Bills Digest no. 96 2007–08
Veterans' Entitlements Legislation Amendment (2007
Election Commitments) Bill 2008
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
Contact officer & copyright details
Passage history
Veterans' Entitlements Legislation
Amendment (2007 Election Commitments) Bill 2008
Date
introduced: 13
March 2008
House: House of
Representatives
Portfolio:
Veterans' Affairs
Commencement:
The provisions presented
in this Bill commence from 1 July 2008.
Links: The 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
at http://www.comlaw.gov.au/.
To provide amendments to the
Veterans Entitlements Act 1986 (VEA) and other associated
acts, to give effect to several veterans commitments made by the
government during the 2007 election. These initiatives feature:
- the automatic grant of war widows /ers pension (WWP) to the
partners of all deceased Intermediate rate and Totally and
Temporarily Incapacitated (T&TI) rate disability
pensioners,
- the extension of payment access to the Income Support
Supplement (ISS) to all WWP recipients, and
- the extension of disability pension bereavement payment
arrangements to single indigent disability pensioners who were on
the Special rate[1]
or the Extreme Disablement Adjustment[2] rate at the time of death.
The amendments to the VEA
presented in Schedule 1 aim to expand the
instances of automatic grant of war widows /ers pension (WWP) to
the partner of all deceased Intermediate rate and T&TI rate
disability pensioners.[3] At the moment, not all partners of a deceased
Intermediate rate or T&TI rate disability pensioner are
automatically qualified for a WWP.
Background
Currently, WWP is granted
automatically to the surviving partner of a disability pensioner
where the disability pensioner was:
- an ex-prisoner of war, or
- receiving a disability pension at the Special rate (T&PI),
or
- receiving the disability pension at the Extreme Disablement
Adjustment (EDA) rate.
There are
other circumstances where there is an automatic grant of WWP to the
surviving partner of a disability pensioner. These are where the
disability pensioner was receiving the Intermediate Rate[4] or the T&TI rate
disability pension and was also receiving a disability pension at
an increased rate for a war or defence caused incapacity of a kind
described below:
- two arms amputated,
- two legs and one arm amputated,
- two legs amputated above the knee,
- two legs amputated and blinded in one eye,
- one arm and one leg amputated and blinded in one eye,
- one leg and one arm amputated,
- one leg amputated above, and one leg amputated below, the knee,
or
- two legs amputated below the knee.[5]
So at the moment, there is no automatic
qualification to a WWP for the surviving partner of a disability
pensioner who was receiving the Intermediate rate or T&TI rate,
only where the pensioner s disability was also one of those listed
above.
The government announced its policy of providing
for the automatic grant of WWP to the surviving partners of all
deceased Intermediate rate and T&TI rate disability pensioners
in the 2007 election campaign.[6]
The changes to the VEA presented in this Bill will provide for
automatic WWP qualification, for the surviving partner of a
disability pensioner, where the deceased disability pensioner was
on the Intermediate or the T&TI rate, regardless of the nature
of the pensioner s disability.
The Explanatory Memorandum details in its Outline and Financial
Impact section, that the estimated cost of the changes in
Schedule 1 of the Bill are $0.0 million in
2007-08, $0.7 million in 2008-09, $1.5 million in 2009-10 and $2.3
million in 2010-2011.[7]
Currently, the particular types of disability that an
Intermediate rate, or a T&TI rate disability pensioner must
have to attract automatic WWP qualification for a surviving partner
after their death, are essentially a significant loss of a limb/s.
This gives an indication that hitherto automatic WWP qualification
was considered appropriate only in cases where the disability was
physical and significant. This is probably a legacy of old
attitudes to disability; that is, serious disabilities are only
physical.
This has probably excluded the benefit of automatic WWP
qualification to other categories of significant war or service
related disabilities, like psychiatric disabilities and other
physical disabilities, like a heart condition. This has probably
been unfair, especially given that the disability and work tests
required to be met to access the Intermediate rate or the T&TI
rate disability pensions are quite onerous. That is, a 70 per cent
or more impairment and unable to work for at least 8 hours a week
(T&TI), or for 20 hours a week (Intermediate rate). Also, since
1990, there has been automatic qualification to WWP for the
surviving partner of an EDA rate disability pension recipient, and
to have this for the EDA rate pension and not for the Intermediate
rate pension is anomalous.
There doesn t seem to be any intrinsic or elementary reason to
confine automatic qualification to WWP for the surviving partner of
a deceased Intermediate rate or T&TI rate pensioner, where they
only had a major loss of a limb/s, as opposed to other significant
war or service caused/related impairments.
Access to automatic qualification to WWP for a surviving partner
of a deceased disability pension recipient is no small benefit.
Otherwise, the surviving partner needs to make a claim for WWP and
then satisfy the requirements in the VEA that the death of their
partner, who was on a disability pension, was due to or connected
with the war or service related disability for which they received
the disability pension. This can often be contentious, especially
when there is a long period of time between the date the
illness/injury was originally sustained and the date of death.
Currently, WWP is paid at $582.40 per fortnight[8] and as it is compensation it is
also income test and asset test free and it is not taxable income.
A WWP recipient may also qualify for a means tested income support
payment as well as their WWP. To qualify for an additional income
support payment, the WWP recipient must also meet the income
support income and assets tests. However, recognising that WWP is
received free of any means testing or taxation liability, the
income support payment that is provided is ISS and is paid at a
lower rate than other income support payments.[9]
ISS was introduced with the passage of the Veterans' Affairs
(1994-95 Budget Measures) Legislation Amendment Act 1994.
Prior to March 1985, any wife or age pension paid to a WWP
recipient was provided at a frozen rate under the Social
Security Act 1991 (SSA). Also, having to receive a payment
under the SSA and also a WWP under the VEA, meant the person had to
deal with two departments, the then Department of Social Security
to receive their income support payment and also with the
Department of Veterans Affairs (DVA). ISS was introduced as a
replacement payment arrangement provided by DVA to simplify the
payment processes.
In introducing the ISS in March 1995, DVA then automatically
transferred all age and wife pension payments under the SSA across
to be paid ISS by DVA. There was theoretically a choice but a
recipient actually had to object in order to not be automatically
transferred, so the vast majority of recipients are now paid ISS
through DVA.
When originally introduced the ISS rate was frozen it was not
indexed or increased unless a government saw fit to increase the
rate. In more recent years, the ISS rate has been unfrozen and it
is now also indexed twice yearly to movements in Male Total Average
Weekly Earnings (MTAWE).
Currently, not all WWP recipients can qualify for ISS. The WWP
recipient needs to:
- be of qualifying age (age 60 or more for males and over the age
service pension qualifying age for females),[10]
- be permanently blind or permanently incapacitated and unable to
work,
- have a dependant child or children, or
- be the partner of a person who is receiving an income support
pension from either DVA or Centrelink.
Where the WWP recipient does not meet one of these descriptions,
and their WWP was granted after 20 March 1985, they cannot
otherwise qualify for any income support payment.
The government announced the expansion of access to ISS for all
WWP recipients in the 2007 election.[11] The changes to the access to ISS
presented in this Bill will allow access to ISS to all WWP
recipients.
The Explanatory Memorandum details in its Outline and Financial
Impact section that the estimated cost of the changes in
Schedule 2 of the Bill are $0.6 million in
2007-08, $5.3 million in 2008-09, $4.9 million in 2009-10 and $5.1
million in 2010-2011.[12]
As at September 2007 there were 109 717 WWP recipients of which
83 796 (76.4 per cent) were also receiving ISS, leaving 25 921
(23.6 per cent) not receiving ISS.[13] The vast majority of the 83 796 WWP
recipients also receiving ISS would be those aged 58 or more, being
the partners of former World War Two (WWII) veterans. This is
confirmed by the fact that as at September 2007, of the 109 717 WWP
recipients, some 100 554 (91.6 per cent) arose from their partner
having WWII service.[14]
For the 25 921 not on ISS, not all would have other forms of
income or other means of support. Certainly some would have access
to other forms of support from other sources, like from:
- their own employment,
- their partner, where they have re-partnered, and/or
- superannuation, savings and investments.
For this group, where their income or assets
exceed the pension income or assets test limits, no ISS is
payable.
As explained above, currently only some WWP recipients can
receive some additional income support in the form of ISS, albeit
at a reduced rate. This initiative will allow all WWP recipients
access to ISS. Not all will get paid ISS, some will have income or
assets that exceed the income or assets test limits.
Schedule 3 of the Bill proposes to amend the
bereavement payment provisions in the VEA to provide a larger
bereavement payment to persons on a T&PI or EDA rate disability
pension, who are single and who die in indigent circumstances.
The government announced its intention to provide an extended
bereavement payment arrangement for some T&PI and EDA rate
disability pensioners in its 2007 election veterans policy
statement.[15]
The Explanatory Memorandum details in its Outline and Financial
Impact section that the estimated cost of the changes in
Schedule 3 of the Bill are $0.0 million in
2007-08, $0.1 million in 2008-09, $0.1 million in 2009-10 and $0.1
million in 2010-2011.[16]
Bereavement payment is provided to assist with the costs that
may follow the death of a person and to help a surviving partner
adjust their finances, given that the pension of the deceased
person will stop.
Where the disability pensioner is single, their disability
pension is stopped. No bereavement payment is made. Quite often
there is one fortnightly payment paid after the date of death, as
it often takes some days for DVA to be notified, but this is not
usually recovered.
Where the disability pensioner was partnered, the disability
pension is paid to the surviving partner for 6 fortnightly
instalments after the date of death at the rate that applied at the
time of death. This bereavement payment is to provide some
financial assistance to the partner with the one-off extra costs of
bereavement and also to provide some adjustment period for the
partner to adjust to the drop in their income.
The changes presented in Schedule 3 are to
provide the same 6 fortnightly payments (the bereavement payment)
of disability pension, as currently applies to partnered recipients
of a disability pensioner, to some single disability pension
recipients. This is to apply where the pensioner was in receipt of
the T&PI rate or the EDA rate and they are classified as
indigent. The payments are to be made to the deceased pensioner s
estate. A deceased T&PI or EDA rate disability pensioner is to
be classified as indigent where the value of the person s estate is
insufficient to cover all financial liabilities including funeral
expenses.
The reference to the definition of indigent in the Explanatory
Memorandum refers to a situation where:
the value of the person s estate is
insufficient to cover all financial liabilities including funeral
expenses[17]
There is very little detail in the Explanatory Memorandum as to
what financial liabilities refers to. Does it mean all financial
liabilities, including bank and financial institution loans, monies
owed to other persons, or does it only refer to immediate debts
necessary to be met to provide for a funeral? A definition of
indigent circumstances is not provided for in the Bill to be placed
into the VEA, so one has to assume this will be spelt out as a
matter of policy in guidelines, against what is described for in
the Explanatory Memorandum.[18]
It is common for a person to be buried within a week of their
death. This means that applications for the bereavement payment to
be paid to the estate of a single indigent disability pensioner
will need to be lodged and then assessed quickly, to meet the
financial commitments of a funeral, before the funeral is
conducted. The persons lodging the claim for the bereavement
payment will probably be family members, friends of the pensioner,
the executor of the estate of the pensioner. It is probable that
many or most of the payments made will be post any funeral and that
some of the benefit of this measure therefore may be lost.
Presumably one of the benefits of this measure is to see a
reasonable funeral conducted for the deceased pensioner. The
guidelines setting out how to assess whether the deceased pensioner
was indigent will need to be both comprehensive and at the same
time very clear and precise to enable timely assessments and
payments.
Item 1 adds references to the T&TI and the
Intermediate rates of disability pension into sub-section
13(2)(c)(i) of the VEA, which is the section that refers to those
pensions where there is automatic entitlement to WWP, for the
surviving partner of certain deceased disability pensioners.
Item 1 inserts a new section 45A into the VEA
specifying that a WWP recipient is entitled to ISS. Item
2 removes section 45AA from the VEA. Currently, there are
situations where the WWP recipient can qualify for ISS on the
grounds of permanent incapacity for work. Under the changes
presented in this Bill, this will no longer be required as all WWP
recipients will qualify for ISS, so long as they otherwise meet the
income and assets tests.
Where a WWP recipient qualifies for ISS as they are assessed as
being permanently incapacitated for work, any ISS paid is not
taxable income. This is in line with both the Invalidity Service
Pension paid under the VEA and also the Disability Support Pension
paid under the SSA, which are likewise not taxable income. To
ensure these WWP recipients are not in future disadvantaged,
Item 3 inserts a new sub-section 45Q(4), to
require that where an ISS claimant claims that they are permanently
incapacitated for work, the Repatriation Commission must make a
determination as to that work capacity. This probably does not
involve many cases, but for those few cases involved, where ISS is
paid to a WWP recipient and they are also assessed as being
permanently incapacitated for work, the ISS paid will not be
taxable income.
Items 5 and 6 are transitional provisions
basically ensuring that determinations about permanent incapacity
for work made prior to this Bill coming into effect continue to
apply.
Items 8 and 9 amend the SSA to reflect the
amendments to the VEA in the main amendments of Schedule
2.
The remaining items in Part 2 of Schedule 2
amend various sections in the SSA that refer to the ISS qualifying
age. Currently the age is over age service pension age.[19] This is to reflect
that there is now a new definition of qualifying age in section 5Q
of the VEA, being the general definitions section of the VEA. The
amendments presented in this Bill will no longer require that the
WWP recipient be of age service pension age to qualify for ISS.
Items 1 and 2 inserts items into the Income
Tax Assessment Act 1997 (ITAA) to describe that any
bereavement payment paid to a single veteran or member is not
taxable income.
Item 3 inserts new provisions into the VEA to
provide for a 6 payment bereavement payment to a deceased T&PI
or EDA disability pensioner who died in indigent circumstances.
Items 6 and 7 inserts provisions requiring that a
claim for the bereavement payment must be made within 12 months of
the death of the disability pensioner.
Item 16 inserts provisions to provide that
bereavement payments provided for under Schedule 3
of the Bill are also not taxable income under the ITAA.
Concluding comments
The amendments to the VEA and associated other acts presented in
this Bill are beneficial.
The extension of the automatic qualification to WWP for
surviving partners of Intermediate rate and T&TI rate
disability pensioners is logical. Currently, automatic
qualification to WWP for the surviving partner only applies to some
Intermediate rate disability pensioners, where the disability
involves the loss of one or more limb/s. This is probably old
fashioned and doesn t recognise that some other disabilities can be
just as severe in their impact.
The extension of a bereavement payment to some single T&PI
and EDA rate pensioners, who are assessed as being indigent at the
time of death, while beneficial, could be problematic in
application. If a part of this initiative is to help with the
financial costs of a funeral for an indigent disability pensioner,
often there is very limited time between the date of death and the
conduct of the funeral.
[5]. Veterans
Entitlements Act 1986. Section 13(2) Eligibility for pension
Where: (a) a veteran has
died;
(b) the death of the
veteran was not war-caused; and
(c) the veteran was,
immediately before the veteran's death:
(i) a veteran to whom
subsection 22(4) or section 24 applied; or
(ii) a veteran to whom
section 22, 23 or 25 applied who was in receipt of a pension the
rate of which had been increased by reason that the pension was in
respect of an incapacity described in item 1, 2, 3, 4, 5, 6, 7 or 8
of the table in section 27;
the Commonwealth is,
subject to this Act, liable to pay pensions by way of compensation
to the dependants of the veteran in accordance with this Act.
[10]. For male
veterans - age 60. For female veterans with qualifying service and
female ISS qualifying age
| Date of Birth |
Qualify at
|
| Born before 31 December 1947 |
now
|
| 1 January 1948 to 30 June 1949 |
58
|
| 1 July 1949 to 31 December 1950 |
58.5
|
| 1 January 1951 to 30 June 1952 |
59
|
| 1 July 1952 to 31 December 1953 |
59.5
|
| 1 January 1954 and later |
60
|
[11]. Mr Kevin
Rudd, MP and Mr Alan Griffin, MP, Labor s Plan for Veterans
Affairs, Labor party 2007 Election policy paper, op. cit.
Peter Yeend
15 April 2008
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