House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Veterans' Affairs and Minister for Defence Personnel, The Honourable Andrew Gee MP)

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

VETERANS' AFFAIRS LEGISLATION AMENDMENT (EXEMPTING DISABILITY PAYMENTS FROM INCOME TESTING AND OTHER MEASURES) BILL 2021

Veterans' Affairs Legislation Amendment (Exempting Disability Payments from Income Testing and Other Measures) Bill 2021 is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Schedule 1 - Exempting disability payments from the social security income test and removal of Defence Force Income Support Allowance (DFISA)

Overview of the Schedule

The amendments proposed to be made by Schedule 1 amend the Social Security Act 1991 to exclude certain payments made under the Veterans' Entitlements Act 1986 (VEA) and the Military, Rehabilitation and Compensation Act 2004 (MRCA) from the social security income test. These amendments will ensure that the Defence Force Income Support Allowance currently referred to as DFISA will be made redundant as they will instead receive an increase in their social security payments as the adjusted disability payments made by Department of Veterans' Affairs will no longer impact the social security entitlements of veterans in receipt of these payments.

DFISA is currently paid to persons whose social security pension or benefit (social security payment) under social security law is reduced, including to nil, because the compensation, pension and payments (together known as the adjusted disability payments) have been included as ordinary income in assessing the rate of the social security payment.

As a consequence of these amendments the DFISA payments will become redundant. As these payments will be exempt from the income test under social security law, no person applying for entitlements under social security law will have their primary payment affected by their entitlement to certain compensation, pensions and payments under the VEA and MRCA.

Human rights implications

Schedule 1 of the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

This Schedule amends the Social Security Act 1991 to provide that certain Department of Veterans' Affairs payments are exempt income for the purposes of the social security income test.

This Schedule engages the right of everyone to social security in Article 9 of the International Covenant on Economic, Social and Cultural Rights.

The right to social security requires that a system be established under domestic law, and that public authorities must take responsibility for the effective administration of the system. The social security scheme must provide a minimum essential level of benefits to all individuals and families that will enable them to acquire at least essential health care, basic shelter and housing, water and sanitation, foodstuffs, and the most basic forms of education.

These amendments will operate beneficially as this group of payments paid by Department of Veterans' Affairs will no longer be taken into account when assessing a person's entitlement or rate of social security under the social security income test. This will mean that those veterans and their partners in receipt of these Department of Veterans' Affairs payments will receive the same, or a higher rate, of payment. This Schedule is therefore consistent with the promotion of the right to social security.

Conclusion

This Schedule is compatible with human rights as it supports a person's right to social security.

Schedule 2 - Increased rent assistance

Overview of the Schedule

The amendments proposed to be made by Schedule 2 amend the VEA to remove the disability income rent test as it applies to persons with a 'disability pension', or as per the amendments made in Schedule 3, persons with a 'pension by way of compensation'. The disability income rent test is the method of calculating the amount by which a person's rent assistance is reduced because of the amount of adjusted disability pension paid to the veteran or their partner.

The current disability income rent test results in veterans with a high level of compensation as a result of their service related injuries or diseases receiving less rent assistance than those with a lower level of disability, because of the amount of compensation they receive.

The amendments will mean that those veterans with high levels of compensation as a result of their service related injuries or diseases will have the same rent test applied as the test that currently applies to entitled persons under the Social Security Act 1991. This test is based on the amount of rent paid above the prescribed threshold and whether entitled persons are privately renting. It will no longer be based on how much compensation payment a person receives.

Currently some of those who receive a pension by way of compensation receive less rent assistance than those veterans not receiving this type of pension. This is because the amount of adjusted disability pension, exceeds the income support pension "Rent Assistance Free Area" (RAFA) for a single pensioner of $180.00 per fortnight or $320.00 per fortnight for a couple. As a result, the rate of rent assistance is reduced by 50 cents in the dollar for each dollar of adjusted disability pension income that exceeds $180.00 for a single pensioner or $320.00 for a couple.

These amendments commence on 1 January 2022.

Human rights implications

Right to Social Security

The amendments proposed to be made by Schedule 3 engage Article 9 of the International Covenant of Economic Social and Cultural Rights (ICESCR). Article 9 of the ICESCR states "State Parties ... recognise the right of everyone to social security, including social insurance".

The amendments promote the right to social security by removing the VEA disability income test, which means that veterans with high levels of compensation as a result of their service related injuries or diseases will have the same rent test applied as is currently applied to entitled persons under the Social Security Act 1991.

Right to an Adequate Standard of living

The right of everyone to an adequate standard of living provided by Article 11 of the ICESCR requires states to take adequate steps to ensure continuous improvements of living conditions for the individual and their family.

The amendments made under Schedule 1 will increase the rate of rent assistance to a number of veterans, and will also provide that rent assistance is available to some veterans that were previously ineligible due to their pension rate under the VEA.

It is envisaged that this increase rate of rent assistance to some veterans will increase their standard of living.

Conclusion

This Schedule is compatible with the Right to Social Security as it promotes the access to social security by removing the disability income rent test which will increase the rent assistance provided and in some cases provide rent assistance to veterans who were previously not able to receive rent assistance.

This Schedule is compatible with the Right to an Adequate Standard of living as it promotes the access to an increase in rental assistance by removing the Disability Income Rent Test which will increase the rent assistance provided and in some cases provide rent assistance to veterans who were previously not able to receive rent assistance.

Schedule 3 - Removing references to disability pension

Overview of the Schedule

The amendments proposed to be made by Schedule 3 amend the VEA to remove references to 'disability pension' from the VEA. This will clarify the nature of the payment, which is not an income support pension or welfare, but is instead a compensation payment. This will not affect a veteran's payments.

These amendments commence on 1 January 2022.

Human rights implications

This Schedule does not engage any of the applicable rights or freedoms.

Conclusion

This Schedule is compatible with human rights as it does not raise any human rights issues.

Schedule 4 - Indexation of above general rates

Overview of the Schedule

The amendments proposed to be made by Schedule 4 will change the way certain pensions are indexed.

Currently the Extreme Disablement Pension Adjustment (EDA), Intermediate Rate and Special Rate (colloquially known as TPI payment) of pensions by way of compensation are split into two components for indexation purposes and each is indexed separately. The amendments in Schedule 4 will change the way these rates are indexed, so that the whole payment is indexed at once, rather than in two components.

The split indexation mechanism was introduced in 2004 when a different indexation mechanism was introduced for the 'above general rate' component, but it is now redundant as the indexation mechanisms were aligned in 2008.

These amendments commence on 1 July 2022.

Human rights implications

Right to Social Security

The amendments proposed to be made by Schedule 4 engage Article 9 of the International Covenant of Economic Social and Cultural Rights (ICESCR). Article 9 of the ICESCR states "State Parties ... recognise the right of everyone to social security, including social insurance".

The amendments under Schedule 4 will ensure that the relevant pensions by way of compensation will continue to be indexed taking account of the Consumer Price Index (CPI), the Pensioner and Beneficiary Living Cost Index (PBLCI) and the Male Total Average Weekly Earnings (MTAWE) benchmark. The primary outcome of this calculation is that indexation will be calculated as a whole rather than in two parts. This may result in the indexation increase being 10 cents per fortnight lower at some indexation points than they would otherwise be if this amendment does not take place.

Conclusion

This Schedule is compatible with the Right to Social Security as it continues to promote access to social security by way of ensuring that pensions by way of compensation will be indexed in line with the CPI in a logical and consistent manner.

Schedule 5 -Non-liability rehabilitation pilot

Overview of the Schedule

The amendments proposed to be made by Schedule 5 will establish a pilot of non-liability rehabilitation. Currently, veterans have to wait until their initial liability claim is accepted before they can access rehabilitation, which can take some time. The amendments in Schedule 5 will provide access to rehabilitation support without requiring veterans to have lodged a compensation claim.

This pilot is intended to raise awareness of the benefits of early engagement with rehabilitation, and encourage veterans to participate voluntarily by 'un-coupling' access to rehabilitation support from compensation liability. The Pilot will target veterans who have an identified need for rehabilitation, who are not currently participating in rehabilitation through the Department of Veterans' Affairs, and who are not in receipt of incapacity payments.

These amendments commence on 1 January 2022.

Human rights implications

Right to Health

The amendments proposed to be made by Schedule 5 engage Article 12(1) of the International Covenant of Economic Social and Cultural Rights (ICESCR). Article 12(1) of the ICESCR states this "right must be understood as a right to the enjoyment of a variety of facilities, goods, services and conditions necessary for the individual to realise his or her highest attainable standard of health".

The amendments promote the right to health by establishing a pilot providing access to rehabilitation without the need to establish liability, for more timely delivery of services.

Conclusion

This Schedule is compatible with the right to health as it promotes the access to rehabilitation without the need to establish liability, for more timely delivery of services.