Senate

Explanatory Memorandum

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

Schedule 2 - Residence required to qualify for disability support pension

Summary

This Schedule will introduce an ongoing requirement for residence in Australia for disability support pension, bringing the pension into line with other workforce age payments.

Background

These amendments will close a loophole that has allowed continued payment of disability support pension to people who live permanently overseas but return to Australia every 13 weeks in order to retain their pension.

It is not the intention of the 13-week portability period to allow people to live overseas and return to Australia for only short periods every 13 weeks to maintain payment. The 13-week portability period is designed to allow disability support pensioners who reside permanently in Australia sufficient time to deal with personal matters that may arise from time to time overseas. This is consistent with the purpose of disability support pension, which is to assist people with the cost of living in Australia, and is designed to engage people of workforce age in activities in Australia that will lead to greater levels of economic and social participation.

Section 7 of the Social Security Act lists the factors to which regard must be had in deciding whether or not a person is an Australian resident . Part 2.3 of the Social Security Act provides the qualification rules for disability support pension. Subdivision A of Division 1 of that Part provides how a person is qualified for disability support pension. Those provisions are to be amended to provide that a person must be an Australian resident to qualify for disability support pension.

The new qualification requirement for disability support pension will not apply to a pensioner whose disability support pension is portable under an international social security agreement. The new requirement will also not apply to a pensioner who is grandfathered from certain portability changes made in 2000 and 2004. Lastly, the new requirement will not apply to a pensioner who is severely disabled and terminally ill, and who is overseas to be with a family member or to return to the person's country of origin.

The amendments made by this Schedule commence on 1 January 2011.

Explanation of the changes

Item 1 provides for the amendment of section 94 (Qualification for disability support pension) of the Social Security Act by the insertion of new paragraph 94(1)(ea), which requires that a disability support pensioner either be an Australian resident or be absent from Australia and remain eligible for disability support pension under section 1218AA.

Item 2 provides for the amendment of section 94A (Qualification for disability support pension - person transferring to that pension) of the Social Security Act by the insertion of paragraph 94A(1)(ja), which requires that a disability support pensioner either be an Australian resident or be absent from Australia and remain eligible for disability support pension under section 1218AA.

Item 3 adds a note to subsection 94A(1), referring to section 7 as the source of the definition of Australian resident.

Item 4 provides for the amendment of section 95 (Qualification for disability support pension - permanent blindness) of the Social Security Act by the insertion of paragraph 95(1)(d), which requires that a disability support pensioner either be an Australian resident or be absent from Australia and remain eligible for disability support pension under section 1218AA.

Item 5 provides for the amendment of section 1212 of the Social Security Act by the addition of a new definition of Australian resident disability support pensioner .

Item 6 provides for the amendment of section 1212 of the Social Security Act by the addition of a new definition of terminally ill overseas disability support pensioner .

Item 7 provides for the amendment of the table in section 1217, relating to portability of social security payments, by repealing item 3 of that table and substituting two new items to provide for portability of an Australian resident disability support pensioner (item 2) and of a terminally ill overseas disability support pensioner (item 3).

Item 8 adds new clause 150 to Schedule 1A to the Social Security Act. This provides an exemption from the requirement to be an Australian resident to qualify for disability support pension for certain pensioners whose entitlement to disability support pension is otherwise maintained.