Bills Digest no. 117 2008–09
Social Security Amendment (Liquid Assets Waiting Period)
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introduced: 12 March
House: House of Representatives
Portfolio: Education, Employment and Workplace
The substantive measures
in the Bill will commence on 1 April 2009.
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
To increase the asset thresholds
that are used in the determination of liquid assets waiting periods
for people claiming Newstart Allowance, Youth Allowance, Austudy
Payment and Sickness Allowance.
To add the surrender value of a life insurance policy to the
list of exempt assets for the purposes of the liquid assets waiting
In order to secure the passage of the February economic stimulus
package through the Senate the government made a number of
commitments to the Greens and the independents. The relaxation of
the liquid assets thresholds was part of a set of measures agreed
with the Greens at that time.
From February 1991 a liquid assets test was applied to
Unemployment Benefit recipients by the Hawke ALP Government.
Claimants with liquid assets (cash and deposits with financial
institutions) of $5 000 if single or $10 000 if married or single
with dependants were required to serve an additional waiting period
of four weeks. The legislation concerning this measure was the
Social Security and Veterans' Affairs Legislation Amendment Act
From September 1997 the liquid assets test was
amended by the Howard Coalition Government so that people with
liquid assets of over $2500 if single or $5000 if partnered were
subject to waiting periods of from one to thirteen weeks depending
on the amount they had.
An income maintenance period was also introduced. Leave payments
were treated as income from the date they were received for the
period for which they were calculated. Eligible termination
payments rolled over into an appropriate fund were exempt.
The change to the liquid assets waiting period has been
supported by some welfare agencies who feel that there is no good
reason for unemployed people to be required to run down their
assets before gaining assistance.
The Greens are naturally supportive and would like further
measures to assist the unemployed at a time when the economic
downturn is increasing unemployment levels.
The Coalition did not oppose the Bill in the House of
The Bill will cost an estimated $29.21m over three years.
Item 1 of Part 1 of
Schedule 1 inserts new paragraph
14A(1)(dac) into the definition of liquid assets in the
Social Security Act 1991. This change excludes the
surrender value of a life insurance policy from the definition.
Item 3 inserts new subsections 14A(6A)
and (6B). These subsections provide for the doubling of
the amount of exempt assets for the period 1 April 2009 until 31
March 2011. Subsection 6B includes a provision for the end date to
be extended by legislative instrument.
Item 4 inserts new paragraph 19B
(fc). This changes the definition of liquid assets for the
purposes of the carer receiver assets test to exclude the surrender
value of a life insurance policy from the definition.
Item 6 of Part 2 provides transitional
provisions to ensure that a waiting period that started before 1
April 2009 and would have ended before that date if the provisions
of part 1 applied will end on 31 March 2009. The provisions of Part
1 will also continue in effect for waiting periods that commence
before 31 March 2011and have not been completed by that date.
Part 3 contains technical amendments to the
citation of the Household Stimulus Package Act (No.2) 2009
in a number of Acts.
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277 2410.
7 May 2009
Bills Digest Service
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