On 20 November 2013, the Social Services and Other Legislation Amendment
Bill 2013 ('the bill') was introduced into the House of Representatives. On
4 December 2013, the House conducted the Second Reading debate,
Consideration in Detail and the Third Reading stage of the bill. On 5 December
2013, the bill was introduced in the Senate.
The bill is an omnibus bill with 12 schedules. On 5 December 2013, the
Senate Selection of Bills Committee referred the provisions of Schedules 1, 1A,
3, 4, 5, 7, 8, 10, 11 and 12 to the Senate Community Affairs Legislation
Committee ('the committee'). The Selection of Bills Committee asked the
committee to report by 11 February 2014. However, on a motion from the
Assistant Minister for Social Services, Senator the Hon. Mitch Fifield, the
Senate voted to bring forward the committee's reporting timeframe to 12
Conduct of the inquiry
The committee recognises that the short timeframe for this inquiry
the 2013 sitting calendar, and the proroguing of parliament in
August 2013, which meant that several of the measures announced in the May 2013
federal budget were not introduced and passed in the previous parliament; and
that several of the proposed measures are due to commence on 1
January 2014 and therefore need the parliament's assent by the last sitting day
of 2013 (see Table 1).
Within the timeframe, the committee held two public hearings on 9 and 10
December 2013. The first hearing focused on stakeholders' views on Schedule 1 and
1A of the bill. The second hearing provided an opportunity for stakeholders to
comment on Schedules 3, 4, 5, 7, 8, 10, 11 and 12. The transcript of these
hearings is reproduced in Appendix 2 of this report. The report should be
read in conjunction with the evidence contained in these transcripts.
The committee also received 64 submissions, which are listed in Appendix
1. The majority of these submissions relate to Schedule 11 of the bill.
The committee thanks all the organisations and individuals who provided both
written and verbal evidence to this inquiry at such short notice. It is also
grateful to the Parliamentary Library's researchers for providing an advance
copy of the Bill's Digest to assist the committee with its inquiry and report.
Table 1: Timing and estimated savings of the measures
1 – Encouraging Responsible Gambling
Day of Royal Assent
Abolition of the National
Gambling Regulator may result in savings
Day of Royal Assent
The financial implications of
this amendment are unquantifiable in 2013–14 and 2014–15, and nil in the
2 – Continuing income management
as part of Cape York Welfare Reform
Day of Royal Assent
Cost of $4.2 million over two
3 – Family tax benefit and
1 January 2014
Savings of $76.6 million over
4 – Period of Australian working
1 January 2014
Saving of $50.8 million over
5 – Interest charge
1 January 2014
Saving of $33.5 million over
6 – Student start-up loans
Immediately after the
commencement of Schedule 5 to this Act.
Saving of $1,213.7 million over
7 – Paid parental leave
1 March 2014
Cost of $7 million over five
8 – Pension bonus scheme
1 March 2014
Saving of $80.5 million over
9 – Indexation – child care
1 March 2014
Saving of $105.8 million over
10 – Indexation – remaining
1 July 2014
Saving of $18.8 million over
11 – Extending the deeming rules
to account-based income streams
1 January 2015
Saving of $161.7 million over
12 – Other amendments
Parts 1–4: Day of Royal Assent
Part 5: The seventh day after
the Bill receives Royal assent
Part 6: Immediately after the
commencement of Parts 1 and 2 of Schedule 2A to the Family Assistance and
Other Legislation Amendment Act 2013.
Source: Social Services and
Other Legislation Bill 2012, p. 2. Explanatory Memorandum, p. 5.
Schedule 1: Encouraging responsible gambling
Schedule 1 of the bill amends the National Gambling Reform Act 2012
to implement aspects of the government's responsible gambling policy and remove
parts of the existing gambling regulatory regime. At the public hearing on 9
December 2013, the committee received evidence from several witnesses into the
provisions of Schedule 1 (see Appendix 2).
The bill would abolish all commitments in the National Gambling
Reform Act 2012 relating to pre-commitment systems including:
abolishing requirements on manufacturers and venues to ensure electronic
gaming machines are pre-commitment enabled;
repealing provisions limiting ATM withdrawals;
repealing provisions requiring electronic warning messages be
displayed to players;
abolishing the proposed gambling regulator and the proposed
removing references to a proposed trial of pre-commitment in the
Australian Capital Territory as well as its proposed evaluation by the
The bill would commit the government to:
work with the states and territories, the gaming industry,
academics and the community sector to develop and implement a voluntary pre-commitment
scheme on gaming machines in venues nationally, within a realistic time period;
work with the gaming industry and the states, to ensure all
pokies are capable of supporting a venues-based voluntary pre-commitment
scheme, and to do this within a realistic timetable.
The committee emphasises that while gambling is a significant problem
for some Australians, most Australians gamble responsibly. The gaming industry
is a major employer in Australia and governments have a responsibility to
ensure that legislation does not place undue financial stress on venues. The gambling
lobby's concerns with the potential impact of a mandatory pre-commitment system
on their business models were discussed in the first report of the
Parliamentary Joint Select Committee on Gambling Reform.
The committee highlights the fact that the changes proposed in Schedule
1 of the bill were flagged by the Federal Coalition in the lead-up to the 2013
federal election. The Coalition's pre-election policy document on gambling stated:
The Coalition does not support mandatory pre-commitment
because it will not effectively tackle problem gambling. Gambling reforms need
to ensure that problem gambling is prevented and problem gamblers helped.
Mandatory pre-commitment is highly unlikely to achieve either of these aims.
The Coalition supports voluntary pre-commitment programme for
electronic gaming machines adopted in concert with other measures, such as
targeted counselling services and an effective self-exclusion scheme.
The Coalition will put a stop to the trial of mandatory
pre-commitment in the Australian Capital Territory and instead devote much
needed resources to programmes that will actually help problem gamblers and
those at risk...
The Rudd-Gillard Government’s national gambling regulator
represents unnecessary duplication of a function already satisfactorily
undertaken by the States and Territories. The Coalition will shut down the
national gambling regulator and divert funding earmarked for it to the States
and Territories to fund additional counselling and support services for problem
We will amend the National Gambling Reform Act to put an end
to Labor’s bureaucracy and invest resources in measures proven to support
problem gamblers, such as counselling.
The committee acknowledges the strong views put at the public hearing in
opposition to Schedule 1 of the bill. This included evidence from the Salvation
Army, the Australian Churches Gambling Taskforce and Gambling Impact Society
New South Wales.
Major Kelvin Alley from the Salvation Army expressed his disappointment with
Schedule 1 in the following terms:
I am very surprised to be here...I have worked for the last
couple of years tirelessly with the previous government, so it surprises me
that the work done to introduce national legislation to reform the area of
problem gambling on poker machines is about to be repealed. We were delighted,
despite the watered down legislation, to achieve the milestones achieved last
year. The Salvation Army, along with the Australian Churches Gambling
Taskforce, worked very hard with the previous government to achieve what was
I appeal to members and senators of this great house—this
house for all Australians—that Christmas should be about good news. Let this go
through and it is bad news; 33 per cent of players are in danger of harm from
these machines—33 per cent of players. If this were a vehicle there would be a
national regulation to control the sort of damage caused by any consumer
product that would be harmful to 33 per cent of its users. Forty per cent of
income—and I hesitate to use the word 'income'; it is actually people's
losses—comes from the vulnerable. Take more time, I appeal to you, to think
this through. Please.
Having experienced the impacts of problem gambling, Ms Kelilah Doust
told the committee:
Appearing as someone who has been affected by gambling
problems with a family member, I suffered as a child from neglect and financial
loss. My family almost lost our home. I am ashamed to be sitting here today in
the face of regulations being repealed. Australian families have been fighting
a silent battle and will continue to do so without this legislation. If any of
these government bodies or clubs actually cared about the issue they would find
a way. Instead, they find excuses.
While the committee shares these witnesses' concern with the social
impact of problem gambling, it emphasises that there is no evidence that
mandatory pre-commitment would be an effective public policy response in
On 4 December 2013, during the Third Reading stage of the bill,
government amendments inserted Schedule 1A. This sub-schedule would delay the
commencement of the Charities Act 2013 from 1 January 2014 to 1
September 2014. The Supplementary Explanatory Memorandum states that the
delayed commencement 'will allow for further consultation on the legislation in
the broader context of the Government's other commitments in relation to the
The committee considered the rationale for Schedule 1A at the public
hearing on 9 December and again the following day. UnitingCare Australia,
Justice Connect and the Community Council of Australia were all given the
opportunity to give their views on the practical effect of delaying the Charities
Act (see Appendix 2).
The committee notes the views expressed in a submission from the Centre for
Independent Studies, which supports the government's consultative approach:
The government’s decision to abolish the ACNC within the next
year raises many questions about how the elimination of the commission should
be managed. Will the national register of charities be maintained in some form?
Will a national ‘centre for excellence’ be created to replace the ACNC, and if
so, what responsibilities will it have? How can the commission be wound down in
a way that preserves accountability in the charity sector?
Laudably, the government has committed to consulting with NFP
[Not-for-Profit] sector stakeholders and experts over the next several months
to develop constructive answers to these questions. It would be counterproductive
if, while these consultations are taking place, the sector were simultaneously confronted
with changes to the legal definition of ‘charity’ and ‘charitable purpose.’
Allowing the Charities Bill 2013 to come into effect on 1 January 2014 would be
both distracting and constraining at a time when focus and flexibility are
From the outset, the Coalition has been clear that it opposes the previous
government's reforms to regulating charities and in particular, the creation of
the Australian Charities and Not-for-Profits Commission (ACNC). In 2012,
Coalition Members of parliamentary committees reporting into the provisions of
the Australian Charities and Not for Profits Amendment Bill, argued that they:
...do not accept that the current Commonwealth regulatory
regime, based on the activities of the Australian Securities and Investments
Commission and the Australian Taxation Office, is broken, and therefore do not
accept the premise for this new regulatory megastructure. We are unpersuaded by
claims that this reform will reduce the regulatory burden faced by the sector.
Commenting on the Charities Bill in June 2013, the then Shadow Minister
for Families, Housing and Human Services, the Hon. Kevin Andrews, told the
This bill would be the first time that legislation has sought
to comprehensively define in statute, for the purposes of Commonwealth law,
charity. Our concern is clear: why create a statute where the common law has
and does serve us well? Why depart from 400 years of clarity and consistency?
The coalition will oppose this bill and, if elected to government later this
year, we will seek to repeal it.
In the Second Reading Speech on the Social Services and Other
Legislation Amendment Bill 2013, Minister Andrews explained:
The government has committed to consulting with the sector on
abolishing the Australian Charities and Not-for-profits Commission and
establishing a centre for excellence and a possible national register of
charities. The delay will mean we can work holistically with civil society,
consulting a range of stakeholders, including charity law specialists who
provide advice to the sector.
The committee asked officials from the Department of Social Services (DSS)
and the Treasury about the connection between the Charities Act 2013 and
the proposed abolition of ACNC. DSS responded:
I think there are intersections for people, for stakeholders,
in the sector about how they see these issues connected in terms of the
construct of that piece of legislation—how it operates, how it might be
implemented by the ACNC, what role they might play in that, whether that
construct continues into the future. In our conversations with stakeholders,
they do see these things to be connected.
When asked to comment what areas in the Charities Act have been flagged
for change, Treasury responded:
It is impossible to know at this stage and I think that is
why the government has asked for more consultations, to see if there are any
areas and possibly to flush out areas that they are interested in.
The government's broader reforms to the regulation of charities in
Australia will be a matter for parliamentary consideration in the new year,
when the government intends to introduce the legislation to repeal the ACNC. On
4 December 2013, the Minister announced that the government will establish a
new Centre for Excellence which 'will support innovation and provide education,
training and development opportunities to the sector' and 'will move the
relationship from a compliance and regulatory focus to one that advocates for
In light of these proposals, the delay of the commencement of the Charities
Act 2013 until 1 September 2013 is a necessary and prudent measure.
Schedule 3—Family tax benefit eligibility rules
Currently, Family Tax Benefit Part A is payable to:
a parent with children aged 0–15;
a parent with children aged 16–17 who are still undertaking or
have completed secondary study; and
dependent full-time secondary students aged 18 until the end of
the calendar year they turn 19.
Schedule 3 of the bill proposes to limit eligibility for Family Tax
Benefit Part A for children aged 16 to 17 who have already completed their
Year 12 qualification. The benefit would only be paid in respect of children
over 16 until the end of the calendar year in which they finish senior
secondary school. The Explanatory Memorandum states that 'youth allowance...will
remain available as the more appropriate payment to help young people
transition from school into work or post-secondary study'.
This measure was announced in the May 2013 federal budget by the
previous government. The change will commence on 1 January 2014. The 2013–14
Budget Papers estimate savings from the measure of $76.6 million over four
years: $7.5 million in 2013–2014; $22.7 million in 2014–15; $23.9 million
in 2015–16; and $24.6 million in 2016–17.
DSS confirmed that the saving of $76 million takes into account not only the
saving from terminating the payment of Family Tax Benefit A, but also the cost
of the person taking up the youth allowance.
The committee expressed interest in the process for moving from receipt
of Family Tax Benefit A (at the end of the calendar year in which they
completed Year 12) to a youth allowance payment (should they decide to
study full time at tertiary level). DSS officials told the committee that this
transition was possible, provided the person had applied to study at tertiary
In a response to a Question on Notice, DSS confirmed that:
FTB recipients are currently sent a letter if they have a
child who will complete Year 12 to advise them of the effect on their FTB, and
the letter also advises about the option for the child to claim Youth
Allowance. This process would continue to apply under the new measure in
Schedule 3 to the Social Services and Other Legislation Amendment Bill 2013
(Family tax benefit and eligibility rules).
Schedule 4—Period of Australian working life residence
Schedule 4 of the bill relates to eligibility for the age pension for recipients
living outside Australia. The current requirement for age pensioners to receive
the full pension where they have been living abroad for 26 weeks or more is for
25 years of residency during their Australian working life (16 years of age to
pension age). The Parliamentary Library's Bills Digest gives the example
of a person with 16 years Australian residency (16/25) during their working
life receiving 64 per cent of the rate otherwise payable if they
resided in Australia.
Schedule 4 proposes that from 1 January 2014, age pensioners will be
required to have been Australian residents for 35 years during their working
life to receive the full means-tested pension after 26 weeks' absence from
Australia. Where they have been absent from Australia for 26 weeks or more, the
full pension is payable only where the person has been a resident for 35 years
of their Australian working life. If they have been an Australian resident for
less than 35 years, their pension would reduce proportionately.
Possible impact of the measures in
In the Bills Digest, the Parliamentary Library reproduced estimates
from FaHCSIA officials at a Senate Estimates hearing in May 2012 that:
around 5,400 pensioners go overseas permanently each year and of
these, around 2,100 are paid under social security agreements with New Zealand
and Greece; and
of the 3,300 who leave Australia permanently each year, around
'858 have less than 25 years working life residence, 759 have between 25 and 35
years Australian working life residence and 1683 have more than 35 years
Australian working life residence'.
The Bills Digest extrapolates that:
If current trends were to continue under the new rules, then
around half of those pensioners who leave Australia permanently each year will
not receive a full pension payment, compared to 26 per cent under the existing
rules. Around 4,000 pensioners leave Australia temporarily each year and those
that stay overseas for 26 weeks can also have their payments reduced under the
portability rules. No estimates have been published as to how many of the 4,000
stay overseas longer than 26 weeks, nor how many might be affected by the AWLR
Another indication of the possible impact of this measure comes from the
2012–13 Budget Papers, where the measure was first announced. Budget Paper No.
2 estimated that the government will achieve savings of $50.8 million over four
years by amending the Australian Working Life Residence rules applying to the age
pension, from 1 January 2014.
DSS confirmed at the public hearing that this estimated cost saving remains
The Council on the Ageing (COTA) supported the proposed measures in
Schedule 4, noting that the reforms would bring Australia into line with other
Organisation for Economic Cooperation and Development (OECD) countries.
National Seniors Australia expressed some concern that the amendment
could impact the pension payment of people who are currently overseas—having made
their retirement plans based on the previous 25 year rule—and need to return to
Australia for a period of longer than 26 weeks, before returning abroad.
Schedule 5—Interest charges for certain student debts
The Parliamentary Library's Bills Digest notes that a social
security debt arises when payments are made to a person who is not entitled, or
when overpayments are made to an entitled recipient. It explains that this
situation may arise where an individual has failed to declare income or assets
that would have been taken into account by the means test, and would have resulted
in a lower payment rate.
Overpayments may be recovered by a reduction in future social security
payments or, when a person who has raised a debt is no longer in receipt of a
social security payment, they are usually required to enter into a repayment
plan. Currently, however, there is no incentive for student income support
debtors to repay their debt.
Schedule 5 of the bill proposes to introduce an interest charge for
certain debts relating to austudy payment, fares allowance, youth allowance payments
to full-time students and apprentices, and ABSTUDY living allowance payments. The
charge will only apply where the debtor does not have or is not honouring an
acceptable repayment arrangement.
The committee asked DSS officials to provide an overview of the number
and quantum of social security debts that the measure seeks to address. DSS
told the committee that there are currently 22,000 individual debtors
comprising 33,000 debts, with a total value of $72 million.
DSS estimates that once the interest charge is imposed, roughly half these
debtors will begin to repay their debt.
At the public hearing on 10 December 2013, the committee took evidence on
matters relating to Schedule 5 from the National Welfare Rights Network, the
Australian Youth Affairs Coalition (AYAC) and the National Tertiary Education
Union. AYAC argued that the additional interest charge is not likely to make
debtors pay on time.
The National Welfare Rights Network commented that it is more difficult to
recoup a debt where people are no longer receiving a social security benefit.
It also noted that the proposed rate of interest (new proposed section 1229H)
would be difficult for debtors who have only recently entered the workforce to
service. The National Welfare Rights Network recommended a number of amendments
to proposed new subsection 1229F of Schedule 5 to soften the proposed penalties
for non-compliance with, or termination of repayment arrangements.
Committee view on Schedule 5
The committee believes that the interest charge proposed in schedule 5
of the bill is an appropriate measure to ensure that debts are repaid when the
debtor has the capacity to do so. Debtors would have 28 days once notified by
the Department of Human Services to enter into a debt repayment arrangement. The
potential gain to the public purse is quite significant. DSS stressed there
would be no interest charge paid where the debtor is honouring an acceptable
Schedule 7—Paid parental leave
Schedule 7 of the bill would remove the current requirement for
employers to make payments to employees under the national Paid Parental Leave (PPL)
scheme from 1 March 2014. Employees would be paid directly by the
Department of Human Services, although employers would have the option to make
the payment to employees themselves. The government estimates that removing
this requirement will save employers $48 million nationally, with
implementation estimated to cost $7 million.
The Regulation Impact Statement on the provisions of Schedule 7 noted
that as of June 2013, 76 per cent of recipients were receiving their PPL from
their employer. It also cited the results of an Australian Chamber of Commerce
and Industry (ACCI) survey published in May 2013 which found that 84.3 per cent
of businesses either agreed or strongly agreed that 'the Government should not
require employers to be the paymaster of the Paid Parental Leave Scheme'.
The committee notes that both major parties took policies to the last
federal election to at least partially remove PPL paymaster responsibilities
from employers. Pre-election, the Coalition announced that it would fully
remove this obligation, meaning that all employees' PPL entitlements will be
paid directly by the Commonwealth Government.
The Labor Party's election policy was that businesses with fewer than 20
employees would no longer have to administer government-funded PPL.
Both the Council of Small Business of Australia (COSBOA) and ACCI told
the committee that it was highly desirable to have government as a paymaster,
rather than employers. Both organisations emphasised that there is no evidence
to suggest that payments through the employer's payroll lead to a stronger
attachment to the workplace.
ACCI noted that in New Zealand, where the government is the PPL paymaster,
there has not been 'any compelling policy rationale' to transfer the paymaster
role to the individual employers.
COSBOA took issue with the costs and complications associated with current
claiming processes. The Executive Director of the Council, Mr Peter Strong, told
In dealing with a person who is on parental leave, quite
often they will come in, especially after the child is born or just beforehand...You
will find out and you will talk about the pay. You will do a pay run and the
pay will go off into their account, as it normally does. You will email, if
that is what you do, their pay advice to them. That sounds easy except...[T]here
are too many problems in there. There are too many issues that you have to
change. It is imposed upon you from a third party that has no role of telling
us what to do with our pay system above and beyond PAYG and the normal sorts of
things you ask of an employer. It does not happen often and it just causes
confusion for everybody and creates mistakes. Without a doubt, it creates
mistakes that do not benefit everybody as well.
The committee believes that the measures proposed in Schedule 7 of the
bill will provide a significantly more streamlined process for businesses that
choose not to 'opt-in'.
Schedule 8—Pension bonus scheme
The Pension Bonus Scheme provides a lump sum payment to people who are
qualified for the aged pension but who choose to defer their pension and remain
in the workforce. The bonus payment is paid at the time an applicant eventually
claims their age pension. While the scheme closed in September 2009, people
remained able to register if they qualified but had not registered at the time
Schedule 8 of the bill seeks to establish 1 March 2014 as the cut-off
date for late applications to the Pension Bonus Scheme. It will establish a
formal cut-off date so that no applications to the Pension Bonus Scheme can be
made on or after 1 March 2014. Applicants who are already registered in the
scheme will not be affected by this change, and those who are eligible can
continue to apply up until 1 March 2014.
The committee supports Schedule 8:
the cut-off date for the Pension Bonus Scheme was originally
announced by the previous government in the 2013 federal budget and represents
an important cost saving of $80.5 million over three years;
the 2009 Harmer Review of Pensions found that the Pension Bonus
Scheme is complex and difficult for people to understand. Moreover, the benefits
from the scheme flow to individuals who would have continued working past the
pension age in any event;
the replacement Work Bonus Scheme is considered a simpler and
more targeted workforce participation incentive for older workers.
Under the Work Bonus Scheme, age pension recipients can have half of their
employment income, up to a cap of $500 per fortnight, disregarded from the
The Committee took evidence on Schedule 8 of the bill from both the
Council on the Ageing (COTA) and National Seniors Australia. Both organisations
supported the proposed amendments.
Schedule 10—Reduction of period for temporary absence from Australia
Family and parental assistance payments—including Family Tax Benefit
Part A, Family Tax Benefit Part B, Parental Leave Pay (PLP) and Dad and
Partner Pay (DAPP)—assist families with the costs of raising children.
Currently, recipients can continue claiming these family and parental
assistance payments while they are temporarily overseas for up to three years.
Schedule 10 of the bill seeks to reduce the length of time recipients
can claim these family and parental payments while they are temporarily
overseas from three years to 56 weeks. The Schedule provides for some
extensions to this 56 week period in special circumstances.
1.51 Australian Defence Force and Australian Federal Police personnel who are
deployed overseas will, under an addition to section 24 of the Family
Assistance Act, be explicitly exempt from the measures and continue to be
eligible for the payments for up to three years. Other Australian Government
personnel who are stationed overseas temporarily, such as diplomatic staff, appear
not to be exempt from the changes given they are not explicitly mentioned in
The committee recommends that the Government consider extending the
exemptions available in Schedule 10 of the bill to all personnel stationed
overseas by the Australian Government, to ensure that diplomatic staff are
The committee supports the provisions in Schedule 10, which were first
announced in the 2013 federal budget. The number of recipients impacted will be
relatively small: in June 2013, FaHCSIA estimated that the families of 2,800
children will be affected by the changes in the first year of operation.
The committee did not receive any feedback from stakeholders critical of
11—Extending the deeming rules to account-based income streams
When calculating income to assess an income support recipient's
financial investments, the investments are assumed to be earning a certain rate
of income regardless of what they actually earn (a deeming rate). The EM notes
that these deeming rules encourage people to choose investments on their merit
rather than the effect the investment income may have on the person's income
Currently, however, certain income streams are not subject to income
deeming. Schedule 11 of the bill extends the income deeming provisions to any
asset-tested income stream that is an account-based pension. The government's
intent is that people with similar financial assets are treated consistently
under the income support system.
The measures will begin for products assessed from 1 January 2015. They
are estimated by Treasury to save $161.7 million. Some witnesses have queried
Concerns with the impact of
As noted earlier, the majority of submissions received by the committee
during this inquiry related to Schedule 11 of the bill (see Appendix 1). More
than 40 submissions were received from financial advisers. They expressed
the potential disincentive the deeming provisions might have on
the responsible management of retirees' superannuation assets;
reducing competition between financial products and product
providers by offering preferential social security treatment to pension schemes
which are not asset-backed; and
equity implications, with claims that the measures would disproportionately
affect Australians with modest means, and therefore lead to greater reliance on
the aged pension.
All three concerns are addressed in Financial Planning Australia's (FPA)
submission. In terms of a possible anti-competitive effect, the FPA noted:
If the value of the underlying asset is used to deem the
income derived from the financial product, then financial products without an
underlying asset (such as Defined Benefits Scheme Pensions or annuity products)
may have a lower income than the deemed income of an account based pension. We
do not form a value judgment by comparing these products, but stress that
product recommendations made by financial planners should be influenced by the
circumstances and goals of the client, and not arbitrary distinctions in the
social security law.
DSS responded that people with non-account based income stream products
have no access to their capital, no investment choice and no ability to change
the amount of income they receive each year to reflect the changes in the
deeming rates. The Department stated that 'it would not be appropriate to
subject these products to deeming'.
In terms of equity considerations, the FPA presented data comparing aged
pension outcomes for a 65 year old single woman who purchases either a $200,000
or a $500,000 account based pension and has no other assets. For the person
with the $500,000 account based pension, there is no effect as the asset will
be unaffected by the deeming provisions. On the FPA's figures, the retiree on a
$200,000 account based pension will expect to receive $62.40 less per fortnight
from the age pension.
This evidence was put to the DSS for its response. DSS commented:
This is a consequence of people being assessed under either
the income test or the assets test. At $500,000, a person will be assessed
under the assets test. Regardless of whether they have their assets in
superannuation or non-superannuation holdings, they will receive the same level
of pension. That is, the pension assets test already assesses financial assets
consistently regardless of how they are held.
The person with a $200,000 balance will be assessed under the
income test and...will get a pension payment depending on whether it is held
directly or in superannuation. That is, the pension income test does not
currently assess income consistently for superannuation account based income
streams and financial assets held directly. Thus the schedule changes the
social security income test treatment of superannuation account based income
streams to ensure equity for people assessed under the income test.
The committee supports extending the deeming provisions to align
treatment of account based superannuation streams with the deemed income rules
applying to other assets. The committee agrees with National Seniors Australia
that it is important that people with similar financial assets are treated
consistently under the income support system.
The committee supports the passage of Schedules 1, 1A, 3, 4, 5, 7, 8, 10,
11 and 12 of the bill before the parliament rises in 2013.
The provisions in Schedule 1 of the bill effect a clear Coalition
election commitment. The committee is pleased that both major parties now
support a voluntary pre-commitment programme for electronic gaming machines.
Senators on the committee also emphasise the importance of assisting those with
a gambling problem with targeted counselling services and an effective
Schedule 1A has been inserted to ensure there is further
consultation on the commencement of the Charities Act 2013. For some
time, the Coalition has clearly stated that it favours a different approach to that
of the previous federal government in the regulation of the not-for-profit
sector. The proposed nine months delay of the commencement of the Charities Act
is prudent given this different path and the need for stakeholder
The provisions in Schedules 3, 4, 5, 8, 10 and 11 of the bill would
implement commitments made by the previous federal Labor Government in budget
statements and Mid-Year Economic Forecasts. These measures are savings measures
and will be among several measures that the Coalition intends to implement to
improve the budget bottom line.
Schedule 7's provision to relieve employers of the administrative
responsibility of paying their employee's paid parental leave is implementing a
clear Coalition election commitment. The government recognises the cost that
current administrative arrangements have on business.
The committee recommends that the Schedules of the bill inquired into by
the Senate Community Affairs Legislation Committee be passed without amendment.
Senator Sue Boyce
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