Bills Digest No. 27 2004-05
Family and Community
Services and Veterans' Affairs Legislation Amendment (2004 Budget
Measures) Bill 2004
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
Family and Community
Services and Veterans' Affairs Legislation Amendment (2004 Budget
Measures) Bill 2004
Date
Introduced: 24 June
2004
House: House of Representatives
Portfolio: Family and Community Services and
Veterans' Affairs
Commencement:
Most of the amendments
presented in this Bill are proposed to commence on the date the
Bill receives Royal Assent. There are a small number of different
commencement dates for a few minor parts of the Bill, as set out in
Clause 2 of the Bill.
To amend both the Social
Security Act 1991 (SSA) and the Veterans Entitlements Act
1986 (VEA) to give effect to two government initiatives
announced in the 2004-05 Budget one for students and the other for
carers.
Schedule 1 of the Bill proposes to amend both the SSA and the
VEA to exempt all fee waiver and fee pay scholarships as income
under the income tests for income support payments.
The government announced on
17 September 2003 that as a part of the Higher Education Reform
Package all scholarships that pay tuition fees on a student s
behalf, or waive all, or part of, a student s tuition fee, will no
longer be included as income under the SSA or VEA income
tests.(1)
The proposal to exempt scholarships as income under the SSA and
VEA income tests was presented in the 2004-05
Budget.(2)
For the income tested income support payments provided under the
SSA, the Budget estimates that the cost of this proposal will be
$2.703 million in 2004-05, $4.979 million in 2005-06, $7.331
million in 2006-07 and $8.691 million in 2007-08.(3)
For the income support payments provided under the VEA, the
Budget estimates that the cost of this proposal will be $0.123
million in 2004-05, $0.099 million in 2005-06, $0.114 million in
2006-07 and $0.129 million in 2007-08.(4)
In his media release of 17 September 2003, The Minster for
Education Science and Technology, the Hon. Brendan Nelson, MP then
claimed that about 2,000 scholarships affected by this proposal
were provided across the education sector.(5)
It is probable that if this proposal is implemented, and
scholarships are exempted as income that there would be an increase
in the number of scholarships taken up by students to take
advantage of the beneficial treatment.
The SSA does not carry specific sections stating that
scholarships are income for income support payments paid under the
SSA. Rather, the SSA has a general all encompassing definition of
income then lists specific exemptions.(6) Subsection
8(1) of the SSA basically says everything is income , unless it is
listed as an exemption in sub-sections (4), (5) or (8) of section 8
in the SSA.
The VEA in its definition of income and listed exemptions is
constructed very much the same as the SSA. In the VEA income is
generically defined in section 5H.
So at present, scholarships are caught by the income tests in
the SSA and the VEA as they are considered an income amount earned,
derived or received and are not specifically listed as an
exemption.
To change this, Schedule 1 of the Bill proposes
to add scholarships as a listed income exemption in section 8 of
the SSA and also in the income exemption section in 5H of the
VEA.(7)
Almost all income support payments provided under both the SSA
and the VEA have an income test. The only exception is the age
pension, service pension, disability support pension (DSP) and the
invalidity service pension paid to persons who meet the blind
criteria.
While almost all income support payments paid under the SSA have
an income test and will therefore be affected by the change, the
ones most likely affected by this proposal are those paid to those
of working age, as they are the more likely to be studying and
receiving a scholarship. The income tested income support payments
provided under the SSA are:
- Youth allowance
- Parenting payment partnered
- Parenting payment single
- DSP
- Wife pension (age and DSP)
- Widow B pension
- Newstart allowance
- Austudy payment
- ABSTUDY Scheme
- Partner allowance
- Sickness allowance
- Special benefit
- Age pension
- Mature age allowance
- Special benefit
The income tested income support payments provided under the VEA
are:
- Service pension
- Partner service pension
- Income support supplement
- Invalidity service pension
This proposal only refers to the income tests applied under
income support payments provided under the SSA and the VEA. It
could be argued that students who otherwise qualify for income
support payments are by definition on low incomes, as they have
satisfied the income and asset tests. Therefore, exempting
scholarships as income is benefiting low-income students.
At present, scholarships received by students (fee waiver or fee
paid) are regarded as income as they are virtually the equivalent
of income received. As section 8 of the SSA defines income refers
to any monies or valuable consideration earned derived or
received.(8) Where any student receives income from
other sources, for example from employment or bank interest, it is
regarded as income under the income test. The proposed exemption of
scholarships as income from the income test does give scholarship
students on income support an advantage over other students on an
income support payment. Purely from the perspective of providing
income support in an equitable way to like groups of recipients,
the exemption of scholarships as income is difficult to
justify.
The Bill proposes to exempt as income scholarships provided in
the form of fee waiver amounts or fees payable to the Commonwealth
as a result of a person s enrolment in:
- A secondary or tertiary course under section 5D of the
Student Assistance Act 1973 (SAA);
- A Masters or Doctoral degree accredited as a higher education
course; and
- A course of vocational education as defined in section 19 of
the SSA.
CA (adult) is income supplement and paid to help carers to care
for adults with a disability at home. CA (adult) replaces the
former Domiciliary Nursing Care Benefit (DNCB). CA (adult) may be
paid on top of carer payment (commonly known as the carer pension)
or other income support payments.
The rate of CA (adult and child) as at August 2004 is $90.10 per
fortnight and is income test and tax free.
There is also CA (child) which is paid at the same rate to help
parents or carers to care for children with a disability at home.
It replaced the former Child Disability Allowance (CDA)
program.
Schedule 2 of this Bill proposes to amend the
SSA to allow a carer in receipt of CA (adult) to not be residing in
the same residence as the caree (person being cared for) and still
qualify for CA. Currently, the CA qualification requirements in the
SSA require the carer to reside in the same residence as the
caree.
This proposal was announced in the 2004-05 Budget.(9)
This is to only apply to payment of CA (adult) and does not apply
to CA (child).
The proposal is estimated to cost an extra $106.9 million over
four years made up of $10.304 million in 2004-05, $29.644 million
in 2005-06, $32.141 million in 2006-07 and $34.779 million in
2007-08.(10)
It is estimated this proposal will assist an additional 13,000
carers who are not residing in the same place of residence as their
caree.(11)
Sub-section 954(1) of the SSA requires that to qualify for CA
the carer and caree (where is a single adult) have to reside
together.(12)
The replacement of the DNCB and CDA programs with the single CA
program was announced in the 1998-99 Budget.(13)
The CA (adult) part of CA
has its origins in the DNCB program which was income supplement
paid to an adult caring for another adult. The basic DNCB
requirement was that the caree s care requirements would otherwise
qualify them for nursing home admission.
The CA (child) has its
origins in the CDA program which had been in existence since 1983
when it had replaced the pre-existing Handicapped Child s Allowance
(HCA) program. CDA was also income supplement paid to an adult
caring for a child with a disability requiring substantially extra
care.
The replacement of DNCB and
CDA with CA from 1 July 1999 was achieved with the passage of the
Assistance for Carers Legislation Amendment Act
1999.(14)
Both DNCB and CDA had co-residence rules, that is required the
carer and caree to be residing in the same residence. The DNCB
assistance was provided under the Health legislation and while
there was the general requirement of co-residence, there was the
discretion for the Secretary to pay where there was not
co-residence. This was occasionally used to pay DNCB where the
carer and caree were not residing together but the carer was
providing the requisite care.
Given the care requirements of DNCB and CDA, the co-residence
rule was considered appropriate ensuring that the carer was the
primary carer and was in a position to provide the requisite care.
When CA replaced DNCB and CDA, the co-residence rules were carried
over.
There were a few cases where the carer and caree were not
residing in the same residence, but residing so close that the care
requirements of CA were otherwise met. For example, where a
daughter (carer) lives in one flat of a small block of flats and
her mother (caree) lives in another flat in the same block. A
proper reading of the co-residence rule would not allow payment of
CA, as they are not residing in the same residence. The
co-residence rules was also being challenged for other care
payments see below.
Carer payment (CP) (commonly referred to as carer pension),
being income support paid to the full-time carer of a caree
requiring full-time care, originally had the same co-residence
requirements as CA. More recently these co-residence requirements
have been lessened recognising that in a few cases the carer and
caree may not reside in the same residence.
The first step towards lessening the co-residence requirements
for CP was made in 1991 with the passage of the Social Security
Legislation Amendment Act 1990.(15) This act
allowed the carer and caree to live in an adjacent or nearby
residence. The CP co-residence requirement for the carer and caree
was removed in 1996 with the passage of the Social Security
Legislation Amendment (Carer Pension and Other Measures) Act
1995.(16)
Items 1 and 2 propose to insert new subsections
8(8B) and 8(8C) in section 8 of the SSA, being the income
definition and income exceptions section. The inclusion of these
new subsections in section 8 will exempt scholarships as income
under the SSA income test.
Items 3 and 4 propose to insert the like
amendments to Items 1 and 2 into section 5H of the
VEA achieving the same result, being scholarships exempted as
income under the VEA income test.
Item 1 proposes to insert a new section 954A
into the SSA to set out the basic qualification requirements for CA
(adult), where the carer and caree do not share the same
residence.
Both of the Schedules presented in this Bill provide for
beneficial legislation. Schedule 1 to scholarship
students on an income support payment and Schedule
2 for CA paid to carers of an adult caree.
-
The Hon. Brendan Nelson, MP, (Minister for Education, Science
and Training), Higher Education Reform Package Enhanced,
Media Release, 17 September 2003,
http://www.dest.gov.au/ministers/nelson/sept03/n463_170903.htm
-
Department of Family and Community Services, Our
Universities Exempt Fee-Waiver and Fee-Pay Scholarships from Social
Security Income Tests. Our Universities Exempt Commonwealth
Learning Scholarships from Social Security Income Tests,
2004-05 Budget accompanying information, Canberra, 2004.
-
Department of Family and Community Services, Portfolio
Budget Statements 2004-05, Budget Related Paper No. 1.8,
Canberra, 2004 page 91.
-
Department of Veterans Affairs , Portfolio Budget Statements
2004-05, Budget Related Paper No. 1.4B, Canberra, 2004, page
48.
-
The Hon. Brendan Nelson, MP, (Minister for Education, Science
and Training), Higher Education Reform Package Enhanced,
op. cit.
-
8.(1) In
this Act, unless the contrary intention appears:
"income", in relation to a person, means:
an
income amount
earned, derived or received by the person for the person's own
use or benefit; or
a periodical payment by way of gift or allowance; or
a periodical benefit by way of gift or allowance;
but does not include an amount that is excluded under
subsection (4),
(5) or
(8).
-
5H (1) In this Act, unless the contrary intention appears:
income, in relation to a person, means:
an income amount earned, derived or received by the person for
the person's own use or benefit; or
a periodical payment by way of gift or allowance; or
a periodical benefit by way of gift or allowance;
but does not include an amount that is excluded under
subsection (4), (5) or (8).
-
ibid.
-
Senator the Hon. Kay Patterson (Minister for Family and
Community Services), More Support for Carers in $461 million
Budget package, Media Release, 11 May 2004.
-
Department of Family and Community Services, Portfolio
Budget Statements 2004-05, Budget Related Paper No. 1.8,
Canberra, 2004, page 58.
http://www.facs.gov.au/internet/facsinternet.nsf/aboutfacs/budget/budget2004-pbs.htm
-
Senator the Hon. Kay Patterson (Minister for Family and
Community Services), More Support for Carers in $461 million
Budget package, op. cit.
-
Qualification for carer allowance-caring for a disabled
adult
954.(1) A person is qualified for carer
allowance for a disabled adult (the care
receiver) if:
(a) the care receiver is an
Australian resident; and
(b) the care receiver is a
family member of the person or is a person approved in writing
by the
Secretary for the purposes of this paragraph; and
(c) the care receiver has been assessed and
rated under the Adult Disability Assessment Tool and given a score
under that assessment tool of at least 30, being a score calculated
on the basis of a professional questionnaire score of at least 12;
and
(d) because of the disability from which the
care receiver is suffering, the care receiver receives care and
attention on a daily basis from the person, or the person together
with another person, in a private home that is the residence of the
person and the care receiver; and
(e) the person is an
Australian resident.
-
1998-99 Federal Budget Measures, introduction of carer
allowance from 1 July 1999.
http://www.facs.gov.au/internet/facsinternet.nsf/aboutfacs/budget/budget98-whatsnew-g3.htm
-
Assistance for Carers Legislation Amendment Act 1999,
Bills Digest No. 148 1998-99.
http://www.aph.gov.au/library/pubs/bd/1998-99/99bd148.htm
-
Social Security Legislation Amendment Act 1990. Bills
Digest No. TL900 1990.
http://parlinfoweb.parl.net/parlinfo/view_document.aspx?ID=1248&TABLE=BILLSDGS
-
Social Security Legislation Amendment (Carer Pension and
Other Measures) Act 1995. Bills Digest No. 61 1995.
http://parlinfoweb.parl.net/parlinfo/view_document.aspx?ID=3441&TABLE=BILLSDGS
Peter Yeend
9 August 2004
Bills Digest Service
Information and Research Services
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