House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Families, Community Services and Indigenous Affairs, Minister for Disability Reform, the Hon Jenny Macklin MP)

Schedule 5 - Carer supplement

Summary

This Schedule introduces a measure from the National Carer Strategy , which will allow access to carer supplement for those carers whose rate of payment is reduced to nil because of income where they or their partner worked in the fortnight covering 1 July in any given year. This will help ensure the income support system does not act as a disincentive to carers working in paid employment.

Background

Presently, a carer cannot receive the annual carer supplement payment if their income, or their partner's income, reduces the carer's rate of carer payment, wife pension, carer service pension or partner service pension to nil during the instalment period that includes 1 July in any given year.

This situation may disadvantage carers or their partners who may participate in casual or irregular work in addition to their caring commitments, and who are offered extra employment in the instalment period that includes 1 July. These carers may be faced with the difficult decision of accepting the offer of extra employment, knowing that they may then lose their annual carer supplement because the employment income they receive in that period may, solely or partly, cause their instalment of carer payment, wife pension, carer service pension or partner service pension to be reduced to nil.

This Schedule introduces amendments to remedy this situation. The amendments apply to a carer who is not paid an instalment of carer payment or wife pension under the Social Security Act or partner service pension or carer service pension under the Veterans' Entitlements Act because the income threshold has been exceeded in the carer's instalment period that includes 1 July. If the carer's income threshold has been exceeded because of assessed income that includes an amount of employment income, then the carer can nevertheless, from 2012, receive carer supplement.

The amendments made by this Schedule commence on the day of Royal Assent.

Explanation of the changes

Item 1 repeals the heading to section 992X of the Social Security Act, and substitutes the heading 'Carer supplement'. This essentially updates the drafting to remove the redundant reference to arrangements for 2009.

Item 2 repeals and substitutes subsection 992X(1), updating the drafting to remove the redundant reference to arrangements for 2009.. New subsection 992X(1) provides that a person is qualified for carer supplement for a year if the person was paid an instalment of carer allowance or carer payment under the Social Security Act or carer service pension under the Veterans' Entitlements Act in respect of a period that includes 1 July in that year.

The Note to the new subsection makes it clear that a person may have more than one qualifying instalment for carer supplement for a year where, for example, the person may be in receipt of an instalment of carer allowance as well as an instalment of carer payment in respect of a period that includes 1 July.

Item 3 inserts new subsection 992X(3A). This new subsection sets out the circumstances in which a person who is a carer payment or wife pension recipient under the Social Security Act or a partner service pension or carer service pension recipient under the Veterans' Entitlements Act may receive carer supplement even where the person has exceeded the income threshold in respect of an instalment period that includes 1 July, resulting in their carer payment, wife pension, partner service pension or carer service pension being reduced to nil.

The relevant circumstances are that the person's rate of payment is reduced to nil because of the income test module in the relevant rate calculator in either the Social Security Act or the Veterans' Entitlements Act, and that the income assessed under the relevant rate calculator comprises income that includes a component of employment income. Employment income is defined in section 8 of the Social Security Act.