Bills Digest No. 10 2002-03
Veterans' Affairs Legislation Amendment Bill
(No. 2) 2002
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
Veterans'
Affairs Legislation Amendment Bill (No. 2)
2002
Date Introduced:
27 June 2002
House: House of Representatives
Portfolio: Veterans' Affairs
Commencement:
Within Schedule 1 of the Bill there are eight parts with various
commencement dates. The commencement dates are set out in detail in
the Table in clause 2 of the Bill.
Purpose
There is no singular or central theme to the
initiatives proposed in this Bill, rather the Bill proposes to make
minor amendments to the Veterans' Entitlements Act 1986
(VEA) to fix up anomalies and to make consequential amendments
arising from changes to the Social Security Act 1991
(SSA). There are some minor extensions of beneficial assistance for
some veterans groups. However, the Bill is mainly a legislative
housekeeping exercise.
Many of the Parts proposed in this Bill involve
aligning provisions in the VEA with like provisions in the SSA.
Many provisions in both Acts for income support payments mirror
each other and parity is maintained to ensure consistency and
equity. These mirrored provisions commonly refer to income testing,
asset testing and treatment of compensation income. All of the
income support pensions and allowances provided under the SSA
(except for blind pensions) are income and assets tested. The
income support payments provided under the VEA that are also income
and assets tested are service pensions, income support supplements
and invalidity service pensions.
Schedule 1
Both the SSA and the VEA provide income support
payments for persons in need, where they are unable, or cannot be
expected to provide for their own livelihood. This may be due to
reasons of age, illness/disability, unemployment, caring for
another person, being a sole parent and so on. Almost all income
support payments paid under the SSA and the VEA are means tested
(income and assets tests), to ensure payment is directed to those
most in need and not to persons who can otherwise provide for
themselves.
The most common form of self-support for those
of working age is income from employment, but self-support may also
be obtained from income from savings and investments, or overseas
pensions. Self-support may also be in the form of income provided
from other sources replacing lost earnings from employment, such as
compensation.
Sub-section 5NB(2) of the VEA defines
compensation.(1) These are the same compensation
definitions that apply under the SSA.
Compensation payments are commonly provided as a
replacement for lost wages or earnings, as the person is no longer
able to work due to their illness/injury. This is commonly called
economic loss compensation and is also known as pecuniary loss.
Compensation may also be paid for expenses or costs, other than
lost earnings, arising from an accident or injury. Some examples
are pain and suffering, loss of enjoyment of life, doctors and
medical expenses, loss of or reduced capacity to undertake the
basic daily functions of life like prepare and eat food, get
dressed etc.
However, compensation paid for, or deemed to be
paid for, lost wages or earnings may have an effect on the payment
of government provided income support.
There are special rules in the SSA and the VEA
for the treatment of compensation provided as replacement earnings.
These special provisions are to ensure that persons, who are able
to access self-support by way of income support from compensation,
cannot at the same time access assistance from government provided
income support. It has been a long-standing view of successive
governments that the compensation system has the first
responsibility for the provision of income support to those with a
compensable illness or injury, not the taxpayer by way of
government support. The foremost concern of governments has been
that there should not be any "double-dipping", that is
receiving compensation for lost earnings from a compensation payer
or insurer while at the same time receiving government replacement
earnings by way of income support.
Set out below are the broad principles of
treatment of compensation under the VEA and SSA.
Periodic payments of compensation for economic
loss, such as lost earnings from employment, reduce a person's
entitlement to income support payments, paid under the SSA or VEA,
on a dollar-for-dollar basis. These compensation payments, being
payments for lost salaries/wages, provide income support and
therefore the effect is dollar-for-dollar.
Lump sum compensation payments are examined to
identify the component, if any, that has been paid for lost salary
or wages, being the part for lost earning capacity. Where a court
or tribunal ascribes the part for economic loss within a lump sum
payment, this is usually accepted. Where there is no court or
tribunal attribution for economic loss (commonly in out-of-court
settlements), the SSA or VEA ascribes 50% of the sum as being for
economic loss. The residual 50% is then ascribed for other
non-economic loss items such as pain and suffering and loss of
enjoyment of life etc.
To then determine the impact of the 50% ascribed
for lost salaries/wages, there is a statutory formula within the
SSA and the VEA. Under the formula, the 50% is then divided by the
single pension cut-off figure under the pensions income
test,(2) to set a number of weeks for which the sum
provides replacement earnings. This number of weeks is then taken
to have commenced either from the date periodic compensation
payments stopped or the day the loss of earnings began, whichever
is the later. This is often the date of injury or illness. This
period is known as the lump-sum preclusion period for income
support payments.
The length of the lump-sum preclusion period is
largely determined by the size of the lump-sum payment, as under
the statutory formula, the amount of the lump sum is divided by the
single pension cut-off figure, to arrive at a number of weeks for
the period. Therefore, the larger the lump sum amount the longer
the preclusion period.
The amendments proposed in Part
1 of Schedule 1 are generally beneficial
in that compensation will no longer be double counted against two
separate payments. Currently, where a person is receiving
compensation for lost wages, and a war disability pension (war
injury/illness compensation) is also paid for the same
illness/injury, the compensation is a dollar-for-dollar deduction
against the war pension. The compensation is then also regarded as
income under the income test against any service pension paid. In
short, it is double counted. The proposed amendments in
Part 1 are to amend the VEA to not count as income
against the service pension any compensation off-set against the
disability pension. Only excess compensation would be treated as
income under the income test against the service pension.
This proposal to not double count compensation
has parallels with recent amendments to both the VEA and the SEA,
in respect of excess compensation being counted on a
dollar-for-dollar basis against a partner's income support
payments. The recent change was to no longer count excess
compensation against the partner's rate of income support on a
dollar-for-dollar basis, but as income under the income test. The
legislation that changed the treatment of excess compensation
against a partner's entitlement under the SSA was provided for in
the Family and Community Services Legislation (Simplification
and Other Measures) Act 2001. The Bills Digest for this Act is
No. 161 of 2000-2001.(3) The mirror legislation that
amended the VEA was the Veterans' Affairs Legislation Amendment
(Further Budget 2000 and Other Measures) Act 2001. Bills
Digest No. 17 2001-2002 refers.(4)
The VEA was amended recently to allow debts
arising from the compensation provisions of the VEA to be recovered
directly from insurers. The amending legislation was the
Veterans' Affairs Legislation Amendment (Further Budget 2000
and Other Measures) Act 2002. Bills Digest No. 109 2001-2002
refers.(5) The amendments in Part 2 are
minor, only referring to the recovery of a partner's compensation
directly from insurers and distinguishing between periodic and lump
sum compensation received before and after 20 March 1997. The date
20 March 1997 refers to when the VEA was amended to exclude the
compensation recovery provisions from affecting lump sum
compensation paid to a partner of a VEA income support payment
recipient.
The changes proposed in Part 3
are aligning provisions in the VEA with those already in the SSA.
The changes to the SSA were made in the Social Security and
Veterans' Affairs Legislation Amendment (Family and Other Measures)
Act 1997. Bills Digest No. 13 1997-98
refers.(6)
Rent assistance is provided to assist persons on
low incomes with the costs associated with renting private
accommodation. Therefore, it is not paid to persons in government
housing as the housing costs are already subsidised, nor is it paid
to persons who are home owners as they have an equity in their
residence.
Persons entering a retirement village commonly
are required to provide an entry contribution, the amount varying
between different retirement residence situations. Some may
purchase the unit outright, which can be sold on departure, and
there is commonly on-going resident contributions to pay for
administrative costs such as gardening, communal facilities,
garbage disposal etc. These entry contributions are usually for
higher amounts. In other cases the entry contribution may be small
and the person is not purchasing any equity in the unit, merely
making a contribution to the owner to provide some return to the
accommodation provider. When the person leaves the unit there is no
monetary return and there is also some on-going payment required to
secure the unit as a residence and to aid with running costs.
In the latter situation, where on-going resident
contributions are paid and the person has not paid enough of an
entry contribution to be considered as having sufficient equity in
the property, this is very much like paying rent and can be
regarded as such, attracting rent assistance.
The SSA uses a minimum entry contribution amount
to distinguish between those in retirement villages who should be
considered non-home owners and those considered home owners.
Non-home owners are eligible for rent assistance. The amendments
made to the SSA in 1997(7) provided clarification as to
amounts to be considered as entry contributions, to ensure
circumstances were not artificially contrived to attract rent
assistance. This ensures rent assistance is not paid where in
reality the person should be considered a home owner. The
amendments proposed in Part 3 to the VEA, mirror
those made to the SSA in 1997.
The amendments in Part 4 to TA
are beneficial, expanding access to TA for holders of a mobile
phone, where no fixed in-home phone is present. Telephone Allowance
is to be paid where the only phone held is a mobile phone.
Previously, TA was restricted to telephone subscribers with a phone
only at their place of residence.
Part 5 is like the amendments
proposed in Parts 2 and 3; being
aimed at aligning the VEA with amendments previously made to the
SSA. The amendments proposed in Part 5, allowing
access to rent assistance, where it is otherwise precluded under
the SSA and are beneficial.
The amendments to the PLS provisions in the VEA proposed in
Part 6 are beneficial. The amendments are designed
to redress an unintended anomaly in the VEA, not allowing access to
the PLS for Income Support Supplement (ISS) recipients who are not
veterans. Many ISS recipients are also war widow/ers pension
recipients and are not actually a veteran themselves, being the
surviving partner of a deceased veteran. With access to the PLS
currently restricted to veterans, the vast majority of ISS
recipients have been unintentionally excluded from access to the
scheme.
The amendments to the VEA proposed in
Part 7 will extend access to the minor extra
concessions available under the Commonwealth Seniors Health Card
(CSHC) to war widows/ers at an earlier age. The amendments proposed
in Part 7 are beneficial.
The CSHC is issued to persons over age pension
age not on a government income support pension and therefore not
holding an attached Pensioner Concession Card (PCC). The CSHC
allows access to concessional pharmaceuticals under the
Pharmaceutical Benefits Scheme (PBS) and a few other minor extra
concessions. The PCC also allows access to the PBS but includes
access to a far larger range of other concessions that vary from
place-to-place, for example discount council rates, discount car
registration, discount heating and power bills. The CSHC does not
provide access to these other extra variable concessions but does
provide a few extra benefits not attached to the PCC, being
concessional fares on Great Southern Rail lines.
Currently, all war widow/ers are issued with a
PCC, being the same card issued to other pensions like service
pension, age pension, sole parent pension etc. War widows/ers can
claim a CSHC when they reach age pension age (65 - males, 62 -
females). The amendments to the VEA proposed in Part
7 will allow war widows/ers the capacity to claim a CSHC
from the earlier service pension qualifying age (60 - males, 57 -
females). This is clearly beneficial but is only being extended to
war widows/ers.
Both the VEA and SSA have provision for a
partnered couple to be deemed to be separated due to ill health and
then each provided with assistance at the higher single rate,
notwithstanding they still consider themselves partnered and still
a couple. This commonly applies where one of a couple enters a
nursing home. Likewise, where a former couple (married or
non-married) are living apart permanently and no longer consider
them selves partnered, they can be regarded as separated and again
the single rate paid. This is called a 'non-illness separated
spouse'.
The amendments proposed in Part
8 are to address an anomaly in the VEA, in that currently
a veteran cannot be deemed to be a 'non-illness separated spouse',
only the spouse of a veteran.
Part 1 inserts into the
excluded income definitions of the VEA an additional excluded
income definition being compensation taken into account to reduce
the rate of war disability pension. This leaves only that amount of
compensation not excluded, to be regarded as income.
Items 5 and 8
define the partner's compensation amounts to be recovered directly
from insurers.
Item 11 defines parts of entry
contributions to a retirement village that are not rent and
therefore cannot attract rent assistance.
Item 14 adds to the range of
persons eligible to be paid rent assistance under the VEA.
Item 21 adds to the definitions
of persons eligible for a CSHC being war widows/ers over service
pension qualifying age.
This Bill contains a miscellany of generally
beneficial but minor amendments to the VEA. The amendments are
designed at either ensuring a maintenance of parity with the SSA or
fixing up unintended anomalies in the VEA.
-
- VETERANS' ENTITLEMENTS ACT 1986
SECT 5NB - Compensation recovery definitions
(1) In this Act, unless
the contrary intention appears compensation has the
meaning given by subsection (2).
Compensation
(2) For the purposes of Part IIIC, compensation means:
(a) payment of damages or compensation; or
(b) a payment under a scheme of insurance or
compensation under a law of the Commonwealth or of a State or
Territory, or under a contract entered into under such a scheme;
or
(c) a payment (with or without admission of
liability) in settlement of a claim for damages or of a claim under
such an insurance scheme;
made wholly or partly in respect of lost
earnings or lost capacity to earn. The payment may be in the form
of a lump sum (or part of a lump sum) or in the form of a series of
periodic payments and may be made either within or outside
Australia, but it does not include any payment that, under
subsection (3), (4), (5) or (6), is excluded from the application
of this subsection.
Note: Under section 59O, a person may be treated
as having received compensation that the person would have received
but for the effect of a State or Territory law.
-
- $1,185.00 per fortnight as at July 2002.
- Bills
Digest No. 161, 2000-2001 - Family and Community Services
Legislation (Simplification and Other Measures) Bill 2001.
- Bills
Digest No. 17, 2001-2002 - Veterans' Affairs Legislation Amendment
(Further Budget 2000 and Other Measures) Bill 2001.
- Bills
Digest No. 109, 2001-02 - Veterans' Affairs Legislation Amendment
(Further Budget 2000 and Other Measures) Bill 2002.
- Bills
Digest No. 13, 1997-1998 - Social Security and Veterans' Affairs
Legislation Amendment (Family and Other Measures) Bill 1997.
- ibid.
Peter Yeend
8 August 2002
Bills Digest Service
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ISSN 1328-8091
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