House of Representatives

Explanatory Memorandum

Circulated By the Authority of the Minister for Families, Housing, Community Services and Indigenous Affairs, the Hon Jenny Macklin MP

Schedule 3 - Assessing qualification for disability support pension

Summary

This Schedule introduces a requirement, commencing from 3 September 2011, that people will need to provide evidence that they have tested their future work capacity by participating in training or work-related activities to be qualified for disability support pension. This new requirement will not apply to claimants for disability support pension who have a severe impairment, such as those who are clearly unable to work.

As part of the Job Capacity Assessment - more efficient and accurate assessments for Disability Support Pension and employment services 2010-2011 Budget measure, the Government undertook to reform disability support pension assessments in this way. Implementation of this aspect of the measure was brought forward to September 2011 (instead of January 2012) in the 2011-2012 Budget.

Background

Disability support pension provides income support to people who, because of an ongoing physical, intellectual or psychiatric impairment, are prevented from working or from being re-trained for work. The qualification for disability support pension requires, amongst other things, that a person has a continuing inability to work because of an impairment.

The Government believes long-term dependence on disability support pension is not the best option for people who have skills and capacity to participate in the workforce or who are able to build such skills with appropriate assistance. The measures in this Schedule are focused on ensuring that people who are unable to work, or who have made a positive effort to build their capacity to work but due to their impairments are unable to work, qualify for disability support pension.

Presently, a person has a continuing inability to work because of an impairment if the Secretary is satisfied that the impairment is of itself sufficient to prevent the person from doing any work independently of a program of support within the next two years, and either: (i) the impairment is of itself sufficient to prevent the person from undertaking a training activity during the next two years; or (ii) if the impairment does not prevent the person from undertaking a training activity - such activity is unlikely (because of the impairment) to enable the person to do any work independently of a program of support within the next two years.

This Schedule introduces the new requirement that a person who does not have a severe impairment must satisfy the Secretary that they have actively participated in a program of support. The requirement for a person to have actively participated in a program of support will not of itself answer the question of whether the person has a continuing inability to work. In addition, the person will also be required to satisfy the Secretary that, as a result of the person's impairment, the person is prevented from undertaking any work and/or a training activity within the next two years.

A person will have a severe impairment if the person's impairment has been assessed under the Impairment Tables and been assigned an impairment rating of 20 points or more, of which 20 points or more have been assigned under a single Impairment Table. A person with a severe impairment will not be required to have actively participated in a program of support. However, the person will have to satisfy the Secretary that, as a result of the person's impairment, the person is prevented from undertaking any work and/or a training activity within the next two years.

The intent of this measure is, where appropriate, to require a person claiming disability support pension to demonstrate that they have undertaken and actively participated in a program of support.

This Schedule commences on 3 September 2011. This commencement date aligns with Centrelink system requirements.

Explanation of the changes

Items 1 and 2 are consequential to the repeal of section 94A of the Social Security Act in item 10. Item 1 omits from subparagraph 94(1)(e)(iii) the phrase 'while a dependent child of an Australian resident; and' and substitutes the phrase 'while a dependent child of an Australian resident' . Item 2 repeals paragraph 94(1)(f).

Item 3 inserts new paragraph 94(2)(aa) in to the Social Security Act. Subsection 94(2) sets out the requirements for the Secretary to be satisfied that a person has a continuing inability to work.

New paragraph 94(2)(aa) adds another step in determining whether a person has a continuing inability to work. New paragraph 94(2)(aa) provides that, if the person's impairment is not a severe impairment (which is defined in new subsection 94(3B), at item 6), the person must have actively participated in a program of support (defined in new subsection 94(3C), at item 6).

To satisfy the Secretary that the person has a continuing inability to work, a person who does not have a severe impairment must also satisfy paragraphs 94(2)(a) and (b).

A person who does have a severe impairment will not have to satisfy the Secretary that they have actively participated in a program of support but will have to satisfy the Secretary that they have a continuing inability to work as provided by paragraphs 94(2)(a) and (b).

The note provides that a new heading to subsection 94(2), ' Continuing inability to work', will be inserted.

Items 4 and 5 insert the words 'in all cases' before the words 'the impairment' in paragraph 94(2)(a) and before the word 'either' in paragraph 94(2)(b). The phrase 'in all cases' has been inserted in subsection 94(2) to clarify that paragraphs 94(2)(a) and (b) apply to a person who has a 'severe impairment' and to a person who is to have actively participated in a program of support.

Item 6 inserts new subsections 94(3A), (3B), (3C), (3D) and (3E).

New subsection 94(3A) provides that, if a person is receiving disability support pension, and the Secretary gives the person a notice under subsection 63(2) or (4) of the Social Security Administration Act in relation to assessing the person's qualification, then the requirement inserted by item 3 will not apply in relation to that assessment. That is, if a person is receiving disability support pension, and the Secretary decides to review that person's qualification, then the person will not need to satisfy the Secretary that they have actively participated in a program of support.

New subsection 94(3B) inserts a definition of severe impairment. Severe impairment is a new criterion being introduced into the qualification criteria for disability support pension.

A person has a severe impairment if the person has an impairment which has been assessed under the Impairment Tables and been assigned an impairment rating of 20 points or more, of which 20 points or more have been assigned under one Impairment Table. That is, 20 points on a single Impairment Table is the minimum requirement in order to have a severe impairment for the purposes of new subsection 94(3B). A person may be assigned 20 points or more under more than one Impairment Table, but for the purpose of determining whether the person's impairment is a severe impairment, at least 20 of the impairment points assigned must have been assigned under one Impairment Table alone.

A person with a severe impairment will not have to satisfy the Secretary that the person has actively participated in a program of support. Even though the person has a severe impairment, the person is still required to satisfy the Secretary that the person satisfies paragraphs 94(2)(a) and (b).

Examples 1 and 2, which follow new subsection 94(3B), have been included to illustrate situations in which a person will have a severe impairment for the purposes of new subsection 94(3B). Example 3 illustrates where a person will not have a severe impairment.

New subsection 94(3C) provides the Minister with a power to make a legislative instrument setting out the requirements that a person must satisfy in order to have actively participated in a program of support.

New subsections 94(3D) and 94(3E) provide that the Minister may make guidelines with respect to matters about which the Secretary is to be satisfied in determining whether a person, who does not have a severe impairment, has actively participated in a program of support (as provided for in new paragraph 94(2)(aa) in item 3). The Secretary must comply with any guidelines in force under subsection 94(3E). These guidelines will be a legislative instrument.

Items 7 and 9 effectively remove the definition of a 'program of support' from the definition of doing work 'independently of a program of support'.

Item 7 repeals paragraph 94(4)(a) and substitutes new paragraph 94(4)(a). New paragraph 94(4)(a) removes the definition of a 'program of support' from the definition of doing work 'independently of a program of support'. The definition of program of support is inserted into subsection 94(5) by item 9.

Despite the separation of the definition of program of support from paragraph 94(4)(a) and minor rewording to effect the separation, the intent of both the definition of a program of support and of doing work independently of a program of support remains the same.

A program of support is a program that is designed to assist persons to prepare for, find or maintain work and is either funded wholly or partly by the Commonwealth or is of a type that the Secretary considers is similar to a program that is designed to assist persons to prepare for, find or maintain work and that is funded (wholly or partly) by the Commonwealth.

The note to item 7 provides that a new heading to subsection 94(4), ' Doing work independently of a program of support', will be inserted.

The note to item 9 provides that a new heading to subsection 94(5), ' Other definitions', will be inserted

Item 8 omits the word 'such' from paragraphs 94(4)(b) and (c).

Item 11 omits the reference to section 94A from paragraph 729(2A)(a) of the Social Security Act.

Item 12 contains the application and saving provisions.

Subitem 12(1) provides that the amendments made by items 1 to 9 apply to a person who makes a claim, or who is taken to have made a claim for disability support pension on or after 3 September 2011.

The note to subitem 12(1) informs the reader that sections 12, 13 and 15 and clause 4 of Schedule 2 to the Social Security Administration Act deal with claims for disability support pension that are taken to have been made.

Subitem 12(2) provides that, despite the repeal of section 94A of the Social Security Act by item 10, if:

a)

a person made a claim for disability support pension under section 94A before the commencement of item 10 and, immediately before that commencement, the claim had not been finally determined; or

b)

a person was receiving disability support pension under that section immediately before the commencement of item 10;

section 94A, as in force immediately before that commencement, continues to apply on or after that commencement for the purposes of working out the person's qualification for disability support pension under that section.