Explanatory Memorandum
(Circulated by the authority of the Minister for Social Services, the Hon Kevin Andrews MP)Schedule 2 - Indexation
Summary
This Schedule pauses for two or three years the indexation that occurs on 1 July of various asset test thresholds that apply to some social security payment types. There are comparable provisions in the Veterans Entitlements Act and the Farm Household Support Act which are also paused. When indexation recommences, it will apply to the (paused) thresholds and there will be no catch-up in respect of indexation that would otherwise have occurred during the two or three year pause.
Part 3.16 of the Social Security Act provides for the indexation and adjustment of amounts. Division 2 deals with CPI indexation, which affects various amounts set out in section 1190, and applies acronyms for the purposes of the table in section 1191, which describes the rules and timing for the relevant indexation.
This measure takes effect from 1 July 2015 and 1 July 2017.
Explanation of the changes
Part 1 - Amendments commencing on 1 January 2015
Amendments to the Farm Household Support Act
Item 1 amends table item 5 of section 95, omitting 1 July 2015 and substituting 1 July 2017, to mirror the amendments to the Social Security Act.
Amendments to the Social Security Act
Item 2 repeals table items 21A, 21B and 21C from subsection 1191(1) because they are redundant. The relevant indexation will be effected by section 1204 (see item 4).
Item 3 adds a further subsection to section 1192.
New subsection (5AB) affects indexation provided for by items 21, 22 and 23 (benefit 'single' and 'partnered' assets value limit for homeowners and non-owners) of the CPI Indexation Table in subsection 1191(1). The amounts under these items are not to be indexed on 1 July 2015 and 1 July 2016.
Item 4 repeals and replaces section 1204, which provides for the adjustment of benefit asset value limits. The formulae in current section 1204 use the pension 'partnered' homeowner asset value limit, the pension 'partnered' non-homeowner asset value limit and the pension 'single' homeowner asset value limit. It is intended instead that the benefit assets value limits will be based upon relevant other benefit asset limits from 1 July 2014. However, the various pension asset value limits currently forming the basis for the adjusted benefit asset value limits will continue to be indexed until 1 July 2017, unlike the benefit asset value limits. Accordingly, this item re-bases the adjustment in benefit asset value limits on related benefit asset value limits with effect from 1 July 2014. This then means that these adjusted thresholds will not be indexed until 1 July 2017, when indexation will again resume.
The formulae in new section 1204 use the benefit 'partnered' homeowner asset value limit, the benefit 'partnered' non-homeowner asset value limit, and the benefit 'single' homeowner asset value limit (as relevant) in deriving an adjusted benefit asset value limit generated by other provisions of the Act.
New subsection 1204(1) substitutes a figure for the benefit 'single' non-homeowner asset value limit, applying a formula which relies upon various other values as at 1 July.
The benefit 'partnered' (item 3) homeowner asset value limit is the current figure, as at that 1 July, for the benefit 'partnered' (item 3) homeowner asset value limit.
The benefit 'partnered' (item 3) non-homeowner asset value limit is the current figure, as at that 1 July, for the benefit "partnered (item 3) non-homeowner asset value limit.
The benefit 'single' homeowner asset value limit is the current figure, as at that 1 July, for the benefit 'single' homeowner asset value limit.
These terms are abbreviations defined in section 1190.
New subsection 1204(2) substitutes a value for the benefit 'partnered' (item 2) homeowner asset value limit. The formula involves adjustment based upon the value of the benefit 'partnered' (item 3) homeowner asset value limit as at 1 July. This is an abbreviation defined in section 1190.
New subsection 1204(3) substitutes a value for the benefit 'partnered' (item 2) non-homeowner asset value limit. The formula involves adjustment based upon the value of the benefit 'partnered' (item 3) non-homeowner asset value limit as at 1 July. This is an abbreviation defined in section 1190.
Part 2 - Amendments commencing 1 July 2017
Item 5 adds a further subsection to section 1192.
New subsection (5AE) affects indexation provided for by items 18 (pension 'single' homeowner asset value limit), 19 (pension 'partnered' homeowner asset value limit) and 20 (pension 'partnered' non-homeowner asset value limit) of the CPI Indexation Table in subsection 1191(1). The amounts under these items are not to be indexed on 1 July 2017, 1 July 2018 and 1 July 2019.
Amendments to the Veterans' Entitlements Act
Item 6 repeals subsections 59C(2A) and (3) and substitutes a new subsection 59C(3), which affects indexation provided under items listed in the CPI Indexation Table in subsection 59B(1): item 6, which deals with the pension 'single' homeowner asset value limit; item 7, which deals with the pension 'partnered' property owner asset value limit; item 8, which deals with the pension 'partnered' non-property owner asset value limit;. The amounts under these items are not to be indexed on 1 July 2017, 1 July 2018 and 1 July 2019.
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