Bills Digest No. 108 2002-03
Veterans' Affairs Legislation Amendment Bill (No. 3)
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
Contact Officer & Copyright Details
Affairs Legislation Amendment Bill (No. 3) 2002
5 December 2002
House: House of Representatives
Portfolio: Veterans' Affairs
On the day the Bill
receives Royal Assent.
To update some minor anomalies in
the Veterans' Entitlements Act 1986 (VEA) and to align
provisions in the VEA with mirror provisions in the Social
Security Act 1991 (SSA).
This Bill presents no new major initiatives or new policies and
there is no singular or central theme to the amendments presented
in this Bill. Rather, the Bill proposes to make minor amendments to
the VEA to fix up anomalies and to make consequential amendments
arising from changes to the SSA. There are some minor extensions of
beneficial assistance for some veterans groups.
These proposed amendments will provide for the continued
indexation of the small number of child-related payments still
provided under the VEA. In 1998, most child-related payments were
transferred across from the VEA to be provided under the SSA by
Centrelink, but a small number were retained as the transfer would
have seen a reduction in the amount of assistance provided. The
repeal of the family assistance arrangements provided under the
SSA, and their replacement with Family Tax Benefit (FTB) now
provided under the A New Tax System (Family Assistance) Act
1999 (FAA), has meant benchmarking of the VEA child-assistance
arrangements against the SSA is now no longer appropriate and the
payment rates have remained frozen.
Amendments to the VEA in Part 1 of Schedule 1
will ensure the indexation of child-related payments paid under the
VEA in line with FTB indexation payment increases provided under
the FAA. There are only some 50 families still receiving assistance
in this manner and as the children age and are no longer eligible
for assistance the number of families assisted will eventually
Item 3 of Part 1 will link the rate of
additional service pension or income support supplement paid for a
child to the rate of FTB-Part A paid under the FAA.
This is a beneficial amendment to the VEA.
There has been a succession of amendments to both the SSA and
the VEA in recent years relating to income streams, with amendments
to both Acts mirroring each other. The major amendments were
contained in the Social Security and Veterans' Affairs
Legislation Amendment (Budget and Other Measures) Act 1997, in
which certain categories of income stream were exempted from assets
tests. Bills Digest No. 138 1997-98 refers.(1)
Generally, those income streams that were capital in nature with a
life expectancy of over 5 years can be assets exempted, so long as
other requirements are met.
Further amendments were made to the VEA in respect of income
streams by the Veterans' Affairs Legislation Amendment (Further
Budget 2000 and Other Measures) Act 2002. Bills Digest No. 109
2001-02 refers.(2) Those changes to the VEA were
mirrored for the SSA in the Family and Community Services
Legislation (Simplification and Other Measures) Act 2001.
Bills Digest No. 161 2000-01 refers.(3)
Both Bills Digest No. 109 2001-02(4) and Bills Digest
No. 161 2000-01(5) provide a good background about
income streams and the asset exemptions that can apply to certain
income stream products. Almost all of the changes that have been
made to both the SSA and the VEA in recent years, in regards to
income stream products have been in response to the increasing
diversity and variety of these products and to attempt to keep the
income and asset test rules up-to-date. The amendments presented in
this Bill refer to commutation of income stream products and the
capacity to carry over their asset test exemption.
Where a commutation has occurred that breaches the rules of the
income stream product and the asset test exemption is revoked, then
an overpayment can be raised and a debt recovered. Where a second
commutation occurs shortly thereafter against the same income
stream product, the current provisions in the VEA do not allow debt
recovery from the original commutation, but only from the second
commutation. The proposed amendments in Part 2 of Schedule
1 will allow debt recovery from the original
Item 4 of Part 2 allows for the recovery from
the original commutation were there is a second commutation within
a five year period. Item 5 of Part 2 allows for
the recovery from the original commutation where there has been
more than one commutation against one income stream product.
This is not an amendment that should affect a large number of
persons, and aligns provisions in the VEA with like provisions in
The Pension Bonus Scheme was introduced with the passage of the
Social Security and Veterans' Affairs Legislation Amendment
(Pension Bonus Scheme) Act 1998. Bills Digest No. 173 1997-98
refers.(6) The Pension Bonus Scheme allows a person to
defer taking their age pension, service pension or wife service
pension in return for receiving an increased pension at a later
date. Under the Pension Bonus Scheme a person may defer their
pension for up to five years and for each year that a person defers
their pension, he or she will receive a bonus of 8 per cent on top
of their pension.
An anomaly arises where a person initially defers taking their
age pension under the Pension Bonus Scheme and at a later date
becomes entitled to a war widow(er)'s pension under the VEA. Under
the SSA, where war widow's/er's pension becomes payable, age
pension is no longer payable and any bonus accrued under the
Pension Bonus Scheme is lost.
The amendments in Part 3 of Schedule
1 allow a person to continue to carry over their Pension
Bonus Scheme when transferring from an age pension to be paid
income support supplement as well as war widow(er)'s pension under
There would not be a great number of age pensioners, who have
deferred their pension under the Pension Bonus Scheme, who
subsequently become entitled to a war widow(er)'s pension. This is
a beneficial amendment to the VEA.
The amendments proposed in Part 4 of Schedule 1
flow from the Pension Bonus Scheme amendments in Part 3 of
Schedule 1 and refer to the calculation of the bonus
during the period the pension is deferred and the bonus is
accruing. The calculation during the deferment period takes into
account any change in marital status and also pension entitlement
during the deferment period.
The amendments correct a number of minor errors of formula in
the VEA and provide for the new category of person added to the
Pension Bonus Scheme in VEA in Part 3, ie. the
person previously on a SSA pension and now entitled to a VEA war
This is a beneficial amendment to the VEA.
The amendments proposed in Part 5 of Schedule 1
are minor and will only affect a small number of claimants. The
proposed amendments allow the payment of a partner service pension
from the original claim for special rate disability pension, where
the initial claim was rejected. Currently, the partner service
pension can only be paid from the second claim.
This proposed change is beneficial.
As with other proposed amendments in the Bill, Part 6 of
Schedule 1 regarding compensation recovery aligns
provisions in the VEA with like provisions in the SSA. The original
compensation provisions in the VEA regarding treatment of lump sum
compensation payments were contained in the Veterans' Affairs
(1994-95 Budget Measures) Legislation Amendment Act (No. 2)
1994. Bills Digest No. 183 1994 refers.(7)
A good description of the treatment of compensation against
income support payments is provided in the Bills Digest for the
Compensation for Non-Economic Loss (Social Security and
Veterans' Entitlements Legislation Amendment) Act 1999. Bills
Digest No. 185 1998-99 refers.(8)
The proposed amendments in Part 6 are to deal
with situations where there is more than one lump sum compensation
payment. They mirror provisions added to the SSA by the Family
and Community Services Legislation (Simplification and Other
Measures) Act 2001. Bills Digest No. 161 2000-01
refers.(9) Where two or more lump sum compensation
payments are received in respect of the same event, they are to be
regarded as one payment lumped together. This is to ensure that
both lump sum payments are correctly taken into account for lump
sum compensation preclusion purposes.
Most of the amendments to the VEA presented in this Bill are to
align provisions in the VEA with like provisions in the SSA or to
correct minor errors on the VEA and are generally beneficial.
- Bills Digest No. 138, 1997 98: http://wopared.parl.net/library/pubs/bd/1997-98/98bd138.htm
- Bills Digest No. 109, 2001 02: http://wopared.parl.net/library/pubs/bd/2001-02/02bd109.htm
- Bills Digest No. 161, 2000 01: http://wopared.parl.net/library/pubs/bd/2000-01/01BD161.htm
- Bills Digest No. 109, 2001 02, op.cit.
- Bills Digest No. 161, 2000 01, op.cit.
- Bills Digest No. 173, 1997 98: http://wopared.parl.net/library/pubs/bd/1997-98/98bd173.htm
- Bills Digest No. 183, 1994:
- Bills Digest No. 185, 1998 99: http://wopared.parl.net/library/pubs/bd/1998-99/99bd185.htm
- Bills Digest No. 161, 2000 01, op. cit.
7 February 2003
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