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CONTENTS
Passage History
Purpose
Background
Main Provisions
Contact Officer and Copyright Details
Social Security and Veterans' Affairs
Legislation Amendment (Payment Processing) Bill 1998
Date Introduced: 25 June 1998
House: House of Representatives
Portfolio: Social Security
Commencement: The amendments described in
the Bill, other than the transitional provisions contained in
Schedules 6 and 7, commence on 1 July 1999.
To introduce
uniform rules requiring social security and veterans' affairs
payments to be made fortnightly in arrears; introduce a uniform
notification period for a change in circumstances that may effect
the rate of payment; and to introduce uniform rules relating to the
date of effect of a decision adverse to an applicant.
Currently there are two main payment regimes
operating in relation to pensions, allowances and other benefits.
First, for pensions and family payments eligibility is determined
by the person's circumstances on the day when the benefit becomes
payable. For example, if a person satisfies the criteria for the
aged pension on the Thursday payday they will be eligible for the
payment regardless of their circumstances on other days. In this
regard pension and family payments, although paid fortnightly, do
not represent payments for the prior or next fortnight but reflect
eligibility on payday only. The second method applies to
allowances, such as the Newstart allowance, and provides payment
for the prior fortnight. A major practicable difference between the
two payment methods is that for allowances a person can be paid for
part of a fortnight when they qualify for the allowance whereas
this is not possible in the case of pensions and family
payments.
There is no policy or administrative reason,
other than that these are the current rules, for the differences in
the payment methods for the various benefits, which have largely
resulted from the administrative history of the payments. The
differences cause confusion for both the staff administering the
benefits and customers.
In the 1997-98 Budget the Government announced
that all social security and veterans' affairs payments would be
made fortnightly for the previous fortnight. As a result,
eligibility for payments will be assessed on a daily basis so that
an applicant for a pension will be paid from when they become
eligible, rather than from the next pension pay day.
There is also a difference between pension and
allowance payments relating to the period in which a person is
required to notify a change in circumstances which may affect the
rate of pension/allowance payable. For pensions, recipients are
required to notify the change in circumstances within 14 days while
for allowances the time allowed is 7 days. So long as notification
occurs during the required time, the adjustment to the rate of
payment occurs from the date of notification. As a result, pension
recipients may receive a higher payment than they would otherwise
be entitled to by a late notification of the changed circumstances.
Similarly, a late notification of a change in circumstances that
would result in increased pension payments may result in lower
payments due to late notification. In the 1997-98 Budget it was
also announced that the notification period would be standardised
as 7 days.
The same amendments will also be made to those
veterans' entitlements which are substantially the same as social
security payments.
The Social Security Act 1991 (the
Principal Act) is structured so that the provisions relating to a
pension or allowance are largely self-contained within different
Parts of the Act. As a result, to implement the announcements
described above it is necessary to make substantially similar
amendments to a large number of provisions.
Item 31 will substitute a new
section 57 into the Principal Act that provides for the payment of
age pension by instalment. The pension is to be paid in arrears for
a maximum period of 14 days. The pension will be payable for each
day that that the person is eligible during the previous fortnight
(this changes the eligibility criteria from being assessed only on
the payment day to assessment for each day of the period).
Consequently, instalment payments are to be calculated on a daily
basis. If the pension is received overseas, the Secretary may
determine the payment day (this reflects the current payment regime
for overseas recipients).
Other payments that are subject to the same
amendments are:
-
- disability support pension
-
- carers payment
-
- bereavement allowance
-
- widow B pension
-
- widow allowance
-
- parenting payment
-
- youth allowance
-
- newstart allowance
-
- mature age and mature age partner allowances
-
- sickness allowance
-
- special benefit
-
- partner allowance
-
- special needs pension
-
- family allowance
-
- family tax payment
-
- child disability allowance
-
- double orphans pension
-
- mobility allowance, and
-
- pensioner education supplement
Other amendments in Schedule 1
of the Bill provide, where such provisions do not already exist,
for the daily calculation of the pension, allowance or benefit to
enable payment to be calculated on the basis of the eligible days
during the payment period and formalise that the rate of the
payment is to be calculated on a daily basis.
Items 209 and 212 amend the
Principal Act to provide that the denial of payments to people in
imprisonment or psychiatric confinement following a criminal charge
are to be assessed for eligibility on a daily basis rather than on
the payday basis that currently applies.
Schedule 2 of the Bill makes a
number of amendments to the bereavement allowance which provides
for the continuation of benefits for a short period, or the payment
of a lump sum, following the death of a recipient. The amendments
alter the wording of various sections of the Principal Act to
reflect the change to bereavement allowance to an instalment
payment regime.
Section 68 of the Principal Act provides that
the Secretary may request a person to provide information on a
change of circumstances that may effect their eligibility for the
age pension and that if such a request is made the information must
be provided within 14 days of the change in circumstances or within
14 days of when the person becomes aware that a change of
circumstances is likely to occur (in practice the requirement to
provide information on a change in relevant circumstances is part
of the eligibility criteria for the receipt of benefits).
Item 2 of Schedule 3 provides that the 14 day
period is to be reduced to 7 and also allows the Secretary to
determine that due to special circumstances the notification period
may be extended to a maximum of 28 days.
Currently, where a person notifies a change in
circumstances that leads to the age pension being cancelled or paid
at a reduced rate, this is to have effect from the end of the
notification period. Items 5 and 8 provide that if
the pension is cancelled or reduced in the instalment period
immediately following the instalment period during which the event
leading to the cancellation or reduction occurred, the pension will
be payable at the previous rate until the end of the second
instalment period. If the pension is not reduced or cancelled
during this period, it will be cancelled or reduced at the end of
the notification period.
Item 12 of Schedule 3 will
repeal sections 81, 81A and 81B of the Principal Act, which deal
with the implementation date of decisions adverse to a recipient of
the age pension, and substitute new provisions. Currently, such
determinations have effect from the date of the determination or
the date specified in the determination unless there has been a
contravention of provisions requiring the provision of information,
in which case the determination may specify an earlier date if the
breach of those provisions resulted in a delay in making the
determination. Proposed section 81 provides
that:
-
- if the changed circumstances have been notified within the
allowable time and no payment of age pension has been made since
notification, the change of rate will have effect from the date of
the change in circumstances
-
- if the adverse decision relates to the provision of periodic
compensation payments in arrear, the determination will have effect
from the start of the periodic payment period during which the
compensation payments were made
-
- if there has been a contravention of the Principal Act, other
than provisions relating to the requirement to notify certain
information, that causes a delay in the making of a determination,
the determination will have effect from the day specified in the
determination (which may be earlier than the making of the
determination)
-
- if a person has made a false representation and this results in
the pension either not being cancelled or paid at a reduced rate,
an adverse decision will have effect from the date specified in the
determination, and
-
- in other circumstances the determination will have effect from
either the date it is made or a later day specified in the
determination.
Similar amendments are also proposed for
the:
-
- disability support pension
-
- wife pension
-
- carer payment
-
- bereavement allowance
-
- widow B pension
-
- widow allowance
-
- parenting payment
-
- youth allowance
-
- austudy payment
-
- newstart allowance (which currently applies a notification
period of 7 days but will be amended in regard to the other aspects
mentioned above, such as the date of effect of an adverse
determination)
-
- mature age allowance
-
- sickness allowance (which also currently applies a notification
period of 7 days but will be amended in regard to the other aspects
mentioned above, such as the date of effect of an adverse
determination)
-
- special benefit (which also currently applies a notification
period of 7 days but will be amended in regard to the other aspects
mentioned above, such as the date of effect of an adverse
determination)
-
- partner allowance (which also currently applies a notification
period of 7 days but will be amended in regard to the other aspects
mentioned above, such as the date of effect of an adverse
determination)
-
- special needs pension
-
- family allowance
-
- family tax payment
-
- child disability allowance
-
- double orphan pension
-
- mobility allowance, and
-
- pensioner education supplement.
Amendments to the Veterans' Entitlement Act
1986 provide for payments made under that Act to be paid
fortnightly (currently payments are based on eligibility on pension
day) in arrears and for the period of notification of a change in
circumstances to be standardised at 7 days. The amendments reflect
the changes in the social security system discussed above
(Schedule 4 of the Bill).
Transitional provisions relating to social
security payments are contained in Schedule 6 of
the Bill. Item 1 of the Schedule will allow the
Secretary to determine that instalment payments may commence from
18 June 1998 prior to the introduction of instalment payments from
1 July 1999. Payment during the instalment period prior to 1 July
1999 will be based on the new provisions contained in Schedule 1 of
the Bill (payment by instalment), however the amendments relating
to notification of a change in circumstances and the date of effect
of an adverse determination will apply only from the first
instalment period after 30 June 1999.
Similar transitional provisions are made to the
Veterans' Entitlements Act 1986 by Schedule
7 of the Bill. However, these amendments reflect the
different paydays for veterans' payments and allow the first
instalment period to commence from 13 June 1999.
Chris Field
4 August 1998
Bills Digest Service
Information and Research Services
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ISSN 1328-8091
© Commonwealth of Australia 1998
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Published by the Department of the Parliamentary Library,
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