Senate

Revised Explanatory Memorandum

(Circulated by the authority of the Minister for Social Services, the Hon Christian Porter MP)

Schedule 6 - Cessation of Widow Allowance

Summary

This Schedule will close Widow Allowance to new entrants from 1 January 2018, and cease the payment entirely from 1 January 2022.

Background

Widow Allowance provides income support for older working age women who lose the support of a partner and face barriers to employment. Widow Allowance is payable to women born on or before 1 July 1955, who are no longer partnered and have become widowed, divorced or separated since turning 40 years of age, and have no recent workforce experience. This Schedule will close Widow Allowance to new entrants from 1 January 2018, and cease the payment entirely from 1 January 2022.

From 1 January 2018, women who claim Newstart Allowance who would have otherwise qualified for Widow Allowance will be exempted from the activity test requirements. Women who would have qualified for Widow Allowance and who are over pension age and not residentially qualified for Age Pension could claim special benefit.

All women in receipt of Widow Allowance immediately before 1 January 2022, or who could have qualified for Widow Allowance had they claimed it prior to 1 January 2018 will be of pension age by 1 January 2022. A woman who is receiving Widow Allowance immediately before 1 January 2022 will be transferred to Age Pension under transitional arrangements which deem them to satisfy the requirements to qualify for Age Pension. Any women who reach Age Pension age after 1 January 2018 who would have qualified for Widow Allowance but had not claimed it prior to 1 January 2018 will be transferred from newstart to Age Pension, if residentially qualified, or special benefit if not so qualified.

Explanation of the changes

Part 1 - amendments closing claims for Widow Allowance

This Part closes Widow Allowance to new entrants from 1 January 2018, or the day after Royal assent, if this is after 1 January 2018.

Social Security Act

Section 408AA provides a limitation on granting Widow Allowance, limiting it to persons born on or before 1 July 1955. Items 1 and 2 amend section 408AA.

Item 1 adds (1) prior to the existing content of section 408AA, to enable the addition of new subsections 408AA(2) and (3) by item 2.

New subsection 408AA(2) limits the grant of Widow Allowance to a woman unless the woman's claim for the allowance is made before the commencement of the subsection, and the woman qualified for the allowance before that day. New subsection 408AA(3) creates an exception where Widow Allowance becomes payable in accordance with section 85 of the Social Security Administration Act. Section 85 allows the Secretary to reconsider a decision to cancel or suspend a payment, and to substitute a decision that the payment was or is payable to the person, including retrospectively (although subject to the date of effect rules in Division 9 of Part 3 of the Social Security Administration Act.

Item 3 modifies the activity test which ordinarily applies to Newstart Allowance, provided for by Subdivision B of Part 2.12 of the Act, by inserting new section 603AC. New subsection 603AC(1) provides that a woman is not required to satisfy the activity test for a period, if she made the claim for Newstart Allowance on or after the commencement of the section, she was born on or before 1 July 1955, she was a member of a couple when she turned 40 and has ceased to be a member of that couple, is not a member of a couple throughout the relevant period and she satisfies the Secretary that she has no recent workforce experience on the day she made the claim for Newstart Allowance. This category of women would previously have qualified for Widow Allowance.

New subsection 603AC(2) provides a definition of 'recent workforce experience'. Employment of 20 hours or more a week for a total of 13 weeks or more at any time during the 12 months immediately before the day the woman made the claim for Newstart Allowance would constitute recent workforce experience, and prevent the exemption in subsection 603AC(1) applying. This duplicates the former qualification requirements for Widow Allowance.

Item 4 is consequential to item 3, and inserts a reference to new section 603AC into subsection 605(2C), which provides an exemption from the requirement for a Newstart Employment Pathway Plan for a person who satisfies new section 603AC.

Part 2 - amendments commencing 1 January 2022

This Part ceases Widow Allowance from 1 January 2022. Item 17 repeals Part 2.8A of the Social Security Act which sets out the qualification and payability criteria for Widow Allowance.

Income Tax Assessment Act 1936 and Income Tax Assessment Act 1997

Items 5 to 8 are necessary consequential amendments to remove references to Widow Allowance from the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997.

Social Security Act

Items 9 to 15 make a number of consequential amendments to remove references to Widow Allowance from various provisions of the Social Security Act.

Item 16 amends section 43, which provides the qualification for Age Pension. A person will qualify for Age Pension if the person was receiving Widow Allowance immediately before reaching Age Pension age. New subsection 43(1C) additionally provides that a woman is qualified for Age Pension if the woman was receiving Widow Allowance immediately before 1 January 2022, and is not otherwise qualified for Age Pension.

Item 18 repeals section 603AC, inserted by item 3 above as a temporary mechanism to allow persons who would previously have qualified for Widow Allowance to be exempt from the activity test. This exemption will no longer be required after 1 January 2022 because any women who could have qualified for Widow Allowance will have reached pension age. Item 19 consequentially removes the reference to section 603CA from subsection 605(2C).

Items 20 to 59 are necessary consequential amendments to remove references to Widow Allowance from various provisions of the Social Security Act.

Items 60 to 62 are necessary consequential amendments to remove references to Widow Allowance from various provisions of the Social Security Administration Act.

Item 63 is a savings provision, ensuring that former Parts 2.8A and 3.6 of the Social Security Act continue to apply after commencement despite their repeal, to allow the qualification or rate of Widow Allowance to be worked out for days before commencement.

However, subitem 63(2) makes clear that no payment of Widow Allowance is to be made on or after commencement in relation to a day on or after commencement.

Items 64 and 65 are savings provisions maintaining the tax treatment of Widow Allowance payments, despite repeal of the relevant provisions.

Items 66 and 67 are savings provisions which maintain the effect of qualification provisions in respect of days before commencement, despite the repeal of the relevant provisions in the Social Security Act.

Item 68 is a savings provision which maintains the effect of rate provisions in respect of the calculation of rates for days before commencement, despite the repeal of the relevant provisions.

Item 69 is a savings provision which maintains the effect of qualification for concession card provisions in respect of days before commencement, despite the repeal of the relevant provisions.

Item 70 is a savings provision which maintains the effect of various advance payment provisions in respect of days before commencement, despite the repeal of the relevant provisions.

Item 71 is a savings provision, which maintains the effect of various means testing and debt provisions in respect of days before commencement, despite the repeal of the relevant provisions.

Item 72 is a savings provision, which maintains the effect of various administration provisions in respect of days before commencement, despite the repeal of the relevant provisions.