Social security and veterans' entitlements legislation amendment (Miscellaneous matters) Bill 2000
June 2000
© Parliament of the Commonwealth of Australia 2000
ISSN 1440-2572
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Senate Standing Committees on Community Affairs
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Membership
of the committee
Members
|
Senator Sue
Knowles, Chairman
|
LP, Western Australia
|
|
Senator Lyn
Allison, Deputy Chair
|
AD, Victoria
|
|
Senator Kay
Denman
|
ALP, Tasmania
|
|
Senator Chris
Evans
|
ALP, Western Australia
|
|
Senator Brett
Mason
|
LP, Queensland
|
|
Senator Tsebin
Tchen
|
LP, Victoria
|
Report - Social security and veterans' entitlements legislation amendment (Miscellaneous matters) Bill 2000
THE
INQUIRY
1.1
The Social Security and
Veterans' Entitlements Legislation Amendment (Miscellaneous Matters) Bill 2000
(the Bill) was introduced into the House of Representatives on 16 March 2000 and into the Senate on 10 April 2000. On
12 April
2000, the Senate, on the recommendation of
the Selection of Bills Committee (Report No. 6 of 2000), referred the Bill to the Committee for
report by 5
June 2000.
1.2
The Bill gives effect to a
range of 1999 Budget and related matters. However, the Committee was only asked
to examine a specific aspect of the Bill - namely the impact of the proposed common international
portability rules for DFaCS pension and allowance recipients.
1.3
The measures in the Bill relating to
international portability aim to simplify current portability rules with a view
to streamlining their administration. They include standardisation of the
portability rules; consolidating working life residence rules; phasing out of
special needs pensions; and extending to two years the short residence rule.
1.4
The Committee received
submissions from the National Welfare Rights Network and the Department of
Family and Community Services relating to the portability issue. The Committee
agreed that rather than hold a formal public hearing, it would seek a written
response from the Department to the issues raised in the Welfare Rights
Network’s submission. The submissions and Department’s response may be accessed
through the Committee’s web site at: https://www.aph.gov.au/senate_ca.
1.5
Issues raised by the National
Welfare Rights Network (see Attachment 1) included:
-
Reduction of the maximum portability period for
Disability Support Pension (DSP) for non-severely disabled persons from 1 year
to 26 weeks would have a detrimental effect on migrants who want to return to
their country of origin;
-
Reduction of maximum portability period for Wife
and Widow B pensions from 1 year to 26 weeks is unwarranted;
-
The underlying rationale of the extension of the
non-portability period for former residents from 1 to 2 years and repeal of the
discretionary provision;
-
Reduction of the non-proportional period for
long-term travellers from 1 year to 26 weeks may well act as a disincentive for
people who would otherwise return to their country of origin; and
-
The removal of specific references to visa types
that attract eligibility for various payments.
1.6
The Department responded to the
issues raised by the National Welfare Rights Network (see Attachment 2) by
advising that:
-
The standardisation and simplification of
portability rules will benefit around 90 000 recipients, including the majority
of pension and allowance recipients who travel overseas. The small number of
adversely affected recipients will, however, benefit from the introduction of
portability for ancillary payments such as Rent Assistance, Pharmaceutical
Allowance and Telephone Allowance;
-
The exemption of particular payments from the
standardised portability rules would increase legislative complexity without
adding much value for customers;
-
The proposed changes to the non-portability
period of former residents are consistent with the residency principles of the
Australian social security system. Retention of the discretionary provision
would continue to leave the system open to abuse;
-
The shortening of the non-proportional period is
consistent with the standardisation and simplification of the portability rules
and there is no evidence that it will have a detrimental effect on migrant
communities. The addition of ancillary benefits will benefit all recipients,
including migrants; and
-
The amendments will make life easier for all
concerned by providing a single point of reference for the listed visas.
RECOMMENDATION
1.7
The Committee reports to the
Senate that it has considered the Social Security and Veterans' Entitlements
Legislation Amendment (Miscellaneous Matters) Bill 2000 and recommends that the Bill proceed.
Senator Sue Knowles
Chairman
June 2000
Minority report - Australian Labor Party
Social security and veterans' entitlements legislation amendment (Miscellaneous matters) Bill 2000
1. Proposed common international portability rules - areas
of concern
Many of the proposals regarding
international portability contained in this legislation will benefit
individuals receiving social security payments travelling overseas and
streamline administrative arrangements. It is not Labor’s intention to examine
these matters.
However, a number of measures
relating to portability will leave Centrelink customers worse off. These are
discussed below.
1.1 Reduction in Portability for Disability Support, Wife
and Widow B pensions
The legislation proposes to reduce
portability of pensions from 12 months to 26 weeks for people those receiving
Disability Support Pensions who are not categorised as ‘severely disabled’ (ie
those unable to work at least eight hours per week). It also proposes the same
reduction for Wife and Widow Pensioners whose pensions are not permanently
portable (ie ‘entitled persons’).
Disability Support Pension
The Department of Family and
Community Services (FACS) argues in its submission that few Disability Support
Pensioners travel overseas for periods longer than twelve weeks and therefore the
numbers affected by limiting portability to 26 weeks would not be great. Such
an argument provides a rationale for the adoption of a longer period such as
twelve months. If, as the FACS argues, the numbers taking advantage of more
generous portability are few, there is little chance retention of portability
of twelve months is likely to see a flood of individuals using the provisions
to relocate overseas for periods of time. Equally, FACS should be concerned to
limit the administrative burden placed on those who, for good reason, need to
remain overseas beyond the 26-week limit proposed. In this light the provision
of a clause allowing people to extend their stay beyond 26 weeks seems overly
bureaucratic.
FACS argues that Disability
Support Pensioners who have an ability to work at least some of the time are
increasingly being expected to participate either socially or economically. It
therefore argues that these individuals should be expected to remain in Australia in order to fulfil these commitments. Again on the
Department’s own evidence there does appear to be widespread deviation from the
principle that Disability Support Pensioners remain and participate where
possible in Australia.
Further, one of the tenets of
welfare reform debate to date is a concern to be more responsive to individual
needs and life events. Retaining a more generous portability provision,
particularly one that does not appear to be being abused would be consistent
with such an approach.
Finally, the legislation appears
to be structured to ensure that people’s participatory obligations override
portability. As such, changes to Disability Support Pension activity levels
would not seem to be jeopardised by the retention of a longer portability
period.
In its submission, The National
Welfare Rights Network argues that for some, particularly aging disability
support pensioners, there are valid reasons for return for periods of time to
countries of origin:
the person may have children and grandchildren in Australia, yet the needs of aged, frail parents,
and siblings may also draw them to spend large amounts of time in their country
of origin. In a sense they have a foot in each country.
It should also be remembered that
increasing numbers of older workers are claiming Disability Support Pensions.
This reflects both changes in the structure of the workforce, which has left
many low skilled workers without employment or future prospects of employment.
Many of these individuals are eligible for Disability Support Pensions as a
result of injuries related to the type of work they have performed. Migrant
workers are likely to be over-represented amongst this group.
Additionally, the changes do not
take into account the need in certain circumstances for people with
disabilities to seek medical treatment overseas. In such cases the shorter
portability arrangements would be unfair.
Wife and Widow B Pension
The proposals that seek to reduce
entitlements for many Wife and Widow B Pensioners do not appear to be
underpinned by strong logic. Because both payments are currently being phased
out, the demand for consistency is not as strong as maintaining certainty of
entitlements for the few affected.
Those currently receiving either
of the above pensions who travel overseas understand their entitlements provide
them with twelve month’s portability. To remove this entitlement would create
confusion and stress for those affected.
FACS claims less than 100
pensioners are affected by this proposal. Given this group is likely to rapidly
diminish it will not be a great deal of time before the class of persons is
nil. Until that time, the fact that only a few are affected does not represent
a valid argument for reducing their entitlement.
1.2 Extension of the waiting period
The proposal to extend the period
before which a person re-entering the country can be eligible for further
portability from one year to two years is represents another reduction in
entitlement. Further, the elimination of the opportunity for people to return
overseas within the proscribed period due to unforseen circumstances removes a
measure of flexibility from the system.
FACS contends this measure is a
guard against people abusing the integrity of the social security system, which
rests on its targeting to people who are residents. FACS believes that some
people manipulate the current system in order to gain access to payments with
indefinite portability before leaving the country permanently.
The National Welfare Rights
Network counters that proportionality rules protect against such an abuse.
In Labor’s view, the present
system provides an adequate test of a person’s commitment to this country.
Given the small number of individuals (FACS estimates around 10 people each
year), it does not appear the system is currently being abused.
FACS argues the removal of the
exemption from the proscribed period is due in part to the need for an
individual to evince an unequivocal desire to remain a resident of this
country. There is little evidence of individuals who need for this to be
reinforced.
FACS also argues it is difficult
to determine the veracity of claims for the proscribed period to be reduced
given evidence must usually be obtained from overseas. This is hardly a
compelling case for the withdrawal of a mechanism that allows flexibility in
circumstances where an individual may need to travel overseas unexpectedly.
The retention of a mechanism to
waive the proscribed period would allow individuals to continue to travel
overseas when a family member is ill or dies.
FACS argues that Centrelink has
reported a high rate of attempted abuse of the provision with two genuine
claims out of 16 total claims. Further, FACS argues that such a high attempted rate of abuse deserves a swift response. What
is more illuminating about these facts are that the system appears capable of
detecting ‘abuse’ from ‘legitimate cases.’ Given the measure has fundamental
merit (ie it allows discretion on humanitarian grounds), it is a low volume
transaction (ie only 16 cases in a year) and it is being enforced stringently,
there would appear to be few reasons to remove the provision.
1.3 Proportionality - long term travellers
The proposal to reduce
proportional portability from one year to 26 weeks for long term travellers who
receive Age Pension and Disability Support Pension (severely disabled) will
reduce the entitlements of a small number of customers.
While FACS claims many people will
not be affected by these provisions due to their residency or other qualifying
circumstances, it remains the case that some will. The National Welfare Rights
Network argues that for these individuals difficulties may arise in their
ability to settle in another country.
The National Welfare Rights
Network also contends that many of these individuals will save Australia moneys through their relocation, as they would otherwise
have drawn full pensions until their deaths.
Given the small numbers affected,
the desire to retain maximum flexibility within the system to meet individual
needs, and the sound economic arguments for erring on the side of generosity,
Labor supports the view that proportionality remain at one year for the
above-mentioned payments.
2. Conclusion
The stated aims of the Social
Security and Veterans Entitlement Legislation Amendment (Miscellaneous Matters)
Bill 2000 are commendable. The streamlining of provisions into a central area
of the legislation will no doubt improve the accuracy of decision making and
make easier for all concerned, the task of determining entitlements.
It is also commendable that
through this process, there is a recognition that certain ancillary payments be
made portable. This reflects the reality that many domestic financial
commitments do not cease when an individual must travel overseas.
However, it is of great concern
that the Government should seek to use what is an otherwise noble exercise, to
reduce the entitlements of some customers. The Government has provided little
justification for this proposed reduction of entitlements, beyond noting that
few will be hurt. However in our view, the cumulative impact of four years of
Coalition social security legislation in which allegedly few are hurt is now
substantial.
There remain compelling reasons
for offering greater flexibility of portability to customers of Centrelink than
the Government is offering in this legislation. For this reason Labor believes
the measures that diminish current entitlements should be amended to preserve
current entitlements while allowing for the consolidation of portability rules
to be centralised for administrative ease.
3. Recommendation
It is recommended that the
provisions relating to International Portability that diminish the entitlements
of Centrelink customers be amended to ensure no one is worse off.
Senator Chris
Evans
(ALP, Western Australia)
Senator
Kay Denman
(ALP,
Tasmania)
June 2000
Attachment 1 - Submission by National welfare rights network
8 May 2000
Mr Elton Humphery
Secretary
Australian Senate Community Affairs Committee
Parliament House
CANBERRA ACT
2600
by email:
community.affairs.sen@aph.gov.au
Dear Mr Humphery,
Social Security and
Veterans Entitlement Legislation Amendment
(Miscellaneous
Matters) Bill 2000
We thankyou for providing the National Welfare Rights
Network the opportunity to raise our concerns with the proposals contained in
the Social Security and Veterans Entitlement Legislation Amendment
(Miscellaneous Matters) Bill 2000.
Schedule 1
Part 1 Beneficiaries leaving Australia
New Division 2 Portability of social security payments
Subdivision A Basic portability provisions
The proposed s1217 of the Act sets out the maximum
portability period for portable social security payments.
Whilst there are some commendable changes with the
lengthening of portability periods for some payments, the portability periods
for other payments have been reduced from twelve to six months. We oppose these
reductions.
Disability Support
Pension (Item 3 of the Table at the end of the proposed s1217 of the Act)
It is proposed that the maximum portability period for
Disability Support Pension where the person has not been determined to be
severely disabled (i.e. capable of less than eight hours of work per week), be
reduced from twelve months to 26 weeks.
This proposal does not take into account that most
Disability Support Pensioners who leave Australia for extended periods
are migrants to Australia who for a variety of
reasons, ranging from the practical to the sentimental, wish to return to their
country of origin. The decision as to whether to resume residence in their
country of origin is a difficult one, particularly as a person ages or is
forced to come to terms with the effect of disability. The person may have
children and grandchildren in Australia, yet the needs of
aged, frail parents, and siblings, may also draw them to spend large amounts of
time in their country of origin. In a sense they have a foot in each country.
The fact that they may have minimal or no social security entitlements in their
country of origin (particularly if most of their working life was in
Australia), means that without their Australian pension a permanent return to
their country of origin would be prohibitive. The alternative is to spend long
periods out of Australia meeting their
responsibilities to extended family, and also meeting personal needs associated
with aging, living with a disability (and homesickness).
We propose that the current twelve month maximum
portability period for Disability Support Pensioners who are not severely
disabled is reasonable, and should remain in place.
Wife pension and Widow
B pension
It is proposed that the maximum portability period for
both wife pension and widow B pension, where these pensions are not permanently
portable (entitled persons), be reduced from twelve months to 26 weeks.
Considering that both wife pension and widow B pension are being phased out,
with no new grants, we propose that the change is unwarranted. The intention is
evidently for consistency with other pensions as it would be an insignificant
savings measure, yet even with the savings provisions (clause 128ff), this
would cause confusion on the part of wife and widow pensioners who understand
their pensions to be portable for twelve months. We are aware that there are
currently some wife pensioners who live overseas with partners whose pensions
are permanently portable, who return to Australia annually to retain
their own pension entitlement. This practice will phase out as these pensioners
reach Age Pension age.
Items 117 to 120 proposed amendments to s1220 of the Act
These amendments affect people who have been granted
pension after having resumed Australian residence following a period of
residence overseas (returning non-residents). Currently, pensions are generally
not portable for returning non- residents unless they have resided back in Australia for at least twelve
months. The exception from this requirement is where the person's reasons for
leaving Australia before the end of the 12 month period arose from
circumstances that could not have been reasonably foreseen when the person
returned to Australia.
The amendments would increase the proscribed period of
residence back in Australia for pension to be
portable from one year to two years. The exception for people whose reasons for
returning overseas could not have been reasonably foreseen would be removed.
We strongly oppose these amendments, particularly the
removal of the unforeseen exception. We cannot accept the underlying rationale
as logical.
The amendments are apparently intended to minimise the
possibility of people returning to Australia and remaining for
twelve months in order to secure a permanently portable pension.
We consider that even if there were a significant number
of people who each year return to Australia from residing overseas purely to
garner a pension to take back overseas as soon as legally possible (and we
would dispute that this so), it is important to recognise that people in this
position are subject to the proportional portability provisions contained in
Chapter 4 of the Act. Under these provisions, only people with at least 20
years working life residence receive maximum rate pension after a year
overseas; people with less working life residence receiving a proportion of the
pension based on their length of working life residence. Thus, the only people
who are entitled to substantial pensions during indefinite periods of residence
overseas, have resided in Australia for substantial
periods of time.
It should be noted that people who are not returning
non-residents (i.e. who have not resided outside Australia within the previous
twelve months), have fully portable pensions the day from which payment is
granted. There is no restriction based on length of receipt of the pension. It
is difficult to understand the rationale behind imposing a length of receipt of
pension requirement for returning non-residents in addition to the requirement
that the person intends to remain in Australia indefinitely at the
time of claiming.
It should also be noted that people who receive a
pension overseas and turn age pension age while still overseas, do not need to
return to Australia to claim Age Pension.
It would clearly be unreasonable to compel people in this position to resume
residence in Australia in order to qualify
for Age Pension. It is thus difficult to understand the rationale behind
requiring people who have been residing overseas without an Australian pension
to resume Australian residence in order to qualify.
As with the other portability amendments in this Bill, the proposal does
not take into account that most pensioners who would be affected are migrants
to Australia who have had, and
continue to have, ties to two countries Australia and their country of
origin. The impact of these competing
ties become more complex with aging.
We propose that it is unreasonable to restrict pension
portability in this way for returning non-residents. We propose that the
returning non-residence provisions be repealed. In the alternative, we propose
that the unforeseen exemption remain in the legislation.
Items 121 to 126:
Proportionality age, disability, wife
and widow B
pension rate proposed amendments to ss1220A, 1220B &
1221
These amendments would impose proportional portability
on age pensioners
after six months absence from Australia.
We oppose this amendment. For people taking up residence
in another country, receipt of pension at the maximum rate for a period of
twelve months before proportional portability cuts in, assists the person to
settle.
It should be noted, in relation to all of the above matters,
that the proposed changes may well act as a disincentive for people who would
otherwise return to their country of origin.
This might have the result of reducing the savings to Australia arising from a
pensioners decision to return to their country of origin. If a person who qualifies for a pension in Australia chooses to remain
here they are likely to continue receiving the full rate of pension for the
remainder of their lives, rather than just during the first twelve months of
their absence. Furthermore, many of these people will continue to rely on other
government funded services such as Medicare and public housing while they
remain here.
Items 141 et seq
These amendments would remove specific references to
visa types which attract eligibility for various payments, either by virtue of
extending eligibility to cover that visa sub-class, or by virtue of exempting
the holder from a residential qualification criterion, or by exempting the
person from a newly arrived residents waiting period. The amendment would mean
that rather than continuing the dual approach of some visa types being
specified in the Act and some in Ministerial determinations made via a
disallowable instrument, the Ministerial determination would be the sole means
of approving visas.
We oppose these amendments on the grounds that not only
would the insertion of visas be solely by Disallowable Instrument, but also
their removal. We acknowledge that the current dual situation has some
drawbacks in that the Act at any point in time may include references to
defunct visa types, but this is not a problem in practice. Centrelink officers
administering the Acts residential and newly arrived residents waiting period
do not generally refer to the legislation and the Ministerial determinations
anyway; they generally refer to the Guide to the Administration of the Act
which is on Centrelinks intranet and is under constant review and update. High
level Centrelink and Department of Family and Community Services staff
certainly know to refer to both the Act and the Ministerial determinations when
researching cases or policy issues, as do community legal workers.
In our view any proposal to remove a current visa type
from an approved list should be subject to the full scrutiny of Parliament rather
than to the less rigorous Disallowable Instrument process. We propose that
rather than removing the statutory provisions specifying visa types, the
current dual system should remain in place. Further, we propose that greater
emphasis be given on amending the legislation so as to incorporate in the Act
visas declared by the Minister from time to time via Ministerial instrument.
If the proposals, as discussed above, are approved by
Parliament we stress the need for these changes to be conveyed to the community
far in advance of the date of effect. We
believe that the date of effect of 20 September 2000 does not provide the
community adequate notice.
Finally, we ask that the Department provide a breakdown
of the projected savings for the International Portability and related
provisions contained in the Bill.
If you wish to clarify any of the issues raised please
contact Linda Forbes on 9211 5389.
Yours faithfully,
Jackie Finlay,
Liaison Officer of the National Welfare Rights Network
c/- Welfare Rights & Legal Centre
PO Box 337, Civic Square, ACT 2608
PH: 6257 2931 FAX:
6257 4801
Attachment 2 - Response by Department of Family and Community Services to the submission by National welfare rights network
Submission to the Community Affairs Legislation Committee on
the Social Security and Veterans’
Entitlements Legislation Amendment (Miscellaneous Matters) Bill 2000.
Response to the issues raised in the National Welfare Rights
Network's submission.
The standardisation and simplification of portability rules
will have a very positive impact on the majority of pension and allowance
recipients who travel overseas. Extended
portability of many payments and the introduction of portability of ancillary
payments such as Rent Assistance, Pharmaceutical Allowance and Telephone
Allowance will benefit more than 90,000 customers. An even greater number of customers will
benefit from simplification of the legislation, improved service delivery and
removal of unnecessary red tape.
The National Welfare Rights Network submission has raised a
number of issues in relation to the proposed amendments of portability and
residence provisions in the Social
Security Act. The Department of
Family and Community Services (FaCS) will respond to those issues in the order
of their appearance in the submission.
Our first submission to the Committee addresses some of these issues as
well.
Issue: Reduction of the maximum portability
period for Disability Support Pension for non-severely disabled persons from 1
year to 26 weeks.
Response: The Bill
proposes to standardise the short-term portability period for Disability
Support Pension (DSP) for non-severely disabled persons to 26 weeks, in line
with other short-term portable payments.
The National Welfare Rights Network submission argues that this
standardisation would have a detrimental effect on migrants who want to return
to their country of origin permanently.
Depending on the level of disability, DSP has two different
portability periods. Customers who are
severely disabled, that is, who cannot work for more than 8 hours a week, have
an indefinite portability period.
However, DSP recipients who are assessed as non-severely disabled are
considered able to work for up to 30 hours a week and, in view of this, are
encouraged to participate actively in the community. The current review of the welfare system is
examining ways in which people on DSP can increase their economic and social
participation. Indefinite portability is
allowed only in respect of payments for the long-term contingencies of life
such as age and severe disability.
Accordingly, DSP for non-severely disabled customers cannot be paid to
customers who decide to leave Australia
permanently.
Within the group of customers going overseas temporarily,
most go for less than 26 weeks (on average 12 weeks). The same applies to overseas-born recipients
of DSP. Of those going for longer than
26 weeks, the great majority are assessed as severely disabled and, therefore,
eligible for permanent portability. The reduction of maximum short-term
portability for DSP will therefore affect a small number of customers (the
Department’s first submission refers at page 3).
Most customers, including those affected by the
standardisation of the short-term portability period will benefit from the
introduction of portability for ancillary payments such as Rent Assistance,
Pharmaceutical Allowance and Telephone Allowance. Ever since the introduction of portability,
many customers have complained that they have had to shorten their overseas
absence because they have to meet their ongoing financial commitments in
Australia such as paying rent, telephone or pharmaceutical bills. New, simplified portability rules will make
those ancillary payments available for up to 26 weeks of temporary overseas absence. This will help migrants to visit their
country of origin without incurring additional costs in Australia.
The simplified and standardised portability rules also
include a new discretionary provision allowing for the extension of the
portability period under specified conditions (s1218C). This will reduce the
risk that customers overseas in need, who could not return due to reasons
beyond their control, would be left without income support. Under current rules, no such discretion is
available.
Finally, DSP customers who are already overseas will have
their payments portable under the old rules until they return and stay in Australia
for a period longer than 26 weeks (s128).
Summary: The
majority of DSP customers will not be affected by the standardised 26 weeks
portability period. Portability of
ancillary benefits such as Rent Assistance, Pharmaceutical Allowance and
Telephone Allowance will, in fact, greatly benefit most DSP customers who
travel overseas. Severely disabled DSP customers will not be affected by the
standardisation of the short-term portability period. There is no particular reason why
non-severely disabled recipients of DSP should have a longer short-term
portability period than recipients of other short-term portable payments.
Issue: Reduction of maximum portability period
for Wife and Widow B pensions from 1 year to 26 weeks.
Response: The Bill
proposes to standardise the portability period for Wife and Widow B pensions to
26 weeks, in line with other short-term portable payments. The National Welfare
Rights Network proposes to save these pensions from standardisation rules
because no new pensions are granted.
The exemption of these payments from the standardised
portability rules would increase legislative complexity without adding much
value for customers.
Wife and Widow B pensions are payments that are not portable
indefinitely. There are provisions for
some Wife and Widow B pension recipients to be allowed indefinite portability
under “entitled persons” provisions of the Act. This will continue.
Within the group of Wife and Widow B customers going
overseas temporarily, most go for less than 26 weeks. Less than 100 Wife and Widow B pensioners go
overseas for longer than 26 weeks. Most
customers, including those affected by the standardisation of the short-term
portability period will benefit from the introduction of portability for
ancillary payments such as Rent Assistance, Pharmaceutical Allowance and
Telephone Allowance.
Simplification of portability rules is one of the major
objectives of this Bill. A saving provision for a small group of
affected customers would represent a departure from the simplification
objective of the Bill.
Another point raised in the Welfare Rights submission was
that some wife pensioners who live overseas with their partners will be
affected by this measure since they currently have to return to Australia
annually to retain their own pension entitlement.
This group of customers will not be affected since Wife and
Widow B pensioners who are already overseas will have their payments portable
under the old rules until they return and stay in Australia
for a period longer than 26 weeks (s128).
Summary: The
majority of Wife and Widow B customers will not be affected by the
standardisation of the short-term portability period. Most customers, including those affected by
the standardisation, will benefit from the introduction of portability of
ancillary payments. Customers already
overseas will continue to be subject to the old portability rules. There is no particular reason why Wife and
Widow B pensions should have a longer short-term portability period than other
short-term portable payments. This would increase legislative complexity and
would represent a departure from the simplification objective of the Bill.
Issue: Extension of the non-portability period for former residents
to 2 years and repeal of the discretionary provision.
Response: The Bill
proposes to extend the non-portability period for former residents to 2 years
and to repeal the discretionary provision.
The National Welfare Rights Network’s submission questions the
underlying rationale of this proposition.
A fundamental qualification criterion of all Australian
social security payments requires that applicants are Australian residents. Once granted, some payments (eg, Age Pension)
are portable indefinitely. Former
residents who return to Australia
have to establish their Australian residency before they can be granted a
payment. It is always difficult to assess whether a former resident’s claim to
have resumed Australian residency is genuine.
This is particularly so when a former resident claims a payment within a
short period after their return to Australia. To prevent the situation where former
residents come to Australia only to obtain an indefinitely portable pension and
return overseas, it is proposed that the current 12 months non-portable period
be extended to two years. This proposal
is consistent with the residence principles of the Australian social security
system.
The Welfare Rights submission further argues that
proportional portability provisions provide enough of a safeguard against
increased expenditure on returning former residents. The proportional rate of Age and Disability Support
Pensions applies to all customers who have less than 25 years of Australian
working life residence, regardless of whether they are former residents or
not. The main objective of the extension
of the non-portable period for former residents is to uphold the integrity of
the residence-based Australian social security system.
There is a very real difference between Australian residents
who have not severed their ties with Australia
and those who have resided in Australia
for a period of time and then ceased to be Australian residents. As previously
emphasised, it is fundamentally important that social security claimants are
Australian residents. For these reasons,
former residents have to manifest their commitment to stay in Australia. This is only fair and equitable and is
consistent with community expectations.
The only way to establish this commitment, in the case of a former
resident claiming an indefinitely portable payment, is to prevent portability
for a sufficiently long period after the former resident returns to Australia.
Customers overseas who receive a social security payment can
be transferred to Age Pension when they reach Age Pension age and satisfy other
qualification criteria. There is a major
difference between these customers and returning former residents. Customers overseas who are not former
residents have either: already been in receipt of an indefinitely portable
payment (eg DSP for severely disabled) and been transferred to a more
appropriate indefinitely portable payment (eg Age Pension); or, their
Australian residency was established at the time of claiming the first payment.
The proposed change to extend the non-portability rule is
not detrimental to the migrant community because it does not prevent migrants
from commuting between their country of birth and Australia. It simply requires a former resident to
manifest his/her commitment to resume residence in Australia.
The discretionary provision allows for the exemption from
the non-portability rule where the reason for leaving Australia, before the end
of the 12 month period, arose from circumstances that could not have been reasonably foreseen
when the person returned to Australia.
This discretionary provision can lead former residents to believe that
the commitment to Australian residence does not have to be unequivocal. Also, evidence about unforeseen circumstances
usually comes from overseas sources, the reliability of which is difficult to
assess. During the last 12 months, 16 former
residents claimed unforeseen circumstances within the non-portable period. Centrelink advises that just two of these 16
cases were legitimate cases. Such a high
rate of attempted abuse of the discretionary power requires a swift response.
Summary:
The proposed changes to the non-portability period of former residents are consistent
with the residency principles of the Australian social security system. Retention of the discretionary provision
would continue to leave the system open to abuse.
Issue: Reducing the non-proportional period for
long-term travellers from 1 year to 26 weeks.
Response: The Bill
proposes that the non-proportional period for Age Pension, Disability Support
Pension for severely disabled people and Wife and Widow B pensions for entitled
persons be shortened to match the standard 26 week short-term portability
period. The current one year
non-proportional period reflects the current one year short-term portability
period for Disability Support Pension for non-severely disabled, Wife and Widow
B pensions. The National Welfare Rights
Network argues that these amendments may well act as a disincentive for people
who would otherwise return to their country of origin. This might result in reduced savings to Australia.
There is no evidence to suggest that
the shortening of the non-proportional period would have a detrimental effect
on customers wanting to settle in their country of origin. Australia
has a number of social security agreements with migrant source countries. One of the main objectives of these
agreements is to help migrants who wish to return to their country of
origin. Under the portability rules of
these agreements, a proportional rate of pension starts to be paid immediately
after a customer leaves Australia. FaCS data on overseas agreement customers
show that this rule has not had any effect on the number of customers wanting
to settle in agreement countries.
The non-proportional portability
period enables Australian residents to travel overseas for a short period of time and have a full
rate of Australian pension paid. In
addition, under the proposed portability rules customers will also be paid
ancillary payments that will help them to meet their financial commitments in Australia. Thus, for migrants who have not made up their
mind whether to settle permanently in their country of origin, the proposed
rules will enable travel for up to 26 weeks without incurring any additional
costs in Australia.
Summary:
The shortening of the non-proportional period is consistent with the
standardisation and simplification of the portability rules and there is no
evidence that it will have a detrimental effect on migrant communities. The addition of ancillary benefits will
benefit all customers, including migrants.
Issue: The date of effect of 20
September 2000
does not provide the community with adequate notice.
Response:
After the legislation is approved by the Parliament, Centrelink will inform
customers of the details of the legislation. Changing the implementation date
would be costly.
Summary:
The 20 September 2000
implementation date should remain intact.
Centrelink is ready to advise customers on any changes when Parliament
approves the legislation.
Issue: Removing
specific references to visa types that attract eligibility for various payments.
Response: The Bill amends the Act in relation to several provisions that
contain references to visas. These
amendments are made at Items 141, 156, 158, 159, 160, 161 and 162 of Schedule 1
to the Bill.
At present the Act refers to certain visa holders by
listing in the Act the type of visa held by that person. The Act contains a provision to enable the
Minister to make a determination adding further classes of visa to this
list. However, this approach has its
drawbacks, as it requires the casual reader to consult both the Act and any
published determinations, and it requires the legislation to be periodically
updated (as listed classes of visa become defunct, etc).
To avoid this, the Bill
amends the Act so that in the future the list of visas will be contained solely
in a determination made by the Minister.
The Explanatory Memorandum makes it clear that the first
determination made will include those visas which are presently listed (unless of course they become defunct in the
interim) and includes a list of those visas.
The National Welfare Rights Network suggests in its
submission that the scrutiny applied to a disallowable instrument is "less
rigorous" than that applied to an Act.
FACS does not agree with this assertion; in fact, the requirement to
table disallowable instruments in the House of Representatives and in the
Senate for 15 sitting days is precisely the same process which applies to
Regulations made by the Governor-General under almost all Commonwealth Acts,
and can be viewed as no less stringent than that and other legislative
processes.
The submission from the National Welfare Rights Network
suggests that there is no need to make these amendments because it "is not
a problem in practice". They say
that "Centrelink officers ... do not generally refer to the legislation
...they generally refer to the Guide to the Administration of the
Act". They go on to say that
"High level Centrelink and Department of Family and Community Services
staff certainly know to refer to both the Act and the Ministerial
Determinations when researching cases or policy issues, as do community
workers".
While the extent to which any individual person relies on
the legislation (as opposed to the Guide) may vary, it should be emphasised
that these amendments are not directed toward the benefit of any single group;
their purpose is to make it easier for all users of the legislation to
quickly determine what visas are prescribed for the purposes of the relevant
provisions of the Act. The term
"all users" embraces not just the customer, but also members of Courts
and Tribunals, community workers, and indeed those very Centrelink officers
whose job it is to ensure that this is "not a problem in
practice".
Summary: The Bill
will make life easier for all concerned by providing a single point of
reference for the listed visas.
Issue: A Request for the breakdown of the
projected savings for the international portability and related provisions
contained in the bill.
Response:
|
Outcome
|
1999-00
$m
|
2000-01
$m
|
2001-02
$m
|
2002-03
$m
|
|
Portability
Simplification[1]
|
|
|
|
|
|
Administered
|
0.000
|
-0.459
|
-0.578
|
-0.553
|
|
Departmental
|
0.237
|
2.136
|
-0.367
|
-0.367
|
|
Comparable
Foreign Payments
|
|
|
|
|
|
Administered
|
0.000
|
-4.214
|
-9.448
|
-9.779
|
|
Departmental
|
0.745
|
5.371
|
2.062
|
1.570
|
|
Simplification
of Qualifying Residence
|
|
|
|
|
|
Administered
|
negligible
|
negligible
|
negligible
|
Negligible
|
|
Departmental
|
negligible
|
negligible
|
negligible
|
Negligible
|