Bills Digest no. 135 2009–10
Veterans' Entitlements Amendment (Income Support
Measures) Bill 2010
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
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Veterans' Entitlements Amendment (Income
Support Measures) Bill 2010
Date introduced: 10 March 2010
Portfolio: Veterans' Affairs
Commencement: Sections 1 to 3, Items 1 to 28 and Items 34 and 35
on the date of Royal Assent. Items 29 to 33 and Item 36 on
the day after date of Royal Assent.
links to the Bill, its Explanatory Memorandum and second
reading speech can be found on the Bills page, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
The majority of provisions in the
Bill align the Veterans’ Entitlements Act 1986 (VEA)
with like provisions in the Social Security Act 1991
(SSA). The Bill also removes redundant provisions.
The amendments in the Bill remove references to
‘benevolent homes’ in the VEA. The term
‘benevolent homes’ used to refer to institutions in
which a person may be placed for a prolonged period. This
could apply to an adult in a place for the mentally ill or a young
person or child in a place for the care of the child. For a
long time there was a disagreement between the Federal Government
and the States about the provision for such persons and the payment
of pensions or family assistance payments. Was it a matter
for the States or a matter for the Commonwealth? The Bill
removes references to the term ‘benevolent homes’,
which was a term commonly used to describe a home (institution)
into which a person in State care was placed. The term is now
The Bill proposes to exempt as income under the income test
payments provided for expenses incurred during part-time work as a
part of a labour market program. Payments provided to an
employee to cover expenses that they have no discretion over, such
as amounts for a uniform, are not income for the income test.
These provisions will align the VEA income test provisions with
like provisions in the SSA, where such income is also exempt.
It is not likely that many VEA income support recipients would be
undertaking a labour market program. The main income support
payment under the VEA is age service pension which is paid to
retired aged veterans.
However, there are some income tested income support payment
that are payable to a person of working age, for example,
Invalidity Service Pension and Income Support Supplement (ISS). Some of these recipients may
have income for work expenses for part-time work while undertaking
a labour market program.
The provisions presented in the Bill will require a
person’s partner to claim any foreign pension
entitlement. Currently, the recipient of an income support
payment provided under the VEA is required to claim but not his/her
partner. All income support pensions and payments provided by
the Commonwealth are subject to an income and asset test. The
rationale for those tests is that persons who have the means to
support themselves should use their own resources before calling
upon the public purse for financial assistance. That being
the case, where a VEA payment recipient or their partner has an
entitlement to a foreign pension they will, under the proposed
amendments in this Bill, be compelled to claim and receive that
payment. These provisions will align the VEA income test
provisions with like provisions in the SSA.
Where a person claims a foreign pension, it may take some time
for the overseas paying agency to determine entitlement, the rate
payable and to deliver the payment. Often when payments
eventually commence, there is also an amount for arrears
owed. Under the current pensions’ income test, lump-sum
payments are treated as income in the year of receipt. This
is because the rate of pension paid is an annual rate based on the
assessed level of annual income. This annual rate is then
reduced to a fortnightly rate to provide fortnightly payments.
The amendments to the VEA presented in the Bill are to apportion
any lump-sum arrears of foreign pension received over the period
for which it has been paid, rather than as a lump-sum amount in the
year of receipt. This will align the VEA income test
provisions with like provisions in the SSA.
For most persons receiving a small lump-sum amount apportioned
over a period of less than a year there will not be much of a
change to their payments. It will depend on their level of
other income and their rate will only be affected if their total
income exceeds the income test free areas.
For those overpaid, there will be the creation of a debt and
recovery action, but this applies under the current
arrangements. Those who will be more adversely affected will
be those who receive a large lump-sum amount for a period covering
more than 12 months. This will result in a debt for a period
that would not have normally arisen; that is for a period of more
than a year prior to the receipt of the arrears. A debt will
be created for the past period the lump-sum represents and a debt
raised and recovered.
Generally, where a person has monies or valuable consideration
in an investment, a property or a business, the value of the
investment can be regarded as an asset under the assets test and
any income realised is counted under the income test in calculation
the rate of pension payable. However, in some circumstances
the value of the investment can be disregarded.
The Bill presents amendments to the provisions in the VEA for
the disregard of an asset. The proposed amendments to the VEA
will align it with like provisions in the SSA. The Minister
will be empowered to disregard a particular asset under the assets
test. This might commonly occur where it is considered the
person is unable to access their value in the assets, for example,
where the asset has gone bankrupt for asset test purposes.
Deprivation refers to where a person gives away or disposes of
an asset without adequate return or value and the asset value then
continues to be maintained as an asset value for five years.
This power, for the Minister to disregard an asset, will not impact
on any pre-existing application of the deprivation provisions that
may have been applied in a case.
The Bill contains only one schedule. All proposed
amendments are to the VEA.
Items 1, 4 and 28 remove
references to ‘benevolent homes’ from the VEA.
Item 27 is a consequential amendment to a heading
arising from those changes.
Items 5, 9, 13, 17 and 23
contains amendments which will empower the Secretary to issue a
notice to a person claiming certain VEA payments requiring their
partner to claim a foreign pension where the Secretary considers
they may have an entitlement to a foreign pension.
Item 29 inserts a new section 204 which refers
to an arrears payment of a foreign pension which has been received
is to be regarded as income over the period of periodic payments it
has been paid for. Any excess payment of income support under
the VEA in that arrears period is then a debt.
The amendments to the VEA presented in this Bill are generally
beneficial. Much of the provisions are to align the VEA with
like provisions in the SSA. This alignment is sustained to
ensure consistency in treatment of like means tested income support
payments between the two acts. The main example of this is
the age pension in the SSA with the service pension in the VEA,
which have the same income and asset testing provisions.
There a few minor exemptions to the like treatment of income and
The only ‘losers’ might be those very few income
support recipients who receive a lump-sum arrears of foreign
pension that exceeds 12 months in periodic payments, who may now
have a larger debt than under the current provisions. The
numbers will be very small and it could be argued that to recover
any excess amount of Australian income support payment over the
whole of any arrears period of foreign pension paid is
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277
18 March 2010
Bills Digest Service
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