFRDB Act as a consequence of the amendment made by item 10.

Item 17

203 This item amends paragraph 6BA(1)(b) of the DFRDB Act as a consequence of the amendment made by item 10.

Item 18

204 This item amends the note to subsection 49D(1) to ensure that the current terminology can be easily related to the pension entitlements provided under sections 38 and 39 of the DFRDB Act. This change does not have the effect of extending benefits to any persons not currently taken to be eligible under the scheme, rather, it reflects the change of terminology from ' widow' to ' spouse' that was originally introduced by the Commonwealth Superannuation Schemes Amendment Act 1992 .

Item 19

205 This item substitutes the term ' widow's pension' in subsection 75(5) of the DFRDB Act, which relates to benefits payable on the death of a deferred benefit member, with the term ' spouse pension' . Apart from same-sex partners of members who die on or after the day the amendment commences, this change does not have the effect of extending benefits to any persons not currently taken to be eligible under the scheme, rather, it reflects the change of terminology from ' widow' to ' spouse' that was originally introduced by the Commonwealth Superannuation Schemes Amendment Act 1992 .

Item 20

206 This item amends paragraphs 98B(4)(ab), (ac) and (c) by substituting the term ' widow' with 'spouse' . This ensures that the current terminology is easily related to the relevant pension entitlements provided under sections 38 and 39 of the DFRDB Act. The effect is the same as that described for item 19.

Item 21

207 This item amends paragraphs 98D(1)(a), (b) and (c) by substituting the term ' widow' with ' spouse' . This ensures that the current terminology is easily related to the pension entitlements provided under sections 38 and 39 of the DFRDB Act. The effect is the same as that described for item 19.

Item 22

208 This item amends paragraphs 98D(2)(a), (b), 3(b) and (4)(b) by substituting the term ' widow' with ' spouse' . This ensures that the current terminology is easily related to the pension entitlements provided under sections 38 and 39 of the DFRDB Act. The effect is the same as that described for item 19.

Item 23

209 This item substitutes the term ' widow's pension' in subparagraph 98J(3)(b)(ii) of the DFRDB Act, which relates to the waiving of member contributions in certain circumstances, with the term ' spouse pension' . Apart from same-sex partners of members who die on or after the day the amendment commences, this change does not have the effect of extending benefits to any persons not currently taken to be eligible under the scheme, rather, it reflects the change of terminology from ' widow' to ' spouse' that was originally introduced by the Commonwealth Superannuation Schemes Amendment Act 1992 .

Item 24

210 This item provides that the amendments to the DFRDB Act only apply in relation to scheme members who die on or after the commencement of the amendments made by Schedule 3 to the Bill. It does not extend pension benefits to partners and children of members who die before the commencing day.

Defence Forces Retirement Benefits Act 1948

Item 25

211 This item inserts new sections 64AA, 64AB and 64AC into the DFRB Act. Eligibility under all three proposed sections is measured at the date of death of the recipient member. The sections each establish a power for the Authority to allow payment to be made to persons who would meet the requirements for payment under the DFRDB Act, but for the deceased member having been a member of the 1948 scheme.

212 Determinations of eligibility by the Authority are not legislative instruments for the purposes of the Legislative Instruments Act 2003 . This is consistent with the exemption of reviewable decisions by item 21 of Schedule 1 of the Legislative Instruments Regulations 2004 . Decisions of the Authority relating to the 1948 scheme may be reviewed by the Administrative Appeals Tribunal, in accordance with section 99 of the DFRDB Act

213 The amendments relate expressly to recipient members under the scheme because there are no current contributing members in this closed scheme.

Proposed section 64AA

214 Proposed section 64AA provides that where a pension is not payable to a person under the DFRB Act as the widow of a member, the person may be provided with a pension if they would have met the requirements for payment of a spouse pension under the DFRDB Act had the deceased member been a recipient member under that latter scheme.

215 In deciding whether to grant the pension, the Authority must be satisfied that there are necessitous circumstances, or that the pension is otherwise warranted. In this case, the discrimination that would occur were the partner of a deceased member unable to gain a pension due only to their marital status, despite the existence of a genuine couple relationship prior to the death of the member, would be a circumstance that would warrant the grant of a pension.

Proposed section 64AB

216 Proposed section 64AB provides that where a pension is not payable to a person under the DFRB Act in respect of the child of a member the child may be provided with a pension, if the child would have met the requirements for payment of a child pension under the DFRDB Act, had the deceased member been a recipient member under that latter scheme. Paragraph 64AB(2)(b) allows the Authority to approve retrospective payment of the child pension if satisfied that special circumstances exist, however, this date cannot be earlier than the commencement date for the amendments.

Proposed section 64AC

217 Proposed section 64AC provides that where a pension is not payable to a person under the Act as the orphan of a member, an orphan may be provided with a pension if they would have met the requirements for payment of a eligible orphan's pension under the DFRDB Act had the deceased member been a recipient member under that latter scheme. Paragraph 64AC(2)(b) allows the Authority to approve retrospective payment of the child pension if satisfied that special circumstances exist, however, this date cannot be earlier than the commencement date for the amendments.

Item 26

218 This item provides that the amendments to the DFRB Act only apply in relation to scheme members who die on or after the commencement of the amendments made by Schedule 3 to the Bill. It does not extend pension benefits to partners and children of members who die before the commencing day.